Attorney General Hardy Myers today announced the filing of three proofs of claim in the Enron Corp. bankruptcy proceeding. The Department of Justice, working with State Treasurer Randall Edwards and the Public Utility Commission, filed the proofs of claim with the U.S. Bankruptcy Court for the Southern District of New York. The filings preserve the state's claims for damages against the now-defunct corporation.
The documents describe in detail Oregon's claims in three separate areas: the loss of value in the Oregon Public Employees Retirement Fund ($81.5 million), an ownership interest in the assets of Portland General Electric on behalf of Oregon ratepayers and damages owed to the state resulting from the manipulation of the wholesale power market during the 2000 - 2001 West coast energy crisis.
The Retirement Fund claim asserts the state paid unlawfully inflated prices for various Enron-related securities in the management of the Oregon Public Employees Retirement Fund (OPERF). Total managed account holdings in OPERF sustained losses of over $47 million that are directly attributable to the collapse of Enron Corp. OPERF has also entered a claim for passive losses totaling nearly $34.5 million. In addition to filing a proof of claim in the bankruptcy proceeding, the Department of Justice is coordinating with the Oregon Investment Council to investigate any wrongdoing present in the business transactions related to the Retirement Fund's Enron-related losses.
"Enron's actions have wronged Oregonians," Treasurer Edwards said. "We must hold Enron accountable for its corporate misconduct and the financial losses the state and public employees have taken. I'm pleased we're taking this action today in an effort to recover those damages."
The Department also filed a proof of a secured claim on behalf of the Oregon Public Utility Commission (PUC) preserving a lien on the assets of Portland General Electric Company (PGE) on behalf of state ratepayers. The filing asserts that customers of PGE would be entitled to any gain realized on the sale of PGE's assets. The lien becomes effective if the bankruptcy court elects to sell PGE based on its assets rather than as a stock and securities sale.
Based on the Oregon laws regulating utilities, ratepayers share ownership in a utility's assets as a result of rate payments being credited to the costs of the asset. At this point, PUC officials have not identified specifically the extent of the claim. However, the filing estimates that customers have returned over half of PGE's original investment in plant assets ($3.6 billion) and paid upwards of $1.9 billion in depreciation expenses.
"We need to inform the court that decisions regarding the sale of PGE must take into consideration the impact on Oregon ratepayers," Roy Hemmingway, PUC chairman, said. "This action makes it clear that PGE customers have an unmistakable interest in the disposition of the Enron bankruptcy."
The final document, submitted by the Department of Justice, preserves claims based on evidence that Enron improperly and illegally manipulated energy markets in Oregon and the Western United States, overcharged for energy, and violated state and federal laws and regulations, and that as a result of such misconduct Enron is liable to the state for undetermined damages.
The filing asserts that, "Enron's revenues from Oregon were obtained from, among other things, the improper use of market power, market manipulation, and misrepresentations concerning its power trading services." The filing asks the court for unspecified damages resulting from overcharges for electricity.
"It is impossible to quantify the impact that the collapse of Enron has had on Oregonians," Attorney General Myers said after filing the three actions. "However, I am confident that we are doing all we can to recover damages sustained by the state and its citizens. We also must protect ourselves from any future court action involving the sale of our state's largest utility company."
The claim filings in no way guarantee that the state will recover any of the losses due to the Enron bankruptcy. They do, however, include Oregon among the many creditors asserting claims in the proceedings.
Enron Corp. filed for bankruptcy in December 2001. As with any bankruptcy proceeding, the debtor's assets are disbursed first to the administrative costs of the bankruptcy, then a limited amount to unpaid wages and employee benefits, and then to unpaid taxes. Any remaining funds are then distributed to general unsecured creditors.
Kevin Neely, Justice, (503) 378-6002
Kate Richardson, State Treasury, (503) 378-4329
Bob Valdez, Oregon PUC, (503) 378-8962