ORDER NO. 99-258
ENTERED APR 13 1999
This is an electronic copy. Appendices and footnotes may not appear.
BEFORE THE PUBLIC UTILITY COMMISSION
OF OREGON
UI 176/UP 157
| In the Matter of the Application of Portland General Electric Company for Approval of the Transfer of Property to Enron Engineering and Construction Company, an Affiliated Interest. | ) ) ORDER |
DISPOSITION: APPLICATION APPROVED WITH CONDITIONS
On February 18, 1999, the Commission received an application from Portland General Electric Company (PGE or the Company), filed pursuant to ORS 757.480 and 757.495, requesting approval of the sale of the property (consisting of certain benefits and rights under the Westinghouse settlement agreement) to Enron Engineering and Construction Company (EECC) and approval of the stipulation regarding the amended agreement of the PGE vs. Westinghouse Electric Corporation litigation. PGE and EECC are affiliated interests under ORS 757.015. This order will address the property sale. The Commission will address the request for approval of the stipulation in an order in docket UE 102.
Based on a review of the application and the Commission’s records, the Commission finds that the application satisfies applicable statutes and administrative rules. At its Public Meeting on April 6, 1999, the Commission adopted the Staff’s recommendation to approve the sale with conditions. Staff’s recommendation is attached as Appendix A and is incorporated by reference.
OPINION
Jurisdiction
ORS 757.005 defines a public utility as anyone providing heat, light, water, or power service to the public in Oregon. The Company is a public utility subject to the Commission’s jurisdiction.
Affiliation
An affiliated interest relationship exists under ORS 757.015.
Applicable Law
ORS 757.495 requires public utilities to seek approval of contracts with affiliated interests within 90 days after execution of the contract. The intent of the statute is to protect ratepayers from abuses which may arise from less than arm’s length transactions.
ORS 757.480 provides that a public utility doing business in Oregon shall first obtain Commission approval for any transaction to sell, lease, assign or otherwise dispose of property of such public utility necessary or useful in the performance of its duties to the public or any part thereof of a value in excess of $10,000.
PGE is a public utility subject to the Commission’s jurisdiction. The proposed transaction involves the transfer of property to EECC. There is no indication that the proposed sale will impair the Company’s ability to provide public utility service in Oregon.
CONCLUSIONS
1. PGE is a public utility subject to the jurisdiction of the Public Utility Commission of Oregon.
2. The Company’s proposed transaction meets the requirements of ORS 757.480.
3. An affiliated interest relationship exists between PGE and EECC.
4. The application should be granted subject to conditions.
ORDER
IT IS ORDERED that the application of Portland General Electric Company for
approval of the transfer of property to Enron Engineering and Construction Company, an affiliated interest, is granted, subject to the conditions stated in Appendix A.Made, entered, and effective .
| BY THE COMMISSION: ______________________________ Vikie Bailey-Goggins Commission Secretary |
A party may request rehearing or reconsideration of this order pursuant to ORS 756.561. A party may appeal this order pursuant to ORS 756.580.
APPENDIX A
ITEM NO.
PUBLIC UTILITY COMMISSION OF OREGON
STAFF REPORT
PUBLIC MEETING DATE: APRIL 6, 1999
REGULAR AGENDA CONSENT AGENDA X EFFECTIVE DATE
DATE: March 11, 1999
TO: Bill Warren through Marc Hellman and Mike Myers
FROM: Marion Anderson
SUBJECT: UI 176/UP 157/UE 102 - Portland General Electric Company (PGE) Application for Approval of the Transfer of Property to Enron Engineering and Construction Company (EECC), an Affiliated Interest, and Approval of the Stipulation Regarding Settlement of the Westinghouse Litigation
SUMMARY RECOMMENDATION:
I recommend approval with conditions.
DISCUSSION:
This filing was made on February 18, 1999 and requests Commission authorization of two transactions. First, PGE and staff request approval of the UE 102 stipulation regarding the amended agreement of the Portland General Electric Company, et. al. versus Westinghouse Electric Corporation litigation. Second, PGE and staff request approval of the sale of property (consisting of certain benefits and rights under the Westinghouse settlement agreement) to EECC.
PGE and EECC are affiliated entities under the definition of ORS 757.015(3). Enron Corporation wholly owns PGE and Houston Pipe Line Company. Houston Pipe Line Company wholly owns EECC.
PERTINENT ISSUES:
I have investigated the following issues to determine if the agreement is fair and reasonable, and not contrary to the public interest.
1. Description of Transferred Property
2. Transfer Pricing Methods and Cost Allocations
These areas are confidential and subject to a Protective Order issued by the United States District Court for the Western District of Pennsylvania in Portland General Electric Company, et. al. v. Westinghouse Electric Corporation, Civil Action Nos. 93-0225 and
93-0562. The application encloses an explanatory brief with exhibits containing this information. That material is a protected attachment to this recommendation, reviewable by Commission staff, PGE and EECC only.
March 11, 1999
Page 2
PERTINENT ISSUES: (continued)
3. Determination of Public Interest Compliance
The staff review of the submitted material leads to concurrence with the following PGE statement. "In summary, approval of PGE’s request to transfer the property to EECC and for approval of the assignment agreement will increase the expected present value of the potential benefits from PGE’s settlement with Westinghouse for PGE shareholders and customers and allows PGE to guarantee benefits for its retail customers that would otherwise be at substantial risk of not being realized." Detailed Recommendation 4 specifies the benefit, upon Commission approval of this transfer.
4. Records Availability, Audit Procedures and Reporting Requirements
I believe that Detailed Recommendation Condition 1 affords the Commission adequate access to records and provides for the auditing of transactions between PGE and EECC.
CONCLUSIONS:
Based on an investigation and review of this application, my conclusions are as follows:
Portland General Electric Company is a regulated electric company subject to the jurisdiction of the Public Utility Commission of Oregon.
An affiliated interest relationship exists between Portland General Electric Company and Enron Engineering and Construction Company.
The application appears to be fair and reasonable and not contrary to the public interest.
DETAILED RECOMMENDATION:
Based on the preceding discussion and conclusions, I recommend that the UE 102 stipulation and the application presenting the property transfer between Portland General Electric Company and Enron Engineering and Construction Company be approved with the following conditions:
Portland General Electric Company shall provide the Commission access to all books of account, as well as all documents, data and records of Portland General Electric Company and Enron Engineering and Construction Company that pertain to transactions between the two.
The Commission reserves the right to review for reasonableness all financial aspects of this arrangement in any rate proceeding or earnings review under an alternative form of regulation.
Portland General Electric Company shall notify the Commission in advance of any substantive changes to the agreement, including any material changes in any cost. Any changes to the agreement terms that alter the intent and extent of activities under the agreement from those approved herein shall be submitted for approval in an application for a supplemental order (or other appropriate format) in this docket.
March 11, 1999
Page 3
DETAILED RECOMMENDATION: (continued)
Portland General Electric shall place $3,997,067 in a deferred account, representing ratepayers’ share of the Westinghouse amended agreement. This account shall earn interest at Portland General Electric’s Oregon authorized rate of return on ratebase commencing on the date of this approval. The account’s balance shall be returned to customers in a subsequent rate proceeding.
Confidential Attachment
cc: Lee Sparling
Ed Busch
Judy Johnson
Kathy Miller