Enron's $200 Million Problem

[May 4th, 2005] A court judgment against Portland General Electric could bring ratepayers as much as $200 million and drive down the price Enron gets for the utility.

From 1995 through 2000, PGE charged ratepayers for operating the Trojan nuclear plant, which was shut down in 1992. Utilities are typically only allowed to charge ratepayers for actually operating power plants.

For a decade, utility watchdog Dan Meek has pursued repayment for ratepayers, first at the Oregon Public Utility Commission and then in Marion County court, which handles appeals of PUC decisions.

Last December, Marion County Circuit Court Judge Paul Lipscomb ruled PGE improperly charged customers for Trojan. In March, Lipscomb "certified the class" of ratepayers, the final step before ordering PGE to begin notifying customers they had money coming back.

PGE appealed to the Oregon Supreme Court in March. While the high court's historically deliberate pace suggests a long wait for a ruling, the possibility of having to repay the Trojan overcharge-which Meek says could top $200 million including interest-could affect Enron's latest attempt to sell PGE.

After the PUC rejected the Texas Pacific Group's $2.35 billion bid for PGE in March (see "Power Failure," WW, March 16, 2005), Enron acting CEO Stephen Cooper re-opened talks with the City of Portland, which wants to buy the utility.

Cooper told The Oregonian PGE is worth more today than when he struck a deal with Texas Pacific in November 2003. Certainly, utility stocks have climbed. But the uncertainty of the Trojan case casts a shadow over Oregon's largest utility.

"The existence of that liability reduces PGE's value," says Jason Eisdorfer, a lawyer for the Citizens' Utility Board. "Until the [Supreme] court rules, we won't know by how much."