A PUD - Stability for PGE Workers
A PUD guarantees existing union contracts. Wages will be honored. Under state law (ORS 261.345) a PUD which acquires investor-owned utility property must:
But the PUD would not have to hire PGE's million-dollar executives or pay their enormous bonuses and other compensation.
Under a PUD, Oregon’s Public Employee Retirement System (PERS) will become an additional option for PGE workers. Among the best public retirement plans in the country, PERS will be a significant improvement for most PGE employees who had to watch helplessly as their 401(k) investments were depleted.
Currently, less than 900 of PGE’s 2,757 employees are unionized. Forming five PUDs to cover PGE’s entire six county territory will benefit Oregon’s labor movement because history tells us that public-owned entities, in this case ratepayer-owned, bring higher union representation. Though small, the Clatskanie has 100 percent non-management union representation.
A PUD will also increase job security and improve working conditions.
Texas Pacific Group Ownership
There's no guarantee that TPG will become owner of PGE. It could easily fall apart. David Bonderman leads Texas Pacific Group. The company buys distressed companies and then usually sells them a few years later for a 20-40 percent profit.
While commenting about the downsizing that often occurs after corporate buyouts, Bonderman said, "Generally speaking, you like to dance with the girl that brung you, and if you can’t sometimes you have to shoot her."
Because Texas Pacific Group is a private company, unlike Enron, it's exempt from SEC or any other regulatory scrutiny. The TPG fund that would buy PGE is registered in the Cayman Islands.
Neil Goldschmidt is the most well known public figurehead in the TPG offer. The Texas group says it will own 90-95 percent of PGE. Tom Walsh, the other Oregon figurehead, told Willamette Week that he, Neil Goldschmidt, and Garald Grinstein will, as a whole, invest $2 million to $5 million. Considering their small investment amount for five to ten percent of a multibillion dollar company, they stand to reap an enormous profit. These investors will not be looking out for the best interests of PGE employees or ratepayers.
PGE's former CEO, Ken Harrison, cashed out his stock options in 2000 for $75 million. Former PGE treasurer, Joe Hirko, cashed his for $35 million. During the one year or so purchase process, Goldschmidt will be paid for services rendered.
In early 2003, Neil Goldschmidt was hired to co-chair a national airline industry coalition to push a bill in Congress that would ban the right of airline unions to strike. He also helped facilitate the sale of Oregon's Willamette Industries to Weyerhaeuser, an out-of-state company, at a cost of at least 500 Oregon jobs. Goldschmidt’s brother Steve, as head of human resources for Portland Public Schools, was responsible for contracting out the school district's custodial department.
Gerald Grinstein was recently made CEO of Delta Air Lines, Inc. It's well known that his immediate task is to win steep wage concessions from Delta's pilots including cutting pilots' hourly wages by 22 percent, canceling pay raises due over the next year and reducing some benefits.
This is the future of PGE workers as Texas Pacific and its three local investors try to maximize profits and make PGE more attractive to some unknown new owner a few years from now.
A bankruptcy is still possible as it would bring the most value to Enron's creditors. Two likely scenarios are that Enron will absorb PGE into its bankruptcy or PGE will itself be put into bankruptcy. This is confirmed by leading bankruptcy experts, as published in the Business Journal in September 2003. Oregon government could not stop it. The Enron Reorgination plan does not rule out a PGE bankruptcy even though it is the creditors, through the New York Court, who actually hold the power to force a PGE bankruptcy. Details about the PGE bankruptcy option are in the navigation menu above.
Bankruptcy & Union Contracts
Sect. 1113 of the U.S. Bankruptcy Code gives the court the right to void union contracts if the company can prove it "seriously hampers business." At the very least, bankruptcy will be used to force wage and benefit concessions from PGE workers. In a recent example, United Airlines, seeking $2.4 billion in yearly wage cuts, filed a motion in U.S. Bankruptcy Court the day after Christmas 2002 asking a judge to dissolve its labor agreements. United has about 83,000 employees, and 80 percent of them are unionized. In comparing the leverage on both sides, a New York Times article noted, "The unions were driving a Volkswagen Bug and the company an 18-wheeler."
Other examples of bankruptcy being used against workers include:
PGE's "Dead Peasant" Life Insurance Policies [Details]
In just one example of PGE's disdain for its workers, the company continues to buy life insurance policies on rank-and-file employees and designate the company as the beneficiary. When the story broke in April 2002, employees stated that they didn't know the policies had been taken out on them. As of that month, PGE had set aside nearly $80 million for two purposes. About three-quarters of the money was for a long-term compensation plan for managers, directors and top officials and the remainder was to help pay for supplemental executive retirement payments.
These policies, illegal in Texas but not in Oregon, make PGE workers worth a great deal "dead" to their bosses. Although there was an outcry by citizens and some elected officials, PGE is still buying these "dead peasant" policies.
"We do this every day." Yeah -- so? Guess what the employees of PGE will be doing after the PUD wins the election and negotiates a fair sales price? They will go to work for the PUD, they will be paid a fair union scale, and they will work for the same union that is opposing this vote."
"Now I'm just a journeyman lineman for this outfit, but in my 23 years of experience working for PGE I have never seen this company treat its employees so terribly. I've seen a lot of management come and go, but these last few years since Enron crashed have been the pits."
"After hemorrhaging money and laying off more than half of its workforce, after being de-listed from the New York Stock Exchange, Touch America filed for Chapter 11 Bankruptcy protection in June."
"Montana Power had 3,000 employees. And now a lot of those are laid off, or transferred or working for different companies. "It has had a devastating effect on Butte. Many of the retirees are wondering whether their pension benefits are secure. Their savings are certainly not secure. And then there's a lot of uncertainty."
"Generally speaking, you like to dance with the girl that brung you, and if you can’t sometimes you have to shoot her."