Oregon Electric Guarantees $15 Million Rate Credit to PGE Customers.
Oregon Electric Utility Company (Oregon Electric) announced today that Portland General Electric (PGE) customers will receive an unconditional rate credit in the amount of $15 million if it receives Oregon Public Utility Commission (OPUC) approval to acquire PGE.
"We have listened to the concerns of OPUC staff and various customer groups regarding the uncertain benefit of our previous offer to share PGE's profits over a 10.5 percent return with customers," said Kelvin Davis, a partner in an investor group backing Oregon Electric and a future PGE board member. "We are now responding by replacing this benefit with a firm dollar amount. Oregon Electric will now guarantee customers a $15 million total rate credit to be paid from 2007 through 2011 in a manner consistent with what customers may have received under our prior proposal."
In Rebuttal Testimony filed today in response to the testimony of OPUC staff and intervenors in the approval proceeding, Oregon Electric also said that it will make PGE the sole beneficiary of the contractual protection against potentially material Enron-related liabilities that it had negotiated as part of the purchase agreement. "Not only will the approval of this acquisition put an end to the Enron era," Davis said, "It will also ensure that PGE gets the benefit of substantial protection against potentially material liabilities arising from Enron's bankruptcy. PGE currently faces these liabilities, and does not have the benefit of this protection today."
In furtherance of its commitment to provide full transparency, and in response to requests by Citizens Utility Board, Industrial Customers of Northwest Utilities and others for assurances of disclosure of Oregon Electric's activities, Oregon Electric, a privately owned company, also agreed to file with OPUC and make available to all stakeholders annual and quarterly reports equivalent to SEC Forms 10Q and 10K which publicly owned companies are required to file. This complements Oregon Electric's prior agreement to make its books and records relating to PGE available to the OPUC.
"Oregon Electric fully expects to provide disclosure," said Davis. "This commitment underscores that. Furthermore, we have been working hard to fully respond to staff and other intervenors' questions. To date, we have responded to almost 470 data requests and have provided almost 17,000 pages of information. We expect to continue to provide a frank and transparent exchange of information to ensure that we answer questions that have been raised."
In the filing, Oregon Electric clearly sets out the reasons why its acquisition of PGE would result in a net benefit to PGE's customers and addressed questions and concerns expressed by some stakeholders. Oregon Electric explains why its acquisition financing plans will not affect PGE rates or customers, and agreed to a series of conditions similar to those required by the Commission in prior acquisitions of Oregon utilities that are designed to protect customers. Oregon Electric also provided an additional condition that assures dividends from PGE will be used to pay down debt of Oregon Electric for three years rather than being distributed to Oregon Electric's investors.
"The OPUC Staff and intervenor testimony and subsequent settlement conferences have resulted in substantial progress, and I am pleased that we have been able to respond so constructively," said Peter O. Kohler, M.D., prospective chairman of Oregon Electric and PGE. "Today's filing demonstrates that Oregon Electric is listening to the concerns of all constituents, and allowed us to further round out the benefits that Oregon Electric's proposal provides. I remain all the more confident that this transaction is in the best interests of customers and is a positive succession to Enron's ownership."
Dr. Kohler noted that settlement conferences will continue for the next several weeks. "This is a collaborative process and I believe we have made great strides toward a settlement," he said. "The benefits we have articulated are a substantial improvement from PGE's current status. We will operate with transparency and have taken substantial steps to assure that Oregon Electric provides disclosure similar to that of other holding companies."
Oregon Electric reiterated the other benefits that this transaction provides and the other commitments it has made, conditioned on approval of the transaction from the OPUC:
--An end to Enron: An immediate end to Enron's ownership of PGE, ensuring renewed stability and certainty backed by responsible shareholder support
--The creation of a new board with substantial local representation: Oregon Electric has announced seven leading Oregonians to the PGE board, including an Oregon chairman
--A $15 million rate credit: Customers will receive a total rate credit of $15 million, to be paid $3 million annually from 2007 to 2011
--Protection against Enron-related liabilities: Oregon Electric will ensure that PGE is the sole beneficiary of contractual protections provided under the purchase contract against potentially material Enron-related liabilities
--Service quality: A commitment to reinforcing high quality service standards, including a 10-year extension of service quality measures that are currently in place
--Addressing customer concerns: Periodic access by customer organizations and other PGE stakeholder groups to the PGE Board of Directors, providing these constituencies with the opportunity to voice concerns directly to the board
--Capital reinvestment: Substantial future capital reinvestment in PGE, ensuring reliability and efficiency from existing assets and the acquisition and development of new resources
--Long-term efficiency and cost-effectiveness: A commitment to undertaking a comprehensive review of the company post-closing, with the goal of identifying efficiency and productivity gains that ensure customers receive safe and reliable electricity as cost-effectively as possible
--Local headquarters remain: PGE's headquarters will stay in Portland, jobs will stay in Oregon, and PGE will continue its charitable leadership in the community
--A significant Oregon taxpayer: Oregon Electric will be a substantial Oregon taxpayer and will not consolidate its returns with any out-of-state company, as happened in the Enron era
--More renewables: A commitment to vigorously pursue a target of using cost-effective renewable resources to fulfill 10 percent of PGE's peak capacity by 2012
--Organizational accountability for environmental initiatives: The appointment of a manager within PGE with the appropriate responsibility and authority to work with the advocacy groups for renewable energy sources, sustainability, energy efficiency, and environmental matters
--Greater assistance to low-income customers: A doubling of cash contributions for the next 10 years that PGE currently makes to Oregon HEAT, a non-profit organization that assists low-income families in paying utility bills, which will be paid for with Oregon Electric shareholder (rather than customer) funds
About Oregon Electric Utility Company
Oregon Electric Utility Company is a new Oregon company formed for the sole purpose of investing in Portland General Electric. Oregon Electric's goal is to maintain PGE as an independent utility based in Oregon, serving local customers, and contributing to the health of the community and the growth of the regional economy.
The company is backed by Texas Pacific Group, one of the leading private equity firms in the country. In addition, respected Northwest leaders and industry experts have committed to join the new PGE board upon approval of the transaction. They include:
--Peter Kohler, M.D., President of Oregon Health & Science University
--Kirby Dyess, former Corporate Vice President and Director of Operations at Intel Capital, and currently a Principal with Austin Capital Management, LLC
--Maria Eitel, Vice President and Senior Advisor for Corporate Responsibility, Nike, Inc., and President, Nike Foundation
--Gerald Grinstein, Principal, Madrona Investment Group LLC, and CEO, Delta Air Lines, Inc.
--Jerry Jackson, former Executive Vice President and Group President, Utility Operations, Entergy Corporation
--Duane McDougall, former President and CEO, Willamette Industries, Inc.
--Robert Miller, Chairman, Rite Aid Corp. and former CEO, Fred Meyer, Inc.
--M. Lee Pelton, Ph.D., President, Willamette University
--Tom Walsh, President, Tom Walsh & Co.
--In addition, Peggy Fowler, CEO of PGE, and David Bonderman and Kelvin Davis, partners of Texas Pacific Group, will also join the Board.
On November 18, 2003, Oregon Electric Utility Company signed a binding agreement with Enron to acquire all of Portland General Electric for approximately $2.35 billion. The Oregon Electric proposal is now pending review and approval before the Oregon Public Utility Commission.
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|Date:||Aug 16, 2004|
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