Wednesday, July 27, 2005

Willamette Week Blames Erik Sten For PGE Failure

The Nose thinks that it's Erik Sten's fault that Enron opted not to sell PGE to he city of Portland. I'm sure that there's a lot of truth to that, but I think that there is more to it.

Maybe the folks at Enron looked at the whole picture, unlike those at city hall, and saw the city's past failures, the lack of public support, the fact that the Governor and Legislature weren't exactly jumping up and down at the idea, and that PGE would serve a lot of other towns and communities that would have to support the purchase. Maybe, after adding all of this up, they realized that the amount of time that it would take for Tommy & the boys to figure out how to ram this down our throats would end up costing them (Enron) way to much money in the long run.

I arrive at this conclusion because of Enron asked for a $50 million deposit. They obviously had doubts about the City Council's ability to do the deal, or at least do the deal in a timely manner. This is no different than a home buyer putting down earnest money to get the sellers to take the house off the market.

What Erik Sten and Tom Potter don't understand, is that when you tie up money, with no return coming back, even for a short time, you're losing money. Think about how much money stood to be lost if Enron had agreed to a $3 billion dollar deal, and it took the city one year to complete the deal (a highly optimistic time frame) how much would the company lose, as opposed to selling the stock now and then reinvest the returns. Now think about if it took two years, or more likely, three, there would be a lot of answering to do to the bankruptcy judge, and to the stockholders. And you can bet that they listen real close to their shareholders these days.

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