Jim Piro is an Enron survivor. As CFO of Portland General Electric, he helped steer the 116-year-old utility — purchased by Enron in 1997 for $3 billion — through the massive scandal at its parent company. To do that, Piro, 53, had to reassure banks, creditors, ratings agencies, and customers that the utility wasn’t tainted by the energy traders’ sins. More important, he had to focus employees, who had lost much of their retirement savings in Enron stock, on the task at hand — keeping their customers’ lights on.
The effort paid off. On the April day when Jeffrey Skilling first took the stand to defend himself in the Enron criminal trial, PGE listed on the New York Stock Exchange, establishing itself once again as an independent entity. It is the only surviving business of Enron.
What were your thoughts when news of the scandal broke?
Early on, there was so much [information] swirling about, you couldn’t tell fact from fiction. As I learned more about it, I was shocked. I’m generally a trusting person and this doesn’t change my view about people; it’s just that some people are crooks. When Enron had bad periods, they had the chance to come clean and they didn’t; they kept going down the path and, ultimately, it led to their demise.
Was it hard to stay focused amid all the negative publicity?
By far the biggest impact was that we all had Enron stock in our 401(k)s and people saw significant financial losses. That obviously created a lot of talk around the water cooler, especially since some people made big bets on Enron and lost. So from that perspective, it had a really bad effect, and some people carried that pain longer than others. But we knew our customers were depending on us, so we rolled up our sleeves and went to work.
What is PGE doing to try to compensate employees for those losses?
We are supporting legislation that would allow them to put more money aside in their 401(k)s, so that they can catch up a bit. There have been a number of lawsuits and a few other settlements to try to restore some of what was lost, though it can never really be replaced. We also have a very good, well-funded defined-compensation plan.
How did PGE avoid being liquidated, or dragged into bankruptcy along with Enron?
First, everyone rallied around the issue and said, “OK, we’ve had some losses, but we need to do our job — get the lights on, put up the wires, meet our customers’ needs.” Second, we had very strong relationships with the ratings agencies and commercial banks, and they stood by us. Typically, ratings agencies practice the two-notch rule, meaning you can’t be more than two notches away from your parent. At the time of Enron’s bankruptcy, it became junk status, but we were able to retain our investment-grade rating thanks to some structural [strengths], including a ring-fencing provision — meaning we could never have our equity balance go below 48 percent of total capitalization. And that gave the ratings agencies comfort that Enron couldn’t raid the bank.