Seven Days; Power in the Legislature/PGE-Enron merger update

[beeping] [silence]

[beeping] [beeping] [music] [music] [music] Hi I'm Stephanie Fowler and this is seven days. Our topics this week: power politics in the Oregon House and an update on the power merger between the Enron corporation and Portland general electric. Let's meet this week's panel: Nassim Rocket is the capital correspondent for the consortium for public radio in Oregon.

David Steves is a columnist at the Salem Statesman Journal. Bill Mackenzie is a reporter for the Oregonian and ?hostile hearing? is the editor of the Albany Democrat Herald. Washington County representative Chuck Carpenter brought the Oregon House to a standstill when he tried to force a floor vote on a bill banning job discrimination based on sexual orientation. Carpenter's fellow Republicans walked out of the capital rather than suffer an embarrassing defeat on the floor. And it took more than a day in negotiations to reach a compromise that satisfied Carpenter and other Republicans. Naseem why did this happen how could one legislator bring the whole legislature to a standstill like that? Well, why it happened, it says a lot about the leadership of the Republicans. You have to realize that right now the Republican House, I mean the House has got a very slim majority for the Republicans. There's 31 Republicans, 29 Democrats and that means that the speaker of the House Lynn Lundquist has got to keep a very strong hold of what's going on in there. And he was unable to do that. The bill that you're speaking about, the ?end? the bill that would have stopped discrimination in the workplace for gays and

lesbians. On that bill was not moving in this particular committee but Chuck Carpenter, one of the sponsors of the bill, had the votes for it in the House and there's some talk about him even having the votes for it in the Senate but nevertheless he definitely has the votes for it in the House. He was upset that it was being stuck essentially in committee by one person. He didn't think that was part of the democratic process that he was there representing. And so he can, by law and by parliamentary procedure, move that, make a motion, to move that bill out of the committee that it was stuck in essentially and move it on to the floor for a vote, an immediate vote. And it's used very rarely because it is a direct challenge to leadership, right? Yes, it's used very rarely and when it has been used and the recollection of the people that are there the building can't remember any time when it's actually been used successfully. I would say what we saw this week was a successful move by Carpenter because there is going to be movement on [inaudible] the law. Were there discussions, There's nothing between Carpenter and Lundquist that we know about

either in private or in public in which Lundquist might have attempted to avert this? Well there were lots of discussions going on. They have been characterized by Representative Carpenter as not being very productive. The conversations were in the caucus and those conversations were also were amongst the speaker Lundquist and also Representative Minnis, who chaired the committee where the bill was stuck. And these, representative Carpenter had tried to move that bill out of Minnis's committee into the commerce committee earlier on, knowing that that would've gotten a more easy reception at that point. ?Minnus? has not been in favor of this particular bill. What representative ?menace? has said is that he is not in favor of this particular bill, that he really would like to broaden some kind of a legislation to eliminate discrimination of all kinds in the workplace. And the sorts of things he's talking about is the discrimination against short people. By implication, I

guess, he also is talking about discrimination against tall people and against overweight people. If you can, he may have said fat, I'm not sure. In any case, and it's not entirely clear, at least not to me, whether he's serious about this or whether he's trying to use that, that kind of theme as a way to ridicule the bill. [inaudible] That is the question: was it, was there really serious movement to move that bill out of that committee, or even hold a hearing on the bill and re craft it into something that both the Democrats and the Republicans could support. And there wasn't seeing any real serious movement in that direction. And the thing complicating it was that in the Senate side there is a bill that would have banned the, banned gay marriages. And it's uh the that bill see did have a hearing and there had been some discussions between the Republicans and the Democrats that that bill would not have a hearing because it was too controversial. And when that bill did get a hearing, we did start seeing the movement from Representative Carpenter. He had set a date of April

15th, that was his self-imposed deadline to get the bill moving. He wanted action by then. It was Monday the 14th, he saw nothing was happening. So that's when he made his parliamentary effort to get it moving. There had been ongoing negotiations sort of behind the scenes to try to get some version of that bill that could move it - involve business lobbyists and one of the big problems with what Representative Minnis as the chairman was trying to do, he was actually trying to put a bill out that didn't specifically protect gays and lesbians from workplace discrimination. He wanted to avoid that kind of specific language which is perceived by cultural conservatives as a special treatment that's really difficult for conservatives to go along with. So then you have the problem of trying to protect this group of people without specifying it. So then are you protecting everybody and creating a problem with lawsuits. Anytime somebody's dismissed from their job they could claim that they were discriminated against. And that's what the business community was concerned with. And Representative Carpenter was really concerned that with what little effort

