Thank you so much for posting this article. I had not been tracking this issue and didn't realize a decision was upon us.

So the hearing is on Monday--is there anything us citizen/ratepayers can do at this point? Letters? Rally at the hearing? Stand on a street corner and scream?

No doubt the plan I and others are working on can be enhanced and improved, but here are the basics:

1) City issues bonds to buy utility. Essentially, we are a vehicle for gaining control.

2) Regionally-based board is recruited to govern utility.

3) PGE remains intact and continues to run the company. Jobs are saved. Technical change is that PGE is a contract operator rather than the owner of the assets. Not actually all that different than state of affairs under Enron ownership if you think about it.

4) Structural savings are 10 percent or 100 million annually beginning in year one. Much more over time, as public board won't push rates as hard as Texas Pacific will. Savings come from lower interest rates and legal avoidance of federal taxes.

5) Once utility is stable and interest rates are favorable it spins off from Portland and becomes stand-alone, regional public utility.

This is a model that has worked once in New York. It is a solid reconfiguration of the public private partnership that exists now, only it has large financial advantage and walls us off from further speculation that dominates the industry and sucks money out of local economies.

Detailed version can be found at city website. Would love feedback.

As you can probably see, what I'm actually proposing is quite a bit different than how it is typically described in the press.

Chuck, thanks for the post.

Portland has not been the only place that resistance to Enron/TPG has happened [see linked site].

I believe Portland can condemn PGE and that a public statement promising to do just that would increase the likelihood of the utility becoming publicly owned. Of course, city council would take a lot of heat for this from the champions of corporate hegemony. Does the council have the balls? Eric?

I happen to know a few employees of PGE and, yes, Texas-Pacific is not a favored option. However, the only option that is worse would be the City of Portland taking it over. I think you have seen what Mssrs. Sten and Saltzman have done with the Water Bureau already. Neither of them has any training in finances or running any kind of business.

Internally at PGE, the biggest vote getter is for PGE just to finance its own debt and then buy its way out of Enron.

Having the City of Portland provide financing only invites Mr Sten to repeat his previous mgmt mistakes with the water bureau or Mr Saltzman try to throw some more business to his buddies at the engineering consulting firms that were going torun the resrvoir lids program.

Lots there. Let me throw out some clarifications.

Most importantly, I believe I have left Jack with a large misperception. We have traded some notes on this, but not had a dialogue, so perhaps I was sloppy in something I said or someone else is pitching that notion. When I say "spin it off", I don't mean sell it or anything like that. The idea is to transition the utility from being municipally-owned to a traditional, independent public utility.

I propose that step primarily to make it clear that I and my colleagues have no intention of setting up a city bureau that is directly managed by our Council. Under no circumstance, however, would it be sold on the private market, as Jack suggests.

Believe it or not, I didn't enjoy the billing mess, and I learned some things from it. We seem to be a community that wants to point fingers at each other's foibles rather than work together, but trust me, I'm not looking to replicate that mess and it is easily avoidable.

The basic premise is that Oregon would be much better off if the company was publicly-owned. It saves $100 million annually to start, and allows us to build a solid model. The City can provide the necessary financing and political will to buy the company. We then transition to a regional public utility. It would be nuts to try and sell it again on the open market and I have no idea where that thought emerged.

In terms of all the condemnation questions, that's a clear authority of any local govt. In the realm of electricity, Portland's charter is uniquely strong. I and our lawyers read it to give us authority to condemn and own electrical assets throughout the service territory as long as they are part of a system that serves Portland. As to whether or not the Council will begin a condemnation proceeding, I can't speculate on that.

For now, I would strongly encourage concerned readers to write the PUC. Whatever you might think about what I am arguing, the TPG deal is a bad one. We would be much better off if it is turned down and we go from there. PGE is functioning fine in the interim.

Just to clarify David Bonderman, founder of Texas Pacific Group, also has no experience in the utility business. And the proposed board members for the Oregon Electric Company are likewise inexperienced in utility management.

Liz Trojan Oregon Public Power Coalition www.oppc.net

Folks, get some perspective. Look at precedent. Think quantatatively.

The probems at pdx water bureau have caused trifling damage compared to the $ sucked out by Enron. Government snafu gets so much attention. It's shooting fish in a barrel for the media. PGE blew more on their own computerized billing system screwup. Add in the tax scam, the dams not returned to the public, the promised public benefit never delivered, the illegal charges for Trojan. This has been a tap directly into our economic artery.

