Skip to main contentForget, for a moment, the scare tactics about potential power outages or rising rates.
At heart, this month's election in Portland is about whether the electricity that flows into your toaster, PC or lava lamp should come from a public entity--or a private one.
Willamette Week has long since abandoned the knee-jerk notion that public is always good and private is always bad. This paper strongly supports the free-market system and the efficiencies and benefits that can accrue when the profit motive is at work in a competitive environment.
But the free market has nothing to do with electricity these days, which is why we are urging a YES vote on the two local ballot measures that hit voters' mailboxes this week.
Proponents want to form a People's Utility District to acquire Portland General Electric's Multnomah County assets, which consist mainly of poles and wires.
It sounds simple enough, but this election has become more confusing than George Bush's speech patterns. There are several reasons for this.
First, utility issues are almost always complicated.
Second, for the past year, the City of Portland has mounted an unrelated attempt to buy PGE from its bankrupt parent, Enron. That effort that has nothing to do with this election.
But part of the confusion comes from the disingenuous campaign against the measures, which is financed largely by PGE and PacifiCorp, otherwise known as Pacific Power. (Proponents have said they have no interest in acquiring PacifiCorp's local assets, although this measure would technically allow them to do so).
Here's how it would work:
If Measure 26-51 passes, a five-member PUD board, elected on this same ballot (see "Power Picks," page 11), would contract with an engineering firm to conduct a feasibility study of the takeover. That study would be paid for by Measure 26-52, which provides for a one-time levy on property taxes to raise about $127,000. Contrary to the claims of opponents, this levy would be small: three ten-thousands of a percent of assessed property value, or about 45 cents for a $150,000 home.
That's the only financial commitment this election would make.
Once the PUD board gets the study, it could ask voters to approve revenue bonds to pay for the acquisition of PGE's local assets. That could happen either through negotiated purchase or condemnation. The price tag, which opponents say would be more than $1 billion and proponents say should be far less, would be repaid through electricity rates, not through property taxes. Voters, of course, would have the right to say no.
So why should voters back this small step to explore public-owned power?
First, PGE's conduct has been a textbook case not of the failures of the free-market system, but of the failures of a system of unregulated monopoly--which has left customers saddled with stratospheric rates and its employees stripped of their pensions. According to state figures, PGE's rates are the highest of any major utility in the Northwest and it charged customers, on average, more than any PUD or municipally owned Oregon utility last year.
Second, voters should say yes because the opponents haven't found a compelling reason to say no. Opponents are painting the formation of a PUD as a radical move that will kill the business environment. If that's the case, someone needs to let the cities of Seattle, Sacramento and Los Angeles know. Those cities are served by public power, as are 27 percent of the residents of this state.
Opponents have also argued that a PUD takeover will eliminate Portland General's cash contributions to public-purpose projects such as conservation, low-income energy assistance and charitable giving. Such claims exaggerate both PGE's benevolence and the risks to beneficiaries of such programs. Although publicly owned utilities are not required to make similar contributions--which in any case come straight out of customers' pockets--such public utilities as Seattle City Light and the Eugene Water & Electric Board devote a larger percentages of their budgets to such expenditures than does PGE.
Despite all of the scare tactics unleashed in the current campaign, it's worth noting that neither of the state's two leading consumer groups--the Citizens' Utility Board and Industrial Customers of Northwest Utilities--opposes PUD formation.
In fact, while officially neutral, both organizations support the concept of a negotiated public purchase of PGE's assets. ICNU director Ken Canon says his members, who include most of the largest energy consumers in the region, have no problem with public power. "PGE's rates are still very high," Canon says. "Trying to figure out options that would get their rates more competitive is very important. If a voluntary public purchase would deliver savings, my members would look at that closely."
An indirect benefit of forming a PUD could be its effect on PGE's creditors. To date, the City of Portland and PGE have not been able to agree upon a price for the city to acquire the whole utility. It is possible that the passage of these measures, which include the authority of a PUD to acquire PGE's Multnomah County assets by condemnation, will encourage Enron and its creditors to negotiate more seriously.
The PUD proposal is far from flawless. We're nervous about electing a PUD board in this same election and wish the issue were also on the ballot simultaneously in neighboring counties (proponents promise similar ballot measures in the rest of the utility's territory). But our concerns are far outweighed by the performance of existing publicly owned utilities and by PGE's dismal recent past and uncertain future.
WWeek 2015