The Oregonian

PGE denies wrongdoing in settling trading case

09/27/03

JEFF MANNING HILL

Portland General Electric made it official Friday. In documents filed with the Federal Energy Regulatory Commission, the Portland electric utility said it will pay $8.5 million to settle charges it engaged in fraudulent electricity trades.

The commission has been investigating for more than a year allegations that PGE participated in deceptive energy trades with Enron, its parent company. PGE denies any wrongdoing in the settlement agreement, though it admits it played an unwitting role in the Enron trades.

"Settling these cases instead of bringing it to trial was a very difficult decision for us because we believe our traders did not engage in any actions that harmed the power market," said Peggy Fowler, PGE chief executive and president.

"This settlement allows us to put these cases behind us and alleviate further uncertainty so we can focus on the future."

PGE officials say the $8.5 million will be paid by company shareholders, not ratepayers.

The settlement documents show that the bulk of the settlement money -- $6.1 million -- will go to the California Department of Water Resources, which procures electricity for the state. Another $1.1 million will go to Tacoma, which along with the California attorney general's office took a lead role in investigating the PGE case.

Oregon ratepayers will divvy up the remaining $1.3 million. The Oregon Public Utility Commission will take $800,000, which will be returned to more than 700,000 business and residential customers of PGE.

The Industrial Customers of Northwest Utilities will get $250,000. And Blue Heron Paper Co. will get $250,000.

Blue Heron is the sole individual ratepayer to get a piece of the settlement. Mike Siebers, Blue Heron president, said the Oregon City paper mill is particularly deserving of a chunk of the settlement money. Its power costs exploded during the 2000-2001 energy crisis as its power contract was pegged to a wholesale price index. Wholesale prices jumped to unprecedented levels during the crisis, in part due to deceptive energy trading strategies employed by Enron and others.

The settlement agreement now goes to FERC Administrative Law Judge Jeffie Massey and requires approval by the commission to become effective.

Jeff Manning: 503-294-7606 or jmanning@news.oregonian.com