TAPE/#

Speaker

Comments

TAPE 3, A

003

Chair Metsger

Calls the meeting to order at 1:11 PM.  Makes opening comments on the committee staff working for the committee.  Introduces assistant James Goulding and administrator Theresa Van Winkle.  Introduces Senators Laurie Monnes Anderson, Ryan Deckert, and Bruce Starr.  Comments on the positive results of his partnership with Vice-Chair Starr during the interim on the Joint Transportation and Economic Development Committee.  Opens organizational meeting to adopt committee rules (EXHIBIT A).

ADOPTION OF COMMITTEE RULES - ORGANIZATIONAL MEETING

015

Vice-Chair Starr

MOTION:  Moves to ADOPT the proposed Committee Rules.

VOTE:  4-0-1

EXCUSED:  1 - Atkinson

020

Chair Metsger

Hearing no objection, declares the motion ADOPTED.

025

Chair Metsger

Outlines additional unofficial rules, including 48 hour notice for posting.  Notes intent to post hearings of bills 96 hours ahead of time when possible.  States intent not to pass any bill out of committee without bipartisan support.  Talks about transforming existing bills into new bills and making it known in advance to avoid surprises.

060

Chair Metsger

Opens informational hearing on the sale of Portland General Electric.

PORTLAND GENERAL ELECTRIC SALE - INFORMATIONAL HEARING

065

Chair Metsger

Makes introductory comments on the Portland General Electric (PGE) purchase.  Points out they are not commenting on merits of the case, but making sure the Public Utility Commission (PUC) has the tools needed to protect public interest. 

090

Sen. Walker

Presents a draft of LC 819 (EXHIBIT B) to the committee members.  Inquires about forthcoming hearing schedule and scope of questions that can be asked.

095

Chair Metsger

Talks about testimony anticipated over the next two meetings.

100

Sen. Walker

Wonders about the types of questions she can ask.

105

Chair Metsger

Clarifies the purpose and scope of the testimony.

110

Sen. Walker

Notes she may occasionally step out of the scope of the hearing.

115

Lee Beyer

Oregon Public Utility Commission, Chair.  Introduces Paul Graham.  Presents written outline of his testimony to the committee (EXHIBIT C).   Makes opening comments on the nature of the PUC and PGE.  Goes over ground rules of what he may and may not legally answer.  Begins presentation of testimony, touching on delicate issues.

Begins overview of the PUC and their history, creation, and function.   Feels the agency’s role is to regulate practices making sure utilities function, are of good quality, and are reasonable and affordable.

200

Beyer

Presents testimony on the general practices and functions of the PUC.  Presents the standards by which the PUC gauges the activities of utility providers.  Discusses recommendations and decision making processes.  States that PUC follows the rules of judicial procedure, similar to what courts do.   Interested parties can gain access to trade secrets and other documents and challenge them if warranted.

300

Beyer

Outlines history of mergers and acquisitions.  Discusses PUC credit rating and its high standards.  Feels their job is to make sure customers get good utility quality at a fair and reasonable rate.  References the Enron scenario.  Discusses Enron’s attempt to sell its assets.  Presents the current tools available to the PUC and the control that it has. 

395

Sen. Walker

Asks for clarification on his written testimony.

400

Beyer

Clarifies the item that he is referencing.  Continues discussion of his testimony. 

420

Sen. Walker

Inquires if the action meets requirements for public interest written in statute.  Asks how they can make a decision having not before adopted a legal standard for the PUC.

TAPE 4, A

010

Paul Graham

Oregon Department of Justice.  Points out that at the time it was written they had never had a case of this type.  States that in other scenarios they had stipulations based on findings in other cases. 

025

Sen. Walker

Wonders if this is a precedent setting standard in defining public benefit.

030

Graham

Affirms that it is and they have to create a standard to define this issue. 

035

Sen. Walker

Brings up the possible role of the legislature in defining the standard.

040

Graham

States it is possible.

045

Beyer

Points out they function under the laws defined by the legislature.  Moves to discussion on the current proposals.  Discusses formal cross examinations in their decision making process.  Talks about what is involved in creating a procedure.  States there are 47 formal intervenors in the case such as the City of Portland and others.  Outlines the meetings held in the greater Portland and Salem areas.  Points out the volume of responses received on the topic.

115

Beyer

States their decision can be appealed.  Concludes his comments on the process.  Voices that the commissioners are taking this issue very seriously.  Points out that any action taken will generate responses that are half positive and half negative.

