May 15, 2002
MESSAGE DELIVERED TO
This morning, environmental and consumer protection activists Lloyd Marbet and Dan Meek and City Council candidate Peter Alexander urged the Portland City Council to take electric service in the Portland area out from under the criminal taint of Enron and its worldwide financial exploits.
“Enron had many methods for manipulating West Coast energy markets, which includes Oregon,” said Dan Meek. These plans were named “Fat Boy” and “Death Star” and “Get Shorty” and “Ricochet” and on and on. Lloyd Marbet added: “We have a plan for Enron: GET OUT OF OREGON!”
The text of their remarks follows:
Text of Peter Alexander’s Presentation to Portland City Council
Mayor, Commissioners, Citizens of Portland, I appreciate your giving me time to speak today about one of the most critical issues, yet greatest opportunities facing our community. As you know, I am a candidate for City Council. For the past two months my volunteers and I have been out in the community talking with thousands of people in their homes and businesses, asking about the things that are most important to them. I am here today to report to you that as a result of citizen concerns, my number one campaign theme is to get Enron out of our community.
Let’s put this in perspective. Would we want Enron running our water bureau? Obviously not. Why would we want a criminal corporation in charge of our water? A company that thrives on deception. A company that cheats its customers. A company that cheats its employees. A company that cheats taxpayers by extracting hundreds of millions of dollars in income taxes from Oregonians, and instead of sending the money to the US Treasury, sends it to the Cayman Islands! We would never dream of turning our water bureau over to Enron. So I ask you, “Why do we continue to entrust our electric utility to them?”
Commissioners, you have the power to fix this problem. By your action you can prevent about 200 million dollars per year in fraudulently inflated energy bills, executive bonuses, and corporate profits from leaving the City of Portland. By your action you can rescue our business community from the exorbitant rates PGE is charging as a result of Enron’s manipulation of the energy market. Our business community is suffering. For many of the people I have spoken with, the 53% hike in electric rates could mean the collapse of their enterprise. Can Portland afford more business closures? Are we going to allow ourselves to be victimized and bankrupted by this unethical, greedy, and uncaring corporation?
I beg you, therefore, to do what is best for our community. Utilize your power of eminent domain. Give our electric utility to the citizens of Portland. Get Enron out of our community. And save our city.
Statement of Dan Meek
On May 3, Enron announced its plan to keep PGE, which re-emphasizes the need for government action to remove Oregon utility assets from Enron.
We opposed Enron's entry into Oregon in 1997, testifying to the Oregon PUC:
The purchase would harm PGE ratepayers and impair the development of competitive markets in power supply and energy conservation. . . .
Protecting Oregon ratepayers from complicated shell games will be an entirely new and more difficult task for the PUC.
But the PUC approved the purchase and, despite our 3 more years of fighting in the courts, the shell games proceeded, with these results:
Last October the PUC allowed Enron/PGE to raise rates by 41% overall, 53% for businesses. This $400 million annual increase has helped Portland to achieve the highest jobless rate in Oregon (8.4%) [ which has the highest jobless rate in America (7.9% and no other state is even close).]
The reason was the high-priced power contracts PGE signed during May 2000-2001 period, while Enron was manipulating the West Coast energy market to inflate power prices with "Fat Boy", "Death Star" and other strategies revealed in the secret memos from the Stoel, Rives law firm.
California is filing complaints against Enron and others to cancel the high-priced contracts it signed during that period. PP&L did the same last month! PGE will not do that, because it would mean filing a complaint against itself, Enron!
The federal government has banned Enron and PGE from new federal contracts, including renewal of the residential exchange contract that pays PGE ratepayers $53 million this year alone.
The Oregon PERS lost over $80 million, the highest per capita loss in America.
PGE employees lost probably $200 million in their 401k plans, while Enron executives urgently sold off their shares but PGE were locked out of their accounts.
The PGE 2001 Annual Report filed last month noted that Enron might merge its underfunded corporate pension plan with PGE's overfunded plan, thus removing additional untold millions of dollars.
Over 4 years, PGE ratepayers paid $357 million for federal income taxes. PGE sent the money to Enron, but Enron never paid it to IRS. The PGE 10k report notes that PGE itself may be liable for tax liens imposed on Enron for these years.
PGE's former CEO, Ken Harrison, cashed out his options in 2000 for a cool $75 million! Former PGE treasurer, Joe Hirko, cashed his for a measly $35 million.
Even after the bankruptcy, Enron has paid over $100 million in wave after wave of "retention bonuses" to its executives, paying some $1 million just to stay for the rest of the year. Nothing succeeds like failure.
