The Oregonian — Business News

PGE lost 1999 Columbia County battle

10/19/03

JONATHAN BRINCKMAN

COLUMBIA CITY -- The battle over creation of a Multnomah County People's Utility District echoes much that took place here in 1999.

On Sept. 21, 1999, despite a heated campaign directed by Portland General Electric, the residents of three Columbia County communities voted overwhelmingly to join the Columbia River People's Utility District. The vote meant that 7,200 PGE customers became customers of the PUD.

The stakes are far higher in Multnomah County. Proponents of a public takeover are targeting 230,000 customers of Enron-owned Portland General Electric. Nearly 70,000 PacifiCorp customers also would fall within the proposed PUD's boundaries.

But as in Multnomah County, the Columbia County vote hinged on voters' desire for local control, distrust of Enron and arguments over which could provide the cheapest electricity.

Fergus Pilon, 57, general manager of the Columbia River People's Utility District, sighs when asked about the battle being waged now by the private utilities against formation of a Multnomah County PUD.

Pilon was at the helm when PGE lost the ballot battle that authorized expansion of the Columbia River PUD, the newest of the six people's utility districts in Oregon.

Pilon said PGE needlessly scared people in 1999, sounding alarms about the possibility of skyrocketing rates and power system failures that did not turn out to be true. Now, he said, PGE and PacifiCorp are doing it again

Both utilities oppose the creation of a people's utility district in Multnomah County.

"The same garbage that PGE people are pumping now, PGE was pumping out then," Pilon said.

Brian Gard, an advertising executive who represented PGE when it opposed the annexation effort and who is leading the campaign against PUD formation in Multnomah County, disagreed with Pilon's characterization of the anti-PUD campaign but agreed the current campaign has similarities to 1999.

"When people don't have facts, they call names," he said. "The reason that similar arguments were made then is because similar things are happening now."

The cost of electricity is usually the most important factor in any campaign to create or expand a people's utility district, said Bob Moore, president of Moore Information, a Portland public opinion research company, who often works for Republican candidates and causes but is not involved in this case.

"If people think that their power costs too much, that's the single largest reason to vote," he said.

There are clear parallels between the campaign that PGE and PacifiCorp are funding now against PUD formation in Multnomah County and the 1999 campaign that PGE helped fund against the Columbia County annexation. In a mailing PGE sent this month to its residential electricity customers, for example, PGE Chief Executive Officer Peggy Fowler urges Multnomah County residents to vote against creation of the PUD.

"Not only would the reliability of your electric service be in doubt, your prices are likely to go up," the letter reads. "At PGE we believe it's our responsibility to let our customers know when decisions they are making could place their electricity service at risk."

Similar advertisements ran in Columbia County newspapers in the fall of 1999.

"If you want to cut your electric bill now, vote No on PUD annexation," read an advertisement in The Chronicle, a St. Helens newspaper, less than a week before the election. "It doesn't make sense to get stuck with all the risks and costs of a PUD takeover when you can have lower prices for the same service."

That advertisement was paid for by an organization called the Committee for Lower Prices and Reliable Service. The committee reported that it spent $71,592 to oppose the annexation, $32,415 contributed by PGE. Supporters of the annexation effort reported spending $2,304.

There also is a big spending gap in the current campaign. Opponents of the PUD formation reported that they had spent $501,769 by Sept. 18, compared with $20,180 reported by PUD supporters.

Voters approved the annexation of electricity customers in Scappoose, St. Helens and Columbia City to the Columbia River PUD by a 2-1 ratio. Voters approved the annexation of customers in Rainier, also previously served by PGE, to Clatskanie People's Utility District in the same election.

What happened next?

Electricity rates immediately dropped for PGE customers once they became Columbia River PUD customers. Residential customers who had been paying $60.10 a month to PGE for 1,000 kilowatt-hours of electricity began paying $52.50 a month.

Rates dropped, Pilon said, because unlike PGE, Columbia River does not seek to make a profit and because it has access to low-cost electricity from the Bonneville Power Administration.

The rate differential has increased since then: A PGE customer using 1,000 kilowatt-hours of electricity a month pays $80.52; a Columbia River PUD customer using the same amount of electricity pays $68.20.

Gard, president of the Portland advertising firm leading the PGE and PacifiCorp campaign against the formation of a Multnomah County PUD, also ran the anti-annexation campaign in Columbia County. He says there are sharp differences between this battle and the one in 1999.

For one thing, the Columbia River PUD already existed: Columbia County voters authorized its creation in 1944. It began operation 40 years later. Its coverage area included most of Columbia County, excluding the communities of Scappoose, St. Helens, Columbia City and Rainier.

Wayne Mayo, a Deer Island building contractor, and several others launched the successful annexation campaign after learning that PGE planned to sell its service areas in the four cities to Vernonia-based West Oregon Electric Cooperative for $7.9 million.

PGE said at the time that it wanted to sell because it no longer made economic sense to provide power to the 7,200 customers in the four cities. "We didn't want to be sold to West Oregon Electric," Mayo said.

There was another reason to oppose the deal, Pilon said. Under the terms of the agreement with West Oregon Electric, an Enron subsidiary called Columbia Pacific Distribution Services would have been formed.

West Oregon Electric had agreed that it would retain the Enron company to maintain and operate the poles, wires and other components of the electricity distribution system. Columbia Pacific Distribution Services, as an independent contractor, would not have been regulated by the Oregon Public Utility Commission.

"They had this scheme where Enron would become the non-regulated operator of this distribution system," Pilon said. "Within a few days petitions were collected to oppose it."

At the time of the election, Enron's problems were unknown. But the company, which acquired PGE in 1997, had never been warmly received in Oregon.

Gard said the proposed sale to West Oregon Electric and the proposed creation of Columbia Pacific Distribution Services made the 1999 campaign completely different from the current campaign.

"It was a very confusing environment" in 1999, he said.

Gard said the situation is clearer in Multnomah County. He said that despite Enron's collapse, PGE is a well-run utility with strong Portland roots.

"The proponents are insisting that rates will go down" after a PUD is created, Gard said. "We may argue that the rates will be going up. But the very most you can say is we don't know."

CPP Webmaster note: In the latest OPUC figures (2002), Columbia River PUD's overall rate is 5.58 cents per kWh or 24.4% less than PGE. The Clatskanie PUD's overall rate is 3.41 cents per kWh or 53% less than PGE.