Enron to Sell Portland General to Northwest Natural (Update9)
Bloomberg, 10/08/01

Northwest Natural Gas to buy Portland General for $1.8 billion
Associated Press Newswires, 10/08/01
UK Pwr Mkt: Spot Dn On High Interconnector Flow
Dow Jones News Service, 10/08/01
USA: NW Natural sees "double digit" earnings growth.
Reuters English News Service, 10/08/01
NW Natural Gas's Portland General Buy Has No Breakup Fee
Dow Jones News Service, 10/08/01

Northwest Natural's CEO on Portland General Purchase: Comment
Bloomberg, 10/08/01




Enron to Sell Portland General to Northwest Natural (Update9)
2001-10-08 16:21 (New York)

Enron to Sell Portland General to Northwest Natural (Update9)

     (Adds closing share prices in fifth paragraph.)

     Houston, Oct. 8 (Bloomberg) -- Enron Corp. agreed to sell
Portland General Electric to Northwest Natural Gas Co. for
$2.9 billion in cash, stock and assumed debt, ending a more than
two-year effort to shed its Oregon utility.

    Enron, the largest energy trader, no longer needs Portland
General to sell electricity in the West and wants to spend on more
promising businesses, Chief Executive Ken Lay said in a statement.
Enron bought the utility for $3.21 billion in 1997 to gain
knowledge on selling power to neighboring California.

     ``Portland General is a 5 percent bottom-line growth rate
company,'' said Anatol Feygin, a J.P. Morgan analyst who rates
Enron ``buy.'' ``On wholesale and retail energy operations, Enron
has had 35 percent growth in earnings before interest and taxes,
and bottom-line growth of just under 20 percent.''

     Shares of Enron rose $1.72, or 5.4 percent, to $33.45.
Northwest fell 42 cents to $22.99.

     Enron will get less than it hoped from the sale, though
spokeswoman Karen Denne said the Houston-based company expects to
break even.

     A November 1999 agreement to sell the utility to Sierra
Pacific Resources of Nevada for $3.1 billion fell through in April
of this year because California banned sales of power plants
serving the state.

     Regulators had required Sierra Pacific to sell a stake in a
plant that sells power to California as a condition of its
purchase of Portland General.


                         Oregon Regulators

     Both Northwest and Portland General are based in Portland,
Oregon, which should make it easier for Enron to win clearance of
the sale. Oregon regulators can be expected to approve the
purchase in as little as nine months, Northwest Chief Executive
Richard Reiten said.

     ``No other combination of companies could achieve as much
political, regulatory, and general support of the citizens,''
Reiten said. ``We operate in essentially the same geographic
area.''

     Northwest, a gas utility, will pay $1.55 billion in cash,
$200 million in preferred stock and $50 million in common stock,
Enron said. Northwest will assume $1.1 billion in debt and give
$75 million in customer discounts previously agreed upon by Enron.

    Northwest has 525,000 natural-gas customers in Oregon and
Washington. Portland General has 730,000 customers in Oregon.

    Over the past 10 years, Lay has transformed Enron from a gas
pipeline operator into a company that gets most of its profit
growth from commodities trading.

     Enron no longer wants to own expensive assets such as power
plants that are under the control of regulators, who limit
profitability and often make the assets difficult to sell,
analysts say.

     ``This is a sign Ken Lay is tightening up the ship,'' said
Mark Baskir, manager of the $15 million Strong Energy Fund, which
holds 2,400 Enron shares. ``I feel better about the stock now.''

                           Retail Sales

     Enron's road to becoming a top energy trader in California
has been bumpy. It delayed attempts to sell electricity to
California residential customers in 1999, saying the state's
deregulation law made it impossible to profit from small power
sales. It transferred its retail electricity sales business in all
states to NewPower Holdings Inc., a separately traded company
formed by Enron in October 2000.

     When power prices in western state's soared late last year
and early this year, some utilities stopped paying for wholesale
power. Enron has estimated it's owed as much as $500 million for
energy sales in California.

     California's two largest utilities, PG&E Corp.'s Pacific Gas
& Electric and Edison International's Southern California Edison,
are insolvent after racking up billions in debt buying power at
prices far exceeding what state officials would allow them to pass
to customers.

                         California Battle

     California officials have accused Enron and other power
traders of manipulating the state's market. Enron also has
struggled with Oregon regulators.