Look at the track record of publicly owned power. It works, it is cheaper, it is more efficient. The results are consistently positive. Lack of expertise...red herring. Government bumbling...red herring. Stop think in Lars/Rush soundbites. Portland ownership would save us billions longrun.

Check out PGE's desire to build gas-fired generation in Columbia County, at a time when gas supply is strained and huge coat increases are probable. Existing generation assets are selling for less than depreciated value because they can't compete already. So why a PGE gas-fired generator? Because once it's built, PUC has not choice but to pass on gas price increases to consumers. PGE has more power to sell at the state supported price. We all pay.

Such is the wonder of regulated monopoly utlilities. There is the inefficient, nonsensical government. PUDs, municiples, co-ops, work much better. Look at the numbers. You can't make smart economic decisions based on rhetoric.

Eric's 10% savings is conservative. Our Clackamas County PUD feasibility study suggested 33% savings by the 10th year. WE could have cooked the numbers to show an even larger benefit. We didn't. The 33% was meant to stand up to scrutiny. Of course, the local media substituted Gard&Gerber PR for their own scrutiny, but so goes public interest in the media.

If you think Enron was bad, just wait for the nexus of TPG and Shrubbery industry-captured dereg to bear fruit. It's going to feel just like what it will be: rape.

OK, first off, remember I said Texas Pacific is only marginally better than the City of Portland as a manager. The ideal sitauation would be for PGE to finance its own way out of Enron and tehn put some teeth into the PUC to manage rates.

My issues with the City of Portland running this are besides having no experience on delivering any kind of service efficiently, then compare our public water rates to any place in the country if you want a testament of how well run that bureau is.

Another issue is this is going to be one heck of a taxing vehicle for the city coucil. Now they would have access to tax people outside of the city of Portland. Call it what you want (privilege tax is my favorite) but any taxes they throw on are regressive and hit the poor hardest. If you think the cell-phone using the air right-of-way tax is ridiculous, just give the city council time to be even more creative.

I troubles me when I hear people think that having a govt entity run this is so much better than a private enterprise, but look at the realities and your tax bills.

The taxation question is valid. Pdx city council should vow to never use a publicly owned PGE as a source of general fund money. There is a perception, partially justified, that the city bullies the rest of the metro area. Siphoning $ from utility bills for Portland's use would cause immeasurable bad will.

And what is 'the reality of our tax bill'? Are you looking at service provided vs. taxes paid? Are you considering population growth and inflation? Do you factor in reductions in funding from othe sources? Have you compared your taxes to those in nations with sound public infrastructure and and services? Or is any increase in taxes enough to cause you colon spasms?

Do you react the same to increases in gasoline prices? Health care? Or is that free market pricing that must, therefore, be justified?

I have as many complaints with government as the next person, but a blanket conclusion that government cannot provide some service better than the private sector is not justified by experience, and will lead to many wrong decisions. Competition can lead to better, cheaper, digital cameras, but it's a lousy way to provide electric power.

The reality of my tax bill is that it goes up (based on my personal tax returns and property tax) and I am earning the same. I keep getting told that we have to close schools early, let people out of jail, my water rates are going up, 10% of my prop tax bill goes to Police/Fire disability, yadda, yadda. If you can tell me of a service provided by the public sector that a competitive private entity would not do better, let me know. If you want an example, I'll refer you to my friends sending their children to private schools which cost less than the pubilc school per student.

Explain to me then what is the City's role in this if they are not going to run it. They would have a say in it and want it to be able to levy more and creative taxes against everybody. If the city is NOT directly running PGE then what are they doing with it. If you really think that these guys would not see this as some big power trip, then you are vbery naive.

I only use the Water Bureau since it is a utility that everyone uses and needs and is very comparable to what an electric utility would be.

Sorry, I forgot, I read the governance papers Mr B!X linked to. Board members are appointed by the Portland City Council, which pretty much means they will have to agree to do whatever the City COuncil wants and not what rate-payers need (yes, the city council does do a couple of things the public does not like.) They will also approve the budget and expenditures, so, de facto, we have the City Council running this thing.

The real kicker in all of this is that Oregon Electric will systematically move PGE aassets to itself - ostensibly to make clear that there is no insider dealings. It will result in OEUC's assets (aka PGE's old assets) no longer being under OPUC authoirty. NO matter what you think of the City takeover, you should be vocal in opposing the sale of PGE since it will result in out of state owners exercising control over PGE without any ability of the OPUC to protect PGE customers

We have proposed a set of principles for running the utility. One of them is that there will be no new taxes or fees, and that all ratepayers will be treated equally regardless of jursdiction.