Moves on to discuss the Enron bankruptcy filed in New York and how it relates to the PUC.  States PGE will be owned by someone else once the liquidation of Enron is complete.  Details the possible outcomes regarding the sale of the utility, including the PUC role in a parcel purchase.  Details the tax structure and different strategies.

225

Chair Metsger

Thanks Mr. Beyer for his testimony.  Wonders about the statute regarding serving the public’s best interest.  Discusses the complexity of defining what the “public interest” really means.  Offers the question of whether the legislature should give them assistance in the decision making ability to serve the statute.

245

Beyer

Replies that would make his job easier having more power, but it would be difficult to do.  Talks about the broader areas of public interest, feels they don’t have the mandate for that decision making power.    

270

Chair Metsger

Discusses Sen. Walker’s LC 819 draft. Wonders about the rate setting process and their involvement with a holding company.  Asks about the potential of a ratepayer paying for their own credits.

300

Beyer

States he cannot respond on this matter.

305

Graham

Points out the tax issue does not involve just the PGE, but any utility.  Feels that a generic approach is best so all companies can be represented.  Talks about the commission’s role.  Feels it is a tax issue and not a regulatory issue.

340

Chair Metsger

Offers additional questions on intervenor funding to oppose proposals, asks for his evaluation on this issue.

365

Beyer

Replies that only 3 or 4 parties have applied.  Feels it has helped them receive the assistance they need. 

385

Chair Metsger

Asks what standard a court would use to evaluate the actions of the PUC.

390

Graham

Responds that it is an appellate standard through a circuit court.  Details the criteria of a court challenge.

TAPE 3, B

005

Chair Metsger

Clarifies Mr. Graham’s answer.

007

Graham

Concurs with the clarification.

010

Chair Metsger

Asks if there are any concerns of having such a large customer base served by a publicly owned utility without legislative direction.

020

Beyer

Declines to answer the question.

025

Sen. Walker

Asks for permission to ask several questions.  Wonders about court evaluation regarding public benefit.

030

Graham

Replies that if it is felt the commission has misapplied a law, they can be challenged.

032

Sen. Walker

Wonders about the process of sealing trade secret records.

035

Beyer

Replies with his understanding that sealing records is a fairly standard procedure.  States incidents where the decision may be challenged.

055

Sen. Walker

Feels it is not in the public’s best interest to seal documents.  Talks about sealed documents outlining the problems with Enron’s practices. 

060

Graham

Responds that they receive a lot of requests for documents; some secret.  Outlines the protective agreements between businesses and the PUC.  Points out many have had access to those documents to protect their customers.

080

Sen. Walker

States she had asked to see the documents in question.  Points out the Attorney General’s investigation of Diana Goldschmidt’s role on the Oregon Investment Council.  Wonders if they have held the record open for the report now that it is complete. 

090

Graham

Replies that they will take official notice of the information in the report when they receive it.

100

Sen. Walker

Details LC 819, and asks him to bring up some points discussed between them prior to the meeting.

115

Beyer

Replies Enron has ultimate rights to PGE and is required to sell it.

120

Sen. Deckert

Wonders what has been learned since the 1997 sale of Enron.

125

Beyer

Responds about movement of funds and having access to records. 

145

Sen. Deckert

Voices the value of Mr. Beyer’s presentation.  Wonders if they have approved each acquisition request.  Asks if the legislature could do a better job by being specific in its decision making.

160

Beyer

Replies that most have been concluded via settlement.  Points out the importance of creating clear intent in their laws.

175

Vice-Chair Starr

Wonders about the ramifications for leaking sealed documents to the public, as occurred last year.

185

Graham

States there has been a PUC violation of the law, and that the ones who released the leaked documents can be fined, sanctioned, or barred. 

190

Vice-Chair Starr

Asks if there have been previous violations.

195

Graham

Replies this is the first time it has happened at the PUC.

200

Chair Metsger

Thanks Mr. Beyer and Mr. Graham for their testimony.  Invites Robert Bingham, Mitchell Taylor and Michael Morgan of Enron to testify.

235

Robert Bingham

Interim Chief Financial Officer, Enron.  Presents written testimony to the committee (EXHIBIT D).  Outlines the current state of Enron and that when the assets have been liquidated the company will cease to exist.  Reads the written testimony relating to the current liquidation of Enron’s holdings. 

395

Chair Metsger

Wonders about the consequences of failing to sell PGE.  Offers that there is greater value in the entire entity, than dividing into its separate parts. 

