Text

Annual Financial Rept 1979
	ML19323C821
Person / Time
Site:	Trojan File:Portland General Electric icon.png
Issue date:	05/16/1980
From:	; PACIFICORP (FORMERLY PACIFIC POWER & LIGHT)
To:	;
Shared Package
ML19323C817	List: ML19323C816; ML19323C821; ML19323C823; ML19323C824;
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	NUDOCS 8005190253
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{{#Wiki_filter:. MOS194 2.O O PACIFIC POWER L&HLIGHT COMPANY and consolidated subsidiaries 1979 A% NL AL REPORT. i Notice of the 1980 Annual Meeting of Stockholders, scheduled to be held in Yakima, Washington, on June 11, convening at 1:30 P.M. in the Convention Center, will be mailed to shareholders in May along with proxy statements. A copy of the Company's Form 10-K report to the Securities & Exchange Commission for 1979 operations is available upon request, without charge. Write to-- John H. Geiger, Senior Vice President Pacific Power & Light Company 920 5.W. Sixth Avenue Portland, Oregon 97204 Telephone (503) 243-1122 i

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To Our Stockh'oldek f uring the year 1979 'each~ of.the three major.

terms of their day-to-day operations, but at the same D components of the Company's overall business - time to provide coordination, support services and electric,f coal' and telecomm'unications - made overall guidance from a group of seasoned execu-significant contributions to the Company's overall tives. .'. tarnings.- Net income. from the NERCO, Inc. coal

There continued to be formidable obstacles in the: . operations leaped from $12,900,000 in 1978' to path of electric utility operaGons during 1979. The

$28,090,000 in 1979. Opefating results for Alascom, escalation of inflation and money costs, ever-in-Inc. from June 1 and Telephone Utilities, Inc. for the creasing-environmental requirements, regulatory full year combined to generate $8,840,000 of 1979 lags and serious supply problems contributed to the L income. The comparable numbers for income from difficulties. On the positive side there are signs of electric and miscellaneous' utilities amounted ' to - increasing public and regulatory appreciation of the .$73,340,000 for.1979 compared to $86,260,000 in necessity for higher rates and a growing awareness 1978. of the seriousness of impending electric energy 1Overall earnings per share.were diluted by a 7%. shortages, a problem particularly severe in the Pa-increase in the average number of shares outstand-cific Northwest portion of our service area. You may ~e = ing,' causing a Se per share decline from $2.51'per. recall that last year's annual report highlighted this share in 1978 to $2.46 per share in 1979. New shares, problem. Any steps that the nation and each of us

of common and preferred stock sold during the year individually can take to slow down the rate of in-were required to' finance the' heavy construction flation would assure better days ahead for the elec-programs and maintain reasonable capital ratios.

..tric utility business, our customers and for all of us. 1The' three. elements of lthe Company and the Nationally, the coal business is in the doldrums

significance of the size of each_ led your manage :

with over 100 million tons of excess annual produc-ment and the Board of Directors to form a corporate. tive capacity. This results from lower than expected policy' group last June'.with overall management. utility load growth and a slowdown in conversions - policy responsibilities for the Company's three basic from oil and gas due to conflicts within legislative

lines of business. In this connection, G. Eldon Dren..

and regulatory processes and to environmental nan was elected President and Executive Officer of problems. Nevertheless, NERCO made its largest Electric; Operations and'he, along with John!H.- contribution ever to your Company's overall earn-Geiger, Senior. Vice President and Chief Financial - - ings. With the new Spring Creek mine expected to Officeri Gerard K. Drummond, President of NERCO, - be in production by the end of this year, NERCO's and A. M. Gleason, President of Telephone Utilities,; -' outlook continues to be favorabic It was the 8th ' Din with me as the corporate policy group per-- largest U.S. coal producer in 1979. n i forming this function. Our objective is to continue. 1With the acquisition of Alascom, the long-lines ~ the? decentralized ~ natureof these busmesses"m. . telephone company in Alaska, your Company is the O n u. 12f y \\ g \\ ,.i.

,G ^ fI g-I + A s 4 m Executives serung on the Corporate Policy Group are Don C. Frisbee, Chairman and Chief Execuhve O.iicer (seated lef 0; G. Eldon Drennan, President and Executive Ofucer-Electn( Operations (seated nght); A. N1 Gleason President of Telephone Ut lities Inc., and Exe(utive U!aer-Telecommunu ations Standing lef t): Gerard K. Drummond. President of NERCO. Inc. (center) and John H Geiger. Senior Vice President and Chief financ ial Offner of PP&l. (righti nation's 6th largest independent telephone / tele-communications company in terms of revenue. Both TABLE OF CONTENTS PAGE Alascom and 81r/ -owned Telephone Utilities en-Joyed operating results which exceeded any prior Revenues, income and Larnings 4 year's earnings. The Alascom purchase was accom-Const ruc tion 4 plished through a term loan with a group of bankers Coal subsidiarv Operations 7 headed by Morgan Guaranty Trust Company, at an Telecommunicahons .10 interest rate that moves with the prime rate. The net Financing .10 l contribution of Alascom to overall Company earn-g.idend Reinsestmen' .11 ings was dampened by the sharp rise in the prime Conservati n Programs .11 rate during the la;ter part of the year and on into 1980. Personnel .12 Un tnc s tan Opsahons .12 e l By virtue of the diversity in its sources of income, Researc h .13 l vour Company faces the uncertainties of the year 1980 and the start of a new decade from a stronger summary or Consolidated Operations .14 and broader financial base than was the case a Nianagement's Discussion and Analysis. .14 decade ago We are providing basic services and Consohdated Balance Sheets .16 products that are essential to the economic life and statements of Consohdated income .18 health of the nation and we are blessed with a grc'ip statements of Consohdated of dedicated men and women in the Company's Retained Earnings. .18 emolov and serving on your Board of Directors. We statements of Changes in are patucula.ly thankful for the support of our Consohdated financial Position .19 stockholders and other investors. We will be work-Notes to Consohdated Financial Statements.20 ing hard to continue to merit that support. Consohdated Financial Ratios. .30 f nergy S les. Customer and Other Statistics.30 Mnek \\tarket and Drudend Information .31 Directors and Offic ers .32 Fiscal Agents. .32 Chairman of the Board stap of the Companis and Chief Executive Officer Hectnc servne Terntorv . inside Back Coser 3

m u ] ~ fl,'? +;- ' ' CReVenU'es, Net income in~ crease;- chased power costs, operating expenses of Alascom H / Subsidiaries' ' Bolster Earnings: which were not in the 1978 figures, added mainte-m -nance on steam-electnc plants and the overall im-j Higher electric rates along with increased energyJ pact of inflation. 1 Jsales, a'significant increase in ' telecommunications - Net interest charges, principally on long-term ! revenues upon the acquisition 'long-lines services for Alaska,of a system providing debt, were $101,914,000, up 38%. l and higher earnings :

of the other subsidsanes helped push consolidated

Net income was $112,511,000, up 6.4%. After pro-(operating revenues and net income to new highs for vision"for $19,612,000 of preferred stock dividends, . he Company m 1979.- higher by 14%, the earnings applicable to the aver-it age of 37f92,000 shares of common stock outstand- ~ NERCO,(Inc.ithe' wholly-owned coal mining and - ing, which was higher by 2,373,000 shares, amount-(marketing subsidiary;'the 81% owned Telephone - ed to $92,899,000, up 4.9%. { Utilities, ince and Alascom, Inc., the newly acquired ' On November 1,1979, an increase of $26,888,000 3 Alaska system,Jposted improved operating results that added to consolidated net income and high. annually'in electric revenues became effective in ~ lighted the growing significance of subsidiary oper-

Oregon. The Public Utility Commissioner, at the m

a-ations on prospects for future growth in earnmgs. - same time, approved an additional increase of $12,622,000 to become effective May 1,1980 and / Subsidiaries contributed 999 to.the per common - " authorized, subject to review, rate revisions to re-L share earnings of the Company, before full alloca-flect major system additions as of May 1. Earlier, an

tion of. capital costs, up 44* from the prior year'si increase of $3,%6,000 annually in electric revenues contribution. However, earnings per common share was approved by the Washington state commission, r of $2.46 were down' 5e from 1978'due to increases effective June 15,1979. On February 18,1980, the ein the_ dividend requirements for; preferred stock California commission granted an interim increase and in the average number of common shares out-in electric revenues of $4,276,000 annually and con-standingn tinued to hold hearings on whether to grant an addi-Dividend payments on common -stock totaled tional $1,716,000 requested in the Company's filing.