     It was forced to cut power prices to Portland General's
customers by $141 million over eight years, more than double what
the company had anticipated when it bought the utility. Oregon
also rejected Enron's plans to sell its utility's 14 generating
plants.

    Enron will keep its stake in Northwest for at least 30 months,
the company said in a statement. It will have voting rights
limited to 4.9 percent of Northwest's common stock and will have
representation on Northwest's board.

    Northwest said the sale is expected to close this quarter and
add to earnings next year. Northwest expects to maintain its
annual dividend of $1.25 a share through this year.

    Job cuts are planned, Northwest said, without saying how many
positions would be eliminated. Northwest said it won't renegotiate
union contracts.

    Merrill Lynch and Credit Suisse First Boston will arrange
loans to finance the cash portion of the purchase, Northwest said.
Credit Suisse advised Enron on the sale.

     Enron last week agreed to sell oil and gas fields in India to
the U.K.'s BG Group Plc for $388 million. In May, the company
withdrew from a gas-pipeline project in Qatar.


Northwest Natural Gas to buy Portland General for $1.8 billion
By WILLIAM McCALL
AP Business Writer

10/08/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

PORTLAND, Ore. (AP) - Northwest Natural Gas said Monday it will buy Portland General Electric for $1.8 billion in a deal that will combine the largest natural gas and electric utilities in Oregon. 
The purchase comes about four years after Enron Corp., one of the largest energy companies in the nation, paid $3.2 billion for Portland General Electric in a bid to expand into the Pacific Northwest and California.
But the slow pace of deregulation in Oregon and the California energy crisis prompted Houston-based Enron to start shopping for another buyer shortly after the takeover. 
Northwest Natural Gas said it expects to close the purchase late next year, pending approval by regulators and its shareholders. 
Enron will receive $1.55 billion cash and $350 million in securities. 
The deal will create a Portland-based holding company with $5 billion in assets and more than 1.25 million customers. The new company would own more than 2,000 megawatts of generation, 26,000 miles of electric transmission and distribution lines and 12,000 miles of gas mains. 
Northwest Natural Gas Chairman Richard G. Reiten said the deal would "help ensure that assets critical to Oregon's economy and environment will be locally-owned." 
There will be an undetermined number of job cuts, he said, although all union contracts will be honored. 
The deal brought immediate criticism from one of the state's leading consumer watchdog groups. 
Bob Jenks, executive director of the Citizens Utility Board, said he was concerned about the heavy debt Northwest Natural Gas will carry under the deal and the gas company's recent efforts to lobby the Legislature to bypass regulators. 
"They've tried to politicize rate proceedings," Jenks said. "If that's going to happen, and PGE rate cases are fought out in the Legislature and the governor's office, then I don't think that's going to be in the interest of PGE customers." 
Analysts said the deal makes sense because the two utilities can cut a lot of costs in their overlapping service areas. 
But Dan Fidell of A.G. Edwards & Sons said analysts and investors also are wary of the heavy debt load on NW Natural. 
"Their balance sheet is going to suffer, at least in the near term," Fidell said. "They're probably looking at downgrades in their credit rating." 
Enron earlier attempt to sell Portland General Eelctric fell through last March. It has seen stock prices fall in recent months as it moved into investments outside its core business, including an Internet company that took a beating in the stock market. But in morning trading Monday, Enron shares rose 77 cents to $32.50, which analysts said was partly due to heavier investment in strategic energy companies following news about the U.S. attack on terrorist outposts in Afghanistan. 
--- 
On the Net: 
Enron: http://enron.com 
Northwest Natural Gas: http://northwestnatural.com 
Portland General Electric: http://www.portlandgeneral.com

