History
The utility was founded in 1888 by Parker F. Morey and Edward L. Eastham as Willamette Falls Electric Company. On June 3, 1889, it sent power generated by one of four brush arc light dynamos at Willamette Falls over a 14 mi electric power transmission line to Portland, the first US power plant to do so.[7][8] On August 6, 1892, Morey, Frederick Van Voorhies Holman, and Henry Failing formed the Portland General Electric Company. It was funded by General Electric and the investment arm of Old Colony Trust, with $4.25 million in capital. The newly formed PGE Company purchased Willamette Falls Electric and the Albina Light & Water Company in 1892. Less than a year later, in May 1893, PGE purchased the City-Eastside Electric Light Plant, a municipal power company.[9] E. Kimbark MacColl, who chronicled the history of Portland, referred to it "a generous gift to a private company at the expense of future taxpayers" since it was constructed for a cost of $40,342 and sold 15 months later for $27,000.[9]
In 1903, Henry W. Goode, the president of PGE, decided to make PGE a "popular public utility." His vision was for the company to light the Lewis and Clark Centennial Exposition in 1905. in 1903, he traveled to the east coast to raise $3,000 from shareholders. His plan went through, and Thomas H. Wright was put in charge of designing the lighting for the fair.
PGE also purchased the Union Power Company in 1905, and the Vancouver Electric Light & Power Company in 1906.[9] In 1906, PGE, Portland Railway Company, and Oregon Water Power & Railway Company merged, becoming the Portland Railway, Light and Power Company (PRL&P).[9] It was the only streetcar operator within Portland city limits, and the predecessor of the modern PGE.[9]
The company name became Portland Electric Power Company (PEPCO) in 1932. It was reorganized in 1948 as PGE.
On March 1, 1939, PEPCO defaulted on interest bonds that had been issued in March 1934.[10] The bonds were pledged with PGE (the electric subsidiary) and Portland Traction Company (the streetcar subsidiary) as collateral, with Guaranty Trust as trustee.[10] PEPCO filed for Chapter X bankruptcy (now known as Chapter 9) on April 3, 1939, and was assigned District Judge James Alger Fee.[10] The proceedings were later called "one of the most prolonged and complicated series of legal proceedings in Portland's history".[10]
The reorganization and bond default was brought on by PGE's difficult negotiations with Bonneville Power Administration, the death of Seattle City Light's visionary J. D. Ross, and the indecision created by the possible creation of a public utility district in PGE's territory.[10] The Columbia Valley Authority project would have allowed CVA to purchase utilities such as PGE.[10]
PGE survived bankruptcy partially through cheap power purchases from BPA beginning in the fall of 1939, and by the end of 1941 they showed net profits.[10] In the meantime, Ormond R. Bean, the Oregon Public Utility Commissioner, forced PGE to lower its rates.[10] Ultimately, PEPCO and PGE were saved by World War II, which led to the construction of three Kaiser Shipyards and of Vanport City, Oregon to support them.[10] By 1945, PGE derived nearly $400,000 in revenue from the two Kaiser shipyards in Oregon.[10] In August 1946, after the war, they were able to sell Portland Traction for $8 million in cash. Judge Fee ruled the bankruptcy reorganization complete on June 29, 1946.[10]
On July 1, 1997, Enron Corporation bought PGE for $2 billion in stock and $1.1 billion in assumed debt. Then in 1999, and again in 2001, Enron attempted to sell PGE to other investor-owned utilities including Portland-based NW Natural.[11] The corporate officers of PGE claimed that this utility was not involved in the financial mis-dealings of its owner, pointing to the fact that many of its employees suffered when Enron froze the 401(k) retirement plan and were unable to sell the rapidly declining stock. However, Ken Harrison and Joseph Hirko, PGE's CEO and CFO respectively at the time of the Enron merger were charged on several felony level counts primarily related to financial misrepresentation regarding Enron Broadband Services which had its headquarters within the World Trade Center complex that comprises PGE's corporate offices. In addition Timothy Belden, head of the West Coast Trading Desk and John Forney, an energy trader who invented various electricity trading strategies such as the Death Star, operated from the trading floor in the PGE corporate offices and were also convicted of financial crimes related to the California Electricity Crisis.
Early attempts to convert the company to a public utility district
Ballot measures have been filed by citizens several times since the 1960s to convert some or all of PGE into a public utility district (PUD), the latest of these being in 2003. Most were unsuccessful, but an exception was in 1999, when PGE announced it was selling its customer base in St. Helens, Scappoose, and Columbia City to West Oregon Electric PUD for $7.9 million. The terms of this sale proposed to leave the physical assets of the distribution system —the poles, wires and other components— owned by Enron, who would then manage this system as a contractor exempt from state regulation. Voter distrust of both Enron and PGE was severe enough for voters to approve the measure, despite $71,592 being spent in advertisements to oppose it, in comparison to the $2,304 spent by supporters. This resulted in those three cities becoming part of the Columbia River PUD on terms far more favorable to the customers; electricity rates immediately dropped in these cities, and remain lower than those for current PGE customers.
Attempted acquisition by Texas Pacific Group
Concerned by uncertainty that the Enron bankruptcy would bring, several local governments began investigation into acquiring PGE by condemnation. These studies ended after the announcement on November 17, 2003, that a group called Oregon Electric Utility, led by former governor Neil Goldschmidt and backed by Texas Pacific Group, offered to buy PGE for $2.35 billion.