$1.92, up 6e per share over 1978. At the December This interim increase is subject to refund based on meeting the Board of Directors increased the Janu--- the outcome of further proceedings. On March 11, Jary,1980, quarterly payment to S1t per share, an in-1980 an increase of $241,500 became effective in

dicated annual rate of $2.04 per share.

Idaho, a pass-through of higher costs of wholesale .! Operating results foi the electric system were ad-power purchases to supply the small service area in versely affected by' low river flows which reduced that state. Pending are requests for $1,587,000 an-

generation at hydroelectric plants and necessitated nually in Montana and $1,671,000 annually in Wyo-

. greater reliance on higher cost steam-electric gener-ming. c ation and purchases from other uti.fities. The com-The continued rapid growth of the Company's bination~ resulted in 35% greater fuel expense and service requirements coupled with inflation-driven l purchased power costs for the year. cost increases means further electric rate increase Votal utility op. rating revenues amo~ nted to applications du ring the balance of 1980. u 4 $640,108,000..The increase of 26.4%.was primarily ?due to telecommunications revenues' from the ac- .quisition of Alascom,.inc., on June 1. Electric reve-o - inues of $487,855,000 were up 7.6%, attributable to Fourth Jim Bridger Unit Completed; . ! higher rates and a near record increase in the num. ~ Work Beg. ins on Transm.ission T. -ie ber of residential and commercial customers. Water - The fourth 500,000-kilowatt capacity steam-elec-

and steam heat reyenues were $9,893,000, up.17%.

tric generating unit at the Jim Bridger project was tat the end of the year there were 629,569 electric completed, on schedule and below its original cost i customers, a gainfof.20,841. Even with an extensive estimate, and work was started on a 500,000-volt Com'pany, program ! urging o energyL ~ conservation,- transmission circuit that will strengthen the link be- / average residentialLusage of 13,%2 kilowatt-hours tween the Company's coal-fired Wyoming 8ener-i z

was abode 1978 by 448 kilowatt-hours. This was at-ating resources with its system in southern Oregon.

tributed to colder than normal weather early in the :

Commercial operation of the fourth unit at the 7 year.: An estimated 43% of residential customers in Bridger project east of Rock Springs, Wyoming, be ' Oregon, Washington and California ' utilize electric gan November 29. The final cost of $316 million wt * ? energy for household space heating. $77 million below the initial estimate. This resulhd ' Utilit[ operating expenses totaled $479,922,000, in a unit cost of $633 per kilowatt compared '.ith ~ Jup 34%. This'resulted from. grem fuel'and pur - ~ he initial estimate of $786 per kilowatt. t s M 15

r Pacific Power is 'a tw'o-thirds owner and the oper-quently, PGE announced a rescheduling of the proj-

ator of the'2,000,000-kilowatt capacity Jim Bridger

ect for an in-service date of the early 1990s instead i~ ' fproject,1iargest on its system..ldaho, Power Com-Lof the original 1987 target. Pacific Power has a 29.4% - ? pany is a one third owner. Each of the utilities holds. : interest in Pebble Springs. Pacific Power's shares in a c:rresponding share of Bridger Coal Company that = the two projects, as originally proposed, amount to 7 Usupplies fuel for.the units.from adjacent coal re - 1,256,000 kilowatts of generating capacity. While serves / the Company has adequate reserve generating capa-cityfor its near-term foads, it s counting on these - Energizing of the westernmost segment of the' projects to help meet power loads in the late 1980s s new 500,000-volt circuit, a 90 mile segment between - nd early 1990s. The Pacific Northwest region itself Medford Oregon, and facilities at Malin, Oregon, Iwas acco,mplished in February,~ 1980. The Malin f ces shortages throughout the current decade. (See / terminus is interconnected.with the high'-voltage: Note 7, Page 24). ' P:cific Northwest-Pacific Southwest regional inter-For 1980 the Company, exclusive of subsidiaries, tia lines and the. linkage provides interim power de-has budgeted $322,458,000 for new construction,

liv ry capability from the regional intertie into Pa '

which includes $23,708,000 for the Skagit and Peb-c .cific Power's.gr.owing southern Oregon and north - ble Springs projects. Regular system construction crn California service areas! is budgeted for $107,510,000. .. The new 500,000-volt line is more than three years Early in 1979 the Wyodak power plant was cited K - behind its original schedule ldue to procedural de ' by the National Society of Professional Engineers as L ays and environmental litigation on routing. The one of the year's top ten engineering achievements l fin:1 permits' for the full 450 mile route were ob-and the Edison Electric Institute gave its annual out- ! tained in 1979 and work is progressing on a schedule standing achievement award to PP&L and Black Hills ' that will place the circuit in service in the fall of Power and Light Company for the " innovative de-1981. Cost of the !!ne was initially estimated at $159 velopment and. construction" of the project.' The million and is now projected at $237 million due to awards note the plant utilizes a forced-air dry-cool-the delays and reroutingi in8 system for condensing steam bick to water. As

The 1979 construction program, exclusive of sub.

a conservation measure, plant water supply is pri-lsidiaries, required capital ' outlays of $249 million, marily from reclaimed liquid effluent from the Gil- . of which $85 million was for expansion of transmis. ' lette, Wyoming, sewage treatment plant. PP&L takes sion and distribution system capacity to serve in. 80% and Black Hills 20% of Wyodak's output.

creased customerloadsc

. The Company reported in January,1980, that the Construction expenditures were about $80 niil-' two utilities are studying the possibility of construc-1 lion under the' initial 1979 budget, primarily because ting a second 330,000-kilowatt plant adjacent to the of schedule slippages in the construction work on existing Wyodak operation. Accordingly, applica-1:rge regional. plants in which the Company is a tion has been made for a Wyoming air quality per-e . minority participant, and the cost under-run at Jim mit. The new plant could be in service in the mid- !Bridgerc 1980s. . Work on two of the projects was virtually halted in mid-February,1980, the Company applied to . in 1979 by controversies surrounding nuclear power..

the Federal Energy Regulatory Commission for a BIcause of regulatory agency delays, litigation and preliminary permit to study the feasibility of devel-restrictive state legislation, there is no way of esti--

oping additional hydroelectric capability on the j m: ting when construction will resume. Puget Sound

Klamath River in southern Oregon at a site known as c

Power & Light Company, sponsor of the Skagit proj-Salt Caves. The proposal contemplates an earth-fill

ect in' Washington state,-announced deferral of dam of120-foot height that would divert flow of the m2jor expenditures'on Skagit through 1982, after -

tiver into a canal to parallel the river for 22,000 feet i failure to obtain renewal of a local land-use zoning. Lto establish a head of 430 feet. The water would ichinge after a public_' advisory vote objected to lo- ~ drop.through -penstocks feeding two generating Lciting the plant in the Skagit Valley. Skagit had been - units ;with 140,000 kilowatts of capacity. The Salt e scheduled.to be in' service in 1986 and PP&L has a - Caves project would be located between two of

20% interest $he Pebble Springs project in Oregon, several hydroelectric plants operated by the Com-

sponsored by' Portland General Electric Company,.

pany for many years on the Klamath River in Oregon was delayed by 1979 Oregon legislation prohibiting, and California. The feasibility study would explore

issuance of a site" certificate until November 1,1980, two additional potential sites adjacent to'the Salt

