The Oregonian - Business News

PORTLAND GENERAL ELECTRIC'S LEGAL PROBLEMS

08/05/03

The legal wrangling dogging Portland General Electric falls roughly into three categories: matters involving electricity trading practices, those involving the crash of Enron stock and those dealing with ongoing utility operations.

Here's a look at lawsuits disclosed in Enron's reorganization plan and PGE financial reports:

ELECTRICITY TRADING DURING THE 2000-01 ENERGY CRISIS

Gordon v. Reliant Energy, Duke Energy et al. v. Arizona Public Service Co. et al.

U.S. District Court of Southern California and U.S. 9th Circuit Court of Appeals.

Involves individuals and California cities and governments in class-action lawsuits against various traders, including Reliant and Duke, alleging that trading activities in 2000-01 violated California antitrust and unfair competition laws. Duke and Reliant filed cross complaints against PGE and others.

People of California ex rel. Bill Lockyer, Attorney General v. PGE.

Superior Court of California; U.S. District Court, Northern District of California.

Alleges that PGE failed to comply with the Federal Power Act and Federal Energy Regulatory Commission requirements for competitive electricity sales. Seeks fines and penalties for each sale from 1998 to 2001 above a "capped" or "reasonable" price and for each regulatory violation.

Symonds v. Dynegy et al.

U.S. District Court, Western District of Washington

Class-action filed on behalf of Washington consumers against participants in Northwest power markets, including PGE. Alleges violation of the Washington Consumer Protection Act, fraud and negligence. Seeks treble damages.

Port of Seattle v. Avista et al., including PGE

U.S. District Court, Western District of Washington

Alleges that PGE and 16 other companies violated antitrust and racketeering laws and committed fraud. Seeks actual damages of $30.5 million plus punitive damages from all parties.

People of Montana ex rel. Mike McGrath, Attorney General v. Williams Energy Marketing and Trading et al., including PGE

Montana First Judicial District, Lewis and Clark County

Alleges unfair and deceptive trading practices, deception and fraud against numerous electricity generators, traders, marketers and utilities. Seeks general and treble damages.

California Electricity Refund Case

Federal Energy Regulatory Commission

Recent orders by the federal commission ordered refunds totaling about $3.3 billion for spot-market sales during the energy crisis . Eleven states and numerous energy traders and utilities, including PGE, are involved. PGE estimates a refund liability of $20 million to $50 million, which can be offset by an estimated $62 million that California owes PGE for past-due electricity purchases.

Pacific Northwest Refund Case

Federal Energy Regulatory Commission

Several Northwest utilities continue to seek refunds for alleged overcharges by PGE and others during the energy crisis.

PGE Trading Activities

Federal Energy Regulatory Commission

Investigation into whether PGE and Enron Power Marketing participated in trades (nicknamed "Death Star" by Enron traders) that manipulated energy markets and violated regulatory law. Penalties could include fines and a ban on PGE's ability to trade in competitive wholesale markets.

Show-Cause Order

Federal Energy Regulatory Commission

On June 25, the commission ordered 50 energy marketers, generators and utilities, including PGE, to justify their trading practices under California market rules during the energy crisis. Sanctions for violators will include disgorging unjust profits.

SHAREHOLDER LOSSES

Union Grievances

Multnomah County Circuit Court

The grievances, filed by the International Brotherhood of Electrical Workers Local 125, allege that collapse of Enron stock and the losses in workers' pension / savings plan were caused by Enron's manipulation of the stock. They do not specify an amount, but ask that current and past members of the union be made whole. Local 125 represents about 900 PGE workers.

Arthur K. McNett and Aileen G. McNett et al. v. PGE

Multnomah County Circuit Court

Class-action lawsuit claims former PGE executives misled PGE shareholders in 1997 when they advised them to approve a merger with Enron. Other shareholder lawsuits have been filed against Enron, but this is the first of its kind against PGE. No dollar amount is specified.

ONGOING UTILITY OPERATIONS

Utility Reform Project v. Public Utility Commission of Oregon.

Marion County Circuit Court, Oregon Court of Appeals and Oregon Supreme Court.

Challenges a settlement regarding PGE's allowable investment return for the decommissioned Trojan nuclear power plant. The supreme and appeals courts denied recent Utility Reform Project petitions to review settlement, which has been approved by the Public Utility Commission. If plaintiffs succeed, however, customers could receive a rate reduction.

Dreyer, Gearhart and Kafoury Bros. v. PGE and Morgan v. PGE.

Marion County Circuit Court

Class-action lawsuits also stemming from Trojan and the investment return allowed PGE. Together they seek damages of $260 million. Customers could see rate-relief if plaintiffs prevail.

Cyber-Tech Inc. v. PGE

Multnomah County Circuit Court

Seeks $4.3 million for property damage and lost profits during a power failure.

Remington et al. v. Northwestern Energy

Second Judicial District, Silver Bow County, Mont.

Individuals, unions and businesses maintain PGE and other designers of operators of the Colstrip coal-fired power plant in Montana were responsible for groundwater contamination. They allege nuisance, trespass, unjust enrichment, fraud and negligence, and seek unspecified damages, disgorgement of profits and punitive damages.

Sources: Enron bankruptcy reorganization plan, PGE filings with the Securities and Exchange Commission