All of the things people are worried about, justified or not, can and should be addressed through the charter of the new utility, the bond convenants that govern the financing and a contract with the City Council.

All of those documents would be reviewed and debated publicly before adoption. If they don't have the safeguards that are common sense and promised in our materials then no one should support the idea.

This really is an effort to provide stability and save a lot of money. The money grab is what's proposed at the PUC.

It's no surprise we have such a bad economy when we can't even come together to stop a blatant rip-off that is unfolding in front of us.

Tom Civiletti, on votes for condemnation of PGE by the city council, asks;

"Does the council have the balls? Eric?"

There are at least two...

Mr Sten

Sorry open and public discussion is something in short supply wihtin your City Council if you examine all of the issues that were ram-rodded thru without any public vote (trolleys, baseball stadia, gondolas, tax breaks for $1M condos, etc.) I think Mr Leonard knows that open discussion is really not the way to do this anyways which proabbly accounts for his statement that we should just condemn PGE and forget any comment or public desires (especially since PUDs have been voted down repeatedly.)

I am only looking at what is best for the public also and, no, it is not TPG, however, the City of Portland is not the answer either. What is wrong with allowing PGE to finance its own way out of debt to Enron and then have PUC manage rates.

If you have some other utility where you are saving people money that I can reference besides the Water Bureau, fine, I am open-minded and willing to listen. However, the water rates you overcharge communities outside of Portland for BullRun water would be repeated for PGE customers outside of Portland I am afraid. In addition, you will still be expanding your taxable base beyond the city borders.

Randy Leonard wrote:

Tom Civiletti, on votes for condemnation of PGE by the city council, asks;

"Does the council have the balls? Eric?"

There are at least two...

That is better than I expected, Councilman Leonard. I hope a third finds his/hers soon.

This is not primarily about taxation, and I apologize to Steve for taking off on his comments about taxes. It is pretty easy to compare the economic impact of something like the water bureau mess with that of PGE/Enron [lots on PGE at the link provided]. The electric utility has drained exponentially more and promises to continue to do so under TPG.

It is not a matter of PGE pulling itself together and returning to be our great little power provider. PGE scammed us before enron, during enron, and post enron [if you buy the Gard&Gerber crap about enron being 'out of the picture']. Even so, if TPG doesn't get PGE, the stated intention is to distribute stock to creditiors, who are, largely, the same big banks who acquiesced to enron's crimes all along.

I am not completely happy with the city controlling the energy future of Clackamas County, but it looks like a much preferable alternative to any not requiring divine intervention. The plan for who would be on the boards overseeing PGE does shortchange areas outside the city [at least in the draft I read earlier]. I hope this will be altered.

Also, this situation is time sensitive. Even though Portland can condemn PGE as long as it remains in private hands, BPA expects to end soon the policy that would guaruntee us equal footing with preexisting publicly owned utilities. The difference would be substantial. And, with 4 more years of the Shrubbery ahead, it is likely that federal dereg will make it much easier for whoever owns PGE to strip its valuable assets, leaving us with MUCH more expensive electricity. Now is much better than later for a publicly owned utility.

Thanks to Erik for the info/clarifications and all for the discussion. I'll be writing to the PUC!

I know it's somewhat OT but to respond to Steve's commment above:

"If you want an example, I'll refer you to my friends sending their children to private schools which cost less than the pubilc school per student."

Steve, the big difference with public schools (and their incalculable value to our society and community) is they are required to accept every child who walks through their doors. Private schools can pick and choose their clientele.

In Portland, this means we have many, many kids with special needs, dozens of languages spoken, etc. all of which makes educating them more expensive.

Moreover the public schools are required to jump through many expensive hoops not least of which are the unfunded mandates such as the so-called No Child Left Behind.

Cmmr. Sten,

I appreciate your willingness to come onto the blog and discuss this proposal. Kudos to you and Cmmr. Leonard for contributing to this dialogue.

I've expressed this in other fora, but perhaps it bears repeating here. I understand where Steve is coming from, and I think you capture it here:

It's no surprise we have such a bad economy when we can't even come together to stop a blatant rip-off that is unfolding in front of us.

I think you have the reasoning backwards. We can't come together because of the bad economy, not the other way around. Over the past few years, some of us have had had a hard time retaining our faith in City and County government.