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

UK Pwr Mkt: Spot Dn On High Interconnector Flow

10/08/2001
Dow Jones News Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

LONDON -(Dow Jones)- U.K. spot electricity prices Monday were down on a high volume of power from the intercontinental interconnector despite cooler weather, 
while trade in forward contracts was too thin to site a trend, traders said.
Helping prices fall was the ready availability of cheap power through the in terconnector. All available capacity on the interconnector was used on Monday, c ompared with only half on Friday. 
Also influencing prices was that, like last week, Enron started the day shor t, and then tried to push prices down before buying in large volumes, traders sa id. 
"Basically it looks like Enron have gone into the winter short, thinking tha t pre-NETA jitters would make everyone else go long, and so far it looks like th ey're winning that bet," said a trader. 
No one at Enron was immediately available for comment. 
Day-ahead base load traded at GBP17-GBP17.35/MWh, down from Friday's trading 
for Monday base load at GBP17.30-GBP17.70/MWh. 
Day-ahead peaks traded at GBP18.50-GBP19.50/MWh. 
Day-ahead extended peaks traded at GBP19.30-GBP19.50/MWh. 
Weekend base load traded at GBP16.30/MWh, down from Friday's prices for last 
weekend at GBP17/MWh. 
Week 42 traded at GBP17.50-GBP17.55/MWh, down from Friday's prices at GBP17. 70-GBP17.75/MWh. 
Enron's visible buying in the spot market is all the more striking given tha t its own 2000MW facility at Teesside is runing at just over half its maximum ou tput. 
This likely reflects the high price of natural gas relative to electricity, a trader reckoned. 
Plant has been in flux recently with a 400MW unit at Seabank II struggling t o maintain consistent output, while British Energy's 581MW unit at Heysham 1 cam e back online on Friday, and was generating 500MW by Monday afternoon. Both 535M W units at Dungeness B remain offline, while traders expect at least one to come 
back online soon. 
Forward market prices were down beginning with November, but not trading in volumes large enough to identify a trend. 
On the U.K. Power Exchange, within-day prices peaked during settlement perio d 39 at GBP36.95/MWh. Lowest prices were for settlement periods 7-11 at GBP1/MWh . Volume was 12,412MWh in 24,824 contracts. On the Automated Power Exchange, the 
average weighted day-ahead price was GBP18.63/MWh, up from Friday's price of GB P16.01/MWh. 
The Meteorological Office expects Tuesday's temperatures to be 2 degrees Cel sius warmer in the southeast and Yorkshire and Lincolnshire. Countrywide, temper atures are forecast to in line with historical norms. 
The Balancing Mechanism Reporting System said demand will peak Tuesday at 38 ,094 MW, with off-peak demand hitting a low of 25,908 MW. Demand peaked Monday a t 39,094 MW. 
The following forward contracts traded Monday. Figures are in GBP/MWh: Contract Monday Friday
Nov 2001 base 19.33-41 19.50
Jan base 21.50-21.66 ---
Apr base 17.88-18.00 ---
Winter 2002 base 20.10 ---
Summer 2002 base 17.44 17.50
Summer 2003 base 17.58-17.59 17.60
Q1 2001 19.85-19.92 ---
Winter 2003 20.38 ---
-By Sarah Spikes, Dow Jones Newswires; +44-(0)20-7842-9345;
sarah.spikes@dowj ones.com
-0- 08/10/01 17-52G

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

USA: NW Natural sees "double digit" earnings growth.

10/08/2001
Reuters English News Service
(C) Reuters Limited 2001.

NEW YORK, Oct 8 (Reuters) - Northwest Natural Gas Co. said on Monday that the acquisition of Portland General Electric from Enron Corp would enhance its earnings by "double digits" from the first year. 
Earlier on Monday Northwest said it was paying $1.8 billion for the firm and the deal was expected to completed by last quarter of next year.
Speaking to financial analysts on a conference call after announcing the deal, executives said the deal had all necessary financing and a new holding company which will be created to accommodate the assets will have debts of up to 80 percent of its capital structure. 
Northwest said it expects the new holding company to receive an investment-grade credit rating after three years.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

NW Natural Gas's Portland General Buy Has No Breakup Fee
By Christina Cheddar

10/08/2001
Dow Jones News Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

Of DOW JONES NEWSWIRES 
NEW YORK -(Dow Jones)- Northwest Natural Gas Co.'s (NWN) 
planned acquisition of Enron Corp.'s (ENE) Portland General Electric
Co. unit doesn't contain a provision for a breakup fee, Northwest
officials said Monday during a conference call. 

