SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition period from __________ to
__________
Registrant; State of Incorporation; IRS
Employer
Commission File Number Address; and Telephone Number
Identification
No.
1-5532 PORTLAND GENERAL CORPORATION
93-0909442
(an Oregon Corporation)
121 SW Salmon Street
Portland, Oregon 97204
(503) 464-8820
1-5532-99 PORTLAND GENERAL ELECTRIC COMPANY
93-0256820
(an Oregon Corporation)
121 SW Salmon Street
Portland, Oregon 97204
(503) 464-8000
Indicate by check mark whether the registrants (1) have filed all
reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act
of 1934 during the preceding 12 months (or for such shorter
period that the
registrants were required to file such reports), and (2) have
been subject
to such filing requirements for the past 90 days. Yes X . No
.
The number of shares outstanding of the registrants' common
stocks as of
July 31,
1994 are:
Portland General Corporation 50,285,571
Portland General Electric Company 42,758,877
(owned by Portland General Corporation)
1
Index
Page
Number
Part I. Portland General Corporation and Subsidiaries
Financial Information
Management's Discussion and Analysis of
Financial Condition and Results of Operations
3
Statements of Income
14
Statements of Retained Earnings
14
Balance Sheets
15
Statements of Capitalization
16
Statements of Cash Flow
17
Notes to Financial Statements
18
Portland General Electric Company and
Subsidiaries Financial Information
25
Part II. Other Information
Item 1 - Legal Proceedings
30
Item 4 - Results of Votes of Security Holders
30
Item 6 - Exhibits and Reports on Form 8-K
31
Signature Page
32
2
Portland General Corporation and
Subsidiaries
Management's Discussion and Analysis of
Financial
Condition and Results of Operations
Financial and Operating Outlook
Utility
General Rate Filing
On November 8, 1993, Portland General Electric Company (PGE or
the Company)
filed a request with the Oregon Public Utility Commission (PUC)
to increase
electric prices by an average of 5% beginning January 1, 1995.
Commercial
and industrial customers' rates would increase, on average, 3.2%.
The
proposed increase in average annual revenues is $43 million,
after the
effects of the Regional Power Act (RPA) exchange benefits. Under
provisions
of the Regional Power Act PGE exchanges its higher-cost power for
lower-
cost federal hydroelectric power with Bonneville Power
Administration (BPA)
and passes the benefits to residential and small farm customers.
PGE
requested a return on equity of 11.5%, down from the current
authorized
return of 12.5%. If approved, this would be the Company's first
general
price increase since 1991.
The general rate filing includes PGE's request for continued
recovery of
Trojan Nuclear Plant (Trojan) costs including decommissioning,
operating
expenses, taxes, return of capital invested in the plant and
return on the
undepreciated investment. PGE's current rates include recovery
of these
Trojan costs. In May 1994, the PUC issued an order to delay
consideration
of the Trojan-related issues and cost of capital in order to
allow the PUC
Staff to retain an expert to consult and advise the PUC regarding
Trojan
issues.
In July 1994, PGE and the PUC Staff agreed to delay a final order
addressing all rate case matters to no later than March 31, 1995,
contingent upon the PUC approving PGE's first quarter 1995
deferred
accounting application. In the application the Company seeks to
defer, for
later collection, certain costs incurred from January 1, 1995,
through
March 31, 1995, or until the PUC issues an order in the general
rate case,
if earlier (see the Power Cost Recovery discussion below). If
approved,
the amount of revenues PGE will be allowed to collect will be the
lesser of the recorded deferral, PGE's requested
increase or
the same level of revenue as if rates had become effective
January 1, 1995.
The delay, requested by the PUC Staff, provides additional review
time for
the PUC Staff's expert and allows the PUC more time to review the
entire
rate proceeding and issue a final order. The Company expects the
PUC
Staff's recommendations regarding Trojan issues and cost of
capital in
September 1994.
Recovery of power cost deferrals is addressed in separate rate
proceedings,
not in the general rate case (see the discussion of Power Cost
Recovery
below).
3
Portland General Corporation and
Subsidiaries
Management's Discussion and Analysis of
Financial
Condition and Results of Operations
Trojan Related Issues
Shutdown - In early 1993, PGE ceased commercial operation of
Trojan as
recommended in PGE's Least Cost Plan (LCP). On June 3, 1993 the
PUC
acknowledged PGE's LCP.
Decommissioning Estimate - The Company estimates the total cost
to
decommission Trojan, including costs incurred to date, to be $409
million,
reflected in nominal dollars (actual dollars expected to be spent
in each
year). The decommissioning cost estimate includes the cost of
decommissioning planning, removal and burial of irradiated
equipment and
facilities as required by the Nuclear Regulatory Commission
(NRC); building
demolition and nonradiological site remediation; and spent
nuclear fuel
management costs including licensing, surveillance and transition
costs.
Transition costs of $75 million are the costs associated with
operating and
maintaining the spent fuel pool and securing the plant until
dismantlement
can begin. While most decommissioning costs will utilize funds
from PGE's
Nuclear Decommissioning Trust (NDT), transition costs will
continue to be
paid from current operating funds.
The decommissioning plan represents a site-specific
decommissioning cost
estimate performed for Trojan by an experienced decommissioning
engineering
firm and assumes that the majority of decommissioning activities
will occur
between 1998 and 2002, after construction of a temporary dry
spent fuel
storage facility. Decommissioning of the temporary dry spent
fuel storage
facility and final nonradiological site remediation activities
will occur
in 2018 after PGE completes shipment of spent fuel to a United
States
Department of Energy (USDOE) facility. In 1994, transition costs
have
leveled off and are estimated to continue at $10 to $15 million
per year.
As of June 30, 1994 the Company has expensed approximately $6
million in
transition costs for 1994. In addition, since plant closure the
Company
has spent $2 million on decommissioning planning and related
activities
resulting in a remaining decommissioning liability, including
transition
costs, of $401 million.
PGE plans to submit a formal decommissioning plan to the NRC and
Energy
Facility Siting Council of Oregon (EFSC) in late 1994. This is
later than
the previously expected submittal date of mid-1994 due to the
additional
time required to further evaluate decommissioning options. The
NRC and
EFSC rules require the plan be submitted before January 23, 1995.
Presently, PGE is planning to accelerate the removal of some of
Trojan's
large components which is expected to result in overall
decommissioning
cost savings. Since the Company plans to begin this work in
1994, prior to
receiving NRC and EFSC approval of its formal decommissioning
plan,
specific approval will be required from EFSC. Request for this
approval
was filed with EFSC on July 7, 1994. Additionally, the NRC must
approve
the use of PGE's NDT funds for removal of large components.
4
Portland General Corporation and
Subsidiaries
Management's Discussion and Analysis of
Financial
Condition and Results of Operations
Assumptions used to develop the site-specific cost estimate for
decommissioning represent the best information PGE has currently.
The
Company is continuing to evaluate various options which could
change the
timing and scope of decommissioning activities and expects any
future
changes in estimated decommissioning costs to be incorporated in
future
revenues to be collected from customers.
Investment Recovery - In its general rate filing PGE requested
continued
recovery of Trojan plant costs, including decommissioning. See
the General
Rate Filing discussion above for details regarding the order to
delay the
schedule for Trojan-related issues and the agreement to delay
issuance of a
final order addressing all rate case matters.
The analysis performed for the LCP assumed that continued
recovery of the
Trojan plant investment, including future decommissioning costs,
would be
granted by the PUC. Regarding the authority of the PUC to grant
recovery,
the Oregon Department of Justice (Attorney General) issued an
opinion that
the PUC may allow rate recovery of total plant costs, including
operating
expenses, taxes, decommissioning costs, return of capital
invested in the
plant and return on the undepreciated investment. While the
Attorney
General's opinion does not guarantee recovery of costs associated
with the
shutdown, it does clarify that under current law the PUC has
authority to
allow recovery of such costs in rates.
PGE asked the PUC to resolve certain legal and policy questions
regarding
the statutory framework for future ratemaking proceedings related
to the
recovery of the Trojan investment and decommissioning costs. On
August 9,
1993 the PUC issued a declaratory ruling agreeing with the
Attorney
General's opinion discussed above. The ruling also stated that
the PUC
will favorably consider allowing PGE to recover in rates some or
all of its
return on and return of its undepreciated investment in Trojan,
including
decommissioning costs, if PGE meets certain conditions. PGE
believes that
its general rate filing provides evidence that satisfies the
conditions
established by the PUC. See Legal Proceedings for further
discussion of
legal challenges to the declaratory ruling.
Management believes that the PUC will grant future revenues to
cover all,
or substantially all, of Trojan plant costs with an appropriate
return.
However, future recovery of the Trojan plant investment and
future
decommissioning costs requires PUC approval in a public
regulatory process.
Although the PUC has allowed PGE to continue, on an interim
basis,
collection of these costs in the same manner as prescribed in the
Company's
last general rate proceeding, the PUC has yet to address recovery
of costs
related to a prematurely retired plant when the decision to close
the plant
was based upon a least cost planning process. Due to
uncertainties
inherent in a public process, management cannot predict, with
certainty,
whether all, or substantially all, of the $355 million Trojan
plant
investment and $346 million of decommissioning charges (to
be
collected through future rates) will be
recovered.
Management believes the ultimate outcome of this public
regulatory process
will not have a material adverse effect on the financial
condition,
liquidity or capital resources of Portland General. However, it
may have a
material impact on the results of operations for a future
reporting period.
