Oregon Electric Makes Final Filing to Purchase PGE; Offers $43 Million Rate Credit to PGE Customers.

PORTLAND, Ore. -- Oregon Electric Commits to Provide PGE with up to $94 Million in Additional Contractual Protections Obtained from Enron

Oregon Electric Utility Company (Oregon Electric) has offered a guaranteed $43 million rate credit to PGE customers if its proposal to purchase the utility is approved by the Oregon Public Utility Commission. The rate credit - a significant increase from the $15 million Oregon Electric proposed on August 16 - is higher than the $36 million credit Enron provided when it purchased PGE. The $43 million credit would be payable over five years beginning in 2007.

In testimony filed today in response to the testimony of OPUC Staff and intervenors in the approval proceeding, Oregon Electric also made it clear that PGE would receive the benefit of up to $94 million in contractual protection from Enron against potential liabilities and losses unrelated to Enron, in addition to the contractual protection against Enron-related liabilities previously offered to PGE, in a total amount up to $1.25 billion.

"Oregon Electric's proposal provides irrefutable rate relief and other significant benefits to PGE customers," said Peter O. Kohler, M.D., prospective chairman of Oregon Electric and PGE. "In contrast, no such benefits will be enjoyed by ratepayers and PGE if the status quo is preserved. It's time to make PGE an independent Oregon utility once again."

Additionally, Oregon Electric has agreed to rigorous provisions that protect PGE's financial well-being, such as not paying dividends to shareholders until at least $250 million in Oregon Electric debt is repaid. Collectively, these provisions go beyond the conditions that were placed on Enron when it purchased PGE, conditions which have been highly effective in protecting the utility during Enron's bankruptcy. Today's filing also provided additional transparency into Oregon Electric's governance and ownership, as well as made commitments to provide the OPUC with additional information regarding PGE's expenditures.

"We are sensitive to the perceived concerns of OPUC staff and stakeholders, given the Enron experience. For that reason, in the spirit of cooperation that Oregon Electric's ownership portends, we have agreed to more onerous conditions than previously imposed on an owner of an Oregon utility," said Kelvin Davis, a partner in the investment group backing Oregon Electric's proposal to acquire PGE. "Coupled with those protections are a $43 million rate credit, liability protections, local board leadership and other benefits that together clearly demonstrate that Oregon Electric's ownership of PGE will provide undeniable benefits to customers and Oregonians at large."

"Beyond the rate credit and other immediate benefits, Oregon Electric will usher in a new era of collaboration among PGE's stakeholders. This investor group also has deep experience in helping make good companies even better, which will inure to the long-term benefit of customers," said Kohler.

In its final filing, Oregon Electric restated the reasons why its acquisition of PGE would result in a net benefit to PGE's customers. If the Oregon Electric proposal is approved, the following benefits will be achieved:

--An end to Enron: An immediate end to Enron's ownership of PGE, ensuring renewed stability and certainty backed by responsible shareholder support

--A $43 million rate credit: Customers will receive a total rate credit of $43 million, to be paid over five years beginning in 2007

--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

--The creation of a new board with substantial local representation: Oregon Electric has designated seven leading Oregonians to serve on the PGE board, including an Oregon chairman

--Protection against Enron-related and other liabilities: PGE will benefit from certain contractual protections from Enron provided under the purchase contract against potentially material Enron-related liabilities and against certain other non-Enron related liabilities and losses.

--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

--A significant Oregon taxpayer: Oregon Electric will be a substantial Oregon taxpayer and will not consolidate its returns with any other operating 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

"The Oregon Electric proposal provides clear and substantial benefits to PGE customers, benefits that will not be available if PGE remains under the cloud of Enron's ownership," added Davis.

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.