! and ~ requiring new studies on safety and waste dis-' - Caves area. If the permits are granted on a timely l posal by the Oregon Department of Energy. Subse n basis, the project could be in' operation in 1985. ~ 5 m g 4 + 4 i f m w.q y g-A. h = qe-w3yav-qqr5 g-:. p 7 9

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r CO&I Subs diary posts NeW Records, annually to Prospect Point Coal Company, a union i Starts Work on Major Montana Mine Pacific Corporation subsidiary. The Company's mine supplying the Dave Johnston Significant expansions of activities were recorded plant near Glenrock, Wyoming, operated by NER- ~ for 1979 by NERCO, Inc., the wholly-owned sub-CO, produced 3.8 milhon tons. sidiary of the Company that manages the develop-ment of ove< 1.3 billion tons of surface coal reserves Bankhead Mining Company in Jasper, Alabama, in Montant., Wyoming and Alabama and is engaged acquired in 1978, produced 323,000 tons in 1979 for n in urarWm developments in Wyoming and New delivery to Alabama Power Company. In February,
Mexico, 1980, NERCO acquired another mine in northeast-NERCO's earnings contributed 72t to the 1979 per ern Alabama which supplied approximately 270,000 share earnings of the Company, before full alloca-tons to the Tennessee Valley Authority's Widow's tion of capital costs, almost double its 1978 contri.
Creek plant in 1979. but'on. The award in April of a federal mining permit sig-During the year NERCO and its operating suSsidi. naled the start of on-site mine development and aries: construction activities at NERCO's Spring Creek mine n s utheastern Montana north of Sheridan, -Reached record production levels at all owned Wyoming. Production is scheduled in late 1980 for or operated coal mines. delivery to a subsidiary of Houston Industries in -Received mining permits in April for the Spring Houston, Texas. Seven million tons of the annual Creek mine and construction at the Montana output are consigned to fulfill terms of the 25-year site was begun. contract for approximately 181 million tons. -Continued planning and pre-development Plans for two additional mines in Wyoming are work for two new Wyoming mines. going forward. Antelope Coal Company has a sales -Actively worked to market uncommitted coal contract with Platte River Power Authority, of Fort Collins, Colorado, for de.ivery of 900,000 tons an-reserves. nually from the Antelope field,55 miles north of -Reached an agreement, concluded in February, Douglas. A second Antelope contract is in negotia-1980, to acquire another Alabama mine. tion, calling for delivery of 4,700,000 tons annually -Began uranium mining tests in Wyoming. in 1989, with an initial delivery schedule of 800,000 Overall coal production associated with NERCO's tons in 1986. Construction of the mine, assuming operations at five mines in three states amounted to needed permits are obtained, would begin in late 22.9 million tons, up from 17.7 million tons mined 1981. Development of the 250 million ton Cherokee in the prior year. NERCO's share of the tonnage was reserve, west of Rawlins, is currently being planned 14.5 million tons, up 24%. The tonnage ranked for 1986, possibly to fuel a plant being considered NERCO the eighth largest coal producer in the U.S. in the area to produce synthetic natural gas from C 'I' The largest contribution to 1979 coal production came from the two mines operated by Decker Coal Pursuing its intent to develop other energy-related ' Company, a joint venture with a subsidiary of Peter opportunities, NERCO has a 99% ownership of Kiewit Sous', Inc., of Omaha, Nebraska. Decker's Nuclear Exploration and Development Company . production at the mines in Montana north of Sheri. (NEDCO), a Wyoming-based firm. NEDCO and Teton dan, Wyoming, was 13 million tons, ranking it the Exploration Company, Casper, Wyoming, jointly nation's second largest operation. Decker coal is have constructed a test plant near Glenrock, Wyo-marketed under long-term contracts to Common. ming, that will help determine the feasibility of pro-w alth Edison Company in lilinois, to Detroit Edison ducing uranium "yellowcake" from underground, Company in Michigan, and to the City of Austin, in situ leach mining. NEDCO's share of the venture Texas, through the t_ower Colorado River Authority. is 40%. NERCO also joined Union Carbide Corpora-Decker's reserves are estimated at 522 million tons tion in 1979 in a joint venture operation to explore cf strippable low-sulfur, low-ash coal, of which 307 ' and develop uranium leases in Sandoval County, million tons are committed to delivery through New Mexico. NERCO has a 35% share of this ven-2003. Decker is capable of producing up to 18 mil-ture, with an option on an additional 14%. NERCO lion tons annually, also is involved in the exploration of 17,000 acres of The Bridger Coal Company, which supplies the wholly-controlled uranium leases in Wyoming. g' Jim Bridger plant near Rock Springs, Wyoming, and Prior to the end of the year NERCO decided not is two-thirds owned by a subsidiary of NERCO, pro-to exercise its option to acquire majority interest in duced 5.7 million tons. The mine sells 500,000 tons NUBETH, a joint venture that controlled leases on 7
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..q' % ',3 4 g gg The two Decker Coal CompanVs mmes in southeastern Mon-jf A d' + V tana are located withm the 17.W) acres of leased lands m the s ,~ i dehniated area labusei and the mmma daturbed only 160 acres + j in 1979 while ptoducmg il mdhon tons, ranking the operation 1 y one of the nation's largest. Dec ker is one-hati owned by a sub-udiary of NCRCO, Inc, and supphes low sulfur, low-ash coal to 9.. utthties m Chaago. Detroit and Texas. ',N Aude from the land requued for roads radwass and storage [ ~ sdos and other stru(tures, the redamation work restores to grass j q p 7, g - and approsed shrubs about the same amount of land daturbed j ~ ~ annuaHy by the minmg. gf - - E, r ~ J Because the sod and (hmat.c factors san shghtiv from one area and another the redamatmn pmgram ditters shghtly m most T w g 's-c% .; [ Plains segetation with sariebet of grass that udt enhance the instantes, but the basic ettort is to replace the sparse Northern Y, ' - [' ~. .? . 7'W /I At the West Derker m ne (W, rehabibtation work has been m abihty to support hsestock and the same wtidhte that used the 1 / habitat under natural ronditions ' Y' ..,Y r t .M gd, p g; - , ' J, i $ }' progress smcc 1974 two years after mmma began. The minmg '/s., trench (1) is at the outer penmeter of the working area where t e h (.- f~ i* ^ u [ (cat seam is 53 feet thak. Topsod and osetburden a are pded
i. #
@c / <# ^ , } ,,.'/ near the trench One at the sis replanted areas @ n detaded m k e the smal!er pkture The East Dec ker mme tb was opened in r7 t, Y 3 1978 and redamation is m the planning stage. 9
112,000 acres of Wyoming property for the purpose sources that are just neginning to be developed on of uranium exploration. NERCO decided that in situ a broad scale. leaching of uranium from this property was not Alascom had a net utPity plant value of $295 mil-economically feasible and wrote off as a pre-tax loss lion at year end. For the full year (five months under it s $3,041,000 investment in the venture. RCA ownership and seven under PP&D, operating in addition to NERCO's coal holdings, Pacific revenues were $150,798,000, up 13%, and net in-Power is a one-half owner of the coal reserve that come was 519,796,000, up 101 supplies the Centralia, Washington, plant that the On an average day Alascom's 1,385 employees Company operates. The Washmgton Water Power will handle more than 100,000 long-distance calls, Company, one of the seven other owners of the - 2,200 telex messages and 500 telegrams. The major-Centraha plant, owns the other half of the reserve. ity of the long-distance messages into and out of the Production at the Centralia mine, operated by a sub-state are via satellites stationed above the equator, sediary of Wash,ington Water Power, was 5,051,000 Other services include computer data transmission tons in 1979, up from 4,694,000 tons in 1978. and