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Thursday, November 3, 2005

Public power in Portland -- what it would take

Fireman Randy was in the paper yesterday, going to bat for the Average Joes again. He was giving Portland General Electric a hard time over its rates. Leonard's actions on this issue (and those of his colleagues on the City Council) are entirely appropriate, and welcome. The city is using state law to force PGE to give up information to justify what it charges its customers. And the city fathers are putting Portland front and center in the recurring proceedings before the Public Utility Commission in Salem on those rates. Good for Portland.

Often during the city's failed, quixotic, and very expensive push to buy PGE, I expressed the view that the council should spend its energy advocating reform of utility ratemaking in Oregon, rather than trying to buy out the bad guys. I still think that's a good idea, and Randy (along with Erik Sten of course) is currently on the right track. Now let's hope that Governor Ted's PUC continues to get the message.

But PGE isn't the only power play of concern at present. The city also needs to keep the heat turned up on the proposed acquisition of Pacific Power by Warren Buffett's energy outfit. Here's another devotee of the almighty buck, coming to town with a cloudy agenda, and with dollar signs in his eyes. While it hassles PGE, the city needs to keep a careful eye on that other deal as well.

In the end, though, the city commissioners are never going to be satisfied until Portland has public power. The wolves will always be at the ratepayers' door, and it's going to be a constant battle with them unless a people's utility district is formed.

Quirky moves like the doomed PGE takeover will never get the city where it thinks it needs to go. There has to be a PUD election in which the PUD proponents actually win. And if the city wants that to happen, the campaign would have to be one the likes of which Portland has never seen before.

The boundaries of the district would have to encompass the whole city. Don't go beyond that, because voters in the outlying communities will be too distrusting. Don't go for less, because it looks too Mickey Mouse. If it's good for part of Portland, it's good for all of Portland.

City Hall would have to stand behind the PUD unwaveringly. (I am assuming that there's no legal problem with that, but I'm neither a utility lawyer nor a municipal government lawyer.) A management plan must be created, and a management team must be recruited, that will convince the voters that the PUD wll actually know what it's doing. None of this, "We'll find somebody to run this after we take it over, and they won't rip us off, trust us," which was the party line during the PGE takeover bid.

The people who are being offered to the voters as the directors of the PUD must all be people that the voters recognize and trust. The last time around, the proposed PUD board was a collection of bright, highly motivated people whose credentials as power company directors were, shall we say, not well established. And no one from the city lifted much of a finger to help. In that atmosphere, public power was no match for the big money that is always thrown up against it.

But picture another PUD election in a couple of years in which the city places its strong support squarely behind the initiative. Imagine a proposed PUD board with people on it like Tom Potter -- established names in whom voters have confidence. Business people like Sal Kadri. Heads of companies who rely heavily on electricity for their livelihoods. An economist. A couple of serious academics. And think of having experienced energy managers lined up, who know what they are doing and express a willingness to come work for a Portland PUD.

No offense to the smart and dedicated people who have worked hard for public power around here for decades, but get rid of the whole burned-out-hippie, anarchist image. No preaching about wind power, solar energy, and eco-roofs, and it's not a referendum on capitalism generally; if you want to win the election, you have to stifle all that for a while. Have local people who look like bankers and doctors front the whole thing. But no greasy Wall Street investment bankers or giant out-of-state law firms, please.

Then go out and do the hard work of selling the benefits to the voters. Make some promises that you know you can keep, in language that the average voter can understand. The Willamette Week looks like it would be on board. The Trib would be a tossup. The Oregonian would probably recommend a no vote, but really, who cares?

I'm a little skeptical of the benefits of public power, but I'm all ears. If done right, maybe public power could be a good thing for the city. But it would require finding first-rate help from capable industry hands, and taking the issue to the voters -- a course that our City Council seems unable, or too timid, to pursue.

The last time it was presented to Multnomah County voters, in 2003, a PUD went down by more than 2 to 1. It would be a steeply uphill battle, to be sure. It might take a couple of additional tries at the polls, and a series of external developments that push power prices up even further, to where they hurt so bad that they have everyone's undivided attention. But stranger things have happened.

