Thanks, Jeff. I believe that the blogging phenomena is an excellent way to communicate at all levels. I would really like to see more elected officials not just read but also participate in this forum.

Mr Leonard

I appreciate your insights, but what would the City of Portland be able to do to drop rates? If you look at the other utility the City of Portland controls, we are about to have some of the highest water rates in the country.

My question, would you be opposed to PGE becoming publically owned company? That is, selling stock in itself to the public to finance their way out of Enron? This may be the best solution for all involved.

Steve

Can you really compare water rates to electrical rates? And wouldn't some of the savings come right out of the fact that the City would not pay income taxes. Not that PGE actually pays their income tax. But they sure do collect for it.

Also, will the bankruptcy court even allow a solution of PGE selling stock in itself. Don't forget all those creditors out there.

Yes, you can compare water and electrical rates. Both are monopolies. Both are essential services.

We should have an electrical utility that is owned by the people it serves. My problem with the city's bid is that its championed by a guy who's software error is costing us between $30 million and $40 million and supported by others who may be decent politicians, but they sure ain't the people I want overseeing a major utility. Setting parking meter rates is one thing; having power over my electrical meter is another.

I think it is very fair to compare an electrical utility to the water bureau. These PUDs usually become either one of two things: - Tax Collection Device - Like the Bureau of Development Services, if you want a building permit, you pay about $12K worth of system development charges to get a permit. I am sure Portland would have no problem levying an electrical hookup fee or privilege tax on each electrical bill. Favor granting - I can see a poor developer going to the mayor and saying, I need a special low electrical rate to sell these Pearl District condos. This is what they do with property taxes (look at portlandmaps.org and plug in 625 NW 11th, it is assessed at $1M and pays $150/year in prop taxes.) Or perhaps Mr Saltzman's attempt to give his consultant friends a $200M contract to put lids on reservoirs is more obvious. At least if you let PGE stand and have the PUC oversee they can control exploitation. Something you will not see the City do.

As the guy referenced above, I'd encourage you to look a the actual proposal that I'm championing. You can find all of the details on the city's website. It might surprise you that my experience with the billing system has led me to look at different ways of doing things, not replicating mistakes.

In a nutshell, I have proposed that the city use its bond-financing abilty to facilitate the purchase. This can be done with no recourse to taxpayers, backed by the electric rates. The savings, achieved by lower interest rates and avoided federal taxes, would allow a $100 million annual rate advantage, or ten percent.

The utility should be run by a qualifed, appointed board of Directors and they should contract the operations to a private firm. The charter, bond convenants and contracts that create the new entity should ensure that it run like the good, regional public utilities. They should also bar any special deals or siphoning of money for non-electrical related activities. The ten percent savings assumes that the new entity pays local and state taxes at the current level.

Once it has a solid track record and interest rates are favorable, it should be spun off from the city and become a stand-alone entity.

It's easy and not unreasonable to look at things I've been involved in the past, but don't assume that I wouldn't have the common sense to use them to generate better models.

I would strongly encourage you to look at what is actually being proposed.

I do appreciate the good debate, and would be happy to share further thoughts.

Erik Sten

if you want a building permit, you pay about $12K worth of system development charges to get a permit.

And rightly you should. New buildings result in strain on the existing infrastructure (roads, water, etc.) that has to be expanded to meet the needs of your new building. Without those fees, the existing users of said infrastructure eventually ends up paying to subsidize your new building.

On the property tax issue, it is easy to argue that the mentioned building wouldn't be valued at $1M without those tax breaks. The tax breaks get the developers dollars into the Pearl. Eventually the tax breaks expire and the City get and increased tax break. Short term it may look like a give away, but have you considered the long-term benefits for the tax base of the city? An area that was not paying a large amount in taxes will be in ten years.

Wouldn't PGE be regulated by PUC whether the city owns it or not?

Also would a city owned utility really be able to decide, as Commissioner Sten suggested above, whether or not to pay local and state taxes? Not that those taxes would be very much compared with what PGE has paid in the past. Hasn't PGE been paying next to nothing in taxes (all jurisdictions) for years? I know about the charged taxes to rate payers that disappeared into Enron, but did that include all local and state taxes as well?

On the issue of politicians verses businessmen running a utility, at least with politicians everything is relatively in the open. With businessmen like the Texas Pacific Group, the public has very little idea what the business men are doing and even if the public does know, it is a lot easier for a business to obfuscate and/or ignore citizens concerns than it is for an elected official. A good example is the now infamous water billing software error that everyone who watches local politics knows about. On the business side, most mainstream press/people were in love with Enron until the very end, and very few people knew what was actually going on inside the company. Businessmen care about one thing and one thing only: increasing profits. Politicians care about getting reelected. Seems like a no-brainer to me.

I have no problem with SDC's -- they are a necessary tool of city infrastructure -- but I have to agree with Steve. I believe that a city owned PGE would result in the same gutting of the rate payers that a Texas-Pacific ownership would. Trading a tyrant in Texas for one in Portland is no solution in my mind. And I'm sorry if I offend anyone at city hall with that, but you know as well as I that every city government -- every city government -- is on the lookout for new revenue sources.

