PacifiCorp trades up.

Byline: The Register-Guard

Oregon's privately owned utilities used to be among the state's leading corporate citizens, with prominent headquarters in Portland and records of deep civil involvement. Ownership of both PacifiCorp and Portland General Electric slipped out of local hands in the 1990s, and it's hard to see much benefit for customers in Oregon. The pending sale of PacifiCorp to Warren Buffet's investment company promises some improvement, but the utility would have been better off remaining independent.

Buffet's company, Berkshire Hathaway Inc., will pay $9.4 billion for PacifiCorp through an Iowa-based utility conglomerate in which it owns a majority interest, MidAmerican Energy Holdings Co. The seller is ScottishPower PLC, based in Glasgow, which bought PacifiCorp for $11.8 billion in 1999. ScottishPower undoubtedly regrets the acquisition, which came at the dawn of one of the most turbulent periods in the history of electric utilities.

PacifiCorp - which serves half a million customers in Oregon, including large portions of Lane County - was formed by a merger of Pacific Power & Light Co. and Utah Power & Light Co. in 1989. At the time, utilities believed their survival depended on becoming global giants. PacifiCorp tried to buy a British company, Energy Group PLC, but was outbid by a Texas rival. The failure led investors to downgrade PacifiCorp stock, opening the door to bargain-hunters at ScottishPower.

The bargain turned out to be a costly one. An editorial in this space expressed concern that "PacifiCorp's customers are likely to find themselves targeted as a source of revenue for a highly leveraged parent company headquartered half a world away." Those apprehensions proved well-placed, but PacifiCorp did not generate the revenue stream ScottishPower hoped for. Meanwhile, growth in the six-state region served by PacifiCorp left the utility in need of $5 billion in capital investments.

MidAmerican Energy is reportedly willing to make those investments - a willingness that tends to confirm Buffet's stated commitment to becoming a long-term owner of PacifiCorp. MidAmerican thus promises to be a better corporate parent than ScottishPower. Utilities need huge amounts of capital and must plan far into the future, both of which require that investors take a long-range view. If utilities are regarded as sources of quick cash, the necessary investments and planning may not occur.

MidAmerican looks even better in contrast to Texas Pacific Group, which tried to buy PGE from Enron in 2003 for $2.35 billion. Oregon's Public Utility Commission rejected the sale last March, finding that the deal offered insufficient benefits to PGE's customers, who are clustered in Portland and surrounding counties. Texas Pacific approached PGE as a speculator, not an investor, intending to own the utility for a few years and then sell it at a higher price.

The PUC will have to review the PacifiCorp transaction, as will regulators in other states and at the federal level. At the outset, there are fewer causes for concern than greeted Texas Pacific's attempt to buy PGE, or even ScottishPower's acquisition of PacifiCorp. But despite MidAmerican's relative attractiveness, the fact remains that it's headquartered in Iowa, and in turn answers to Berkshire Hathaway, based in Omaha, Neb. A part of PacifiCorp customers' electric bills will be sent eastward each month. It was better when the checks stayed in Oregon.