Oregon Regulators Block Sale of Enron Unit

State regulators in Oregon said Thursday that they had blocked the proposed $2.35-billion sale of Enron Corp. subsidiary Portland General Electric, saying the offer from Texas Pacific Group was not in the public interest.

“The potential harms or risks to PGE customers from the deal outweigh the potential benefits,” said Lee Beyer, Oregon Public Utility Commission chairman.

Beyer and fellow commissioners cited the large debt Texas Pacific would have to carry on the utility and its plan to sell PGE again as soon as the investment showed a profit as the main reasons for discounting the potential benefits the privately held Fort Worth company had claimed for the deal.

“The high debt percentage would likely result in lower credit ratings for PGE than it would in the absence of this transaction,” the PUC ruling stated, adding that lower credit ratings could translate into higher electricity rates for customers.

State law required the commissioners to decide whether utility ratepayers would benefit from the takeover and to ensure that no public harm would result.

The PUC could have approved the deal outright or spelled out conditions for approval.

The commission ruling leaves the fate of Portland General Electric in the hands of Enron creditors if Texas Pacific decides not to appeal or ask the PUC to reconsider.

Texas Pacific and Enron executives said only that the ruling was a disappointment and would have to be carefully reviewed.

Texas Pacific had been trying to build support for the PGE buyout from Enron for more than a year despite widespread criticism and resistance in Oregon, including from major industrial customers such as Intel Corp.

Portland city Commissioner Erik Sten, who has led the proposal to convert PGE into a municipal utility, said the city would begin talking to creditors immediately.

Oregon regulators had been considering the ruling for nearly three months since they heard closing arguments Dec. 14 on the Texas Pacific offer to buy the oldest and largest utility in the state, serving about 755,000 customers.