Secondly, this raises another dynamic which is also seen with the water department -- suburbs buying their utilities from the city of Portland. We've already seen the arrogant, over-a-barrell policies of Portland regarding supplying water and water rights ownership to suburbs, namely, "if you want to help build our expansions, we welcome that, but we won't give you a drop of water rights back, and can cut you off whenever we feel like it." I can just see something similar with power rates. If the PUC were actually owned by the rate payers and not Portland, I might feel differently. Then, at least we'd be dealing only with issues of whether public power is beneficial or not. But as long as it's Portland proposing ownership, there will be a justifiable air of mistrust.

if you want a building permit, you pay about $12K worth of system development charges to get a permit.

And rightly you should. New buildings result in strain on the existing infrastructure (roads, water, etc.) that has to be expanded to meet the needs of your new building. Without those fees, the existing users of said infrastructure eventually ends up paying to subsidize your new building.

*** Everyone in Portland has fought new roads and they are raising the water rates to pay for the infrastructure. I mean how stupid can you be? We hear that jails can't open and schools may have to close early. If someone wants to change the use of a property and not burden the system by moving across the street then they get a bill for $50K. However, we have enough money to fund a basball stadium, a gondola to OHSU and more light rail. A small amount of critical thinking would lead one to believe that perhaps government priorities are not those of the taxpayers?

On the property tax issue, it is easy to argue that the mentioned building wouldn't be valued at $1M without those tax breaks. The tax breaks get the developers dollars into the Pearl. Eventually the tax breaks expire and the City get and increased tax break. Short term it may look like a give away, but have you considered the long-term benefits for the tax base of the city? An area that was not paying a large amount in taxes will be in ten years.

*** Fine, what do you want to tell the grandmother on fixed income and the hard working person sweating to make his mortgage? That it is more important to keep rich developers going than people already in financial trouble. If you think something like the Pearl District is impossible without tax breaks, then tell me, how many tax breaks did NW 23rd and SE Hawthorne get? Yet those seem to be busy areas people actually visit.

People in govenrment really have no idea of what a sound business decision is. They push projects like the Pearl to help certain developers (like ROb Ball who backed Vera's Good Government Initiative) or the reservoir lids (Mr Saltzman's friends at Watson/Hamza.)

I mean how many chances do you want to give an Eric Sten to throw money down the toilet like with the water bureau or Vera with PGE Park? You must be a very patient person.

Steve hits on a critical factor above. While he doesn't like the Pearl redevelopment or other such investments, those are policy decisions. And policy decisions may take into account business factors, but they aren't business decisions. That's the nature of government. Government isn't a business, and it can never be run like a business, even though it should adopt some business principles.

I am one who would like to see the development breaks downtown end for a period. Admittedly, my view comes from the fact that my income has been stagnant for five years, my property taxes continue to increase, and I support the Mult. Co. income tax. Why should developers and future owners continue to get a tax break why I and my area of town subsidize them?

But I understand it's a policy issue, and that many policy issues will favor some over others -- in this case certain developers over those of us who subsidize these tax breaks -- because there’s a larger policy goal.

My issue with the city and PGE is that I cast a doubtful eye on policymakers entering the electrical utility business, even if Erik Sten says he learned something from his $30 million water billing software error as he writes above. Policymakers should stick to policy.

As much as a writer above castigates the media for not keeping a true eye on Enron, that was a regulatory failure. Deregulation, and poor regulation, opened the doors for Enron to run amok. If the PUC does its job, and if our laws are strong enough, ratepayers will be protected whether the city or Texas Pacific owns PGE. It appears the PUC may be taking this role seriously in the Texas Pacific transaction.

I’m one who firmly believes that essential services such as power should be publicly owned. A public utility preserves the business side but also removes pressure to generate returns for investors who have no investment in our region and don’t care what rates may or may not do to our residents and businesses.

But for me, it comes down to trust. I just don’t trust the city of Portland to undertake a massive purchase such as this without policy creeping in. And I don’t trust this group to buy, run, and then maybe spin off PGE without something major going wrong.

With that said, I sure as heck don't think the Texas Pacific sale is ideal, either. Maybe it's a no-win situation either way.

A small correction, I have no problem with the Pearl re-development. My issue is letting the city decide that one area of high income housing should get tax breaks and then making the rest of the town pay for it. Positive things can happen without city interference, unless of course you want a bunch of gondolas ferrying people to a PGE Park.

My issue is letting the city decide that one area of high income housing should get tax breaks and then making the rest of the town pay for it.

My point is that the area of high income housing would not exist in it's current form without the tax breaks. It took a long time for NW23rd and Hawthorne to recover from suburban white flight without the tax breaks.

Ruling by the elite, for the elite is what Portland (and many other) governments were founded on. Elected leaders have almost always been the wealthy and powerful in Society. These leaders tend to identify with their friends (also typically elite) perspective.

Are you guys suggesting, god forbid, that our system of government is good for the elite at the expense of the little guy? If I didn’t know better, I might think you guys were trying to subvert the dominant political system, and bring about a government that actually serves the interests of all people,a nd not just the elite ;)