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August 10th, 2005 Don Mcintosh | News Stories
 

WATT'S UP WITH CONDEMNATION

Why the City of Portland isn't rushing to condemn PGE.

     
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Don't expect the City of Portland to make the ultimate power play and use its ability to acquire Portland General Electric forcibly from Enron.

Since Enron called Portland's underlying condemnation bluff and snubbed the city's offer last month to buy PGE, Commissioner Randy Leonard is the only member of the five-person City Council tossing around the condemnation option.

"If there's ever an appropriate use of eminent domain, it's this particular situation," Leonard says. "I think Enron is a bunch of thieves. They've exploited Portlanders long enough, and I'll use any tool in the bucket to separate them from Portlanders."

But even Commissioner Erik Sten, who oversaw the city's rejected PGE bid, says he would first need to see a broad citizen coalition in support of condemnation.

City Commissioner Dan Saltzman says condemnation would send an "extremely bad signal" to business. Commissioner Sam Adams views it as a last resort. And Mayor Tom Potter's office is sticking to a wait-and-see script despite the mayor's conclusion July 21 that Enron had failed to negotiate with the city in good faith.

Condemnation may be the last arrow in the city's quiver, but it would strike true, says local lawyer Dan Meek, a longtime advocate of a city condemnation.

Meek says there's little legal defense against the option, only a courtroom haggle over "just compensation." Utilities tend to sell voluntarily when faced with threat of eminent domain, Meek says, because "they do not want to be in front of a jury."

And PGE would be in an odd position if it contested the city's right to condemn, given that the private utility itself uses eminent domain when it needs to buy the right-of-way to build transmission lines (for the public purpose of providing electricity).

Under both the U.S. and Oregon constitutions, governments have the right, in order to complete a public purpose, to compel an owner to sell at a fair price.

Enron might howl, but presumably a fair price has already been established-it was prepared to sell PGE to Texas Pacific Group for $2.35 billion. The Oregon Public Utility Commission nixed that deal on the grounds that ratepayers would get too little benefit (see "Power Failure," WW, March 16, 2005).

Bankrupt Enron's latest plan to unload PGE via stock distribution to its creditors also must be approved by the Public Utility Commission, and city officials are likely to testify when the proposal gets a PUC hearing in October.

Could the city condemn PGE as an intact entity even though it has assets-including power plants-outside the city limits? Yes, says lawyer Phillip C. Gildan of Greenberg Traurig, the Florida-based law firm retained by the city to chaperone its PGE bid.

Yet Sten says he isn't ready to pursue public ownership unless he's convinced the public wants it. He does, however, call the stock distribution plan a scam and says he hopes others will agree once more information emerges.

"If we were to start a condemnation proceeding now, attention would be focused on the wrong question," Sten said. "The question isn't 'Should the city use its power to condemn?' It's 'Is stock distribution reasonable?'"

"We have to act on behalf of citizenry," Sten said. "But the citizenry need to get worked up about it first."

 
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