PUBLIC ACQUISITION WOULD PROVIDE FAR BETTER UTILITY SERVICE FOR THE PORTLAND AREA
The 1999 consultant report for the City concluded that rates would fall 10-20% or more under public power. And that was before the massive $400 million rate increase.
1. Of the 3 largest cities in the Northwest, Portland is the only city that is not served by public power.
2. In California, the only places that did not suffer were those served by public power, including Los Angeles, Sacramento Anaheim, Riverside, Burbank, Glendale, Pasadena, Palo Alto, Santa Clara, Modesto, Turlock, etc.
The City of Portland should play a central role in removing the assets from Enron:
1. The city can create an electric utility and acquire the PGE assets by eminent domain, both within and outside the city [ORS Chapters 223 and 225].
2. The city can finance such a purchase at far lower interest rates than the junk corporate bonds proposed by the Gas Co. Portland 10-year revenue bonds currently pay 4.5% interest. The Gas Company is proposing junk bonds at over 10%. That is a savings of over $50 million per year in interest alone.
3. Portland can persuade Enron to sell the PGE assets by imposing its own utility rates under authority of ORS 221.420 [or by imposing franchise terms under Chapter 221].
4. The city can accept ownership of PGE's hydropower facilities under the terms of the state licenses PGE agreed to in order to use the public water resources.
We should not be stuck with a subsidiary of a corrupt, influence-peddling corporation.
WHAT PUBLIC POWER BRINGS PORTLAND
Statement of Lloyd K. Marbet
As you may know, I have spent years involved in energy facility licensing proceedings in the Pacific Northwest, raising concerns over the failure of nuclear power and the growing problems of global warming. Portland General Electric and I have a special relationship that goes back over time.
But I am not here today to discuss the past. I am here to discuss the future and I believe the future of Portland and of Oregon will be greatly benefitted by the City of Portland taking over Portland General Electric and freeing its employees and ratepayers from the clutches of Enron and its creditors.
With the power of eminent domain you can reclaim the hydroelectric facilities owned by Enron, which under its existing licenses rightfully belong to the people of Oregon.
You can directly involve yourself in building the conservation and renewable energy resources that the City of Portland and Oregon so desperately need for our future.
You can bring “green industry” to Portland by establishing public ownership over Portland General Electric. What a better way to directly involve the people of this city in planning its future than by establishing democratic control over a utility that for years has been a pawn in the hands of greed. The same greed that has brought Portland’s economy to its knees with the highest energy rates in the Pacific Northwest, with the highest unemployment rate in Oregon, and with Oregon having the highest unemployment rate in the nation.
Let me share with you a list of what public power will do for Portland:
1. IT WON’T CHEAT RATEPAYERS! Illegally driving up wholesale rates to gouge ratepayers - (PP&L filing complaints with FERC - PGE can’t)
2. IT WON’T CHEAT ITS EMPLOYEES! $100 million out of retirement plans.
3. IT WON’T CHEAT TAXPAYERS! No federal income taxes will be paid to Enron which then ended up in the Cayman Islands.
4. IT WON’T HAVE TO PAY SHAREHOLDER PROFITS!
5. IT WON’T HAVE TO PAY MULTI MILLION DOLLAR BONUSES TO EXECUTIVES! - rewarding them for failure.
6. IT WILL HAVE IMPROVED ACCESS TO BPA - Tapping into wholesale rates under the preference clause. Enron and PGE are banned from all new federal contracts.
7. IT WILL NOT BE SHUT OUT OF CALIFORNIA ENERGY MARKETS! - which is the likely fate of Enron and PGE.
8. IT CAN MEET OUR FUTURE ENERGY NEEDS BY DEVELOPING CONSERVATION AND RENEWABLE ENERGY RESOURCES - HELPING TO ADDRESS THE PROBLEMS OF GLOBAL WARMING.
9. IT WILL BE OUT FROM UNDERNEATH TROJAN’S LIABILITY!
10. IT’S COST OF SERVICE WILL BE CHEAPER:
1. NO JUNK BONDS TO PAY OFF!
2. NO WALL STREET BROKERS TO PAY OFF!
3. NO $800 MILLION PAID ABOVE BOOK VALUE!
11. IT WILL NOT SEEK TO SELL ITSELF OUT FROM UNDER STATE REGULATION THROUGH THE FEDERAL BANKRUPTCY PROCESS!
When you consider these benefits, it is clear that justice is long overdue for the people of Portland.
Thus, I appear before you asking that you take the lead in bringing public power to Portland but if you are not willing to do so then we will begin an initiative campaign to form a public utility district and give the people of Portland the opportunity take PGE over for themselves.
I thank you for the opportunity to testify and I pray you will do what is right.