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Press Release
PUC Staff Recommends Against Sale of PGE to Oregon Electric Utility Company
July 21, 2004 (2004 - 022)(UM 1121)
 
Contacts:  Bryan Conway, PUC Case Manager, 503-378-6200; Bob Valdez, Public Information Officer, 503 378-8962
 
Salem, OR – The Staff of the Oregon Public Utility Commission today made its initial recommendation to the Commission that the sale of Portland General Electric (PGE), a subsidiary of Enron, to Oregon Electric Utility Company (OEUC), not be approved.
 
"Staff has concluded that the proposal, as it stands today, falls short of demonstrating net benefits for customers," Bryan Conway, PUC staff case manager said. "The Commission is requiring a two-step assessment, will the proposed sale provide a net benefit to the utility’s customers, and (2) impose "no harm" to the public at large.
 
Staff says due to many unanswered questions about relevant issues, and risks these entail for customers, it has not been able to fully assess the downside risk to customers of the transaction.
 
"We look forward to hearing from OEUC how it intends to mitigate a number of our concerns as well as those raised by other parties in this case," Conway added.
 
On March 8, 2004, Oregon Electric Utility Company submitted its application to purchase Portland General Electric. OEUC would be a Limited Liability Company of which Texas Pacific Group, a private equity firm headquartered in Fort Worth, Texas would provide the bulk of the financial backing.
 
Summary of Staff’s testimony:
  • At this time, Staff recommends the Commission not approve OEUC’s application;

  • Meaningful rate credits are the clearest method to offset the risks of the transaction;

  • Staff will have a recommendation on how to treat taxes by the conclusion of the case;

  • There are concerns regarding OEUC’s ability to buy PGE without negative financial implications, cost-cutting plans, possibility of cross-subsidies and inter-jurisdictional cost shifts;

  • There is a potential need for an additional service quality measure that tracks issues such as billing accuracy;

  • Staff continues to analyze the proposal.
 
This is a preliminary recommendation from Staff. The applicants, OEUC, will have an opportunity to respond to the initial round of comments with its rebuttal testimony that is due by Monday, August 16, 2004. The other parties in the case, along with Staff, will continue to raise issues and participate in additional discovery and settlement discussions as the case progresses.
 
At this time settlement conferences are scheduled for July 21, July 29, August 23, and September 27, 2004.
 
A final decision by the Commission is expected by the end of the year.
 
PGE serves approximately 741,000 customers in Oregon.
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