The Oregonian: Commentary
Protect PGE ratepayers
Next Friday is the deadline for Enron to file its plan to pay its debts. The Houston-based company was grated an extension to July 11 after announcing that it had reached tentative agreements with its creditors.
Portland General Electric ratepayers, indeed, the economic health of the region, will be profoundly affected by how that plan is received in the New York bankruptcy court.
Oregon regulators and state and regional leaders have a job ahead. They will need to take apart whatever proposal Enron presents, line by line. The ultimate test for Oregon is to protect ratepayers and regional economic interests.
In the 18 months since Enron filed for bankruptcy, the disposition of PGE, acquired in 1997, has been the subject of speculation. Portland has proposed leading a coalition of counties and municipalities in buying PGE, but confidentiality agreements have kept the negotiations under a cone of silence.
Nevertheless, murmurs slipping through legal and securities circles suggest that the city's overtures have been rebuffed and no other serious bidders are believed to have emerged.
Still, the proposal considered most likely would buy off creditors with stock in PGE. Enron has already announced it is creating a separate company with stock in its pipeline operations and another with stock in its international operations designed to satisfy creditors.
In the abstract, a similar solution for PGE might not be a bad outcome, but whether it is will be determined by the fine print of the proposal.
The looming issue is one of liabilities. Enron is facing hundreds of lawsuits. PGE is also being sued. The most serious ones involve pension liabilities and could take years to resolve.
The most important thing from our perspective is that PGE emerges with its ties to Enron cut. Enron inflated its profits and filed false earnings reports. It manipulated the West Coast energy prices with trading schemes called "Death Star" and "Ricochet" and helped extend an economic downturn the region is still struggling to dig out of. In the wake of the energy crisis that Enron helped create, PGE raised rates to the highest in the Northwest. Enron's collapse wiped out the retirement savings of thousands of Oregon workers. It collected local taxes and took them with the rest of its corporate plunder.
An electric utility is too critical a resource to be in the hands of an entity with such a dismal record.
If Enron's bankruptcy proposal leads to an Oregon-based company with all ties severed from Enron and its illegal activities, fine. And, on this point, it doesn't matter whether it is owned by investors or the public.
But any plan that leaves PGE attached to Houston-based Enron should get the full scrutiny of the Oregon Public Utilities Commission in its role as regulator of ownership changes. The state attorney general should be ready to challenge the fitness of any successor to Enron's fraudulent business to do business in the state.
State agencies have a clear duty. They must protect Oregon ratepayers from having their pockets picked twice.