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The Oregonian

House backs bill to ban takeover of PGE by city



SALEM -- The House easily passed legislation on Thursday that would strip the city of Portland's power to take over Portland General Electric if the city's efforts to buy the utility fail.

House Bill 2356 passed 37-22, with most Republicans supporting the bill and most Democrats opposed. The measure goes to the Senate, where it faces an uphill fight.

Fred Miller, PGE executive vice president, said he was pleased but not surprised by the vote.

"I think once people understand the city would be condemning property outside its own boundaries, they will be concerned," he said. "We provide service in 51 cities. Essentially we are saying that one city shouldn't be condemning property for 50 others."

Jeff Bissonnette of the Citizens Utility Board of Oregon called the House vote disappointing, but said it showed the lobbying power of the big Portland utility.

"It was a decidedly anti-consumer vote, in our opinion," he said.

Lawmakers spent about an hour arguing the merits of the bill, which bans any Oregon city of more than 500,000 people from using its power of eminent domain to take control of the assets of an electric utility.

Portland has been trying to buy PGE, owned by the bankrupt Enron Corp., for nearly a year. The Houston-based Enron has rebuffed the city and offered few details about its intentions for PGE in a restructuring plan filed July 11.

Portland, in turn, has not said formally it would use condemnation powers to seize PGE. However, three of four city commissioners and Mayor Vera Katz have said it might be necessary as a last resort to protect the interests of the utility's 743,000 ratepayers.

Proponents of the bill said Portland has no right to take over a company that serves customers in six counties and has operations in nine.

They said local governments stand to lose millions of dollars in property and franchise taxes if another public entity takes over the private company.

Opponents, however, said ratepayers could be hurt if Enron sells PGE piecemeal or distributes its stock to Enron creditors.

Rep. Dan Doyle, R-Salem, said PGE is more than a Portland company, and its fate shouldn't be decided by just one city.

"Right now PGE pays many state and local taxes," he said. "It continues to be a viable entity for the entire state of Oregon."

Rep. Mary Gallegos, R-Cornelius, said PGE pays $26 million in property taxes and almost $42 million in franchise fees to cities."I would hope we would be mindful of that," she said.

But Rep. Jeff Merkley, D-Portland, said all PGE customers have a stake in getting affordable and stable power, which is threatened by Enron's bankruptcy. He said that consumer groups and many large Oregon business customers of PGE were opposed to the bill.

"Now is not the time to take a significant tool away from our public officials," he said. "It is premature to take any option off the table."

In the Senate, which is evenly split between the parties, the bill probably will be referred to the Senate Rules Committee. Senate Democratic Leader Kate Brown of Portland said many of her colleagues have concerns about the bill, particularly the idea of the Legislature putting restrictions on a local government.

"The issues in the bill are extremely complex, and there might not be enough time left in the session to deal with them properly," she said.

Mary Ellen Glynn, spokesman for Gov. Ted Kulongoski, said he also was concerned about limiting Portland's options but has not taken a formal position on the bill.

Steven Carter: 503-221-8521; stevencarter@news.oregonian.com