Portland General deal is dying

Monday, March 26, 2001 | 11:13 a.m.

The owner of an Oregon utility sought by Nevada Power Co.'s parent company concedes that their deal may be dead.

Enron Corp. Chief Executive Officer Jeffrey Skilling told investors Friday that the chances of his company closing the sale of Portland General Electric Co. to Nevada Power owner Sierra Pacific Resources Inc., Reno, are at about 5 percent.

Sierra Pacific's top executive said earlier this month the $3.1 billion acquisition of the utility was on the verge of collapse because of his company's weakened financial condition.

Walter Higgins, chief executive officer of Sierra Pacific, said his company had hoped to close the deal by May 5. He said the elimination of duplicated jobs between the two utilities ultimately would save Nevada and Oregon ratepayers millions of dollars.

"There's probably a 5 percent probability that Sierra Pacific's purchase of Portland General will be consummated," Skilling told investors, Bloomberg News reported.

Skilling said Enron is not in a rush to sell Portland General, which it acquired in 1996.

Skilling indicated that the changing energy environment was to blame for the high probability that the transaction would not be completed.

Lawmakers in California are prohibiting public utilities from divesting their generators until 2006 because of a shortage of electricity. The Nevada Legislature is considering a similar law.

In a recent Securities and Exchange Commission filing, Sierra Pacific said the California law, enacted Jan. 18, prohibits or may prohibit divestiture of some of its Northern Nevada power plants and its 14 percent interest in the Mohave plant in Laughlin.

"Sierra Pacific is actively seeking legislation to exempt (Sierra Pacific Power Co.) from this moratorium on generation sales," the filing said. "However, unless modified by future legislative action or by a court, California law has halted divestiture of (the company's) Valmy, Tracy and Fort Churchill plants."

Faye Andersen, a spokeswoman for Sierra Pacific, said Friday that the biggest problem facing the company is gaining SEC approval of the Portland General deal.

Higgins was even more specific about why the deal was collapsing earlier in the month. He said the SEC probably would not allow the Portland General sale to be approved under the Public Utilities Holding Act because of Sierra Pacific's weakened financial condition that resulted from the company's inability to sell its power plants.

Skyrocketing fuel costs led to corporate losses for Sierra Pacific in 2000 and for the company to request up to a 25 percent rate increase from ratepayers this month.

Portland General supplies power to 728,000 Oregonians. If Sierra Pacific were successful in its acquisition, it would create the 15th largest power company in the nation and the third-largest utility in the West, with 1.7 million customers in Oregon, Nevada and California.