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Industry News

Northwest Natural Gas to Buy Portland General Electric

LCG, Oct. 8, 2001--Northwest Natural Gas Co. said this morning it has agreed to buy Portland General Electric Co. from Enron Corp. for $1.8 billion, in a deal that combines Oregon's largest natural gas utility with the state's largest electric utility.

Under terms of the agreement, Northwest Natural will pay $1.55 billion in cash, $200 million in preferred stock and $50 million in common stock and assume Enron's roughly $1.1 billion in Portland General debt and preferred stock and $75 million balance on its customer benefits obligation.

"The acquisition makes sense for our customers, our shareholders, our employees and for Oregon," said Richard G. Reiten, chairman and chief executive of Northwest Natural. "It will help ensure that assets critical to Oregon's economy and environment will be locally-owned. We expect to be able to hold down electric and gas prices over the long run and to deliver more convenient and more comprehensive customer service."

With overlapping service territories and shared customers, the combined companies will be able to capture significant operating efficiencies in their energy delivery systems, especially in administrative areas, that neither company could accomplish on its own, Reiten said.

Reiten himself might be called a synergy, having been a member of the board as well as president and chief operating officer of PGE from 1989 to 1996.

In addition, the Northwest Natural and PGE have a successful track record of working together to find savings through operational efficiencies. The companies have a joint meter reading program in place already and conduct common trenching for new construction projects.

"This sale is consistent with our overall objective of selling assets that are not strategic to our wholesale and retail energy business," said Kenneth L. Lay, Enron chairman and chief executive. "Portland General is a solid performer and has been a great addition to the Enron portfolio since 1997.

"However, over the past few years our need for ownership of a regional utility has been diminished by the rapid extension of our third party supply network. As a regional utility, Northwest Natural is a perfect partner for Portland General going forward."

In a statement, Enron said its $50 million common equity stake in Northwest Natural will entitle it to voting rights limited to 4.9 percent of Northwest Natural's total shares of outstanding common stock. Enron also said it will receive "appropriate" representation on Northwest Natural's board and would hold its Northwest Natural securities for a minimum of two and a half years.

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