HOUSE SPECIAL SESSION COMMITTEE ON ECONOMIC GROWTH AND JOB DEVELOPMENT

 

 

September 13, 2002   Hearing Room 50

10:00 am Tapes  16 - 18

 

MEMBERS PRESENT:            Rep. Jeff Kropf, Chair

Rep. Alan Brown

Rep. Dan Doyle

Rep. Elaine Hopson

Rep. Al King

Rep. Jerry Krummel

Rep. Kathy Lowe

 

 

STAFF PRESENT:                  Ray Kelly, Administrator

Nancy Massee, Administrative Support

 

 

MEASURE/ISSUES HEARD:        

                                                Informational Meeting - Electric Utilities

 

 

 

These minutes are in compliance with Senate and House Rules.  Only text enclosed in quotation marks reports a speaker’s exact words.  For complete contents, please refer to the tapes.

 

TAPE/#

Speaker

Comments

TAPE 16,A

010

Chair Kropf

Convenes meeting at 4:10 p.m. Introduces Matt Wingard to speak in behalf of Oregonians for Jobs and Power.

INFORMATIONAL MEETING

015

Matt Wingard

Oregonians for Jobs and Power (OJP). (EXHIBIT A-D)  Gives presentation on how private investment works as utility ownership.  Discusses Oregon Public Power Coalition.  Discusses proposals:

1)      City of Portland

a)      Up to $3 million to condemn PGE assets

b)      Purchase service area and developing a structure to run that area.

2)      By community

a)      Use PUC District legislation to break up PGE

b)      Washington, Multnomah, Clackamas, Yamhill, Polk, Marion Counties into 5 Public utilities

 

Rep. King

Asks about BPA power.

 

Wingard

Savings is through accessing BPA power.  Third proposal is:

3)      Willamette Valley Power (WVP) which is made up of six counties forming a public utility.  Discusses use of ORS 190. 

Explains Eco-Northwest analysis and conclusions about WVP. 

 

Wingard

Continues discussing Portland General Electric (PGE)   Discusses political differences between counties and city of Portland.  Discusses the creation of the entity and money that will be made by supporters of that proposal.  Discusses the importance of keeping PGE employees in work. 

308

Rep. King

Asks if several public entities acquired PGE would they form a municipal jurisdiction in and of themselves, and as an entity conduct their bonding elections. 

319

Wingard

Answers there are a number of options being studied including purchase of the entire service area for condemnation. Answers it could be a separate entity.  Comments on bankruptcy procedures.

365

Wingard

Continues discussing protections that must be guaranteed by anyone considering a PUD.  The counties and some local bodies want a seat at the table. They want ratepayers interests protected. They want community concerns from the region known.  Discusses community polls. 

422

Rep. King

Asks if Oregonians for Jobs & Power is opposed to any government organization acquiring PGE.

430

Wingard

Responds he will get the coalition’s position on a local government that is non-geographically located from expressing an interest.  Answers that is correct.

TAPE 17,A

060

Wingard

Discusses the coalition’s goals and concerns.  Does not support the breakup of PGE.  Explains OJP’s stand on condemnation  Discusses PGE’s sale as an integrated utility.   

110

Wingard

Summarizes the coalition’s purpose.  OJP considers options such as local leverage buyout of individuals or community organization.  OJP feels the city of Portland is discouraging this.

121

Rep. King

Asks about the City of Portland’s stand on the issue.

127

Wingard

Answers the city’s resolution says the city will allow condemnations. Discusses various possibilities heard. 

142

Rep. Hopson

Asks what the timelines are.

144

Wingard

Answers that a condemnation timeline can begin at any point.  Discusses the auction process beginning in October.  Discusses the city of Portland’s procedures and the county’s procedures that would have to be followed.

156

Rep. Lowe

If PGE is condemned by the city of Portland, will PUC not have power over their rates?

175

Wingard

Responds what happens to rates is an open question.

l81

Rep. Lowe

Comments on the economic power centered in the Pacific Northwest.  Asks how the proposal will impact that.  Has a concern about selling PGE to the highest bidder and resulting in a regional power grid. 

220

Wingard

PUC will not sanction breaking up of PGE.  Answers that private bidders understand they would be buying an integrated utility.  As far as lowering rates, that is an open question.

234

Rep. Lowe

Asks about delaying the October auction.    

253

Wingard

Replies that the Federal Bankruptcy Court and CEO of Enron drive the auction process.  As for a delay, the creditors want to get their money.

272

Rep. Krummel

Asks why PGE was sold to Enron.  Was it a hostile takeover?

298

Wingard

Responds he does not know about the purchase.

304

Rep. King

Says it was not a hostile takeover.  Somebody else could have taken it over.  Enron was one of the first takeovers of utility companies to get NW power to match up with California’s power purchases.

330

Rep. Krummel

If Portland bid for PGE would PUC have to approve the sale?

314

Wingard

Responds that there is question of PUC role in a bankruptcy process.  Once a public utility, a petition for removal from PUC can be filed.

336

Rep Krummel

Asks if a Federal Bankruptcy Court can render PUC irrelevant.

375

Wingard

Comments that the creditors would want the smoothest sale possible.

366

Rep. Krummel

Asks if PGE is using Bonneville Power Administration (BPA) power.

383

Wingard

PGE does purchase some BPA power.

418

Rep. Brown

Asks if public utilities come under PUC regulation.

420

Wingard

Answers, no, they do not.

TAPE 16, B

004

Chair Kropf

Asks about possible higher rates on small utilities.

