Almost a month after the Portland Public Utility Commission rejected Texas Pacific Group’s $2.35 billion bid to purchase Portland General Electric from Enron, the firm officially announced late Wednesday it would not continue to pursue the deal. That night, Enron CEO Stephen Cooper also put in a call to Mayor Tom Potter.
Potter has long expressed interest in a public buyout of PGE, saying the purchase would pump $100 million in rate reductions into the regional economy and provide stability to the company.
“This gives long-term stability and control,” City Commissioner Erik Sten said. “One of the issues surrounding Texas Pacific was, will you really make 50-year investments if you’re planning on selling in five years?”
The City of Portland is on the short list of buyers for PGE, Potter and Sten said at a press conference yesterday.
Sten has been a leading figure in Portland’s efforts to acquire Oregon’s largest utility from bankrupt Enron.
Texas Pacific’s concession, made after about a year and a half of effort, seemed inevitable since the PUC’s March 10 decision to reject the firm’s buyout offer, on the grounds that the transaction was not in the public’s best interest. The holding company had had until May 9 to appeal the commission’s decision.
“Texas Pacific made the honorable and responsible decision to bow out,” Sten said.
Now that Portland is the top contender for the utility, the city is mobilizing to find funding and the legal team to close the deal, Potter said. He expected to have financial underwriters chosen today.
Enron is now free to explore selling opportunities, which will include respective city and state public-purchase offers and potential private offers.
“Enron’s press release says that they will not formally seek third party offers,” Sten said. “Given that Mr. Cooper is one of the shrewdest businessmen in the country, given that his job is to get the most money possible, I think his decision is based on strong knowledge that no one else is waiting in the wings.”
Sten will meet with Enron CEO Stephen Cooper in a few weeks to discuss the city’s offer.
“We will make him a formal offer when he comes to Portland,” Sten said.
Sten noted that the city has the power to condemn PGE and take control by eminent domain, but said the city wants to come to a mutual agreement with Enron. “From our point of view, the goal is to get a fair price.”
Gov. Ted Kulongoski, too, said he would meet with Cooper “later this month” to discuss the state’s offer to acquire PGE.
The state legislature is currently considering a bill that would create a public corporation to purchase and run the utility under government ownership.
City officials are eager to pursue the purchase, regardless of the state’s intentions.
But Potter stressed that the two governments would not bid each other up to purchase PGE. “That won’t happen on our watch,” he said.
“I realize there are other offers on the table. We will consider any offer that benefits Oregonians,” Potter said.
Both public-purchase plans would provide funding through revenue bonds, the debt of which would eventually be paid off by PGE ratepayers. A government-owned utility, regardless of who owns it, offers money-saving benefits due to the relatively low interest rates of revenue bonds and the lack of due federal and state income taxes.