access. Terrestrial facilities, satellites and 151 carth stations are used to serve 291 communities and 113 additional facility locations. Alascom also main-Telecommunication Operations Grow tai;is the communications system along the Trans-With Acquisition of Alaska System Alaska oil pipeline between Prudhoe Bay and Val-dez. In addition, the State of Alaska has contracted Acqu..t.isi ion of Alascom, Inc., the telecommun.ica-with Alascom to provide live television broadcasts, tions system that supplies long distance and other via satellite, from the primary U.S. networks to 55 related services between local telephone exchanges locations that reach 909 of Alaska residents. within Alaska and with the rest of the world, has greatly expanded the Company's operations in this Because or, the geograph.ic and climatic conditions industry. Together with growth of Telephone Util, and the distance between the villages and cities of ilies, Inc., which is 81% owned by PP&L and oper-Alaska the system has unique communications re-ates exchanges in six states, the enlarged telecom-sp nsibilities. For example, every village with a pop-munications activities have significant roles in the ulation of 25 or more is provided with at least one Company's long-term goals for corporate develop. telephone for emergency communications needs, such as obtainmg medical service that often is flown ment. into the community from the larger centers. Eamings from seven months of ownersh.ip of Alas-com, which was acquired June 1 from RCA Corpor-ation, and the full year's earnings of Telephone Util-ities, Inc., contributed 24e to the per common share Subsidiary Funding Programs carnings of Pacific Power, before full allocation of Enlarge Financing Activities capital costs. Financing activities were broadened in 1979 to TU has cont.inued its recent trend of post.ing rec-accommodate expansion in all three of the Com-ord revenues and net income. The 1979 operating pany's significant business segments. In addition to revenues were $54,170,000, up 21G; operating m-three major new issues of conventional securities, come was $12,613,000, up 19%; and consolidated f nancing arrangements were completed for NER-net income was 59,135,000, up 16.8%. CO's Spring Creek mine and the acquisition of The number of stations served by TU totaled Alascom Short-term borrowing capacity was also 185,737 at year's end, up almost 9% and well above enlarged. the national average growth. The gain reflects the On June 1 PACOM, the Company's wholly-owned favorable economic situation in the 99 communit,es subsidiary formed to acquire Alascom, Inc., con-i served by the TU exchanges m Oregon, Wash,ngton, summated a $210 million six-year term loan for this i California, Nevada, Idaho and Montana, purpose. The financing was funded by a group of 15 I TU's construction expenditures of $29 million commercial banks and managed by Morgan Guar-were financed from internal sources and inter-com-anty Trust Company of New York. pany loans. For 1980 it is expected that $35 million Project financing for Spring Creek Coal Company will be expended for construct,on, with REA loans was completed on June 25 when this wholly-owned i and short term borrowings used as needed. NERCO subsidiary entered into a $110 million pro-The acquisition of Alascom provides an oppor-duction payment financing with five commercial ' tunity to participate in the growth of the largest state banks headed by The Chase Manhattan Bank. The in the union,'a state with great diversities in re-funds are provided as construction proceeds and 10
will be followed by a ten-year payout term com-pany, there are no commissions or service charges j mencing in mid 1982. Arrangements for approxi-to the participants. j mately $36 million of equipment lease financing also Stockholders electing to participate may reinvest were made for this mine. the dividends from either or both common and pre-L The Company sold $100 million'of 10%% Fi'rst ferred stock in shares of common stock, and also [ Mortgage Bonds on April 10 to a group of under-may make cash payments, if they wish, in amounts writers led by Lehman Brothers Kuhn Loeb incor-of not less than $25 per payment and not more than porated. This group bid 0.693% for its compensa- $5,000 per quarter. Optional cash payments received tion and offered the bonds at 99.35% to the public. after a monthly investment date will purchase com-Net proceeds of. the issue to the Company were mon stock as of the next monthly investment date. I $98,657,000 at an effective cost of 10.4E Stockholders also may elect to participate in the P an by making the optional cash payments while l i During the summer negotiations were completed ' - for the private placement of 500,000 shares of the continuing to receive dividends in the usual way on Company's 9.15% $100 Par Value Serial Preferred their shares not held under the plan. Stock. Two investment banking firms, Merrill Lynch Stortholders whose shares are registered in names White Weld Capital Markets Group and Donaldson, other than their own (e.g., broker, bank nominee) Lufkin & Jenrette Securities Corporation, acted as must first become holders of record with the Com-the Company's agents in the October.11 sale to pany by having those shares transferred into their i twenty-three insurance. companies. Net proceeds own names in order to participate in the plan. A full w;re approximately $49,885,000, description of the plan and the forms necessary for Kidder Peabody & Co. Incorporated headed the participation are available by writing to the Office successful underwriting group that bid $18.271 per of Corporate Secretary of the Company. share for the January 16,1980, offering of 3,000,000 shares of the Company's common stock. The shares Energy Conservation Programs w;re reoffered to the public at $18.75. Net proceeds Heighten Public Awareness of Need to the Company were $54,813,000. Corporate short-term borrowing capacity was en- '..e Company's continuing commitment to elec-larged as the Company's authorization for issuing tric energy conservation was intensified during 1979 commercial paper and its domestic lines of credit and public awareness of the need to conserve was w:re raised to $100 million each. Twenty four com. heightened by the promotion of energy saving pro-I mercial banks now participate in the latter. In addi. grams and the services available to customers. tion, the five banks involved in Spring Creek's pro-Leading the way was the Company's interest-free duction payment plan provided a revolving credit loan program for weatherization of homes with lina of up to $39 million to Western Minerals, Inc.,_ electric space heating. Under this innovative, another NERCO subsidiary. nationally recognized program,6,700 residences had - Additional funds were provided by the sale of the been or were being weatherized at year end. Company's common stock through its dividend re-Under the plan, a homeowner requests the Com-investment and stock purchase plan and its em-pany to conduct a Home Energy Analysis (HEA) to ployee stock purchase plan. Over 172,000 shares be performed by a Pacific Power Energy Consultant. w;ra issued under the latter plan in 1979, an in-The HEA determines whether insulation of floors cr:ase of nearly 76% over 1978 sales. There are and ceilings and installation of storm windows and 2,100 employees of the Company and subsidiaries doors will be cost effective. The Company then participating in the1979 offering. ' offers to finance the necessary work as defined by the analysis through loans which are interest free until repaid. In Oregon, Idaho and Montana loans Dividend Reinvestment and Stock re t be repaid when the home is sold or transfer-red. In Washmgton, the loan period,s 10 years. i Purchase Plan Ava lable i Pending is a request for approval of the interest-free A dividend reinvestment and common stock pur. weati'erization plan in California. caase plan is available to holders of the common and During the term of the loans the amount out-preferred shares. During 1979 the Company re-
standing will be included in the Company's rate