009

Wingard

Responds describing how rates may be affected.  Explains preference power. 

021

Chair Kropf

Asks about the concern that city of Portland’s ownership might load social programs increasing costs for non-energy causes.

035

Wingard

Responds that is a possible issue not known now.

040

Chair Kropf

Could a private utility purchase the assets of PGE and load it with social programs?

045

Wingard

The coalition believes that it is not likely.

067

Rep. Krummel

Comments on local government law.  On an enterprise governmental agency, there has to be a connection between the expenses and the rates charged. 

093

Chair Kropf

Asks about breaking up PGE’s assets.

098

Wingard

The coalition feels it is highly unlikely for a private utility to break up the assets because they are under PUC oversight.

096

Chair Kropf

Asks if the city of Portland can condemn PGE during the bankruptcy?

108

Wingard

Answers that is an open question.  A municipality can condemn at any time. 

110

Chair Kropf

Asks if part of the bankruptcy proceeding was dissemination of PGE assets to a qualified bidder, how could a condemnation proceeding occur after that?

121

Wingard

Discusses the condemnation process.

134

Chair Kropf

Asks for any questions.  Calls Gary Conkling and Julie Brandness of Associated Oregon Industries (AOI).

138

Gary Conkling

Represents Northwest utilities’ customers.  Client represents large Industrial electricity users.  Wants WVP to advance. Discusses PGE high rates. 

164

Conkling

Discusses public power’s importance historically.  Describes BPA’s part as a regional collaborative effort.  Lowest cost power of PGE comes with contracts from three public utilities in Washington.  Discusses reasons for auction.  OPUC will be involved in determining details of sale and the Federal Energy Rates Commission (FERC) and bankruptcy court.  The question is who can win the bid.

295

Conkling

Supports WVP.  Supports a better rate structure as a goal.   Property tax and state income tax would not be charged.  Supports the diligence of those working on this. Disagrees with statement on page 2, “Talk of condemnation or public purchase is devaluing PGE”. Says WVP is in contact with the creditors’ committee weekly and not viewed as devaluing PGE but as potential highest bidder.

300

Conkling

Says the preference will be the highest bidder.

305

Chair Kropf

Asks if public purchase talk does not devalue PGE assets, does condemnation talk?

330

Conkling

Responds he does not have knowledge of that.

327

Julie Brandis

AOI. Describes work on energy issues by AOI and Northwest Utlities. 

360

Brandis

Discusses what happens to PGE.  Members feel they need to keep their options open. PGE has been for sale four times in the past few years.

 States five options to PGE: 2 private ownership options and 3 public ownership options.

      1) Enron keeps PGE as a restructured company

2) Private entity purchases PGE. (The last attempt was by Northwest Natural.)

      3) Several PUD’s form.

      4) City of Portland acquisition

      5) Public ownership by counties

 

477

Brandis

Discusses PGE on the auction block and the various possible bidders. 

TAPE 17, B

052

Rep. Krummel

Asks about the second criteria.

057

Brandis

Answers the service area must be kept whole.

068

Rep. Krummel

Asks if county commissioners are supporting this idea.

070

Conkling

Answers there have been a number of county commissions that have taken positions similar to customers’ positions and think that the idea is worthy of exploration. Unaware of any intergovernmental agreements.

088

Rep. Krummel

Asks how Willamette Valley Power could decrease rates.

095

Conkling

Believes WVP will have that as a goal. PGE is a profitable entity of the Enron corporation.    

130

Brandis

Comments she does not know how WVP can lower rates by ten percent. 

147

Rep. Krummel

Alludes to the energy crisis of 2001 causing the aluminum plants to be idle.  Asks if this newly proposed large entity will become pulled in many directions like Metro. 

166

Conkling

Discusses colleagues of the Citizens’ Utility Board organizing this utility. WVP deserves a chance to do this.

230

Rep. Krummel

Asks if there would be property taxation if the rates were not sufficient to cover the debt level.

240

Conkling

Responds that he does not have that answer.

245

Brandis

Comments that the counties and agencies would have a local option. 

270

Rep. King

Discusses an employee trust buying the utility.  Local control would be substantial.  Concern is for local interest to own PGE. Asks if WVP would have public employees.

290

Conkling

Comments that not all planning has been done.  Gives the example of NW combined distribution system.  WVP is considering this. WVP would have access to lower cost capital and be untaxable as a public entity. 

320

Brandis

Comments on multi-state utility.

379

Chair Kropf

Asks about sources other than BPA

388

Conkling

There are other sources of power that may be cheaper.

TAPE 18, A

008

Conkling

Preference power is an issue in the future.  Discusses Oregon’s private preference and Washington’s public preference.  There is geo-political significance in the future. BPA would not be able to supply the preference power now and is not planned on.

030

Brandis

Comments that utilities are business monopolies.  Describes how there is active interest in these purchases. Emphasizes the importance of this transaction and the broad customer issue. Asks the committee to look at the broad interest in this issue. 

052

Chair Kropf

Adjourns meeting at 6:00 p.m.

 

Submitted By,                        Reviewed By,

 

 

 

Nancy Massee,                        Ray Kelly,

Administrative Support                        Administrator

 

EXHIBIT SUMMARY

 

A – Overhead presentation, M. Wingard, 38 pp

B – Oregonians for Jobs & Power, Issues, 29, M. Wingard, 29 pp

C – Letter to Commissioners from George Passorde, Wingard, 2 pp

D – Report on The economic Costs of the Proposed Government Acquisition of Portland General Electric by EcoNorthwest, Wingard, 22 pp