Minnis was exerting it was going to pay the bill in the wrong direction so he wanted to get it into a different venue. Did Minnis have a certain obligation to get some form of that bill out that included some sort of protection for gays and lesbians. Because I had understood there was an actual agreement that the Republicans would pass the job discrimination, or the ban on job discrimination, in exchange for no one pushing the gay marriage or legalization of gay marriage in the state. Was that, is there any truth to that? I have a general understanding that there was a really uneasy truce at the beginning of the session. Let's not push more dramatic - sweeping, you know, gay rights or anti gay rights legislation. That would fit right into that kind of an agreement, that there was this long ongoing, very tenuous effort to try to do something that makes a lot of sense to everybody, which is to protect people from discrimination, just because of sexual a preference or for any other legitimate reason. Well the thing that makes, it makes

but what makes no sense to people is that when you ask people about discrimination, everybody is against it as a matter of course, but then when you ask them exactly what that means. Do you think, for example, that you should be able to discriminate against people you don't like for whatever reason? How about against, do you think you ought to be able not to hire somebody cause you don't like the sound of their last name, or the sound of their first name or the, or simply the way they act? That kind of thing. Right. And in every workplace you have a certain class of workers who serve at the pleasure of, basically the boss, and they can be dismissed for for all those reasons, for no reason at all, and if you're going to protect people from - you know - being dismissed with no good cause. And that was one of the problems, is that certain people might be given perpetual employment or else the right to sue and win if... Is there a larger issue here though, rather than, I mean I know that we're talking a lot about the issue of gay rights in one, from one perspective to another. But is what happened here with

Carpenter and Lundquist really part of just a larger issue about the relative control the Republicans have over the House and what this might portend for budget discussions later, and whether it's education or other areas. [speaking over] Possibly. I think so. The obvious fact as Naseem has pointed out is that there are only 31 Republicans and needs, it takes 31 people in the House to pass anything. So the defection of even a single person will simply paralyze the whole operation. And in this case there was a defection of two. Well, there's a defection of 2, but [inaudible] which created a coalition of [inaudible] voted 31 with the 29 Democrats, two Republicans, you've got a majority [inaudible] move something. They had enough with 29 Democrats, all of whom supported this bill, that Carpenter, the Republican was trying to pull out of committee. Carpenter and another Republican - Representative Jim Hill - Jim Hill . They had enough to pass that bill, and that's really it the issue that may or may not portend something for budget negotiations. The point is how much? I think, David, you wrote I think something like, well, you know, I think Lundquist said "well that's just one of those

things that happen." And you wrote the question is, "will that happen more and more?" Right, and beyond budgets, there's all kinds of issues. Budgets are actually so intertwined with all kinds of other decisions to pass a public school funding budget for example, that could be very difficult to pull a maneuver like that and win. But, you can actually - you can stop things and, not so coincidentally, those two representatives are the two Republicans in the House who are refusing to go along right now with the budget agreement, which includes money for schools which Democrats say is inadequate and a lot of other people. [inaudible] I think that there's even more than two that are not going along with it at this point. Those are at least the two, and after that, after you find two that aren't willing to go along then there are [inaudible] What the situation pointed out, that there's always the potential for some kind of a rebellion as we saw in the 1970s and, most recently, in the last session in 1995 when there was an incipient rebellion that was crushed by Minnis, as it turns out. But in the 70s, if you remember, a minority of Democrats

joined with the Republicans to take over the House. They unseated the Speaker. That sort of thing could happen again, and be- but it did not in this particular case and what it really illustrates, to me anyway, is that Speaker Lundquist really handled this in a very deft sort of way. I mean, he could have, he tried to soft-pedal the whole thing, as Stephanie pointed out. You know, it's just one of those things tha happens among friends and all that kind of thing. Since that [inaudible] But if had handled it wrong, he would be out of a job. Do you think it enhanced his position, his strength. I think I really think it did. Because I think at least on the Democrats, for example said, well I don't know if they said that they had greater respect for the Speaker the way this was handled, because he managed to control the situation and handled it well. But is respect the same as strength? Well I think In the legislative process? In these personal relationships in the Legislature, it always has something do with respect and strength are sort of intertwined. As I say the Speaker's position is very precarious and he could be unseated him at