We have see a series of white elephants and backroom deals that have not pulled Portland or Oregon out of its economic doldrums. I know that some of these were just bad miscalculations (PGE Park) or others politicians seem to lead with their left foot (Diane Linn). But it all adds up.

When some voices (and not all) from City Hall tell us that the anti-business reputation of Portland is just an "urban myth," or when others tell us that the supposed 3 year temporary tax is going to have to be extended, it becomes harder and harder to believe what is coming out of City Hall.

Where's the outrage? I think we're too tired after fighting to keep our schools open, worrying about the crime wave (I live in SE), and after writing checks for our MC income tax, sewer/water, and property tax. Seriously. It's just not high up on my radar.

Still, keep up the good work.

The Prof states:

Over the past few years, some of us have had a hard time retaining our faith in City and County government.

We have see a series of white elephants and backroom deals that have not pulled Portland or Oregon out of its economic doldrums.

By Sten, Leonard (and Blackmer) opening up the dialogue in this forum and b!X' Portland Communique -- and by making their proposals accessible via the internet -- one should consider that perhaps we are seeing the end of those "backroom days" and that faith is restored by those councilmen who appear to be ending them.

It takes a certain courage to render oneself vulnerable to the masses -- especially with the full knowledge that the attacks from the masses are inevitable. I commend Leonard, Sten and Blackmer for possessing such courage and most especially --- for not allowing those inevitable attacks to jade them to the dialogue in its entirety.

Eric Sten articulates it perfectly when he states that "It's no surprise we have such a bad economy when we can't even come together. . ."

While I took this quote out of context, I did so as I believe it is true of not just this issue -- but any issue that we, as a city, collectively face. As is Sten's suggested approach towards working on them together:

"All of those documents would be reviewed and debated publicly before adoption. If they don't have the safeguards that are common sense and promised in our materials then no one should support the idea.

Lets continue to make a model of our councilmen's efforts along these lines towards resolving once and for all the doubts and reservations voiced by The Prof.

"It takes a certain courage to render oneself vulnerable to the masses -- especially with the full knowledge that the attacks from the masses are inevitable."

Ahem - We elected these people, give them their funds and paychecks and all of a sudden they have courage when they descend from their lofty heights and deign to address some real issues. Diminshed expectations indeed!

Thank you, Steve -- for illustrating my point.

allehseya,

Yes, my point precisely. I commend Sten, Leonard, and Blackmer for exposing themselves to this sort of public scrutiny.

What I'd really like to see is an analysis of the whole PGE mess by a group that I'd think would be philosophically opposed to public ownership (e.g. the Chamber of Commerce) yet who show that publicly owned utilities result in cost savings and that the Texas proposal is very problematic.

Has City Club weighed in on this yet?

What I'd really like to see is an analysis of the whole PGE mess by a group that I'd think would be philosophically opposed to public ownership...

When it comes to running the utility, I would opt for experts in the industry at this point (time is a factor) rather than any organization with a bias regarding public ownership. My understanding (correct me if I'm wrong) is that the Advisory Council is meant to be comprised of customer representatives (those that represent the public interest) -- perhaps your concern is built into the model? The Council would be assessing the success / failure and provide recommendations to the City based on its assessment. Is that accurate?

clarity: The advisory council would consist of representative industry experts as well as the public representatives is my point. If the city is to be guided by the recommendations of this Council -- my point is that you may have a representive for your concerns inherent within this structure.

Hi All: This is an extremely important posting and one of the better threads I've come across in a long time...justifiably so (this is a terribly important issue for so many reasons). I have nothing huge to add, except: major thanks to people I know, like Tom C., Liz Trojan and Dan Meek for their tireless efforts to promote the truth about PGE/nron vs. public power...and to people I don't know like Comms. Leonard and Sten who are willing to pay attention to and respect all the evidence (as well as take all the sh** from their constituents!). As an outsider residing in Tillamook County, I do have a question - is it worth my writing to the PUC even if my area is "seemingly unaffected" by this (Tillamook county is PUD country)? Put another way, what is the evidence that even non-PGE ratepayers can cite to argue that this buyout is bad for the entire state of Oregon???

allehseya,

yes, that is a better suggestion. a panel of outside experts, say made up equally of power industry, public ownership, and non-partisan economists would be a good mix.

but you're probably right, it's too late in the game to get this sort of analysis.

It is my understanding that the Advisory Council would be providing on-going analysis and assessment.