410

Mitchell Taylor

Managing Director, Enron.  Responds that PGE would essentially revert back to a publicly owned utility.

415

Chair Metsger

Asks Mr. Taylor to identify himself for the record.

420

Taylor

Identifies himself.

425

Sen. Walker

Inquires if there is a set deadline for completion of the liquidation process.

TAPE 4, B

005

Bingham

Replies there is no official deadline.  Offers that they will be finished when they have addressed all remaining claims.

010

Sen. Walker

Mentions how Eugene’s court system offers its documents on-line.  Wonders if all the statements are available on-line.

015

Bingham

Replies that E-Law or Enron websites have all related documents available.

025

Sen. Walker

Inquires about the sale issue and the right to sale.  Wonders if it is possible for a sale of the utility to the State of Oregon or City of Portland.

030

Bingham

Replies they have a new board of directors and they will consider the best viable offers made.

045

Sen. Walker

Ponders what PGE is doing to reduce its costs.

065

Bingham

States that PGE should be addressed directly.

070

Sen. Walker

Clarifies that Enron cannot address PGE’s actions.

075

Sen. Monnes Anderson

Inquires on the options if the sale of PGE doesn’t happen.  Wonders what the process would be if they were to become a stand alone utility again.

080

Bingham

Relates the options, finding another buyer, and the option of liquidating their shares to creditors.  States that it would be easier to sell the stock to creditors.

095

Sen. Monnes Anderson

Asks for clarification.

100

Bingham

States again the options for the sale of the PGE, or sale of its stock making it widely held.

110

Sen. Monnes Anderson

Wonder if a group of PGE stockholders could purchase the shares.

115

Mike Morgan

States that once the stock is traded anyone can purchase it.

120

Sen. Deckert

References the ‘Project Tahoe’ documents that were leaked.  Asks if they are aware of them. 

128

Bingham

Concurs they are aware of the documents.

130

Sen. Deckert

Discusses the documents and the comments made that PGE is undervalued and could be turned into a profitable business and sold.  Wonders what their feelings are on the real value of PGE.

140

Taylor

Replies that from their perspective the document contained preliminary findings and that many within PGE do not agree with the findings.

155

Bingham

Offers additional information on the possible sale.

165

Sen. Deckert

Asks if Enron authorized any study of PGE’s value before putting it up for sale.

167

Taylor

Replies they have, but not through third parties.

170

Bingham

Offers that there were some outside evaluations of PGE’s value. 

180

Sen. Deckert

Inquires if there were any outside independent audits performed.

185

Bingham

States that he does not know of any others studies performed.

190

Vice-Chair Starr

Wonders about the role of Enron’s role in the assets they currently own.  Asks how involved Enron is in running PGE’s own operations. 

200

Bingham

Replies that major decisions by PGE are ratified by Enron’s board.  Offers his recollection that Enron has not overturned any of PGE’s decisions.

215

Vice-Chair Starr

Clarifies that PGE is essentially operating independently.

220

Bingham

Affirms that is correct.

225

Sen. Monnes Anderson

Asks if PGE could issue common stock to its holders.

230

Bingham

Replies that PGE will issue stock directly in accordance with the claims made.

233

Sen. Monnes Anderson

Wonders what would happen if PGE issued the stock.

235

Bingham

Replies claimants would get shares and could then sell them.

240

Chair Metsger

Thanks them for their testimony.  Asks about employees of PGE that lost their retirement plans with Enron.  Wonders where on the scale of credits would they stand.

250

Bingham

Replies he hopes the claims are lower than proposed.

255

Chair Metsger

Wants to clarify the ability of PGE employees to be claimants.

260

Bingham

Responds he doesn’t know what the total would be.

265

Chair Metsger

Suspects that their possibility of receiving a significant amount is low.

270

Bingham

Replies that it depends on the definition of significant.  Provides an estimate for a potential claim.  Clarifies that they will get back the current value of their common stock, which is not expected to be very much.

275

Chair Metsger

Thanks them for their time.  States they will hear the rest of the testimony at the next meeting. Outlines intentions for next meeting.

285

Bingham

Interjects that there was a complaint filed called the Tittle Action which relates to common stock and retirement claims.   Points out they are close to a settlement in that case.

295

Sen. Walker

Asks for proper spelling of the Tittle Action.

305

Bingham

Clarifies the spelling.

310

Chair Metsger

Outlines plans to conclude testimony at Tuesday’s meeting.  Adjourns at 2:57 P.M.