any moment by any two Republicans who would join with the Democrats. I don't think that that's what we're looking at now though, is an unseating. No we're not, we're not. That's the whole point. what we're looking at - If he had messed it up, then we could. even during the height - the heat of passion or the height of passion this week, I don't think that that's what we were particularly looking at. What - But I do think that, you know, that Lundquist is being seen as handling this, if you want to use the word deft he's, he handled it well, but there's still a lot of question about what is his, how strong is his leadership. And the things that they're pointing to are two different things. And one of them being the budget and the other being that there's some other bills out there, that early on in the session, there had been an agreement not to hear these bills. Not to hear bills that, for example, you don't have votes for on the House floor, and you don't have votes for on the Senate floor. Well, just yesterday there was a very emotional hearing about a parental notification bill. A bill that Speaker Lundquist told me early on that during the week that he had no idea that that hearing was going to take place. So there's some question about whether he's really, knows what is going on

among his own House representative numbers as well that he thinks he does. Well, [inaudible] the main thing is that, it's pretty well known that the Republican caucus itself is fairly well split. It is not a unified group, and you know, here's a guy trying to preside over a House that is, on the one hand, has 29 Democrats who are very well united on most things. On the other, he has 31 Republicans who are really not 31 Republicans, there might be 17 or 18 who are, you know, part of one faction, and there are some others that you never know exactly what they're going to say, or how are they going to react particular issues. So his position structurally is very weak. David, you look anxious to say something. I just want to get back to a point that Hasso made about about the fact that the Democrats voiced this respect for the Speaker, and I think what that is worth is that well, they've demonstrated they are willing to go along with the couple maverick Republicans if it serves their interests. They also took great pains to point out that they didn't initiate this, and that given their respect for the way that the Speaker handled the situation that they have no plans to

initiate that kind of a coalition to take over the House. So I think that may serve the Speaker well in the future. What does this do for the governor? Does it strengthen his negotiating hand. I know they were negotiating over the budget this week, and negotiations broke off. Did this event and this show of Fisher in, this obvious demonstration of Fisher in the House strengthen the Governor's hand. I think it strengthens it in the sense that it's not a done deal. That what came out yesterday in terms of the Republican proposal for a budget is not a done deal. That it can't, it will go through the Senate it will have the votes in the Senate and support in the Senate. But it will not pass the House. It doesn't have the votes in the House. And so it strengthens it because it gives more time for negotiation. There's even, you know, rumors right now that the Senate might adjourn for a while, and let the House work out their budget. And, you know - because that is where the arguments are going to be. Right now, Representative Carpenter, in talking with him today about where are

things at with the budget. He said, "well you know, we have got more than two people that are not in favor with what Republicans came out with," and right now they're threatening Representative Carpenter, as the chairperson of the Human Resource Committee, threatening the human resource budget if he doesn't go along with the education budget but they need his vote. They need his vote. They can't punish him like they did Minnis two years ago, and ostracize him for a while. They need him. The problem with this points to in the dynamics of the whole Capital, the Legislature, and the role of the Governor is that there are lots of points of power to stop things and block things. The Senate can not go along with what the House comes up with. The governor can veto bills, but where that the power is to actually move something through both houses and past the Governor's desk seems very tenuous. It's ultimately going to have to come down to negotiating a compromise deal. And people are still too much in the posturing position to, I think, get to that point anytime soon. Stephanie, I think it's possible that the Governor will becoming out a little better from all this. The budget negotiations have

been moving moment a little bit his way. The great big stumbling block remains, what to do with the kicker money. The Senate Republicans of course and then most of the House Republicans are adamant that it's going to go back to the taxpayers. But, if it turns out that the budget simply cannot be balanced, and that nothing can be passed, and it's now about the middle of June, and it's getting to be the fourth of July, and then they're staring into August, all these kinds of things may change, and as David has pointed out, the Governor has the very very powerful weapon of vetoing the whole thing. I mean, they need his agreement. That is, no matter how many, how split the whole legislature is in all kinds of factions, at the end of the day, they're going to need the Governor's signature on whatever they pass. And we saw a couple years ago, that all, everything seemed very rosy and calm, and suddenly, we were faced with 50 some vetoes. Now that could easily happen again this time and then you know, all the posturing now means absolutely nothing, cause nothing came out. [inaudible] Did you want to

