Regulators deny Enron subsidiary purchase
3/10/2005, 1:52 p.m. PT
By WILLIAM McCALL
PORTLAND, Ore. (AP) — Six months to the day after a federal judge signed off on Enron Corp.'s plan to sell its last major assets, state regulators in Oregon have blocked the proposed $2.35 billion sale of Enron subsidiary Portland General Electric, saying the offer from the Texas Pacific Group is not in the public interest.
"The potential harms or risks to PGE customers from the deal outweigh the potential benefits," said Lee Beyer, Oregon Public Utility Commission chairman.
Beyer and fellow commissioners cited the large debt Texas Pacific would have to carry on the utility and its plan to sell PGE again as soon as the investment showed a profit as the main reasons for discounting the potential benefits the privately held Fort Worth company had claimed for the deal.
"The high debt percentage would likely result in lower credit ratings for PGE than it would in the absence of this transaction," the PUC ruling stated, adding that lower credit ratings could translate into higher electricity rates for customers.
State law required the commissioners to decide whether ratepayers would benefit from the takeover and that no public harm would result. The PUC could have approved the deal outright or spelled out conditions for approval if the proposal had not met the legal test.
The commission ruling leaves the fate of PGE in the hands of Enron creditors if Texas Pacific decides not to appeal or ask the PUC to reconsider.
Texas Pacific and Enron officials said only that the ruling was a disappointment and will have to be carefully reviewed.
Texas Pacific had been trying to build support for the PGE buyout from bankrupt Enron for more than a year despite widespread criticism and resistance in Oregon, including major industrial customers such as Intel Corp.
Portland city Commissioner Erik Sten, who has led the proposal to convert PGE into a municipal utility, said the city would begin talking to creditors immediately.
"To be fair to all parties and be certain we can deliver this quickly, we will be working to get all the parties to come together and end this once and for all," Sten said.
Oregon regulators had been considering the ruling for nearly three months since it heard closing arguments on Dec. 14 on the Texas Pacific offer to buy the oldest and largest utility in the state, serving about 755,000 customers.
The deal had been complicated by a sex scandal involving former Gov. Neil Goldschmidt, whom Texas Pacific had initially named to lead the takeover before he resigned as chairman of a proposed holding company named Oregon Electric Utility Co.
Gov. Ted Kulongoski said the PUC's decision will give Oregonians a chance to carefully consider the role of Portland General Electric in the state economy. But he said he expects no changes in operation.
"I want to be clear about this — PGE is not in crisis," Kulongoski said. "As a utility, it is well-run and today's decision should not have any immediate impact on customers."