5
Portland General Corporation and
Subsidiaries
Management's Discussion and Analysis of
Financial
Condition and Results of Operations
SCE Complaint - On August 3, 1994, Southern California Edison
(SCE) filed a complaint claiming PGE's decision to close Trojan
violated the terms of a long-term firm power sales and exhcange
agreement entered into on July 31, 1986. The 25-year contract is
for 75 megawatts of firm energy and capacity plus a 225 megawatt
seasonal exchange.
SCE contends that PGE appointed itself liquidator of a
substantial portion of its assets under the general bankruptcy
default provision of the contract. SCE is seeking termination of
the agreement and damages, including a return of payments made to
PGE from the date of PGE's alleged default (approximately $27
million).
Under the agreement SCE is obligated to pay to PGE a reservation
fee for system capacity, seasonal exchange and other services
equal to $16.9 million annually. SCE continues to make these
payments.
The Company will vigorously defend itself and believes it will
succeed in the defense of these claims. See the Legal
Proceedings discussion below.
Power Cost Recovery
In early 1993, the PUC authorized PGE to defer 80% of the
incremental power
costs incurred from December 4, 1992 through March 31, 1993 to
replace
Trojan generation. In total, $44 million of accrued revenues
were recorded
for later collection. In accordance with Oregon law collection
is subject
to PUC review of PGE's reported earnings, adjusted for the
regulatory
treatment of unusual and/or nonrecurring items, as well as the
determination of an appropriate rate of return on equity for the
deferral
period. In early 1994, the PUC granted approval for full
recovery and PGE
began collection in April 1994. Amounts will be collected over a
three
year period.
In August 1993, the PUC authorized PGE to defer, for later
collection, 50%
of the incremental replacement power costs incurred from July 1,
1993
through March 31, 1994. The PUC granted the lower deferral rate
to reflect
expected nuclear operating cost savings. In total, $49 million
of revenues
were recorded. The amount of revenues PGE will be allowed to
collect will
be established by the PUC following its review of PGE earnings,
as
adjusted, and its determination of a rate of return on
equity for the April
1, 1993 through March 31, 1994 review period. The PUC approved a
45-day
extension to allow PGE to submit its filing to the PUC by August
15, 1994.
PGE has since filed a request to delay this earnings review to
June 30,
1995 to coincide with the timing of the review of the first
quarter 1995
power cost deferral (see discussion below). If approved by the
PUC, this
will result in a concurrent review of PGE's earnings for these
separate
deferral periods.
In July 1994, PGE filed an application to defer, for later
collection, 40%
of the incremental replacement power costs incurred from January
1, 1995
through March 31, 1995, or until a PUC order in the general rate
case, if
earlier (see the General Rate Filing discussion above). PGE
expects PUC
approval of its application by fall 1994. In addition to the
limitation discussed in the General Rate Filing section above,
the amount of revenues
PGE would
be allowed to collect will be established by the PUC following
6
Portland General Corporation and
Subsidiaries
Management's Discussion and Analysis of
Financial
Condition and Results of Operations
its review
of PGE earnings, as adjusted, and its determination of a rate of
return on equity for the April 1, 1994 through March 31, 1995
review
period. PGE
would file an earnings review by June 30, 1995.
Power Supply
Restoration of Salmon Runs - The Snake River chinook salmon has
been listed
as a threatened species and the Snake River sockeye salmon has
been listed
as endangered under the federal Endangered Species Act. The
National
Marine Fisheries Service proposed minor changes to current river
operations
in a draft recovery plan. In April 1994, a U.S. District Court
judge
rejected the draft recovery plan. In May 1994, the federal
government
ordered a temporary spilling of water over the Columbia and Snake
River
dams in an attempt to increase the number of salmon that survive
their
downriver trip to the Pacific Ocean. This emergency spill was
halted in
July 1994, when it was not clear that the spill actually helped
the
migrating fish.
PGE purchases power from many sources including the mid-Columbia
dams run
by the federal government. Reductions in the amount of water
allowed to
flow through the dams' turbines reduce the amount and increase
the cost of
power available to purchase on a non-contract or secondary basis.
The
attempt to improve fish passage by releasing more water from the
reservoirs
in the spring and summer could mean less water available in the
fall and
winter when the demand for electricity in the Pacific Northwest
is the
highest. This could lead to higher costs for hydro power and the
need to
run more expensive gas- and coal-fired plants.
Fuel Supply
In May 1994, PGE signed an agreement with Pacific Gas & Electric
(PG&E) to
take assignment of a portion of PG&E's excess firm natural gas
transportation on the Pacific Gas Transmission (PGT) system. In
July 1994,
PGE signed an agreement with Alberta & Southern (A&S) to take
assignment of
a portion of PG&E's excess Canadian firm transportation on both
the Alberta
Natural Gas (ANG) system and the Nova Corporation of Alberta
(NOVA) system.
These agreements collectively provide for 41,000 MMBtu/day of
delivered
capacity to PGE's existing and proposed natural gas-fired
generating
facilities and replace earlier agreements PGE signed with PGT and
ANG.
Service under these agreements is scheduled to start in winter
1995/6.
Under
the terms of the agreements, PGE is committed to paying annual
demand
charges for the capacity on all three systems of approximately
$3.2 million
to $4.5 million, depending upon resolution of federal rate
treatment
issues. The agreements provide for service with PGT, ANG and
NOVA for 15
years, 10 years and 6 years, respectively. However, PGE has
renewal rights
upon expiration and the right to assign unused capacity to other
parties.
In order to fully utilize these contracts for its facilities, PGE
may incur
a capital expenditure in 1995 of approximately $17 million for
pipeline
construction or may incur additional capacity charges in lieu of
construction.
7
Portland General Corporation and
Subsidiaries
Management's Discussion and Analysis of
Financial
Condition and Results of Operations
Customer Growth and Revenues
During the second quarter of 1994, 3,000
retail customers were added to PGE's
service territory. For the twelve-months
ended June 30, 1994, 13,000 retail
customers were added. PGE's weather-
adjusted retail energy sales through the
second quarter of 1994 were 2.7% higher
than weather-adjusted retail energy sales
for the same period in 1993. The Company
expects 1994 load growth to be
approximately 2.6%.
Seasonality
PGE's retail sales peak in the winter, therefore, second quarter
earnings
are not necessarily indicative of results to be expected for
fiscal year
1994.
Nonutility
Portland General Corporation (Portland General), Portland General
Holdings,
Inc. (Holdings) and certain Portland General affiliated
individuals have
been named in a class action suit by investors in Bonneville
Pacific
Corporation (Bonneville Pacific) and in a suit filed by the
bankruptcy
trustee for Bonneville Pacific. The class action suit alleges
various
violations of securities law, fraud and misrepresentation. The
suit by the
bankruptcy trustee for Bonneville Pacific alleges common law
fraud, breach
of fiduciary duty, tortious interference, negligence, negligent
misrepresentation and other actionable wrongs.
Regarding the class action suit, in May 1994 the U.S. District
Court for
the District of Utah (the Court) issued an order dismissing the
claims
filed by the plaintiffs against Portland General, Holdings and
the Portland
General affiliated individuals for common law fraud and negligent
misrepresentation, primary liability for violations of the
federal
securities laws and secondary liability for aiding and abetting
and
conspiracy to violate the federal securities laws. The order
permanently
dismisses the secondary liability claims. The Court stated that
it will
consider an amendment to the complaint with regard to the other
claims.
The Court also held that it would not consider the claims for
Utah state
securities law violations until certain issues are addressed by
the Utah
state courts.
Holdings has filed a complaint seeking approximately $228 million
in
damages against Deloitte & Touche and certain parties associated
with
Bonneville Pacific alleging that it relied on fraudulent and
negligent
statements and omissions when it acquired a 46% interest in and
made loans
to Bonneville Pacific.
8
Portland General Corporation and
Subsidiaries
Management's Discussion and Analysis of
Financial
Condition and Results of Operations
A detailed report released in June 1992, by a U.S. Bankruptcy
examiner
outlined a number of questionable transactions that resulted in
gross
exaggeration of Bonneville Pacific's assets prior to Holdings'
investment.
This report includes the examiner's opinion that there was
significant
mismanagement and very likely fraud at Bonneville Pacific. These
findings
support management's belief that a favorable outcome on these
matters can
be achieved.
For background information and further details, see Note 3, Legal
Matters,
in Notes to Financial Statements.
Results of Operations
1994 Compared to 1993 for the Three Months Ended June 30
Portland General earned $24 million or $0.48 per share for the
second
quarter of 1994, compared with $13 million or $0.28 per share in
1993.
Increased earnings were primarily the result of $6 million, after
tax, in
previously recorded real estate reserves relating to discontinued
operations which were restored to income in June 1994. Excluding
discontinued operations, 1994 earnings would have been $17
million. Net
operating income was consistent with the earlier period due to
customer
growth, higher wholesale sales and nuclear cost savings helping
to offset
the effects of mild weather and poor regional water conditions in
1994.
Operating revenues rose $10 million and variable power costs
increased $18
million in 1994 resulting in an $8 million decline in margin.
The decline
in margin is primarily the result of higher average variable
power costs in
1994.
Increased operating revenues reflect improved wholesale sales and
continued
growth in the retail market. Wholesale megawatt-hour sales
increased 43%
due to increased availability of power and opportunities for
sales.
Despite mild 1994 weather, retail revenues rose $5 million
partially due to
an increase in the number of customers. A decrease in RPA
exchange
benefits (due to the 1993 BPA rate increase) resulted in a $3
million
increase in retail revenues and a corresponding increase in
variable power
costs, therefore having no effect on margin.
