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Mid-Sized Is Just Right

In the utility industry today, many of us feel a bit like goldilocks, trying to decide what is just the right-sized business to meet our customers' current and future energy needs. At a time when utilities are implementing real-time technology to run systems closer to their embedded capacity, what is “too big?” As we witness the enhancements of regional and national standardization in our training and development programs for craft personnel, what constitutes “too small?” And, in an era where a competitive economic model is on hold for want of the necessary supply, what feels “just right?”

Today, at Portland General Electric (PGE; Portland, Oregon, U.S.) we are enjoying the advantages of being a mid-sized utility. We serve 790,000 customers in a relatively compact service territory in northwest Oregon. We're an independent utility, making our own decisions about the future. But it wasn't always that way.

Until last April, PGE was a subsidiary of Enron. For the first half of our nine-year ride with Enron, we felt pretty big. Then, in 2001, we watched along with the rest of the world as Enron began to collapse. Thanks to the foresight of state regulators, PGE was able to remain financially independent from Enron. We maintained investment-grade solvency, and our customers and employees weathered years of ownership uncertainty.

Fast-forward to April 3, 2006, when we issued new PGE common stock on the New York Stock Exchange. We're back, better than ever, and we're proud to be a mid-sized utility in a post-Enron world, where big is still pretty popular.

Being big implies an economic Eden: loadings are spread across billion-dollar budgets; power is purchased across multiple states; and generation fleets are diversified. However, multiple-state regulatory issues, diverse customer groups with widely varying demands and an employee “team” of 15,000 can make life a little cloudy in paradise. So there's still plenty of opportunity for value in mid-sized utilities. To capture this, we need to excel at executing the basics.

When it comes to implementing new technology, being mid-sized means being smart, early adaptors. If we wait too long, the benefits of the technology could go to other regions, placing our customers at a competitive disadvantage. If we move too early, we could find that we're not big enough to absorb large failures — the losses show up too easily in both decreased shareholder value and higher customer prices.

One important technological move mid-sized utilities should be making is the move to real-time information to support initiatives including dynamic real-time transmission line rating, advanced metering and demand-side management programs. These will enhance our ability to develop specialized programs for customer segments including our low-income customers, property managers and renewable customers.

As a mid-sized utility, we must actively engage with our customers. Our customers know what they want and are willing to share their desires and concerns. For example, PGE customers have told us they want us to make decisions with them and their grandchildren in mind by investing in renewable power. As a result, PGE initiated a renewable power program in 1999, and today, PGE is second in the nation overall for sales of renewable power and first in residential sales.

As a mid-sized utility, we believe in the value of trade organizations. On national transmission issues, PGE relies on the Western Electricity Coordinating Council to help communicate our ideas and positions. On national technical and legislative views, PGE relies on both the Electric Power Research Institute and Edison Electric Institute to help represent our point of view.

When appropriate, we take the lead. We have sponsored local conferences on global warming, biofuels and renewable energy, for example. And we use the information gained as input to develop our company's and our community's public policies.

Last but certainly not least, being a mid-sized utility provides us the opportunity to know most of our coworkers. With 2700 employees, PGE is a company of people who are personable and engaged, from our executive team to our customer service representatives to our line crews. A lot of people are attracted to the idea that an individual can make a difference at PGE and for our customers, which has allowed us to attract outstanding new employees. They are so talented, and they bring such excitement and energy to PGE that this just might be the greatest benefit of being mid-sized in today's environment.

In the end, every company has to decide how to best serve its customers. For PGE, after being part of the largest energy company in the world, emerging today as a mid-sized, Oregon-based publicly traded company feels just right.

Steve Hawke, senior vice president of customer service and delivery at Portland General Electric, has more than 33 years of experience in various transmission, distribution, customer service and sales positions with the company.

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