This post from a couple of weeks ago noted this WSJ profile on Texas Pacific Group, the Fort Worth-based investment fund founded by former bankruptcy lawyer David Bonderman and business whiz Jim Coulter in 1993.
Well, it appears that TPG may be getting more than it bargained for in its proposed $2.35 billion cash and debt acquisition of Portland General Electric, which is Enron’s Pacific Northwest utility, a deal that is still awaiting regulatory approval.
In the meantime, this Williamette Week Online article reports that TGP’s proposed acquisition of Portland General is running into rough waters. Earlier this week, TPG released hundreds of pages of internal documents in response to the Williamette Week article as it tries to allay widespread skepticism among Oregonians about its intentions for the utility.
The documents lay out different scenarios that TPG is considering for for making the utility more profitable, including cuts in a customer-service department. TPG contends that the analysis was preliminary and is not going to be used as the basis of actual changes in utility operations. Despite the assurances, several Oregon officials are opposing TGP’s acquisition of Portland General as the Oregon Public Utility Commission has begun final deliberations over regulatory approval.
TGP has proposed to put day-to-day control of the utility in the hands of a new Oregon company that would have a board comprised mainly of Oregonians. Nevertheless, TPG — the 80% owner of the Oregon company — would retain the right to overrule the Oregon company’s board regarding key decisions. After Enron, Oregonians apparently do not trust anyone from Texas.
The main complaint of Oregonians that oppose the deal is that TPG’s turnaround strategies could degrade utility service in Portland and surrounding communities. Oregon and Washington consumers already have been hammered by sharply higher electric rates as a result of rising natural-gas prices and continued fallout from the California energy crisis of 2000-2001.
Meanwhile, the economic bargaining continues. TPG has offered rate reductions totaling $43 million spread out over five years beginning in 2007 if the deal is approved. However, Commission staff and consumer advocates contend that the rate reductions are inadequate and are pushing for further concessions. To date, TPG is holding firm.