Yes I want to move on to our second topic, actually. [laughter] Thank you. On April 11th the proposed merger between Houston natural gas giant Enron and Portland General Electric appeared all but dead after the staff of the Oregon Public Utilities Commission formally recommended rejection of the deal. But, at the beginning of this week the deal was suddenly back on track. Bill, who blame: the PUC, Enron, or PGE? Stephanie, I don't think there's any question but that Portland General blinked. Portland General blinked because it was clear that the deal wasn't going to get through under conditions that Enron was laying out. Enron said, in essence, probably to Portland General, "we're not going to pay anymore. If you want this deal done, somebody's going to have to come up with the money." And Portland General came up with about $35,000,000 from their shareholders to make it work. Why does PGE want it so much that it was willing to take more out of its shareholders' pockets? PGE must have concluded that they were not in a strong competitive position if this deal didn't go through. And that they'd be worse off. Personally I think that PGE

blew it. I think that they could've gone on the table and said to Enron, what Wall Street's been telling Enron, which is, "this is an important deal for you and if you lose it and you can't deal with a bunch of commissioners in Oregon, this has a lot of implications for the sense of - the credibility of your company." And I think Portland General could have stared them down, but they didn't. Not only that, Bill,but PGE has been saying, all along, that the reason Enron wanted PGE is because PGEis such a wonderful company. Great management, wonderful assets, a terrific way of operating, a very an efficient operation, and so on. And it sounded as though, by giving in on this thing by PGE, they simply negated all the claims that they had made only a few weeks before. At least you know in editorial meetings. Yeah, they kind of set that up. You had people like the president of Enron saying in public, although not in Oregon, we found it through checks of information sources going out there and saying this deal isn't critical to Enron. Kind of laying the groundwork for saying, "Well, maybe this thing will fail."

And I think Wall Street basically came back to Enron and said, "It is critical to you." But Enron didn't want to pay anymore. Did Enron make that - say that, you know, "Well, we're going to take our marbles and go find someone else to play with," to threaten PGE, to get them to cough up some more? I think they might have said that for several reasons. One, because they might have been preparing Wall Street for the possibility that the deal wouldn't go through. Two, because they were trying to say to the staff of the Public Utility Commission that we're going to play hardball with you. And three, to say to Portland General that, "if you think this is important, you're going to have to give. We're saying publicly that maybe you're not that important to us." And Portland General bit. And regarding the roll out of the PUC, Bill, I'd like to know what you think. We're talking about an agency of with a staff of twelve people advising just three, you know, appointed commissioners. And they're going up against - really - a couple of very large companies with net assets worth a combined sixteen billion dollars, thousands of people, tons of lobbyists. How gutsy was it for them to say, "No, we're not going to approve this unless

you increase the rate cuts" from, what was it, 61 million to [inaudible] 141 million. I think it was amazingly gutsy of them. And, I made an observation to somebody at a in a conversation recently, that I thought that the staff played the Enron-Portland General deal like a harp. That they, Portland General and but Enron in particular came in here thinking all euphoric, thinking that they were going to slide this deal right through, and it didn't didn't slide right through, you know, and led to accusations even by one of the commissioners, Joan Smith, that you know, "What do you think we are? Just people falling off a turnip truck?" It, Enron found themselves in a very difficult position, and they played it wrong from Day One. Is it really true that they thought it would slide right through? Because in other in others senses I've read that they thought it would take a year for this, the negotiations to happen. And I that I would think that Enron, as a worldwide corporation, just look at how long it's taken to get anywhere with India, and all that they had to do there. But as worldwide corporation knows, how difficult negotiations could it be, particularly when it's regulated, when you're looking at a regulated situation.

So I would think that, they knew that this is going to get difficult and that they knew that they were going to have to play hardball, and that they're good at it. But the other thing about it, about the the whole thing is that the PUC, you know, I don't want to take anything away from them, cause I've said before, they really, and as you have pointed out, they have taken a really gutsy stand on behalf of Oregon consumers. But they also operate in Oregon politics. They don't operate in some kind of vacuum. It almost, the entire reaction, generally from consumers and from anybody else who contacted the PUC on this thing, was to hang tough, you're doing the right thing. We don't necessarily need this merger. We don't care if you disapprove in. In fact here are these guys from Texas, keep them out. Well that was, I mean, well I agree. And one of the things that I think I had a lot of calls all the time from Wall Street analysts calling me and saying, "Look, Enron has made a 41 million dollar offer, or a 61 million dollar offer, how can you possibly reject this? You guys are being too greedy. The public will rise up in protest if the PUC rejects this." And I said, "You guys haven't been in Oregon. Because the overwhelming sense is that