One choice seems clear: Either we get a PUD, or Randy has to write op-ed pieces for a dozen more years, or even beyond. Now there's the scariest scenario of them all.

Comments (17)

Just brilliant, Jack. Thanks for this.

BWEEP, BWEEP, BWEEP - language abuse is in progress!

When politicos start using the words "public" and "power" side by side as they charter-up monopolies, we had all better watch out - liberty is being offered up for sacrifice!

Let's call it what it is:

collectivism |kuh lekt uh viz uhm|
the practice or principle of giving a group priority over each individual in it. the theory and practice of the ownership of land and the means of production by the people or the state.

Nice analysis. I do read what you write with an open mind and you have changed my opinions.

I think the biggest issue to sell this is going to be getting people out of the mindset that government will be running this after the all the CoP bungles on agencies.

I'd go for a PUD, but it really needs to keep a short leash on all of the board members. I am afraid a PUD would just be another new taxing vehicle for government since they saved us so much money on our power bill. Also, no games like with water (i.e. CoP pays one rate and everyone else pays more for BullRun water.)

Sorry, but I dont trust them. I really believe that all Leonard & Sten see is a revenue stream.
They will use this as a way to make up for lost tax revenue. Mark my words...rates will go up, up, up.

Thank you Jack for a sane discussion of the issue. I think the reason the public voted down the PUD was they felt caught between the proverbial "devil and the deep blue sea." The City Culture needs to change, it is relationship not performance oriented, ie who you know and who your decisions profit. How can they attract competent managers when Bureau Managers get the pink slip at the whim of the politicos in charge, and the morale of the top level of civil service employees when they are muzzled and "reorganized" so that more cronies or people who will go along with the "lie"[rim shot] and not blow the whistle on the abuse are eliminated at the cost of their families financial well being.

Softball day?

You need to give voice to discontent or you become a mere politician, even without a formal title.

"An economist."

They are no less political than lawyers, actuaries, and well-funded scientists.

I want a bull-rider or bronco-rider on any commission. Someone that thrives on a good ride.

This ain't no turtle ride at a turtle rodeo.

Personally, I think a PUD has all the potential to become another PDC -- using taxpayer funds without any good checks on its authority, and without any motivation to run efficiently and cost-effectively.

Someone really needs to explain to me how public ownership of utilities truly benefits anyone. Electricity costs money to produce, period. If the customers don't pay for it through their monthly bills, then they'll pay for it through higher taxes.


Glad to see your coming around.

I may be wrong, but I think, like school board members, PUD directors have to be elected under state law.

In 1999, voters in Scappoose, St. Helens, Columbia City and Rainier voted to leave PGE to join the Columbia County PUD. They immediately saved 12 percent on their electric bills. Six years later, their rates are 24.4 percent less than they would be if they stayed with PGE.

As for those of you who always compare public power to the past problems of the water bureau, a PUD wouldn't be a part of the City of Portland.

I grew up in Palo Alto CA, a city which has owned its own utilities from its beginnings. People like my mother continue to sing the praises of publicly owned utilities. But I think Sam and Swimmer are on to a sad fact of life in Portland: the good old culture can doom the best of ideas. Palo Altans tend to be intelligent and engaged and civic engagement is not looked upon with suspicion as it is here, "telling secrets" as Dwight Janes put it. They understand that public business should -for the most part- be conducted in public. At least that's how it used to be.

If a PUD is a better way then why not A PLD also: All lawyers would work for a Public Law District which would assure fair costs for all legal services. The fundamental question here is what system best manages the human impulse for self serving behavior?

This is a very good discussion, Jack. Thank you.

I do not understand why more attention has not been paid to the outrageous rates PGE charges us here in Portland...31% higher for residential and 39% higher for commercial...than what Pacific Power charges its customers.