ceived $8,405,000 from the sale of 419,303 shares of base in the state where applicable and the rate of common stock to the 17,000 stockholders partici-return will partially offset the cost of the funding.
pating in the plan. Sales of shares were up 45% from Through 1979 the loans totaled $6 million. 1978, the initial year. In addition to savings to the customers, the bene- = With the plan being administered by the Com-fit to the Company is the opportunity to obtain kilo-11 p E
- witt-hours of energy th'at can serve new customers. The staffing for the fourth generating unit at Jim These kilowatt-hours are available at a lower cost Bridger added 85 new positions while a higher level than power from new plants. In the long term this of production at other power plants required 44 new reduces capital outlays for new generating capacity employees. The Company's construction force add-and hcips reduce overali cost of service. ed 16 positions due to greater work load for projects , in 1979 the Company received 16,000 requests for important to system and subsidiary operations and In HEA, of which 12,800 were completed by year to maintain operating efficienc:es. end. District operations added 100 new employees to meet the continuing near-record customer growth Other activities include the Energy Saver Home and the emphasis given the energy conservation program that recommends specific features for new programs. At the General Off,ces in Portland new i home construction; the Energy Wise Home program positions were filled by a department established that certifies dwellings that meet four of six conser-to centralize the processing of payments from cus-vation standards; reviews that seek power use ad-tomers system wide and to staff the increasing data justments affecting commercial and industrial ener-processing work of the Company. gy loads which are 59% of the Company's load and have a potential saving of 25%; and advisory serv-The principal subsidianes (NERCC, Telephone ices for contractors, developers, architects and de-Utilities and Alascom) employed 3,249 at year end, signers to optimize energy savings in new structures - higher because of enlarged coal mining operations and to encourage application of passive solar tech-f NERCO and the Alascom acquisition. nology where possible. The Company's interest in research and develop-ment of new techniques encompasses a broad range System Electn.c Power Operations of activities related to solar energy applications and Increase to Meet Customer Needs wind, geothermal and biomass alternatives for gen-For a second consecutive year low river flows in eration. the Pacific Northwest reduced output from the Conservation communications include the avail-Company's 33 hydroelectric plants and forced ability of brochures on a range of subjects, including greater reliance on generation from the Company's insulating water heaters, making storm windows, seven steam-electric plants to supply the increased heating with wood, and passive solar systems adapt-energy requirements of existing and new customers able for households. on the system. Promotion efforts were highlighted ir 1979 by the The steam-electric plants, principally coal-fired, development and sponsorship of an hour-long tele-produced 66% of the system load, hydroelectric vision program designed to heighten public aware-plants supplied 13% and purchases from other sys-ness of the need to conserve electricity and the tems under long-term contract and exchange agree-industry's problems. Television star Steve Allen was ments,mostly hydro,provided 21% of theload. master of ceremonies for the question and answer The Company's total generating capacity was presentation, entitled the " Electric Energy Test." 3,P70,181 kilowatts at year end, on a nameplate rat- - Thousands of viewers subsequently submitted en-ing basis, an increase of 339,039 kilowatts over the ergy saving ideas and the Company is promoting prior year with the enmpletion of the fourth unit at . those that offer prospects for savings. A shortened the Jim Bridger plant in Wyoming. film version of the show is being shown in schools General retail customers purchased 18,446 million and to adult groups throughout the system. kilowatt-hours of electricity during 1979, an in-crease of 7% over 1978. Temporary sales to other utilities for resale amounted to 3,581 million kilo-Growth of Electric Operations w tt-hours. These sales were during short-term pe-nods when the Company had capacity surplus to its Requires Work Force Addit. ions own requirements. Other energy sales amounted to i Growth in the number of electric customers re. 816 million kilowatt-hours. quiring service, increased activities associated with During a severe cold period in January-February the Company's program promoting weatherization of 1979 the system recorded a new high peak de-of houses to conserve energy and expanded power mand of 4,084,000 kilowatts on February 2,1979. production operations resulted in a net addition of Similarly in January-February of 1980 a prolonged 310 employees to the electric operations work force. period of cold weather across the system pushed de-At the end of 1979 there were 4,294 employees mand to a new peak of 4,222,000 kilowatts on Janu-
working for Pacific Power.
ary 30,1980.
12
1 Research Activities Advance Concepts Dry desulfurization processes that will permit For Alternative Energy Sources existing and future power plants to operate in con-formance with air quality regulations on a more The Company's research activities continue to cost-effective basis are under test at the Jim Bridger expand in areas relating to greater efficiencies in plant in Wyoming. Significant cost saving may be ) power production, impacts of system operations on achieved in dry desulfurization of the gas emissions l the environment, alternative energy sources such as from coal-fired plants as compared to conventional solar, wind, geothermal and biomass concepts and wet scrubbing techniques. conservation techniques. Investigations of solar applications for residential i in addition to projects sponsored directly and water heating at several sites with varying climates those in association with neighboring utilities, the have been completed and a report is being pre-Company also was a $1,962,000 participant in the pared. In Portland, Oregon, the energy conservation 1979 funding of the Electric Power Research Insti-laboratory designed to duplicate residential condi-tute's $205 million program, which was supported tions, TERA One, has been further modified to ac-by 500 utilities and government agencies. EPRI ac* commodate monitoring of both active and passive i tivities embrace a wide range of projects directed at solar heating systems. The latter utilizes various fea-both near-term and long-term problems and needs tures, including an attached greenhouse to collect that can benefit utility systems and their consumers. heat. Since its founding in 1973, EPRI has undertaken During 1979 the Company initiated studies of the I some 1500 mvestigations, and a number of these reliability and performance efficiencies of a new have provided direct contributions to improved type of residential water heater using the heat pump operations for PP&L. concept by installing several such devices for testing The Company's efforts include those aimed at im-on customer premises. The objective is to reduce by proving generating availability of existing steam-at least one-half the electric energy use for house-electric plants. The work involves improving coal hold wa ter heat, 'g. quality, boiler modifications to accommodate varia-The Company is an active participant in prelimi-tion m coal quality, and stronger emphasis on pre-nary geothermal studies in northern Nevada. The sentive maintenance practices. initial studies suggest a 10,000-kilowatt well-head generating unit, assuming a satisfactory contract can s k q be reached with a supplier of geothermal fluid. It is hoped the test unit could be in operation by June, ~ N Q 1981. Studies are being conducted to determine the use ,a f,U of biomass as an alternate source of energy. These J mmmmmmmmuss'r include a study of the Willamette and Umpqua na- ,/ tional forests in Oregon to determine if trash residue remaining after logging operations could adequately j support steam-electnc generation. 3M1,7.' < + ,2 r A project on wind power will be expanded in 1980 , ' j. j; # ~ g y.a& to develop methods for determining wind power 1 jer M g i potential at various locations and establish informa-4 4 y ?.c n tion on customer-sized smaller generators. y g a For two decades the Company has sponsored fish + ~[ i propagation experiments on the watersheds where it operates hydroelectric reservoirs. In May,1979, in j [ \\' cooperation with the Washington State Deoartment g of Game, the Company's biologists released 70,000 = young steelhead trout into the North Fork of the + % Lewis River downstream from the Merwin reservoir i _gm% This transmission line tower is one of hundreds that will carry in southv.estern Washington. The steelhead were the Company's new 500,000-volt circuit 4s0 miles from eastern reared from three-inch fmgerling size to eight, ches m idaho, across southern Idaho and southern Oregon to south-in an experimental pen formed of nylon net and western Oregon. The tie will strengthen the link between the suspended in the reservoir from floating platforms. Company's coal-fired generating plants in Wyoming with its The juveniles will journey to the Pacific Ocean and system m s uthwestern Oregon. A 90 mile segment was should return as adults in the summer and winter of energued in February,1980, between Medford, Oregon, and Malin, Oregon. 1961 and augment the sport fishery of that river. 13
ym, =- v p-g- n a
SUMMARY
OFJCONSOLIDATED. OPERATIONS Years Ended December 31 J1979 1978 1977 1976 1975 UTILITYOf ERATING REVENUES: The usands of Dollars - . Electric $487,855 $453,393 $360,212 $316,198 $267,586
Telecommunications -.
142,360 44,698 37,155 32,248 28,836 Other >. .<i.... 9,893 8,428 7,257 - 6,524 5,073 TOTAL UTILITY OPERATING REVENUES. 640,108 - 506 519 404,624 354,970 301,495 ~ UTILITY OPERATING EXPENSES: Operation: Purchased power and fuel expense ', 130,327 %,412 '76,452 65,761 56,368 AE'%istrative and genera! '. 48,936 31,247 28,330 25,317 21,806 ? $ i$1.c[ utility operation expense 105,265 60,272 48,600 43,231 38,573 Maintenance 82,820 43,074 34,564 29,522 27,454 , Depreciation 76,161 60,344 51,158 44,093 35,834 Taxes other than income taxes. 38,751 36,607 34,739 29,892 26,062 Federal and state income taxes. (1,838) 30,519 8,912 6,318 47 TOTAL UTILITY OPERATING EXPENSES 479,922 358,475 -282,755 244,134 206,144 NET UTILITY OPERATING INCOME. 160,186 148,044 121,869 110,836 95,351 OTilER INCOME (DEDUCTIONS): 1 Allowance for other funds used during construction. 23,541 15,986 8,283 10,976 14,015 Coal mining operations--Net. 46,777 17,978 15,558 17,650 12,414 Other income-Net of deductions. (2,755) 75 11,907 8,770 2,048 . Income taxes (13,324) (2,535) 216 (797) (3,473) OTHER INCOME (DEDUCT ')N5)-NET. 54,239 31,504 35,964 36,599 25,004 'lNCOME BEFORE INTEREST CHARGts...... 214,425 179,548 157,833 147,435 120,355 INTEREST CHARCES: ' interest on lo_ng-term debt '. 113,351 83,768 73,877 65,003 52,536 Allowance' fo' borrowed funds used during construction (crediu (17,491) (11,342)' (6,685) (8,504) (14,006) r Amortization of debt discount, premium and expense--Net. 695 558 488 420 361 ~ Other interest '. 5,359 777 1,578 3,601 9,020 . TOTAL INTEREST CHARGES-NET '. 101,914 73,761 69,258 60,520 47,911 NET INCOMF,. 112,511 105,787 88,575 86,915 72,444 Preferred Dividend Requirements 19,612 17,200 13,959 12,375 8.631 . EARNINGS APPLICABLE TO COMMON STOCK $ 92,899 $ 88,587 $ 74,616 $ 74,540 $ 63,813 Average number of shares of Common Stock outstanding (in thousands) ~. 37,692 35,319 33,626 30,016 27,725 I Earnings per common share $2.46 $2,51 $2.22 $2.48 $2.30 Cash dividends declared per common share, 1.95 1.89 1.80 1.725 1.675 1
MANAGEMENT'S DISCUSSION AND ANALYSIS:

