First Person
Surviving Enron
Peggy Fowler
12/01/2006

Peggy Fowler is CEO and president of Portland General Electric.

Standing on the dais last April at the New York Stock Exchange, waiting to ring the opening bell, it struck me that the company I work for was far from a typical start-up launching an IPO.    

PEGGY FOWLER (front) and the Portland General Electric staff celebrate the utility’s survival of the Enron debacle and its public offering.

On April 3, Portland General Electric (PGE) emerged on Wall Street as one of the only surviving assets of the Enron estate. In contrast to its former parent company, which lay in ruins, PGE was a healthy, financially solid utility with an experienced team of managers and employees.

Ringing the bell with me that day were seven of my coworkers, including a lineman, a meter reader and a customer service agent, who were elected by their peers to represent the 2,600 PGE employees who had escaped from the largest bankruptcy in history.

Today, PGE is thriving. We are one of Oregon’s largest publicly traded companies. Our financial ratings are investment grade and our balance sheet is strong.

I’m often asked how PGE survived this tumultuous time and what lessons we learned along the way. The story of PGE’s emergence from the Enron bankruptcy is not about the actions of our former owners. It’s not about backroom deals. In part, our story is one of government regulation done right.

Most of all, our success is a credit to my coworkers, who remained loyal to PGE and focused on serving our customers, even as they watched their parent company dissolve and much of their 401(k) savings disintegrate. They believed in PGE and our mission, and knew we operated our business in an honest, ethical manner. Their focus and determination to keep PGE strong is what maintained the company’s value and allowed us to overcome the odds.

The brash style of many Enron executives seemed a stark contrast to the highly talented, yet modest, PGE team.

A Different Culture
Enron bought PGE in July 1997 for $3.1 billion, at a time when Wall Street was abuzz about deregulation and consolidation in the energy industry. At first, we were excited about being part of a global energy company known for its focus, innovation and pioneer spirit. We soon found it was not a cultural fit. The brash style of many Enron executives seemed a stark contrast to the highly talented, yet modest, PGE team.

Thankfully, Enron mostly left us alone to run our business. We focused on serving our customers, while bringing in solid financial returns. But it quickly became evident that a regulated, asset-based utility with steady returns did not fit Enron’s profit strategy. Two years after Enron purchased PGE, it put the company back up for sale. In fact, we were close to being sold to another utility when Enron declared bankruptcy in 2001.

Ironically, it was government regulation that protected PGE from the bankruptcy. When Enron bought PGE, Oregon’s Public Utility Commission had the foresight to write rules that kept the company whole and protected its assets from seizure by the courts.

While our assets were held harmless, our employees and our company’s reputation were not. For me, the hardest part was watching the retirement plans and dreams of so many of my coworkers disintegrate. Meanwhile, despite our long history and solid performance in Oregon, public distrust of Enron began to spill over onto PGE.

We decided that rather than fight our parent company’s battles, we would maintain our focus on operational excellence and outstanding customer service. We continued to invest in our electricity generation and distribution systems. During one of the toughest winter storm seasons on record, PGE employees worked around the clock to keep power flowing to homes and businesses. Through the darkest days of Enron ownership, they continued to break records for volunteerism and charitable giving.

The focus on our mission paid off. Our customers gave us high marks not only for reliability and service, but also for our commitment to the community. Political, community and business leaders celebrated in downtown Portland alongside PGE employees the day our first round of stock was issued.

Lessons Learned
The PGE officer team and I have reflected often on our experience with Enron. While we learned many lessons, four rise to the top:

• Identify your core strengths and continue to build on them. We never lost sight of our mission as a local service provider that plays a significant role in the well-being of our community.

• Remain true to your values. We continue to follow the guiding behaviors PGE adopted well before we merged with Enron. They include being accountable, making the right things happen, working as a team, keeping a positive attitude, earning trust and dignifying people.

• It’s all about the people. Whether dealing with coworkers or customers, trust and respect are critical. We trust our employees to do a great job every day; in return, we provide them with challenging opportunities, a culture of respect and help with financial planning, employee wellness and work-life balance. For customers, we work to earn their trust by listening to their needs and seeking solutions that work for their homes and businesses.

• Don’t trade long-term success for short-term gains. Be mindful of the kinds of incentives you provide. Enron created financial incentives for their employees that were based on achieving short-term goals. At PGE, we provide team-based incentives, focused on long-term objectives.

The Road Ahead
Looking ahead to solid growth in our service territory, PGE is focused on developing the resources needed to meet the future energy needs of our customers. In the spring of 2007, we will add 400 megawatts to our generation portfolio when our new, highly efficient gas-powered plant on the Columbia River comes on line. We recently secured regulatory approval to develop one of the largest wind-power farms in the West, in addition to existing agreements to purchase output from other such farms. These investments, added to our portfolio of hydroelectric and thermal generation plants and long-term power contracts, will help secure Oregon’s energy future for decades to come.

While we look to the future, we at PGE will not soon forget the lessons learned from the Enron years. We know that by focusing on our core mission, staying true to our values and treating our employees well, we will deliver value not only for our customers, but for our new shareholders as well.