As I mentioned here yesterday, Portland Commissioner Erik Sten and I had an e-mail exchange this week about this blog, and some of the criticisms I've lobbed in his direction from this blog. For my part, I told him that I thought the city's current priorities are all wrong -- that we're wasting time on frills like the tram, streetcars, Convention Center expansion, campaign finance reform, public WiFi, etc., while our foundation is crumbling. I also told him I thought the city was being taken for a ride on PGE -- that if no real utility wanted the company more than the city did, it must be a bad deal for the city's taxpayers. I also opined that the Bull Run regionalization plan was misguided, that the city should maintain control of the water system, and that if the suburban customers didn't want to pay for system improvements through higher water rates, they could drink the Willamette.

Here is some of his response:

I think you have a strong point on the need to focus. I agree with some of your things, and not others. I think our basic infrastructure, like water and electricity, are key things for the next fifty years. That's probably a whole conversation in itself. Let me quickly share some thoughts on the specifics that you've been following.

If you'll allow one jab back at you, the tone of the blog leaves no doubt about your estimation of your own intelligence. You're a tad quick to assume that I can't see the obvious as well. There are 27 water districts for four sources of water, if you count the Willamette, which was unnecessary, but now exists. That's inefficient and costs you money. My original proposal was that we would merge all the districts into three. That was too much for people, but you would not have lost control as a ratepayer, the City govt., which you seem to dislike, would have lost control. Nonetheless, we are exactly where you would like us to be with the suburbs needing to sign a contract. Only difference is our relations are good, as opposed to terrible when the Willamette decision was made. Make no mistake about it, you want the suburbs' money. I do very much understand water bureau economics, and losing those customers, is not incidental. My regional efforts changed the psychology and now we'll get a good contract.

It's humorous to read your blog as if Dan had blocked something against my wishes. I'm outspoken, but not careless, and you have not heard me lamenting Dan's decision. We asked for a lot of money, they said no, and now we are all friends in a way that is positive. It's also worth noting that we have no good source of back-up when something goes wrong on the mountain. We could use better regional interties.

PGE is a much trickier situation, and we may just disagree. The private world is not passing up the opportunity because the company is a poor investment. It is passing it up for two distinct reasons. First, the FERC and SEC rulings make it very difficult for a private company to take over the corporate structure. We are contemplating an asset purchase. Second, capital is hard to find right now and companies are cautious. We have Goldman Sachs engaged to issue revenue bonds that are at a good rate of interest and have no recourse to the tax base. For that reason, we have a unique position, and a very unusual opportunity. That being said, we won't move forward without a good purchase price and a clear shot to reduce the cost basis of electricity by a substantial amount.

We will hire a private firm to operate it. One possible outcome is that Enron breaks up the company into pieces. If you compare that choice with a municipal purchase, you quickly see that all likely paths come with risk. If I understand your argument right, we should sit it out. Intellectually, I'm curious to know your preferred strategy. If a good private buyer emerges, we would be willing to defer.

That's a lot of blog from me, so I'll stop there. I do agree on the issue of priorities. I've backed off on some things you mention for just that reason.

Indeed it is.