OF
SUMMARY
OF CONSOLIDATED OPERATIONS
. UTILITY OPERATING REVENUES = Electric operating revenues increased' 26%. in :1978 and 8% in 1979 due primarily to the effect of higher rates. During 1978, sales to other public utilities of generated power temporarily surplus to the Company's needs were substantial,'while such sales declined in 1979. Adverse water conditions in 1977 and 1979 caused these sales to be approximately 53c8 and 79%,.respectively, of 1978 amounts (see " Energy Sales, Customer and Other Statistics" on page 30).lIn early 1980(water conditions improved but regional streamflow and reservoir levels remained below ' normal; ~ ~'
Telecommunications revenue l'ncreased 20% in 1978 as a cornbined result of sustained growth in the number of stations served, higher toll settlements and a rate increase in early 1978. In 1979, telecommunications revenue grew
-14L p q 1' -..d s m.. y
%+M ipo 3 p ,' w %Qfk M, M E(}k h' @ ' % v Q f C29 ',. ' ~ 2 n ~ f ik ' ~. ' f / , [. 4. ,w-$ e w.n W d2189' as 'a assait as the continuance of positivo growth factors and, most significantly,'the inclusion of seven months 1 ~ lof Alascens sevenues't$37,705,000) since its ' acquisition onLJune 1,71979 (see: Note.9 to Consolidated Financial - eM Statements). i' ^'Y i,m ~ -l A . Other..ut,d,ity lwaterTand steam heat) revenues also in. creased in N78'and 1'979'as a result of the .s+ .mn ? 4 ~,r m .c 7./.' 3;r.: See page 4 for information regarding rate increases gfanted and pending? quw n . +. e; an'..s.- gf$ UTILITY OPERATING EXPE,NSEj " f, .j. M W ileS1978 total utility' operating expenses rose '27% due primarily to increased purchased power,'as a result of prester avadability of secondary hydroelectricity, higher fuel, maintenance and other expenses resulting from in- .~ essasing'une of La greater, number ofi 9m-electric plants, increased depreciation, primarily' related to higher rates - si, N eNectwe January 1,1978 and increased income taxes, due to higher levels of utility income and the deferral of sub. g stantial[ amounts of,'irwestment tax credits utilized bylutilityoperationsin1978s ~ [in 1979, total Mity operating expenses we'r 34% greater than in 1978[ Substa'ntially higher fuel, other produc-s y tion land maintenance expense were related to the poor water conditions and a resultant increase in steam-electric (generation,'as well as to the Company's continued greater overall reliance on steam-electric resources. Also contrib- _uting to the increase in operation expenses were lease charges for Wyodak; which commenced operation in June 1978, and were ' reflected for a full year in 1979. Increases in depreciation, administrative and general and other utility. J ' 3' 6 operation'expensei as well as a portion of the increase in maintenance expenses, primarily result from the inclusion ~ M' Kof Alascom's operations since June 1,1979 (see Note 9 to Consolidated Financial Statements). Income taxes in 1979 ~ { declined due,in part;to reduced levels of utility taxable income. n.. y m s T JOTHER INCOME (DEDUCTIONS); ~ Other income 5(deductions)-net' deMned.12%l in 1978 from 1977 principally due'.to the non-recurring. sale - '_(of Wyoming coal reserves in June 1977, whu.iwas only partial 1y offset by a higher level of allowance for other funds s used during construction in 19781 - - ~ 2 ~, ~ s i$ubstantial improvements in coal mining operations during11979 was' the ~ primary cause of the 72% increase in 4 her income (deductions)-net over 1978. Revenues from coal mining operations (including the minority share in T; Jot T 18tidger Coal Company), increased 20% and 89% in' 1978 and 1979 respectivelyias a result of increased production ' ' (and prices.tWhile annual. coal production declined 8% for 1978,'primarily due to. transportation related problems g iand to poor early-year weather conditions,:more normal operations and favorable short-term sales resulted in a 27% a / production increase in 1979/The average. price for coal increased approximately 30% in 1978 and 47% in 1979. e Sincreased, revenues more. than offset: increased' costs as' coal mining operations-net (before interest expense and . '> income taxes) increased 16% i.n 1978 and 160% in 1979. > ~ - ~ ~ R iT693%' increase in'allowarice for other funds used during construction in 1978 is due to increases in both the - Jallowance rate and the level of construction' work in progress,fwhile the 47% growth'in this item in 1979 resulted ~ donly from an increise in the level of construction work in progress.; income' taxes attributable to other income in- ~ < icreased in 1979 principally because of greater coal income. Total income tax expense was partially offset by.the flow-ithrough' of certain investment tax credits generated by utility operations (see Notes 1 and 6 to Consolidated Financial "u ' i Statemen's); ~ i ~ ~ t ' ;L_, TMINTEREST/CHAlkCEST i s [~n e N increases in in'terestihargesf-net iri1978 and 19'79 (7% 'and 38%, respectively) resulted from the issuance of addi-3tionallong-termdebttofinancetheCompanies' continuing, construction programs and mine development activities, , [and.in 1979 from costs of long. term debt incurred in the acquisition of Alascomt ~ ~ kNET INCOME? ' W @' )MContinuinfincreases'in operating expenses a'nd interest chargeswere'offsetbyvarious other income, with the result that net income improved in both 1978 and 1979. \\ ' 3 ..... m - _~. e 3 y s W L EARNINGS APPLICA8LE TO COMMON STOCKi ~ Og SThe increaselin net income'in:1978 re'sulted in 'an increase in earnings applichble to common stock and earn- ~ lings per common share, despite' the increase in preferred dividend requirements (caused by the issuance of 1,600,000 A Z Madditional shares of No Par Preferred Stock in May.1978) and an~ increase in the average ' number of common shares 'outstandingJThis latter increase is attributable to the offerings of 2,500,000 com. mon shares in May 1977 and October ~ ~' / W q1973.2 i @ + a N [the issuance in October of 500,000 shares of $100 par preferred) which res d 2 ~ j?q$ to common stock l Eamings per common share decreased from?1978t however, due to h aN fi g;snumber of common shases outstanding? P ', 1 h? m n &3 > gn y J: %m ;, M W # M 9,??h! h lb Y '.',,, m,-- $ LY$L m$? Y, Y a~ ag '7J < M. .M-4'm 1. V 'yfW WLs fi n Fw + v %a y p'vdag%W . p ww Ud n m_s > sas ~ - n is
CONSOLIDATED BALA5CE SHEETS ASSETS: DECEMBER 31 1979 1978 UT!LITY PLANT (Notes 1 and 5): Thousands of Dollan UUlity plant in service: Electric. $2,168,890 $1,921,240 Telecommunications 493,610 132,867 J Other. 37,215 33,344 iTOTAL, 2,699,715 2,087,451 Accumulated piovision int depreciation and amortization. (489,481) 0 77,750) UTILITY PLANT IN f skVICE-NET. 2,210,234 1,709,701 Construction work in progress (Note 7). 406 422 412,329 Other utility plant 21,692 19,601 UTILITY PLANT-NET 2,638,348 2,141,631 l OTHER PROPERTY AND INVESTMENTS (No' te 1): Nonutility property (less accumulated provision for depreciation and amortization-1979, $29,809,000,1978, $24,690,000). 148,851 114,277 ' Other 57,847 22,251 - TOTAL OTHER PROPERTY AND INVESTMENTS. 206,698 136,528 CURRENT ASSETS: Cash (Note 2). 13,632 2,971
Working funds and deposits.
3,669 2,740 Temporary cash investments 5,216 6,520 Accounts receivable: Customer (less accumulated provision for uncollectible accounts-1979, $1,532,000,1978, $585,000). 93,129 52,352 Other 19,006 18,721 Materials, supplies and fuel stock (at average cost). 58,100 41,978 Prepayments 4,724 3,245 TOTAL CURRENT ASSETS 197,476 128,527 - DEFERRED Dl81TS: Unamortized debt expense. 4,082 3,038 Preliminary survey and investigation charges..... 13,322 11,747 '. Miscellaneous work in progress.. 45,408 30,360 Other. 23,453 18,091 .-TOTAL DEFERRED DEBITS 86,265 63,236 s TOTAL ASSETS . $3,128,787 $2,469,922 4 J ISee accompanying Notes to Consolidated Iinancial Statements) 116-
3 1 f ^ .P. CIFIC/ POWER & LIGHT COMPANY M; V t l T + a, w ill BILITIES DECEMBER 31 1979 1978
CAPITAllZATION:
Thousands of Dollars
Common Equity (Note 3):
S 123,498 $ 121,576 - Common stock 478,292 468,841 Premium on capital stock. 142 101 Installments received on common stock.. L Capital stock expense. (21,859) (21,587) 228,517 209,208
Retained earnings...,
227,236 227,236 ' Preferred Stock (Note 3)'.. + Redeemable Preferred Stock"(Note 4)' 50,000 1,515,599 1,138,395
Long-term debt (Note 5) l.....
TOTAL. CAPITALIZATION 2,601,425 2,143,770 CURRENT LIABILITIES: Long-term debt currently maturing. 53,733 19,629 10,000 6,000 2 Notes payable (Note 2)
Commercial paper (Note 2).
