On with the show
The Oregon Public Utility Commission has approved the plan whereby the creditors of Enron will become the new owners of the stock of Portland General Electric. The City of Portland had asked the state agency to block the move, part of the protracted Enron bankruptcy proceeding, but the PUC decided not to. Chalk up another loss for the city in the PGE-Enron wars.
For the moment, then, PGE will become a stand-alone company. But it won't stay that way for long. Soon there will be a suitor -- at least one -- and the utility will likely become a captive subsidiary of some much larger concern again.
That's where the problem lies. Once PGE winds up on a consolidated tax return with other corporate entities, the shenanigans will begin anew. PGE ratepayers will be billed for "taxes" that exist only on PUC documents and never get paid to any government. It's an outrage, it's counter to the principles by which utilities are regulated, and it's just plain greasy -- but the people who run the power companies, and the PUC, think it's perfectly legal. It very well may be.
The city will continue to rake PGE over the coals for its recent history in this regard, and at some point Portland might have the guts to set electrcity rates itself, as it apparently has the power to do under state law. Meanwhile, state and county lawmakers ought to revamp their tax laws to make sure that the "taxes" collected from customers through electricity rates actually get paid to the taxing authorities, and not lost in the black holes that conveniently open up on corporate tax returns.
And of course, the countdown is always on to the next people's utility district election. The power companies typically stomp on these proposals, but the city could make the next one a lot more realistic than the old ones ever were.
| Posted at 2:15 AM | Permalink |
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Comments (5)
Does anyone have any idea of how much it would take to buy controlling interest in the stock that PGE will issue? Controlling interest doesn't have to be a majority of the stock. It could be a fairly small percentage.
The city is prohibited from buying securities, and probably doesn't have enough money, anyway. PERS, on the other hand, does. Buying a large chunk of a company that is guaranteed a profit would be a better buy than some of the PERS' board's other stock purchases (a little mentioned factor in the PERS fiasco is that the pension fund invested in some real duds in the past decade.)
Dunno. Maybe it wouldn't be legal for one sector of state government--if PERS is indeed that--to buy stock that is regulated by another sector of state government. Though I bet PERS does have some local/regional utitlities in its portfolio.
Posted by Gil Johnson | December 15, 2005 9:06 AM
If PERS were to invest for any other reason than to maximize the return to its participants, it would be in violation of its fiduciary duty to the PERS participants.
Posted by Bill Holmer | December 15, 2005 9:37 AM
"Does anyone have any idea of how much it would take to buy controlling interest in the stock that PGE will issue?"
Probably a "moot question" for the time being. Only 30% of the stock is being distributed to Enron creditors at this time. The remaining 70% of the stock is going into a trust to be managed by the current CEO of Enron, so, at least for now, the conrtoling interest stays right where it has been for the past few years.
Posted by jj | December 15, 2005 9:56 AM
A 30% distribution certainly won't solve the tax-related rate-setting problem. And that problem, really, is just part of a larger one: a public utility that has a monopoly franchise on one hand and shareholders on the other has a conflict of interest. Could a co-operative be considered? It might have other flaws, but not this one.
Posted by Allan L. | December 15, 2005 12:36 PM
I'm sure that there may be hang-ups in the idea of PERS buying PGE stock, but PERS has invested some meager sums into Oregon-based venture capital firms that probably were a greater risk than buying equities on the NYSE. PERS also has disinvested in firms doing things deemed unacceptable, such as doing business in South Africa during apartheid.
So if PERS has several choices to maximize return on investment, and PGE stock is among them, then could be go onto a secondary reason, such as to keep a local company local?
By the way, last time I looked (about two years ago) less than a half of one percent of the PERS portfolio was invested in Oregon companies. That's way lowere than Oregon's contribution to national GDP, which is about 1%.
All I'm trying to do is figure out another way to get the feline flayed.
Posted by Gil Johnson | December 15, 2005 3:23 PM