Lawmaker Proposes Oregon Buy Portland General
Rep. Peter DeFazio (D-OR) is asking Oregon Gov. John Kitzhaber to consider a proposal that would result in the state purchasing Portland General Electric from Enron. In a letter recently sent to Kitzhaber, DeFazio also proposes that Oregon issue bonds to purchase Portland General's transmission assets.
"As you know, our region is facing an unprecedented series of challenges including a severe drought, misguided electricity deregulation schemes, and volatile wholesale electricity 'markets' that have produced prices 10-20 times what they were just one year ago," wrote DeFazio.
The Oregon lawmaker argued that Portland General's assets would prove to be an "extremely valuable resource" for Oregonians, noting that the company owns a "diverse mix" of generation including hydro, gas, coal and renewable energy sources. DeFazio also points out in his letter that Portland General owns transmission rights, including the ability to sell bulk power via the intertie with California, and has a number of long-term contracts with other generators that limit its exposure to what he called unjust and unreasonable spot market prices seen in the West.
"Unlike California, where bonds may be issued in order to cover the state's electricity purchases, but their taxpayers do not get any permanent assets in return, my proposal would provide Oregon taxpayers with real assets that have the potential to provide a substantial return on the investment," DeFazio wrote. The congressman noted that he has contacted Oregon's treasurer and a lawyer who is well-versed in energy policy to discuss his proposal. "While I have not exhaustively researched the proposal, it does appear to be feasible," he added.
DeFazio said that there were a number of options under which his proposal could move forward. The most obvious option, according to the lawmaker, would be through the creation of a public power entity, such as a public utility district or a cooperative. Under these proposals, he continued, Oregon would put up the money and an alternative governance structure would be put in place.
The state's purchase of Portland General could also involve an enterprise fund, according to DeFazio. Under this proposal, the existing management structure would remain in place, but ratepayers would be insulated from the volatile deregulated markets through control of Portland General's assets. He noted that while bonds would be used for the purchase, they could be retired through revenues, and "profits" could either be earmarked for specific public purposes or used to enhance the general fund. "I would urge you to have your staff expeditiously investigate the best approach in order to gain the necessary authorization during the current legislative session," the congressman wrote.
DeFazio pointed to reports that ScottishPower is negotiating with Enron about the possible purchase of Portland General, and noted that ScottishPower already owns Pacificorp. "While I am sure ScottishPower has done a fine job running Pacificorp, my primary concern is for Oregon ratepayers," he wrote. The lawmaker notes that if ScottishPower also purchased Portland General, it would give one private, foreign-based entity control of over 70% of Oregon's electricity customers. "This raises serious regulatory concerns regarding market power," he asserted. Therefore, expressing Oregon's interest in negotiating the purchase of Portland General, the letter continued, needs to be done soon.
DeFazio noted that because this proposal does not provide protection for Oregonians outside Portland General's service territory, he intends to continue working with interested parties on a plan to regionalize the Bonneville Power Administration. "I would also like to continue to work with you in overcoming the Bush administration's and FERC's senseless opposition to cost-based wholesale rates," he wrote. "In the meantime, I believe the proposal I've outlined would provide a buffer to protect a large number of Oregon's residential ratepayers, businesses, and a substantial portion of our economy."
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