56,000 13,500 Accounts payab!c. 66,437 44,617 Taxes accrued 54,236 54,054 26,026 23,109 Interest accrued....... 25,053 22,612 - Dividends declared.. Other : 38,830 15,888 4 TOTAL CURRENT LIABILITIES.. 330,315 199,409 DEFERRED CREDITS; c 10,635 9,100 Customer advances fos ' onstruction'. . Accumulated deferred investment tax credits (Notes 1 and 6) s 37,536 24,396 - Accumulated deferred income taxes (Notes 1 and 6): 19,032 20,700 ' Accelerated amortization - ',...,......... 74,355 33,310 ~ Uberalized ' depreciation : 21,300 15,911 ' Other. s. 13,443 8,125 Other -. :. 176,301 111,;42 TOTAL DEFERRED CREDITS" 2,746 2,102 _: OPERATING RESERVES c c... ~...................... 18,000 13,099 ' MINORITY INTEREST IN SUBSIDIARY COMPANIES. - COMMITMENTS AND CONTINUENT LIABILITIES (Note 7) 53,129,787 $2,469,922
TOTAL LIABILITIES F..............
- (See accompanying N>tes to Consolidated FinancialStaternents) ' j l7 3 s (w: .-f
[ STATEMENTS 10F CONSOLIDATED INCOME veari ended oecember 32 1979 1978 . UTlUTY OPERATING REVENbES: Thousands of Dollars . Electric.. ,q.. $487,855 $453,393
Telecommunications (Note 9) 142,360 44,698
- Other.... 9,893 8,428 TOTAL UTILITY OPERATING REVENUES 640,108 506,519 . UTILITY OPERATING EXPENSES: i Operation: Electric utility:. Power purchased and interchanged-Net. 41,695 37,753 fuel expense.. 88,632 58,659 Other production.. ~ 30,984 16,567 . Transmission and distribution 22,012 20,346 Custorrer service expense 15,803 13.126 Other utilities.. 36,466 '0,233 Y. Administrative and general. 48,936 31,241 M ' Maintenance ..a. 82,820 43,074 Depreciation - 76,161 60,344 ~ Taxes other than income taxes ' 38,251 36,607 Federal and state income taxes'(Notes 1 and 6). (1,838) 30,519
c. TOTAL UTILITY OPERATING EXPENSES.
479,922 358,475 NET UTILITY OPER'ATING INCOME. 160,186 148,044 - OTHER INCOME (DEDUCTIONS): A!!owance for other funds used during construction (Note 1). 23,541 15,986 Coal mining operations (Note 1)i - Revenues.. ,c. 163,652 86,518
. Expenses other than in' ome taxes (114,265)
(66,295) c Minorityinterest. (2,610) (2,245) ' Other income - 7,113 5,647 - Other deductions (8,118) (3,988) ' Minority interest in telephone operations (1,750) (1,584) , income taxes (Notes 1 and 6). (13,324) (2,535) OTHER INCOME (DEDUCTIONS)-NET 54,239 31,504 INCOME BEFORE INTEREST CHARCES. 214,425 179,548 c INTPtbT CHARCES: ' Interest'on long-term d(bt'. 113,351 83,768 Allowance for borrowed funds used during construction (credit) (Note 1).. (17,491) (11,342) 1 Amortization of debt discount, premium and expense--Net. 695 558 Other interest ' 5,359 777 s 1
TOTAL INTEREST CHARCES 'lET.
101,914 73,761 .' NET INCOME, 5112,511 5105,787 l Eamings per' common share, based on average number of common shares ou%tanding during L', each year-1979,37.692,000;1978,35,319,000 (after recognition of preferred dividend require-ments of $19,612,000 for 1979 and $17,200,000 for 1978). 52.46 $2.51 ) s LSTATEMENTSiOF CONSOLIDATED ve,,, ended Decemse,31
RETAINED EARNINGS-
78 Thousands of Dollars i Balance,' January 1 5209,208 $187,450
Net income i.'
112,511 105,787 1 ? Total I... ...cv. 321,719 293,237 i . ? Deduct cash. dividends: lf l-J ( Preferred stock f.?.. 19,612 17,200 Common stock :. 73,590 66,829 Total cash dividends '. ; i. 93,202 84,029 l ~ Balance Deccmber 31 (Note 3)..,......... 5228,517 $209,208 rs; lfSee accompanying Notes to Consolidated Financial Statements) h 1 {o J18z x.. b%www -- i
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r (p l (q m a u 2 I lJ(STATEMENTS lOECblANDESciN f S /CONSOL,IDATED FINARCIAliPOSITIONL h,. - Years Ended December 31 ~
Y,X $OURCE OF FUNDS '
l 1979 1978 e Thousands of Dollars . ~ 1 From Operations: , = %- 2
p.
$112,511 $105,787 ~ i Net income.
1. ',
~ ~ 'f ~> '- y Non-cashitarges (c'redits)Lto ' income; 76,161 60,344 1~
Depreciation-Utility plant'..
i ~ 9,602 5,898 ~ ~ f.f L.. -Nonutility property ' g. W. 4 ;. fE ? Deferred income taxes-Net. '. 13,230 3,801 . Investment' tax credit' adjustments-Net ).,. SE. (3,071) 19,147 (41,032) (27,328) L Allowance for funds used during construction _.....,,......... 6,279 6,844 ? Other4 Net '
TOTNL FROM OPERATIONS.
173,680 174,493 L ,.... From Outside Sources: 354,574 53,237 ' Long term debti. .9. ~ . c.5 49,885 ,1 Redeemable preferred stock.. .S 38,530 ' Preferred stock. .u.. 11,257 59,119 Common stock Net increase in short-term debt......... 46,500 19,500 l ' $ Net decrease'in temporary investments.,. 1,304 1,165 463,520 171,551 TOTAL FROM OUTSIDE SOUGS.. s Sale of W)3dak project' constructed for leaseback. 211,453
Decrease (increase) in working capital (excluding short-term debt and temporary investments)
(19,951) (7,217) Other sources-Net '. t '.c v. 4,243 8,788 $621.492 $559,068 TOTAL SOURCE OF FUNDS. l APPLICATION OF FUND 5: 1 Construction expenditures: . 5300,875 $271,219 L Utility plant ; 56,883 38,954
Nonutility prope ty.. J.'
~ 357,758 310,173 ' Totai constr'u: tion expendituresa.
1. ;.
IAllowa' nee for funds used dUring constnictionL.... (41,032) (27,328) ~
Construction expenditures--Nc5 L.
316,726 282,845 t . Purchase of Alascom,Inc.,less' working capital acquired: l P.roperty--Net k. 5....... [..., 274,984 J Other assets'and liabilities--Net.,.. (7,070) . / Long-termLdebt asumedi... (90,000) ! Purchase'of interest in nonutility companie* '. 5,388 Dividends-P=ferred stock..' '. '. ' '. ~ 19,612 17,200 f-Common stock c. 73,590 66,829 l Long, term debt reduction...... '. '.. '... 33,650 186,806 ' T TOTAL APPLICATION OF FUNDS f...". $621,492 $559,068 > +e .= [ ^ ~, _ fSee accompanying Notes to Consolid&d financialStatements) i ~ Y i
h. ;.
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- ~ b i This 1979 Annual Report has been prepared by the 7 Company to provide general and statisticalinforma. >V r tion conceming the Company,and not in connection e., gc e ? with any sale, offer for s?Ie or solicitation 31 an offer ,c g. 2 - - '; ^ as ~ b,. a tobuyanysecurities. hl jQ1: hx;, \\ 1 y 19 bgf
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= r b, .v 2% m1 7N6tesWCsnsolidated Financial Statements , December 31,1979 andl.1978 / O &a L [ /1.l SUMMARf0F SIGNIFICANT ACCOUNTING POLICIES: 1 '^ ! Basis of Presentation--T 44
The consolidated financial' statements' include those of the Company, its majority-owned subsidiaries und a 50% interest in the assets, liabilities, and results of operations of a commercial coal mining joint ven-1 ture ("Compa'nies"), since dates of organization or acquisition. Utility' operations include electric, telecom-jmunications, water, and steam heating. Electric utility operations' include two coal mines which produce
~ coal for Company plants (See Note 10). Coal mining operations include the commercial coal mining joint senture interest, a wholly-owned commercial coal mining company, and a 66%% owned coal mining 1 company which primarily serves a Company plant and also sells coal commercially. 7 ~ LRevenues from" coal mining operations include sales to a joint venture partner of $14,423,000 in 1979 ~ i "and $11,603,000 in 1978. Payments to an affiliate of a joint venture partner for equipment construction, de-velopment cost, and management services aggregated $4,290,000 in 1979 and $18,525,000 in 1978. E All signifisant' intercompany transactions and balances have been eliminated, except certain purchases of coal and leasing of equipment from nonutility subsidiaries because of the distinction for regulatory pur-poses between utility and nonutility operations.Such eliminations would have had no effect on consoli-1 , dated net income? RegulatoryAuthor' ties--c i Accounting for the u'tility operations of the Companies is in conformity with enerally accepted account-8 '.ing p'rinciples as applied to. regulated public utilities and as prescribed by federal agencies and the regula- - tory agencies of the.various states in which the Companies operate. . Utility Plant- : U.tility plant in service is stated substantially at original cost. Additions to utility plant include the cost L of contracted services, direct labor and material, indirect charges for engineering, supervision and similar coverhead items, and an allowance for funds used during construction. ~ 1Maintenarice and repairs of property,'and replac'ements and renewals 'of items determined to be less than units of property, are charged to operating expense-maintenance. The cost of units of property re-L placed or renewediplus removal costs, less salvage, is charded to accumulated provision for depreciation, g ! and.the cost of related ' replacements and renewals is'adCed to utility plant. Betterments are charged to
utility plant. Upon sale or disposition of property other than throu8 normal retirement, the difference be-h