When confronted with the same rate increases from Enron as was PGE in 2002, Snohomish County PUD unleashed investigators to look into Enron's claims of increased costs. Snohomish County discovered fraud and deceit were behind some of the rate increases passed on to them by Enron and they succeeded in voiding their Enron power contracts.

Why didn't PGE take on Enron as did Snohonish County on behalf of Portlanders?

I'll tell you why. Because PGE is owned by Enron. The result is that we are stuck with the highest electric rates in the region because no one did the ground work nor advocacy for Portlanders as the Snohomish PUD did for its customers.

I don't know if the city setting PGE's electric rates will lead to a PUD or not. I do know I am fed up with PGE's "We are a good local business and everyone knows Portland is hostile to business" diversionary tactic. That strategy has apparently fooled a lot of otherwise well meaning people to write checks to PGE every month for electricity the rates of which are based on fraudulent costs contrived by their parent company, Enron.

Let's be clear about one thing. PGE is NOT a business subject to the traditional supply and demand model that true businesses must compete within. They are, in fact, a regulated monopoly that gets a guaranteed rate of return based upon the costs they can convince the PUC they have.

Maybe PGE has been successful in whispering "water bureau billing system" in some peoples ear to enable their company to continue to charge the highest electric rates in the Northwest and, thereby, collect hundreds of millions of dollars in excess profits from Portlanders but I, for one, am not biting.

If you are looking for comparisons to PUDs, please don't choose things like law services or Pepsi/Coke; electrical power must be fundamentally provided by a monopoly. That subjects it to a very different type of cost/benefit analysis.

The economics literature, no bastion of "collectivism," points out how utilities are very prone to market failures and do not display many of the cost and efficiency characteristics of the private sector.

paul, but as a monopoly the reasonable price is supposed to reflect, in a game of pretend, the existence of a competitive setting.

What better way to illustrate the present departure from competitive pricing than by having the city pop in poles and wires like a crazed reckless capitalist willing to lose it all. But the bright bond folks would make sure to dim the minds of the folks sitting in the drivers seat. Randy's limited vision can be blamed on his advisors, with pockets to line by dimming wits.

I am wondering whose dimmed wits are at issue here.

In the past 3 years, PGE ratepayers have the distinction of paying $370 million more for their electricity than do Pacific Power ratepayers in addition to paying the highest electric rates in the Northwest.

Only someone benefiting from that windfall would defend it...unless their judgement was clouded by the sweet whispers in their own ears.

Mr Leonard - CoP taxpayers have had the privilege of paying $30M for PGE Park, next up $45M+ for the tram and about 20+% of our property taxes just for your retirement fund (I'll spare you the Water Bureau and upcoming Convention Center stories).

Based on the history of how CoP spends money, do you understand that most people would not trust local government to run a PUD? We are not against a PUD itself, just the stank of local government is too strong on this.

And you do not understand or acknowledge that each of those mistakes were publicly aired? You do not know that examples like you list happen in the private sector daily with no public airing? That you pay exponentially more than those combined mistakes annually to PGE in rates based on fraudulent activity by their parent company, Enron?

You also don't address that, time and time again, it has been said and written for all to see that a publicly held PGE would not be run by the city but by a regional board based on a PUD model.

Look, I don't know who you are. I do know that the scions of profiteers are not above planting "red herrings" such as you have written here to distract attention from their own pillaging and plundering.

If you are not one of those, at least stick to the facts.

First off, I am confused by "scions of profiteers" since I am not a male offspring of PGE. If you mean someone shilling for PGE, my main concern is lower rates. The PUDs so far have not presented a very clear case and the local governments ability to project actual costs on projects is suspect.

My main concern is the min cost for power. I don't think a PUD is the only solution nor is PGE the best solution. I think ideally having a PUC that sets fair rates is the ultimate solution.

Please don't consider people who disagree with your concept part of some grand PGE conspriracy. As far as the CoP "airing" of problems, this usually means admitting there may be an issue and then ignoring it since we will probably get a tram and CC hotel anyways, the water bureau billing is still not fixed and PGE Park is still a white elephant.

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