Earlier, Northwest Natural, of Portland, Ore., and Enron, of Houston, announced the companies agreed to the terms of the sale. The transaction was anticipated since Friday when the companies confirmed a Wall Street Journal that the two were talking.
Under the terms of the planned sale, Northwest will acquire the Enron unit for $1.55 billion in cash and $250 million in seller-financing securities. Northwest also agreed to cancel a $75 million payment obligation from Enron to Portland General that was related to Enron's purchase of Portland General in 1996. 
Northwest also is assuming $1.1 billion in existing Portland General debt and preferred stock. 
During the conference call, Northwest officials said they expect the acquisition to close in the fourth quarter of 2002, following approval of Northwest's shareholders and regulatory agencies, including the Federal Energy Regulatory Commission. 
The company has already secured the necessary financing, officials said. 
Northwest shares recently traded at $23.10, down 31 cents, or 1.3. On Friday, the stock closed down 9.9% to $23.41 in anticipation of the acquisition. 
Enron shares, meanwhile, have gained $1.41, or 4.4%, to $33.14. 
Enron had previously agreed to sell Portland General to Sierra Pacific Resources (SRP) for $3.1 billion, but the deal was called off six months ago, in part because of complications stemming from the California power crisis. 
Enron's decision to sell Portland, an electric utility with $5 billion in assets and $3.9 billion in enterprise value, is an example of Enron's strategy to sell its physical assets and focus on its energy trading activities. 

Northwest Natural Gas Chairman and Chief Executive Richard Reiten said the acquisition of Portland General will have "solid accretion" under old accounting rules, and "double-digit accretion" under the new accounting rules pertaining to the treatment of goodwill. Under the former accounting rules, goodwill was amortized to expense. 
Reiten didn't provide any specific estimates for the earnings of the combined companies. 
In an interview, Reiten said the ability of the transaction to increase the combined company's earnings potential will be helped by a number of factors including the companies' overlapping service areas and combined customer bases. 
Reiten expects to consolidate customer billing, call centers and meter reading. 
Prior attempts by Northwest and Portland General to initiate joint meter reading for about 350,000 customers already have yielded about $1 million in cost savings, Reiten said. 
Also, the acquisition gives Northwest the ability for non-speculative trading around the combined company's natural gas and electric assets, he added. 
"The opportunities are exceptional for a utility in the Northwest. That's why we are so confident about the ability of this transaction to add to the bottom line," said Reiten, who served between 1989 and 1996 as the company's president and chief operating officer and as a member of its board. 
The combination will result in staff reductions, but Reiten said he couldn't quantify how many. He said some of the reductions would occur through early retirement incentives and though attrition. 
-Christina Cheddar, Dow Jones Newswires; 201-938-5166; christina.cheddar@dowjones.com

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	


Northwest Natural's CEO on Portland General Purchase: Comment
2001-10-08 13:36 (New York)


     Portland, Oregon, Oct. 8 (Bloomberg) -- Richard Reiten, chief
executive of Northwest Natural Gas Co., comments on the company's
agreement to buy Portland General Electric Co. from Enron Corp.
for $2.8 billion in cash, stock and assumed debt.

     The transaction would consolidate the natural gas and
electric utilities in Portland, Oregon. Enron bought Portland
General for $3.1 billion in 1997. A 1999 agreement to sell the
utility to Sierra Pacific Resources of Nevada for $3.1 billion
failed in April because of regulatory delays.

     How Northwest, which has a market capitalization of about
$580 million, will finance the $2.8 billion purchase:

     ``We will issue $150 million of common equity at close. Our
Financial plan calls for another $150 million, three years out, in
2005.'' The company also expects to borrow $1.4 billion, and it
will assume $1.1 billion in Portland General's debt.

     On regulatory approval:

     ``We expect a nine-month to 12-month regulatory approval
period. Our first full year as a combined company would be 2003.
We expect to begin paying down debt that first full year, and we
expect double-digit accretion to earnings the first full year.

     ``No other combination of companies could achieve the
efficiencies these companies can, because we operate in
essentially the same geographic area. No other combination of
companies could achieve as much political, regulatory and general
support of the citizens.''

     On potential cost savings:

     ``We expect significant efficiencies. Common meter reading,
common call centers (customer service). All support services and
administrative functions that are duplicated, we can bring them
together.

     ``We have a wonderful match of the gas utility's interstate
pipeline and gas storage that can be used to enhance the gas-fired
generation facilities of Portland General.

     ``We have a storage field 15 miles from a 550-megawatt
generating plant. We'll be able to trade around those assets, in
non-speculative trading, something that Portland General has
become very good at under its ownership by Enron. Those assets
will enhance trading to bring costs down for the gas-fired
generation and give us more options.''

     On the investment profile of the holding company that will be
formed to own the two utilities:

     ``We see ourselves as a strong, combination utility with a
good, secure dividend, a fair price paid for our assets, and good
growth in earnings. We're confident we'll get regulatory support
for our structure.''