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Texas Pacific Group has $2.35bn bid for Portland General Electric rejected

The Oregon Public Utility Commission has rejected an application by Oregon Electric Utility Corporation, a holding company created by Texas Pacific Group and local investors, to buy Portland General Electric from Enron.

PGE serves about 755,000 customers in the Willamette Valley, including Portland and most of Salem.

The Commission said in a statement that it had unanimously denied the application by TPG to buy PGE and announced, 'Based on the evidence presented to us, we found that PGE customers would not be better off in terms of rates and service than they would with PGE as a separate, stand-alone company.'

The relatively short holding period that characterises the business of private equity firms was one reason why the Commission rejected the bid but the major concern was the debt needed to finance the deal. 'The high debt percentage would likely result in lower credit ratings for PGE than it would in the absence of this transaction,' the Commission found.

The Commission also said that it had not considered a potential purchase of PGE by the City of Portland or another public entity, leaving a range of options open for PGE's future, including a new approach by TPG.

TPG filed its application for PGE in March 2004. Politicians and consumer groups have opposed the potential takeover by TPG.

This is not the first time a potential sale of PGE has fallen through: in 1999 Sierra Pacific attempted to acquire the company and in 2001 the sale to Northwest Natural Gas fell through.

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