Enron lost the public relations battle." It lost it early on [inaudible] if they ever had it. They lost it early on, and the PUC could have rejected that thing with no negative consequences politically, I think. Not at all. That's exactly right. How do keep on working with the PUC? Or is there ultimate desire that they won't have to deal with the PUC, because energy will be deregulated in the state. Well I think that PUC, like any other organization - it's like Washington or any other government - they're professionals. When the deal is done to a certain degree, they'll sit down at the table and say, "Okay, now let's move on from here." Just like politicians have to. Well, it wasn't as though this was a completely hostile sort of thing. I mean, the negotiators for these utilities and the PUC had agreed on all kinds of things, even before the money angle angle seemed to get the thing stuck. But, I'm sure - I mean, there's always a certain hostility - or, not hostility - but adversarial relationship between utilities, obviously, and the people who are supposed to regulate them. That's why, a few years ago, Oregon established the three member commission because we thought at least there was some

feeling among the voters that a single commissioner wouldn't be sufficiently insulated from all the utilities. Well we've now seen that this really works fairly well. Although I do think, and this is following up on both of your comments, that, in this case, I think there is some egos did get involved here. Some egos got bruised. There is going to be some lingering personal animosity from this. I know that some members of the PUC felt that some people at Enron and Portland General behaved in a improper manner, and an insulting manner in some cases, and certainly those kinds of feelings are going to take a while to get over. Well, we're talking as if this is a done deal. The commission itself still has to approve the deal. Are there issues left, or is it essentially [inaudible] There are some issues left. Enron has come back with 141 million dollars, but they have not spelled out and the agreement doesn't spell, I mean their proposal doesn't spell out, how that would be divided among different customer classes: commercial customers, residential customers, small business customers.

They've proposed some different language regarding penalties. They've proposed including a reference to a memorandum of understanding they reached with environmental and public interest groups. And, I don't know whether anybody's going to have any concerns with that being included in it. It won't be a slam dunk, but my sense is that the commission and the staff are ready to work with them and that this probably will go through. That's why the stock jumped to Portland General immediately when Enron made this offer. What I find interesting about this, and I'm not sure what the answer is - you might know, Bill, - is in other areas where this move to competition, big mega mergers between utilities, is going on, it's a different in the Northwest where historically we've enjoyed very low rates. We've had an abundance of hydropower. We've had powerful delegations in Congress to protect this great deal that we got. Generally what's in it for rate payers here to accommodate this move to competition. Well, rate payers don't have much

say about it actually. But what do they have to gain. Just this 141 million. [inaudible] And is that real compensation for what's likely to happen? And I don't think anyone knows that. I mean when you talk with Phil Nygaard from PUC, he's not sure what that number should have been. [inaudible] they started off with 189 and now they're 141, they're not sure what that compensation should have been or benefit should have been. Enron came in, if you remember, came in saying that rate payers shouldn't have any benefit. That they should just have no harm. And that's one of the things that put them on the wrong foot with Oregonians to begin with. But - Well, one of the funny things is that we talk, as you say, that this is not quite a done deal. And one of the things that hasn't quite been decided is that - whether the shareholders of PGE are going to really accept this slightly lesser price for the Enron shares that they're going to get. Well we really haven't answer the question of why did PGE blink? If they're in this good position. Well, I think Portland General blinked because they perceived that it was more to their disadvantage not to do the deal

that they would no longer, that perhaps they wouldn't be as an attractive merger partner for somebody else, that competition coming to the region might put them at more of a disadvantage, and that they needed this deal with Enron. And, obviously, Enron may have to convince them that whatever their fears were, that they were justified. So what does that about local, more small, more rural cooperatives? Does it say that if you're small you're not going to be able to survive? Well, those subjects are really important, and they're of concern, and the legislature is trying to lay some kind of ground work for solving, or for answering these kinds of questions. A bill has been proposed that would lay the groundwork for some kind of competition in the electric business in Oregon, by - in three years, I guess by 2001. But the details are not worked out all. And it's going to take - I mean - years to work out what happens to people's utility districts, and other kinds of things. But realistically, given the fact that the move

is toward national - or at least competition and Oregon and the Northwest has the lowest rates in the country, is there any possibility except that rates will go up here? Oh no. Actually there's been a number of studies that would - depending on who I Iisten to, that would suggest that our rates not only might hold where they are, but go down. Okay, we're out of time, that sounds like a good place to stop. Bill Mackenzie, Hasso Hering, Naseem Rakha, and David Steves, thanks for joining us this week on Seven Days, and thank you for watching. Good night. [music] [music] [music] [music]

[music]