Variable power costs rose significantly in 1994. Poor water
conditions in
the region resulted in higher purchased power costs and increased
generation at PGE thermal plants. Average variable power costs
rose to
17.4 mills per kilowatt-hour (10 mills = 1 cent) in 1994 from
15.2 mills
per kilowatt-hour in 1993, resulting in approximately $9 million
more 1994
expense. Total system send-out (megawatt-hours purchased and
generated,
net) increased by 204,103 megawatt-hours or 5% to meet the needs
of
increased retail and wholesale sales. The decrease in RPA
exchange
benefits caused a $3 million increase in variable power costs and
retail
revenues as discussed above.
Operating expenses (excluding variable power costs and
depreciation)
declined $9 million or 12%. The Company experienced $7 million
in nuclear
operating cost savings due to fewer personnel at Trojan. During
the second
9
Portland General Corporation and
Subsidiaries
Management's Discussion and Analysis of
Financial
Condition and Results of Operations
quarter of 1994, $3 million of nuclear operating costs were
expensed to
operating expenses.
The increase in other income reflects a $2 million gain, after
tax, on the
sale of nonutility property.
The Company has substantially completed the divestiture of its
real estate
portfolio with the disposition of its largest remaining holdings.
As a
result $6 million, after tax, of previously recorded real estate
reserves
were restored to income in the second quarter of 1994.
1994 Compared to 1993 for the Six Months Ended June 30
Portland General earned $63 million or $1.28 per share for the
six months
ended June 30, 1994, compared with $50 million or $1.05 per share
for the
1993 period. Higher operating revenues, nuclear cost savings and
the
divestiture of real estate holdings resulted in increased
earnings in 1994.
Excluding discontinued operations which contributed $6 million,
after tax,
in previously recorded real estate reserves which were restored
to income,
1994 earnings would have been $57 million.
Operating revenues increased $11 million and variable power costs
rose $29
million resulting in an $18 million decline in margin. The
decline in
margin is primarily due to $17 million fewer accrued revenues
associated
with the deferral of replacement power costs and an increase in
variable
power costs. The lower margin is offset by nuclear operating
cost savings
of $24 million.
The increase in operating revenues reflects improved wholesale
revenues
offset by lower retail revenues. Wholesale revenues rose $15
million due
to increased availability of power and opportunities for sales.
During
1994, PGE sold 82% more wholesale energy than in 1993.
Retail revenues decreased $3 million. Despite 2.7% load growth,
retail
megawatt-hour sales declined slightly as a result of mild weather
in 1994
and colder than normal weather in 1993. In 1994, $19 million in
revenues
associated with the 50% deferral of replacement power costs (see
Power Cost
Recovery in the Financial and Operating Outlook section above)
were
accrued, down from $36 million relating to the 80% deferral in
1993. The
PUC granted the lower deferral rate to reflect expected nuclear
operating
cost savings. The lower deferral rate, coupled with lower power
costs
during the deferral period ending March 31, 1994, reduced the
amount of the
power cost deferral. The decrease in RPA exchange benefits
caused a $16
million increase in retail revenues and a corresponding increase
in
variable power costs, therefore having no effect on margin.
Variable power costs rose 21%. Increased wholesale sales
resulted in a
453,387 megawatt-hour or 5% increase in total system send-out.
This caused variable power costs to increase
approximately $8 million in 1994.
Poor
regional water conditions resulted in increased generation at PGE
thermal
plants. Average variable power costs rose slightly to 18.9 mills
per
kilowatt-hour in 1994 from 18.4 mills per kilowatt-hour in 1993.
Decreased
RPA exchange benefits resulted in a $16 million increase in
variable power
costs and retail revenues as discussed above.
10
Portland General Corporation and
Subsidiaries
Management's Discussion and Analysis of
Financial
Condition and Results of Operations
The Company continued to experience
significant nuclear cost savings. Due to
fewer personnel at Trojan, nuclear
operating costs declined $24 million in
1994 resulting in a 16% decrease in
operating expenses (excluding variable
power costs and depreciation). During the
six months ended June 30, 1994, $7 million
of nuclear operating costs were expensed to
operating expenses.
The Company recorded a $2 million gain,
after tax, on the sale of nonutility
property which is included in other
income.
The divestiture of real estate holdings resulted in $6 million,
after tax,
of previously recorded real estate reserves which were restored
to income
in the second quarter of 1994.
1994 Compared to 1993 for the Twelve Months Ended June 30
Portland General earned $102 million or $2.11 per share for the
twelve
months ended June 30, 1994, compared with $102 million or $2.15
per share
for the 1993 period. Earnings for 1994 would have been $96
million
excluding the $6 million, after tax, of previously recorded real
estate
reserves restored to income. Excluding the effects of Trojan
steam
generator repair costs of $11 million, after tax, which were
restored to
1992 calendar earnings (and included in the 1993 twelve month
period), 1993
earnings would have been $91 million.
Operating revenues rose $40 million and
variable power costs increased $88 million
in 1994 resulting in a $48 million decline
in margin. The decline in margin is
primarily the result of higher average
variable power costs.
The increase in operating revenues is
primarily due to a 5% rise in retail
revenues.
Increased variable power costs reflect a
21% increase in the amount of power
purchased by PGE in 1994. During the 1993
twelve month period, Trojan supplied 10% of PGE's total system
send-out at
an average price of 3.5 mills per kilowatt-hour. Increased
purchases to
replace Trojan generation helped to drive the average variable
power cost
up from 16.5 mills per kilowatt-hour in 1993 to 19.6 mills per
kilowatt-
hour in 1994.
Operating expenses (excluding variable power costs and
depreciation)
declined $64 million in the 1994 period. This was primarily due
to $62
million in nuclear operating cost savings.
11
Portland General Corporation and
Subsidiaries
Management's Discussion and Analysis of
Financial
Condition and Results of Operations
Depreciation, decommissioning and
amortization rose 23% as a result of the
capitalization of $18 million ($11 million,
after tax) of steam generator repair costs
in the 1993 period as discussed above.
The divestiture of real estate holdings
resulted in $6 million, after tax, of
previously recorded real estate reserves
being restored to income in the second
quarter of 1994.
Cash Flow
Portland General Corporation
Portland General requires cash to pay dividends to its common
stockholders,
to provide funds to its subsidiaries, to meet debt service
obligations and
for day to day operations. Sources of cash are dividends from
PGE, its
principal subsidiary, asset sales and leasing rentals, short- and
intermediate-term borrowings and the sale of its common stock.
Portland General received $15.4 million in dividends from PGE
during the
second quarter of 1994 and $2.2 million in proceeds from the
issuance of
shares of common stock under its Dividend Reinvestment and
Optional Cash
Payment Plan.
Portland General Electric Company
Cash Provided by Operations
Operations are the primary source of cash used for day to day
operating
needs of PGE and funding of construction activities. PGE also
obtains cash
from external borrowings, as needed.
A significant portion of cash from operations comes from
depreciation and
amortization of utility plant, charges which are recovered in
customer
revenues but require no current cash outlay. Changes in accounts
receivable and accounts payable can also be significant
contributors or
users of cash. The decrease in cash flow from operations, when
comparing
second quarter 1994 to second quarter 1993, is primarily due to
fewer
deferred income taxes and higher receivables.
Future cash requirements may be affected by the ultimate outcome
of the IRS
audit of PGE's 1985 WNP-3 abandonment loss deduction. The IRS
has issued a
statutory notice of tax deficiency, which Portland General is
contesting,
related to its examination of Portland General's 1985 tax return.
See Note
4, Income Taxes, for further information.
PGE has been named a "potentially responsible party" (PRP) of PCB
contaminants at various environmental cleanup sites. The total
cost of
cleanup is estimated at $27 million, of which the Company's share
is
12
Portland General Corporation and
Subsidiaries
Management's Discussion and Analysis of
Financial
Condition and Results of Operations
approximately $3 million. PGE has made an assessment of the
other involved
PRP's and is satisfied that they can meet their share of the
obligation.
Should the eventual outcome of these environmental matters result
in
additional cash requirements, PGE expects internally generated
cash flows
or external borrowings to be sufficient to fund such
obligations.
Investing Activities
PGE invests in facilities for generation, transmission and
distribution of
electric energy and for energy efficiency improvements.
Estimated
capital expenditures for 1994 are expected to be $250 million.
This
represents a decrease from the previous estimate of $265 million
due to
construction activity delays relating to various new generating
resources. Completion of the Coyote Springs Generation Project
(a 220
megawatt cogeneration facility), previously estimated for fall
1995, is now
estimated for the 1995/6 winter due to delays in the site
certification
process. The Company does not expect to incur significant
additional costs
as a result of this delay. Approximately $124 million has been
expended
for capital projects, including energy efficiency, through June
30, 1994.
PGE continues to fund an external trust for the future costs of
Trojan
decommissioning. Funding began in March 1991. Currently PGE
funds $11
million each year. As of June 30, 1994, the fund had a current
market
value of $53 million which was invested in investment-grade
tax-exempt
bonds. Upon approval from the NRC these funds will become
available to PGE
for use in the removal of some of Trojan's large components in
addition to
other future decommissioning activities.
Financing Activities
Second quarter 1994 financing activities include a $20 million
sinking fund
redemption of 200,000 shares of PGE's $100 par value 8.10%
preferred stock
series. The redemption included 100,000 optional shares in
addition to the
required 100,000 share redemption.
In May 1994, PGE borrowed $20 million from the assets of its
Corporate
Owned Life Insurance (COLI) policy. The COLI loan is a
long-term variable
rate (6.5% in 1994) arrangement with varying maturity dates.
Proceeds were
used for PGE's construction program.
Portland General replaced expiring committed credit facilities in
July
1994. As a result, Portland General now has a $35 million
committed
facility expiring in July 1995. PGE has a committed facility of
$120
million expiring in July 1997 and an $80 million commitment
expiring July
1995. The lines of credit have annual facility fees ranging from
0.125 to
0.20 percent and do not require compensating cash balances. The
facilities
are used primarily as backup for commercial paper. Portland
General
has a commercial paper facility of $35 million and PGE has a
$200
million commercial paper facility.
The issuance of additional preferred stock and First Mortgage
Bonds
requires PGE to meet earnings coverage and security provisions
set forth in
the Articles of Incorporation and the Indenture securing its
First Mortgage
Bonds. As of June 30, 1994, PGE could issue $460 million of
preferred
stock and $440 million of additional First Mortgage Bonds.
13
Graph Description, Page 8
Quarterly Increase in Retail Customers
Increase in Increase in
Quarter/Year Residential Commercial and Industrial
Customers Customers
1Q 1992 2,374 344
2Q 1992 1,839 427
3Q 1992 2,272 376
4Q 1992 2,927 380
1Q 1993 2,025 275
2Q 1993 1,697 429
3Q 1993 2,802 446
4Q 1993 2,775 563
1Q 1994 2,986 390
2Q 1994 2,476 550
Graph Description, Page 12
Gross Margin
12 Months Ending June 30
Mills/kWh
1992 1993 1994
Net Variable Power 7 9 14
Retail Revenues 49 50 52
Graph Description, Page 11
Operating Expenses
12 Months Ending June 30
Millions of Dollars
1992 1993 1994
Operating Costs 349 324 261
Variable Power 244 252 341
Depreciation 117 100 123
Graph Description, Page 11
PGE Electricity Sales
12 Months Ending June 30
Billions of kWhs
1992 1993 1994
Residential 6.2 6.7 6.6
Commercial 5.7 5.9 6.1
Industrial 3.6 3.7 3.8
Wholesale 3.3 2.0 2.2
Portland General Corporation and
Subsidiaries
Consolidated Statements of Income for the
Three Months, Six Months and Twelve Months Ended June 30,
1994 and 1993
(Unaudited)
Three Months Ended
Six Months Ended Twelve Months Ended
June 30
June 30 June 30
1994 1993
1994 1993 1994 1993
(Thousands of Dollars)
Operating Revenues $202,110 $192,146
$480,124 $468,978 $957,975 $918,020
Operating Expenses
Purchased power and fuel 63,847 45,401
164,817 136,209 340,321 252,277
Production and distribution 15,607 18,999
31,013 39,590 64,999 87,827
Maintenance and repairs 14,069 17,448
23,228 32,566 45,982 73,874
Administrative and other 25,294 26,625
47,726 51,196 96,851 106,994
Depreciation, decommissioning and
amortization 30,399 30,161
61,248 60,905 122,561 99,917
Taxes other than income taxes 12,793 13,756
27,087 29,881 52,936 55,870
162,009 152,390
355,119 350,347 723,650 676,759
Operating Income Before
Income Taxes 40,101 39,756
125,005 118,631 234,325 241,261
Income Taxes 9,089 8,582
36,877 32,270 72,127 68,962
Net Operating Income 31,012 31,174
88,128 86,361 162,198 172,299
Other Income (Deductions)
Interest expense (17,868) (18,085)
(34,919) (35,825) (69,896) (71,900)
Allowance for funds used
during construction 800 215
1,264 388 1,661 2,349
Preferred dividend requirement - PG (2,646) (3,001)
(5,634) (6,069) (11,611) (12,205)
Other - net of income taxes 6,195 3,025
7,819 5,029 13,540 11,034
Income from Continuing Operations 17,493 13,328
56,658 49,884 95,892 101,577
Discontinued Operations
Gain on disposal of real estate
operations - net of income taxes
of $4,226 6,472 -
6,472 - 6,472 -
Net Income $ 23,965 $ 13,328
$ 63,130 $ 49,884 $102,364 $101,577
Common Stock
Average shares outstanding 50,145,565 47,354,072
49,411,959 47,298,907 48,449,925 47,163,990
Earnings per average share
Continuing Operations $0.35 $0.28
$1.15 $1.05 $1.98 $2.15
Gain on disposal of real
estate operations 0.13 0.00
0.13 0.00 0.13 0.00
Earnings per average share $0.48 $0.28
$1.28 $1.05 $2.11 $2.15
Dividends declared per share $0.30 $0.30
$0.60 $0.60 $1.20 $1.20
Consolidated
Statements of Retained Earnings for the
Three Months, Six Months,
and Twelve Months ended June 30, 1994 and 1993
(Unaudited)
Three Months Ended
Six Months Ended Twelve Months Ended
June 30
June 30 June 30
1994 1993
1994 1993 1994 1993
(Thousands of Dollars)
Balance at Beginning of Period $104,939 $ 72,481 $
81,159 $ 50,481 $ 71,240 $ 30,009
Net Income 23,965 13,328
63,130 49,884 102,364 101,577
ESOP Tax Benefit & Amortization of
Preferred Stock Premium (426) (363)
(796) (742) (1,578) (3,740)
128,478 85,446
143,493 99,623 172,026 127,846
Dividends Declared on
Common Stock 15,051 14,206
30,066 28,383 58,599 56,606
Balance at End of Period $113,427 $ 71,240
$113,427 $ 71,240 $113,427 $ 71,240
[FN]
The accompanying notes are an integral part of these consolidated
statements.
14
Portland General Corporation and
Subsidiaries
Consolidated Balance Sheets as of June 30,
1994 and December 31, 1993
(Unaudited)
June 30 December 31
1994 1993
(Thousands of Dollars)
Assets
Electric Utility Plant - Original Cost
Utility plant (includes Construction Work
in Progress of $109,031 and $46,679)
$2,475,693 $2,370,460
Accumulated depreciation
(930,473) (894,284)
1,545,220 1,476,176
Capital leases - less amortization of $24,711 and $23,626
12,608 13,693
1,557,828 1,489,869
Other Property and Investments
Leveraged leases
155,302 155,618
Net assets of discontinued real estate operations
10,785 31,378
Trojan decommissioning trust, at market value
53,018 48,861
Corporate Owned Life Insurance less loan of $19,619 in 1994
55,740 77,612
Other investments
28,020 29,552
302,865 338,021
Current Assets
Cash and cash equivalents
31,379 3,202
Accounts and notes receivable
80,292 91,641
Unbilled and accrued revenues
148,476 133,476
Inventories, at average cost
47,892 46,534
Prepayments and other
12,405 22,128
320,444 296,981
Deferred Charges
Unamortized regulatory assets
Trojan abandonment - Plant
354,543 366,712
Trojan abandonment - Decommissioning
345,726 355,718
Trojan - other
66,443 66,387
Income taxes recoverable
219,128 228,233
Debt reacquisition costs
33,593 34,941
Energy efficiency programs
47,751 39,480
Other
32,019 33,857
WNP-3 settlement exchange agreement
175,655 178,003
Miscellaneous
23,533 21,126
1,298,391 1,324,457
$3,479,528 $3,449,328
Capitalization and Liabilities
Capitalization
Common stock
$ 188,143 $ 178,630
Other paid-in capital
556,090 519,058
Unearned compensation
(16,195) (19,151)
Retained earnings
113,427 81,159
841,465 759,696
Cumulative preferred stock of subsidiary
Subject to mandatory redemption
50,000 70,000
Not subject to mandatory redemption
69,704 69,704
Long-term debt
828,122 842,994
1,789,291 1,742,394
Current Liabilities
Long-term debt and preferred stock due within one year
53,936 51,614
Short-term borrowings
160,548 159,414
Accounts payable and other accruals
80,104 109,479
Accrued interest
18,329 18,581
Dividends payable
18,013 17,657
Accrued taxes
36,359 25,601
367,289 382,346
Other
Deferred income taxes
661,020 660,248
Deferred investment tax credits
58,429 60,706
Regulatory reserves
119,658 120,410
Trojan decommissioning reserve and misc. closure costs
401,429 407,610
Miscellaneous
82,412 75,614
1,322,948 1,324,588
$3,479,528 $3,449,328
[FN]
The accompanying notes are an integral part of these consolidated
balance sheets.
15
Portland General Corporation and
Subsidiaries
Consolidated Statements of Capitalization
as of June 30, 1994 and December 31, 1993
(Unaudited)
June 30 December 31
1994 1993
(Thousands of Dollars)
Common Stock Equity
Common stock, $3.75 par value per
share 100,000,000 shares authorized,
50,171,330 and 47,634,653 shares outstanding
$ 188,143 $ 178,630
Other paid-in capital - net
556,090 519,058
Unearned compensation
(16,195) (19,151)
Retained earnings
113,427 81,159
841,465 47.0% 759,696 43.6%
Cumulative Preferred Stock
Subject to mandatory redemption
No par value, 30,000,000 shares authorized
7.75% Series, 300,000 shares outstanding
30,000 30,000
$100 par value, 2,500,000 shares authorized
8.10% Series, 300,000 and 500,000 shares outstanding
30,000 50,000
Current sinking fund
(10,000) (10,000)
50,000 2.8 70,000 4.0
Not subject to mandatory redemption
7.95% Series, 298,045 shares outstanding
29,804 29,804
7.88% Series, 199,575 shares outstanding
19,958 19,958
8.20% Series, 199,420 shares outstanding
19,942 19,942
69,704 3.9 69,704 4.0
Long-Term Debt
First mortgage bonds
Maturing 1994 through 1999
4-3/4% Series due April 1, 1994
- 8,119
4.70% Series due March 1, 1995
3,045 3,220
5-7/8% Series due June 1, 1996
5,216 5,366
6.60% Series due October 1, 1997
15,363 15,363
Medium-term notes - 5.65%-9.27%
242,000 242,000
Maturing 2002 through 2005 - 6.47%-9.07%
165,845 166,283
Maturing 2021 through 2023 - 7 3/4%-9.46%
195,000 195,000
Pollution control bonds
Port of Morrow, Oregon, variable rate
(Average 2.3% for 1993), due 2013
23,600 23,600
City of Forsyth, Montana, variable rate
(Average 2.4% for 1993), due 2013
through 2016
118,800 118,800
Amount held by trustee
(8,559) (8,537)
Port of St. Helens, Oregon, due 2010 and 2014
(Average variable 2.2%-2.4% for 1993)
51,600 51,600
Medium-term notes maturing 1994 through 1996 - 7.23%-8.09%
47,500 50,000
Capital lease obligations
12,608 13,693
Other
40 101
872,058 884,608
Long-term debt due within one year
(43,936) (41,614)
828,122 46.3 842,994 48.4
Total capitalization
$1,789,291 100.0% $1,742,394 100.0%
[FN]
The accompanying notes are an integral part of these consolidated
statements.
16
Portland
General Corporation and Subsidiaries
Consolidated Statements of Cash Flow for the
Three Months, Six
Months and Twelve Months Ended June 30, 1994 and 1993
(Unaudited)
Three
Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1994
1993 1994 1993 1994 1993
Cash Provided (Used) By -
Operations:
Net income $ 23,965 $
13,328 $ 63,130 $ 49,884 $102,364 $101,577
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation and amortization 21,497
21,900 43,221 43,765 85,693 90,452
Amortization of WNP-3 exchange agreement 1,173
1,122 2,347 2,244 4,592 5,073
Amortization of deferred charges - Trojan Plant 5,915
6,093 12,056 11,942 24,129 11,942
Amortization of deferred charges - Trojan Decomm. 2,805
2,805 5,610 5,610 11,220 5,610
Amortization of deferred charges - Trojan Other 580
548 1,160 1,162 2,312 2,430
Amortization of deferred charges - other 2,235
(461) 4,574 994 10,293 3,708
Deferred income taxes - net 8,032
6,875 10,844 22,138 49,792 44,068
Other noncash income (324)
(435) (658) (893) (1,691) (2,259)
Changes in working capital:
(Increase) Decrease in receivables 14,185
17,528 (3,584) (10,565) (65,856) (52,432)
(Increase) Decrease in inventories (2,475)
(883) (1,358) (203) 13,862 1,365
Increase (Decrease) in payables (47,367)
(49,100) (18,609) (33,694) (14,752) (11,175)
Other working capital items - net 13,722
18,264 6,104 10,166 8,411 7,010
Gain from discontinued operations (6,472)
- (6,472) - (6,472) -
Deferred items 1,991
(220) 1,689 200 (2,173) (8,870)
Miscellaneous - net 6,768
4,290 7,315 4,525 21,903 15,983
46,230
41,654 127,369 107,275 243,627 214,482
Investing Activities:
Utility construction - new resources (28,191)
- (52,485) - (81,151) -
Utility construction - other (36,108)
(26,469) (61,408) (47,380) (115,720) (134,009)
Energy efficiency programs (5,198)
(3,745) (10,032) (6,124) (22,057) (12,155)
Rentals received from leveraged leases 3,214
5,456 12,882 9,588 15,299 15,062
Trojan decommissioning trust (2,805)
(2,805) (5,610) (5,610) (11,220) (11,220)
Other investments (1,987)
(2,503) (2,327) (2,069) (11,021) (5,623)
(71,075)
(30,066) (118,980) (51,595) (225,870) (147,945)
Financing Activities:
Short-term debt - net 40,283
13,297 1,134 (5,406) 25,276 60,963
Borrowings from Corporate Owned Life Insurance 19,619
- 19,619 - 19,619 -
Long-term debt issued -
177,000 - 177,000 75,000 237,000
Long-term debt retired (233)
(185,550) (11,465) (194,239) (97,212) (275,690)
Repayment of nonrecourse borrowings for
leveraged leases (2,902)
(4,473) (12,061) (9,415) (13,601) (12,987)
Preferred stock retired (20,000)
(3,600) (20,000) (3,600) (20,000) (31,225)
Common stock issued 1,899
2,262 45,206 4,942 49,784 10,182
Dividends paid (15,482)
(14,255) (29,710) (28,401) (58,159) (56,698)
23,184
(15,319) (7,277) (59,119) (19,293) (68,455)
Net Cash Provided By (Used In)
Continuing Operations (1,661)
(3,731) 1,112 (3,439) (1,536) (1,918)
Discontinued Operations 26,454
793 27,065 1,829 27,836 (375)
Increase (Decrease) in Cash and
Cash Equivalents 24,793
(2,938) 28,177 (1,610) 26,300 (2,293)
Cash and Cash Equivalents at the Beginning
of Period 6,586
8,017 3,202 6,689 5,079 7,372
Cash and Cash Equivalents at the End
of Period $ 31,379 $
5,079 $ 31,379 $ 5,079 $ 31,379 $ 5,079
Supplemental disclosures of cash flow information
Cash paid during the period:
Interest $ 20,330 $
21,414 $ 32,938 $ 38,524 $ 68,675 $ 74,044
Income taxes 18,450
10,860 18,239 10,370 20,128 18,845
[FN]
The accompanying notes are an integral part of these consolidated
statements.
17
Portland General Corporation and
Subsidiaries
Notes to Financial Statements
(Unaudited)
Note 1
Principles of Interim Statements
The interim financial statements have been prepared by Portland
General
Corporation (Portland General) and, in the opinion of management,
reflect
all material adjustments which are necessary to a fair statement
of results
for the interim periods presented. Certain information and
footnote
disclosures made in the last annual report on Form 10-K have been
condensed
or omitted for the interim statements. Certain costs are
estimated for
the full year and allocated to interim periods based on the
estimates of
operating time expired, benefit received or activity associated
with the
interim period. Accordingly, such costs are subject to year-end
adjustment. It is Portland General's opinion that, when the
interim
statements are read in conjunction with the 1993 Annual Report on
Form 10-
K, the disclosures are adequate to make the information presented
not
misleading.
Reclassifications
Certain amounts in prior years have been reclassified for
comparative
purposes.
Note 2
Regulatory Matters
Public Utility Commission of Oregon
Portland General Electric Company (PGE) had sought judicial
review of three
rate matters related to a 1987 general rate case. In 1989, PGE
reserved
$89 million for an unfavorable outcome of these matters. In
July 1990 PGE
reached an out-of-court settlement with the Oregon Public Utility
Commission (PUC) on two of the three rate matter issues being
litigated.
As a result of the settlement $16 million was restored to income
in 1990.
The settlement resolved the dispute with the PUC regarding
treatment of
accelerated amortization of certain investment tax credits (ITC)
and 1986-
1987 interim relief. As a settlement of the interim relief
issue, PGE
refunded approximately $17 million to customers.
In 1991 the Utility Reform Project (URP) petitioned the PUC to
reconsider
the order approving the settlement. The Oregon legislature
subsequently
passed a law clarifying the PUC's authority to approve the
settlement. As
a result, the PUC issued an order implementing the settlement.
URP filed
an appeal in Multnomah County Circuit Court to overturn the PUC's
order
implementing settlement which was later dismissed in December
1992.
In addition, the Citizen's Utility Board (CUB) filed a complaint
in 1991 in
Marion County Circuit Court seeking to modify, vacate, set aside
or reverse
the PUC's order implementing settlement. In September 1992 the
Marion
County Circuit Court judge issued a decision upholding the PUC
18
Portland General Corporation and
Subsidiaries
Notes to Financial Statements
(Unaudited)
orders approving the settlement. CUB appealed this decision to
the Oregon
Supreme Court which denied CUB's petition for review in April
1994.
The settlement, however, did not resolve the Boardman/Intertie
gain issue,
which the parties continue to litigate. PGE's position is that
28% of the
gain should be allocated to customers. The 1987 rate order
allocated 77%
of the gain to customers over a 27-year period. PGE has fully
reserved
this amount, which is being amortized over a 27-year period in
accordance
with the 1987 rate order. The unamortized gain, $120 million at
June 30,
1994, is shown as "Regulatory reserves" on the balance sheet.
Note 3
Legal Matters
WNP Cost Sharing
PGE and three other investor-owned utilities (IOUs) are involved
in
litigation surrounding the proper allocation of shared costs
between
Washington Public Power Supply System (Supply System) Units 1 and
3 and
Units 4 and 5. A court ruling, issued in May 1989, stated that
Bond
Resolution No. 890, adopted by the Supply System, controlled
disbursement
of proceeds from bonds issued for the construction of Unit 5,
including the
method for allocation of shared costs. It is the IOUs'
contention that at
the time the project commenced there was agreement among the
parties as to
the allocation of shared costs and that this agreement and the
Bond
Resolution are consistent, such that the allocation under the
agreement is
not prohibited by the Bond Resolution.
In February 1992, the Court of Appeals ruled that shared costs
between
Units 3 and 5 should be allocated in proportion to benefits under
the
equitable method supported by PGE and the IOUs. A trial remains
necessary
to assure that the allocations are properly performed.
Bonneville Pacific Class Action Suit and Lawsuit
A consolidated case of all previously filed class actions has
been filed in
U.S. District Court for the District of Utah (the Court),
purportedly on
behalf of purchasers of common shares and convertible
subordinated
debentures of Bonneville Pacific Corporation (Bonneville Pacific)
in the
period from August 18, 1989 until January 22, 1992, alleging
violations of
federal and Utah state securities laws, common law fraud and
negligent
misrepresentation. The defendants are specific Bonneville
Pacific
insiders, Portland General, Portland General Holdings, Inc.
(Holdings),
certain Portland General affiliated individuals, Deloitte &
Touche and
three underwriters of a Bonneville Pacific offering of
subordinated
debentures.
In May 1994 the Court issued an order dismissing the claims filed
by the
plaintiffs against Portland General, Holdings and the Portland
General
affiliated individuals for common law fraud and negligent
misrepresentation, primary liability for violations of the
federal
securities laws and secondary liability for aiding and abetting
and
conspiracy to violate the federal securities laws. The order
permanently
dismisses the secondary liability claims. The Court stated that
it will
19
Portland General Corporation and Subsidiaries
Notes to Financial Statements
(Unaudited)
consider an amendment to the complaint with regard to the other
claims.
The Court also
held that it would not consider the claims for Utah state
securities law
violations until certain issues are addressed by the Utah state
courts.
A separate legal proceeding has been initiated by the bankruptcy
trustee
for Bonneville Pacific who has filed an amended complaint against
Portland
General, Holdings and certain affiliated individuals in US
District Court
for the District of Utah alleging common law fraud, breach of
fiduciary
duty, tortious interference, negligence, negligent
misrepresentation and
other actionable wrongs. The original suit was filed by
Bonneville Pacific
prior to the appointment of the bankruptcy trustee. The amount
of damages
sought is not specified in the complaint.
Other Legal Matters
Portland General and certain of its subsidiaries are party to
various other
claims, legal actions and complaints arising in the ordinary
course of
business. These claims are not considered material.
Summary
While the ultimate disposition of these matters may have an
impact on the
results of operations for a future reporting period, management
believes,
based on discussion of the underlying facts and circumstances
with legal
counsel, that these matters will not have a material adverse
effect on the
financial condition of Portland General.
Other Bonneville Pacific Related Litigation
Holdings filed complaints seeking approximately $228 million in
damages in
the Third Judicial District Court for Salt Lake County (Utah)
against
Deloitte & Touche and certain other parties associated with
Bonneville
Pacific alleging that it relied on fraudulent and negligent
statements and
omissions by Deloitte & Touche and the other defendants when it
acquired a
46% interest in and made loans to Bonneville Pacific starting in
September
1990.
Note 4
Income Taxes
The IRS has issued a statutory notice of tax deficiency, which
Portland
General is contesting, related to its examination of Portland
General's
1985 tax return. The IRS has proposed to disallow PGE's 1985
WNP-3
abandonment loss deduction on the premise that it is a taxable
exchange.
Portland General disagrees with this position and will take
appropriate
action to defend its deduction. Management believes that it has
appropriately provided for probable tax adjustments and is of the
opinion
that the ultimate disposition of this matter will not have a
material
adverse impact on the financial condition of Portland General.
20
Portland General Corporation and Subsidiaries
Notes to Financial Statements
(Unaudited)
Note 5
Trojan Nuclear Plant
Shutdown - In early 1993, PGE ceased commercial operation of
Trojan as
recommended in PGE's Least Cost Plan (LCP). On June 3, 1993 the
PUC
acknowledged PGE's LCP.
Decommissioning Estimate - PGE estimates the total cost to
decommission
Trojan, including costs incurred to date, to be $409 million,
reflected in
nominal dollars (actual dollars expected to be spent in each
year). The
decommissioning cost estimate includes the cost of
decommissioning
planning, removal and burial of irradiated equipment and
facilities as
required by the Nuclear Regulatory Commission (NRC); building
demolition
and nonradiological site remediation; and spent nuclear fuel
management
costs including licensing, surveillance and transition costs.
Transition
costs of $75 million are the costs associated with operating and
maintaining the spent fuel pool and securing the plant until
dismantlement
can begin. While most decommissioning costs will utilize funds
from PGE's
Nuclear Decommissioning Trust (NDT), transition costs will
continue to be
paid from current operating funds.
The decommissioning plan represents a site-specific
decommissioning cost
estimate performed for Trojan by an experienced decommissioning
engineering
firm and assumes that the majority of decommissioning activities
will occur
between 1998 and 2002, after construction of a temporary dry
spent fuel
storage facility. Decommissioning of the temporary dry spent
fuel storage
facility and final nonradiological site remediation activities
will occur
in 2018 after PGE completes shipment of spent fuel to a United
States
Department of Energy (USDOE) facility. In 1994, transition costs
have
leveled off and are estimated to continue at $10 to $15 million
per year.
As of June 30, 1994, PGE has expensed approximately $6 million in
transition costs for 1994. In addition, since plant closure PGE
has spent
$2 million on decommissioning planning and related activities
resulting in
a remaining decommissioning liability, including transition
costs, of $401
million.
PGE plans to submit a formal decommissioning plan to the NRC and
Energy
Facility Siting Council of Oregon (EFSC) in late 1994. This is
later than
the previously expected submittal date of mid-1994 due to the
additional
time required to further evaluate decommissioning options. The
NRC and
EFSC rules require the plan be submitted before January 23, 1995.
Presently, PGE is planning to accelerate the removal of some of
Trojan's
large components which is expected to result in overall
decommissioning
cost savings. Since the Company plans to begin this work in
1994, prior to
receiving NRC and EFSC approval of its formal decommissioning
plan,
specific approval will be required from EFSC. Request for this
approval
was filed with EFSC on July 7, 1994. Additionally, the NRC must
approve
the use of PGE's NDT funds for removal of large components.
21
Portland General Corporation and Subsidiaries
Notes to Financial Statements
(Unaudited)
Assumptions used to develop the site-specific cost estimate for
decommissioning represent the best information PGE has currently.
PGE is
continuing to evaluate various options which could change the
timing and
scope of decommissioning activities and expects any future
changes in
estimated decommissioning costs to be incorporated in future
revenues to be
collected from customers.
Investment Recovery - PGE filed a general rate case on November
8, 1993, requesting
continued
recovery of Trojan plant costs, including decommissioning. In
May 1994,
the PUC issued an order to delay consideration of the
Trojan-related issues
and cost of capital in order to allow the PUC Staff to retain an
expert to
consult and advise the PUC regarding Trojan issues. In July
1994, PGE and
the PUC Staff agreed to delay a final order addressing all rate
case
matters to no later than March 31, 1995, contingent upon the PUC
approving
PGE's first quarter 1995 deferred accounting application. The
delay,
requested by the PUC Staff, provides additional review time for
the PUC
Staff's expert and allows the PUC more time to review the entire
rate
proceeding and issue a final order.
The analysis performed for the LCP assumed that continued
recovery of the
Trojan plant investment, including future decommissioning costs,
would be
granted by the PUC. Regarding the authority of the PUC to grant
recovery,
the Oregon Department of Justice (Attorney General)issued an
opinion that
the PUC may allow rate recovery of total plant costs, including
operating
expenses, taxes, decommissioning costs, return of capital
invested in the
plant and return on the undepreciated investment. While the
Attorney
General's opinion does not guarantee recovery of costs associated
with the
shutdown, it does clarify that under current law the PUC has
authority to
allow recovery of such costs in rates.
PGE asked the PUC to resolve certain legal and policy questions
regarding
the statutory framework for future ratemaking proceedings related
to the
recovery of the Trojan investment and decommissioning costs. On
August 9,
1993, the PUC issued a declaratory ruling agreeing with the
Attorney
General's opinion discussed above. The ruling also stated that
the PUC
will favorably consider allowing PGE to recover in rates some or
all of its
return on and return of its undepreciated investment in Trojan,
including
decommissioning costs, if PGE meets certain conditions. PGE
believes that
its general rate filing provides evidence that satisfies the
conditions
established by the PUC. URP and CUB have appealed the PUC
ruling.
Management believes that the PUC will grant future revenues to
coverall, or
substantially all, of Trojan plant costs with an appropriate
return.
However, future recovery of the Trojan plant investment and
future
decommissioning costs requires PUC approval in a public
regulatory process.
Although the PUC has allowed PGE to continue, on an interim
basis,
collection of these costs in the same manner as prescribed in
PGE's last
general rate proceeding, the PUC has yet to address recovery of
costs
related to a prematurely retired plant when the decision to close
the plant
was based upon a least cost planning process. Due to
uncertainties
inherent in a public process, management cannot predict, with
certainty,
whether all, or substantially all, of the $355 million Trojan
plant
investment and $346 million of decommissioning charges (to
be
collected through future rates) will be
recovered.
22
Portland General Corporation and Subsidiaries
Notes to Financial Statements
(Unaudited)
Management believes the ultimate outcome of this public
regulatory process
will not have a material adverse effect on the financial
condition,
liquidity or capital resources of Portland General. However, it
may have a
material impact on the results of operations for a future
reporting period.
Note 6
Short-Term Borrowings
Portland General replaced expiring committed credit facilities in
July
1994. As a result, Portland General now has a $35 million
committed
facility expiring in July 1995 and PGE has a committed facility
of $120
million expiring in July 1997 and an $80 million commitment
expiring July
1995. These lines of credit have annual facility fees ranging
from
0.125 to 0.20 percent and do not require compensating cash
balances. The
facilities are used primarily as backup for commercial paper.
Portland General and PGE have commercial paper facilities of $35
million
and $200 million, respectively. The amount of commercial paper
outstanding
cannot exceed each company's unused committed lines of credit.
Note 7
Real Estate - Discontinued Operations
Portland General has substantially completed divestiture of its
real estate
operations, which consist primarily of Columbia Willamette
Development
Company (CWDC). In June 1994, CWDC sold for $16 million the
largest
remaining property in its real estate holdings. As a result $6
million
was restored to income relating to previously recorded real
estate
reserves.
At June 30, 1994, the net assets of discontinued real estate
operations
primarily consist of deferred taxes.
At June 30, 1994 and December 31, 1993, the net assets of real
estate
operations were composed of the following (thousands of dollars):
June 30, December 31,
1994 1993
Assets
Real estate development $ 1,987 $18,900
Other assets 9,247 21,234
Total assets 11,234 40,134
Liabilities 449 1,632
Reserve for discontinuance - net - 7,124
Net assets $10,785 $31,378
23
Portland General Corporation and
Subsidiaries
Notes to Financial Statements
(Unaudited)
Note 8
Commitments
In May 1994, PGE signed an agreement with Pacific Gas & Electric
(PG&E) to
take assignment of a portion of PG&E's excess firm natural gas
transportation on the Pacific Gas Transmission (PGT) system. In
July 1994,
PGE signed an agreement with Alberta & Southern (A&S) to take
assignment of
a portion of PG&E's excess Canadian firm transportation on both
the Alberta
Natural Gas (ANG) system and the Nova Corporation of Alberta
(NOVA) system.
These agreements collectively provide for 41,000 MMBtu/day of
delivered
capacity to PGE's existing and proposed natural gas-fired
generating
facilities and replace earlier agreements PGE signed with PGT and
ANG.
Service under these agreements is scheduled to start in winter
1995/6.
Under the
terms of the agreements, PGE is committed to paying annual demand
charges
for the capacity on all three systems of approximately $3.2
million to $4.5
million, depending upon resolution of federal rate treatment
issues. The
agreements provide for service with PGT, ANG and NOVA for 15
years, 10
years and 6 years, respectively. However, PGE has renewal rights
upon
expiration and the right to assign unused capacity to other
parties. In
order to fully utilize these contracts for its facilities, PGE
may incur a
capital expenditure in 1995 of approximately $17 million for
pipeline
construction or may incur additional capacity charges in lieu of
construction.
24
Portland General Electric Company and
Subsidiaries
Financial Statements and Related
Information
Table of Contents
Page
Number
Management Discussion and Analysis of
Financial Condition and Results of Operations * 3
Financial Statements 26
Notes to Financial Statements ** 18
* The discussion is substantially the same as that disclosed by
Portland General and, therefore, is incorporated by reference
to information provided on the page number listed above.
** The notes are substantially the same as that disclosed by
Portland
General and are incorporated by reference to the
information
provided on the page number shown above.
25
Portland
General Electric Company and Subsidiaries
Consolidated Statements of Income for the
Three Months, Six
Months and Twelve Months Ended June 30, 1994 and 1993
(Unaudited)
Three Months Ended
Six Months Ended Twelve Months Ended
June 30
June 30 June 30
1994 1993
1994 1993 1994 1993
(Thousands of Dollars)
Operating Revenues $201,773 $191,632
$479,445 $467,936 $956,040 $915,302
Operating Expenses
Purchased power and fuel 63,847 45,401
164,817 136,209 340,321 252,277
Production and distribution 15,607 18,999
31,013 39,590 64,999 87,826
Maintenance and repairs 14,068 17,448
23,227 32,566 45,981 73,868
Administrative and other 24,405 26,451
46,412 50,377 94,443 104,116
Depreciation, decommissioning and
amortization 30,318 30,076
61,088 60,714 122,272 99,441
Taxes other than income taxes 12,782 13,800
27,019 29,809 52,886 55,557
Income taxes 12,019 9,072
42,391 36,917 76,964 77,471
173,046 161,247
395,967 386,182 797,866 750,556
Net Operating Income 28,727 30,385
83,478 81,754 158,174 164,746
Other Income (Deductions)
Allowance for equity funds used
during construction - -
- - - 311
Other 8,464 4,751
10,279 7,090 14,960 8,806
Income taxes (3,003) (1,823)
(3,139) (2,230) (4,911) 1,812
5,461 2,928
7,140 4,860 10,049 10,929
Interest Charges
Interest on long-term debt and other 15,134 16,048
29,845 31,256 60,406 62,726
Interest on short-term borrowings 1,314 776
2,310 1,660 4,093 3,015
Allowance for borrowed funds used
during construction (800) (215)
(1,264) (388) (1,661) (2,038)
15,648 16,609
30,891 32,528 62,838 63,703
Net Income 18,540 16,704
59,727 54,086 105,385 111,972
Preferred Dividend Requirement 2,646 3,001
5,634 6,069 11,611 12,205
Income Available for Common Stock $ 15,894 $ 13,703
$ 54,093 $ 48,017 $ 93,774 $ 99,767
Consolidated
Statements of Retained Earnings for the
Three Months, Six
Months and Twelve Months Ended June 30, 1994 and 1993
(Unaudited)
Three Months Ended
Six Months Ended Twelve Months Ended
June 30
June 30 June 30
1994 1993
1994 1993 1994 1993
(Thousands of Dollars)
Balance at Beginning of Period $201,670 $181,678
$179,297 $165,949 $176,811 $153,653
Net Income 18,540 16,704
59,727 54,086 105,385 111,972
ESOP Tax Benefit & Amortization of
Preferred Stock Premium (426) (363)
(796) (742) (1,578) (3,740)
219,784 198,019
238,228 219,293 280,618 261,885
Dividends Declared
Common stock 15,393 18,207
30,786 36,413 67,199 72,826
Preferred stock 2,583 3,001
5,634 6,069 11,611 12,248
17,976 21,208
36,420 42,482 78,810 85,074
Balance at End of Period $201,808 $176,811
$201,808 $176,811 $201,808 $176,811
[FN]
The accompanying notes are an integral part of these consolidated
statements.
26
Portland General Electric Company
and Subsidiaries
Consolidated Balance
Sheets
as of June 30, 1994 and
December 31, 1993
(Unaudited)
June 30
December 31
1994
1993
(Thousands of Dollars)
Assets
Electric Utility Plant - Original Cost
Utility plant (includes Construction Work in Progress of
$109,031 and $46,679)
$2,475,693 $2,370,460
Accumulated depreciation
(930,473) (894,284)
1,545,220 1,476,176
Capital leases - less amortization of $24,711 and $23,626
12,608 13,693
1,557,828 1,489,869
Other Property and Investments
Trojan decommissioning trust, at market value
53,018 48,861
Corporate Owned Life Insurance less loan $19,619 in 1994
34,656 52,008
Other investments
25,376 25,706
113,050 126,575
Current Assets
Cash and cash equivalents
4,351 2,099
Accounts and notes receivable
75,373 85,169
Unbilled and accrued revenues
148,476 133,476
Inventories, at average cost
47,892 46,534
Prepayments and other
12,239 20,646
288,331 287,924
Deferred Charges
Unamortized regulatory assets
Trojan abandonment - Plant
354,543 366,712
Trojan abandonment - Decommissioning
345,726 355,718
Trojan - other
66,443 66,387
Income taxes recoverable
219,128 228,233
Debt reacquisition costs
33,593 34,941
Energy efficiency programs
47,751 39,480
Other
32,019 33,857
WNP-3 settlement exchange agreement
175,655 178,003
Miscellaneous
21,408 18,975
1,296,266 1,322,306
$3,255,475 $3,226,674
Capitalization and Liabilities
Capitalization
Common stock equity $
815,067 $ 747,197
Cumulative preferred stock
Subject to mandatory redemption
50,000 70,000
Not subject to mandatory redemption
69,704 69,704
Long-term debt
798,122 802,994
1,732,893 1,689,895
Current Liabilities
Long-term debt and preferred stock due within one year
36,436 41,614
Short-term borrowings
150,344 129,920
Accounts payable and other accruals
79,755 111,647
Accrued interest
17,009 17,139
Dividends payable
18,268 21,486
Accrued taxes
45,996 27,395
347,808 349,201
Other
Deferred income taxes
527,831 534,194
Deferred investment tax credits
58,429 60,706
Regulatory reserves
119,658 120,410
Trojan decommissioning reserve and misc. closure costs
401,429 407,610
Miscellaneous
67,427 64,658
1,174,774 1,187,578
$3,255,475 $3,226,674
[FN]
The accompanying notes are an integral part of these consolidated
balance sheets.
27
Portland General Electric Company
and Subsidiaries
Consolidated Statements of
Capitalization
as of June 30, 1994 and
December 31, 1993
(Unaudited)
June 30
December 31
1994
1993
(Thousands
of Dollars)
Common Stock Equity
Common stock, $3.75 par value per share,
100,000,000 shares authorized, 42,758,877
and 40,458,877 shares outstanding $160,346
$151,721
Other paid in capital net 468,307
433,978
Unearned compensation (15,394)
(17,799)
Retained earnings 201,808
179,297
815,067
47.0% 747,197 44.2%
Cumulative Preferred Stock
Subject to mandatory redemption
No par value, 30,000,000 shares authorized
7.75% Series, 300,000 shares outstanding 30,000
30,000
$100 par value, 2,500,000 shares authorized
8.10% Series, 300,000 and 500,000 shares outstanding 30,000
50,000
Current sinking fund (10,000)
(10,000)
50,000
2.9 70,000 4.2
Not subject to mandatory redemption
7.95% Series, 298,045 shares outstanding 29,804
29,804
7.88% Series, 199,575 shares outstanding 19,958
19,958
8.20% Series, 199,420 shares outstanding 19,942
19,942
69,704
4.0 69,704 4.1
Long-Term Debt
First mortgage bonds
Maturing 1994 through 1999
4 3/4% Series due April 1, 1994 -
8,119
4.70% Series due March 1, 1995 3,045
3,220
5 7/8% Series due June 1, 1996 5,216
5,366
6.60% Series due October 1, 1997 15,363
15,363
Medium term notes 5.65% 9.27% 242,000
242,000
Maturing 2002 through 2005 6.47% 9.07% 165,845
166,283
Maturing 2021 through 2023 7 3/4% 9.46% 195,000
195,000
Pollution control bonds
Port of Morrow, Oregon, variable rate
(Average 2.3% for 1993), due 2013 23,600
23,600
City of Forsyth, Montana, variable rate
(Average 2.4% for 1993), due 2013
through 2016 118,800
118,800
Amount held by trustee (8,559)
(8,537)
Port of St. Helens, Oregon, due 2010 and 2014
(Average variable 2.2% - 2.4% for 1993) 51,600
51,600
Capital lease obligations 12,608
13,693
Other 40
101
824,558
834,608
Long term debt due within one year (26,436)
(31,614)
798,122
46.1 802,994 47.5
Total capitalization $1,732,893
100.0% $1,689,895 100.0%
[FN]
The accompanying notes are an integral part of these consolidated
statements.
28
Portland
General Electric Company and Subsidiaries
Consolidated Statements of Cash Flow for the
Three Months, Six
Months and Twelve Months Ended June 30, 1994 and 1993
(Unaudited)
Three
Months Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1994
1993 1994 1993 1994 1993
(Thousands of Dollars)
Cash Provided (Used) By -
Operations:
Net Income $ 18,540 $
16,704 $ 59,727 $ 54,086 $105,385 $111,972
Adjustments to reconcile net income to net
cash provided by operations:
Depreciation and amortization 21,491
21,887 43,209 43,718 85,697 90,392
Amortization of WNP-3 exchange agreement 1,173
1,122 2,347 2,244 4,592 5,073
Amortization of deferred charges - Trojan Plant 5,915
6,093 12,056 11,942 24,129 11,942
Amortization of deferred charges - Trojan Decomm. 2,805
2,805 5,610 5,610 11,220 5,610
Amortization of deferred charges - Trojan Other 580
548 1,160 1,162 2,312 2,430
Amortization of deferred charges - other 547
807 2,886 2,245 7,354 4,986
Deferred income taxes - net (2,987)
5,164 4,590 19,457 45,854 23,750
Other noncash income -
- - - - (311)
Changes in working capital:
(Increase) Decrease in receivables 12,440
21,382 (5,137) (5,647) (66,921) (45,558)
(Increase) Decrease in inventories (2,476)
(883) (1,359) (203) 13,861 1,364
Increase (Decrease) in payables (47,825)
(56,002) (13,421) (34,158) (5,851) (1,126)
Other working capital items - net 14,428
17,473 5,698 9,722 6,576 7,310
Deferred items 1,991
(2,401) 1,689 (1,981) 8 (11,112)
Miscellaneous - net 2,607
3,893 2,701 4,151 14,419 16,807
29,229
38,592 121,756 112,348 248,635 223,529
Investing Activities:
Utility construction - new resources (28,191)
- (52,485) - (81,151) -
Utility construction - other (36,108)
(26,469) (61,408) (47,380) (115,720) (134,009)
Energy efficiency programs (5,198)
(3,745) (10,032) (6,124) (22,057) (12,155)
Trojan decommissioning trust (2,805)
(2,805) (5,610) (5,610) (11,220) (11,220)
Other investments (2,441)
(1,514) (2,546) (1,975) (7,704) (5,669)
(74,743)
(34,533) (132,081) (61,089) (237,852) (163,053)
Financing Activities:
Short-term debt - net 63,280
12,586 20,424 (2,028) 52,307 58,611
Borrowings from Corporate Owned Life Insurance 19,619
- 19,619 - 19,619 -
Long-term debt issued -
177,000 - 177,000 75,000 237,000
Long-term debt retired (150)
(171,626) (8,882) (180,315) (95,553) (241,766)
Preferred stock retired (20,000)
(3,600) (20,000) (3,600) (20,000) (31,225)
Common stock issued -
- 41,055 - 41,055 -
Dividends paid (18,444)
(21,128) (39,639) (42,402) (82,188) (85,154)
44,305
(6,768) 12,577 (51,345) (9,760) (62,534)
Increase (Decrease) in Cash and
Cash Equivalents (1,209)
(2,709) 2,252 (86) 1,023 (2,058)
Cash and Cash Equivalents at the Beginning
of Period 5,560
6,037 2,099 3,414 3,328 5,386
Cash and Cash Equivalents at the End
of Period $ 4,351 $
3,328 $ 4,351 $ 3,328 $ 4,351 $ 3,328
Supplemental disclosures of cash flow information
Cash paid during the period:
Interest $ 19,389 $
20,256 $ 29,765 $ 34,616 $ 63,381 $ 66,173
Income taxes 31,560
17,853 25,460 17,853 24,849 45,834
[FN]
The accompanying notes are an integral part of these consolidated
statements.
29
Portland General Corporation and
Subsidiaries
Part II. Other Information
Item 1. Legal Proceedings
For further information, see Portland General's report on Form
10-K for
the year ended December 31, 1993.
UTILITY
Southern California Edison Company (SCE) v. PGE
On August 3, 1994, Southern California Edison (SCE) filed a
complaint in Multnomah County Circuit Court in Portland, Oregon
claiming PGE's decision to close Trojan violated the
terms of a long-term firm power sales and exhcange agreement
entered into on July 31, 1986. The 25-year contract is for 75
megawatts of firm energy and capacity plus a 225 megawatt
seasonal exchange.
SCE contends that PGE appointed itself liquidator of a
substantial portion of its assets under the general bankruptcy
default provision of the contract. SCE is seeking termination of
the agreement and damages, including a return of payments made to
PGE from the date of PGE's alleged default (approximately $27
million).
Under the agreement SCE is obligated to pay to PGE a reservation
fee for system capacity, seasonal exchange and other services
equal to $16.9 million annually. SCE continues to make these
payments.
Item 4. Results of Votes of Security Holders
At the Annual Meeting of Shareholders held on May 3, 1994 the
matters voted
upon and the results of voting were as follows:
For Against
Abstain
Election of Class II Directors:
Carolyn S. Chambers 41,466,466 680,895
603,125
Ken L. Harrison 41,312,554 892,110
545,822
Warren E. McCain 41,391,245 690,543
668,698
Jerome J. Meyer 41,511,087 596,504
642,895
Ratification of the appointment of
Arthur Andersen & Co. as independent
public accountants for the year 1994: 41,869,178 343,257
538,051
Names of other directors whose terms of office as director
continued after
the meeting are:
Class I Class III
Jerry E. Hudson Gwyneth E. Gamble Booth
Richard G. Reiten Peter J. Brix
Bruce G. Willison John W. Creighton, Jr.
Randolph L. Miller
30
Portland General Corporation and
Subsidiaries
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
Number Exhibit Page
(24) Powers of Attorney (filed herewith) 33
b. Reports on Form 8-K - None
31
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the
registrants have duly caused this report to be signed on their
behalf by
the undersigned hereunto duly authorized.
PORTLAND GENERAL CORPORATION
PORTLAND GENERAL ELECTRIC
COMPANY
(Registrants)
August 12, 1994 By /s/ Joseph E. Feltz
Joseph E. Feltz
Assistant Controller
Assistant Treasurer
Principal Financial Officer
Portland General Corporation
Portland General Electric
Company
Joseph M. Hirko*
Joseph M. Hirko
Vice President Finance,
Chief Financial Officer,
Chief Accounting Officer
and Treasurer
*Signed on behalf of this
person.
August 12, 1994 By /s/ Joseph E. Feltz
Joseph E. Feltz
Assistant Controller
Assistant Treasurer
32
[TEXT]
POWER OF ATTORNEY
The undersigned Joseph M. Hirko, in his capacity as Chief
Financial Officer and Chief Accounting Officer of Portland
General Corporation (the "Corporation"), hereby appoints Joseph
E. Feltz, Assistant Controller of the Corporation, as the
attorney-in-fact, in any and all capacities stated herein, to
execute on behalf of the undersigned and to file with the
Securities and Exchange Commission under the Securities Exchange
Act of 1934, the Portland General Corporation Quarterly Report on
Form 10-Q for the quarter ended June 30, 1994.
Dated: August 8, 1994
Portland, Oregon
/s/ Joseph M. Hirko
Joseph M. Hirko
POWER OF ATTORNEY
The undersigned Joseph M. Hirko, in his capacity as Chief
Financial Officer and Chief Accounting Officer of Portland
General Electric Company (the "Company"), hereby appoints Joseph
E. Feltz, Assistant Controller of the Company, as the attorney-
in-fact, in any and all capacities stated herein, to execute on
behalf of the undersigned and to file with the Securities and
Exchange Commission under the Securities Exchange Act of 1934,
the Portland General Electric Company Quarterly Report on Form
10-Q for the quarter ended June 30, 1994.
Dated: August 8, 1994
Portland, Oregon
/s/ Joseph M. Hirko
Joseph M. Hirko
