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News Release
Commission Approves PGE Stock Distribution
December 14, 2005 (2005 - 029) (UF-4218/UM-1206)
Contacts:  Lee Beyer, Chairman, 503 378-6611; Ray Baum, Commissioner, 503 378-6611; John Savage, Commissioner, 503 378-6611; Bob Valdez, Public Information Officer, 503 378-8962
Salem, OR –Today the Oregon Public Utility Commission (PUC) approved a Portland General Electric Company (PGE) application to sever its ties to Enron. The approval will not have a direct impact on utility rates.
In approving the application, the Commission found the transaction provides net benefits to ratepayers, no harm to Oregonians as a whole and is in the public interest. 
“Finally we’re on the road to putting Enron behind us,” Commission Chairman Lee Beyer said. “With today’s action, PGE will return to being an Oregon-based, independent corporation as it was before Enron entered the picture.”
The PUC’s decision authorizes PGE to replace Enron’s ownership by issuing new stock. Initially, thirty percent of PGE’s stock will be owned by Enron’s creditors with the balance held in trust by a reserve created by the federal bankruptcy court overseeing dissolution of the Enron estate. 
The process of stock re-issuance is expected to begin in April 2006. Control of the utility will rest with an expanded PGE board of directors with no ties to Enron.
A board of overseers, appointed by the court will over time distribute the remaining stock to compensate creditors for unpaid loans.  The Commission authorized Stephen Cooper LLC (SFC), acting as agent for the Reserve Overseers, to hold stock not initially given to creditors and to distribute that stock in accord with Enron’s approved bankruptcy plan as credit claims are settled.  Within two years of the initial disbursement date, the Reserve would hold less than fifty percent of the stock; within three years, less than thirty percent.   The Reserve’s control over PGE will be no greater than that of other individual shareholders.
Beyer noted, “There has been considerable discussion about taxes being collected by PGE which were subsequently not paid because their tax liability was consolidated with the bankrupt Enron. Returning PGE to its former status as an independent corporation, filing its own taxes, should resolve these concerns.”
The Commission action was based upon a stipulated settlement entered into by PGE, the Citizens’ Utility Board, Industrial Customers of Northwest Utilities, Community Action Directors of Oregon/Oregon Energy Coordinators Association and PUC staff.   The City of Portland and the Utility Reform Project objected to the application and settlement.
The settlement extends conditions from the Enron merger to the acquisition of stock by the Reserve. Many of these conditions will be phased out as the Reserve holds less PGE stock.  The conditions include:
  • Financial Ring-fencing:
    • After the issuance of new stock, PGE cannot pay a dividend that would cause the common equity capital to fall below 48 percent without Commission approval;
    • Before the issuance of new stock, PGE cannot make a dividend distribution to Enron unless PGE has an investment grade debt rating (senior secured debt rating of not lower than BBB+ from Standard & Poor’s) and can reasonably expect to maintain that rating after the distribution;
    • PGE cannot seek recovery of increases in the allowed return on common equity and other costs of capital due to Enron’s ownership of PGE or caused by the ownership by the Reserve of 25 percent or more of PGE stock;
    • PGE cannot seek recovery of increases in PGE’s revenue requirement that result from Enron’s ownership of PGE.
  • Indemnification from liabilities:  Enron will indemnify PGE for liabilities related to taxes and employee benefits, and PGE agreed to hold ratepayers harmless for any other liabilities that arise due to Enron’s ownership.
  • Notice of dividends:  The Reserve will notify the Commission at the same time that it notifies the public of any dividend declared by the Board of Directors.
  • Access to books:
    • PGE will provide access to books of account and all documents,  which pertain to transactions between PGE and its affiliated interests, and the Reserve will provide access to all books of account and documents pertaining to PGE;
    • PGE and the Reserve will provide access to information provided to stock and bond analysts, or rating agencies, which relates to PGE or any affiliate that exercises influence over PGE.
  • Customer Service Benefits:
    • PGE agrees to extend current service quality measures through 2016;
    • PGE agrees to work with customer groups to develop several new service quality measures;
    • PGE agrees to let customer groups to address the PGE Board of Directors.
View the Order: