November 18, 2003

(Updated) Enron Announces Plans To Sell PGE, City And Others React

Note: This post has been updated. Any and all updates appear at the end of the original post.

Unbeknownst to me as I slept in, Enron this morning announced its plans for the sale of Portland General Electric:

Enron Corp. plans to sell Portland General Electric to a newly formed entity backed by investment funds for $1.25 billion in cash, the bankrupt energy company said Tuesday.

...

The buyer, Oregon Electric Utility Co. LLC, is backed by investment funds managed by Texas Pacific Group and will assume $1.1 billion in debt and preferred stock, Enron spokesman Mark Palmer said.

Texas Pacific Group's investors consist mainly of institutions, including the Oregon Public Employees Retirement Fund.

Upon closing, Oregon Electric's general partners will include former Oregon Gov.Neil Goldschmidt and Gerald Grinstein, former chairman and CEO of Burlington Northern and a director of Delta Air Lines. Oregon Electric will appoint members of PGE's board, which is expected to include Goldschmidt as chairman and Grinstein.

You can also directly read the Enron press release on the announcement.

Goldschmidt, you may recall, was a vocal opponent of the proposed People's Utility District for Multnomah County, acting as a paid spokesperson for Pacific Power, something that KGW manages to report today.

In that capacity, and through his association with the Citizens Against the Government Takeover front group, Goldschmidt helped undermine that debate through echoing the utility industry's half-truths and distortions.

Funny how he turned out to have a personal vested interest in that proposal falling apart. So much for the old political watch-phrase that even the appearance of impropriety should be avoided. City Hall backers of a Portland buyout of PGE for themost part stayed out of the PUD debate, and Goldschmidt should have done the same.

"People kept asking us why Neil Goldschmidt was opposing the PUD, writing letters and opinion pieces for newspapers," said Nancy Newell of the Oregon Public Power Coalition in a news release (pdf) today. "I guess he did not think he needed to disclose his financial interest in the deal."

This announcement comes on the heels of a story on this morniing's Oregonian reporting that a consultant hired by the City of Portland determined City ownership to be a viable option that would lower costs and potentially rates as well.

A prepared statement from Mayor Vera Katz and Commissioner Erik Sten released this morning reads in part:

From the beginning, we said that there could be more than one good solution for the ratepayers of this region. Continued ownership by Enron was not a good solution and we are glad that that seems to be off the table.

When Enron filed for bankruptcy the Portland City Council adopted a concrete set of principles to help us determine what a good outcome could be for our electric utility. Today, our principles remain the same: reasonable rates, long-term stability, and owners who are committed to Oregon's health and economy.

Saying the City still needed to know whether the new sale plan reflects those principles, Mayor Katz said, "We're hopeful that this will bring about a good outcome." City representatives plans to meet tomorrow with the parties involved in the deal announced today.

Saying it's "not a perfect situation, but it's better," Commissioner Sten did express some concern that the current plan does not appear to include specific proposals for bringing down rates. He added, however, "This doesn't look and feel like the last set of deals."

Commissioner Sten also reiterated that should this latest deal fall through as other have before it, the City's proposal is still a viable option.

KGW has more from this morning's news conference at City Hall.

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