tween the proceeds realized and the cost,less the estimated portion of the accumulated provision for de-preciation applicable thereto, is recorded in income.
- Depreciation of utility plant'is coniputed under the straight-line method based on the' estimated service . lives of the variou's classes of prbperty. Provisions' for. depreciation were 3.39% of average depreciable s ~ plant in service for 1979 and 3.16% for 1978. ~ ~ J Other PropertyandInvestments- '
Nonutility property ~ (principally coal mining equipment) is stated at cost. Depreciation is provided prin-
~ cipally on the straight-line method based upon the estimated useful lives of the related assets. Coal m;ne Edevelopment costs are capitalized and amortized over the life of the mine. ~ 4 The excess of cost over net assets of businesses acquired ($49,800,000 and $14,400,000 at December 31, W l1979 and 1978, respectively) is recorded.~as other property and investments-other, and is Benerally being L tmortized over 40 years (see Note 9).: ' ~ ' ~ 9 $$owanceforFundi0sedDururigCons'truction-- ~ 4/An allowance for~ funds'used during construction, which'is' capitalizsd as part of the ' cost of most 1 Dutility' plant,is defined by regulatory agencies as the cost of borrowed funds used for construction purposes ~ ~ and a reasonable rate on other_ funds when so 'used. Generally, the composite rate used was d%% for both ,, years.a / p 1 MWM m g
f ', #
j 4 0 , -4 3 j + 5 t - N h ^- p# -Wr gy - ;4_ a; e w s~ m m_ m
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x n- ~ L Q 3 m L~ 1 ,u y rf. ~.. -~ we ~; y [ vg ;#@ f ' x- %@49 m W . 4 %s4 n+ y ',g, O _m-m Income Tanes-t L n 7The'l Company files'a conso!idatedl ede'al' income tax return. Income' tax provisions'of the individual f r companies are yted on a separate return basis.( 1 J Fur income' tax purposes, the_ Companies generally compute depreciation under the liberalized methods - f allowed by the Asset Depreciation Range System 1ADR) wi ich became effective in 1971. For electric, steam l jKt heeting, and water utility properties,' deferred income taxes are provided for the excess of the tax reductions
attributable to the use of ADR over the use of liberalized depreciation methods and guideline lives used f prior to the adoption of ADR. The tax reductions ~ relating to the difference betweer, such prior liberalized
% methods 'and; book depreciation are flowed through to net income. For telecommunications properties, de- >#; } ferred income taxes are provided for.the total tax reduction resulting from the excess of the ADR method .; lover book depreciation. Deferred income _ taxes'are not provided for certain other differences between " J book and taxable income of the utility ' operations.'Under regulatory practices to which the utility opera-J tior:s of the Companies are subject, it is expected that most income taxes not provided for currently will be ~
recoverable through; revenues when such taxes become payable. Deferred income taxes are provided for
' s all timing differences of the coal mining operations.l l Federal inc$me taddductions resulting from the investment tax credit relating to utility plant, other ? j than telecommunications;are deferred and amortized to income generally over eight-year periods. Begin - 2 ning in 1976,wi_th regulatory approval, investment tax credits, generated by electric utility operations, but P
not estimated to.be realizable by such' operations on a separate return basis, are credited to other income
~ ; tithe extent currently realizable on a consolidated federal tax retum basis. Previously, any such credits uti- , ? tized on the consolidated return would also have been available on a separate return basis by the electric Jutility operations'; investment tax credits' relating to telecommunications plant are deferred and amortized ~ ? ta income over the estimated useful life'of the property. The coal' mining operations flow investment tax . credits through to income in' the year the credit is realized / ~ ~ . s IDeferreSl income; taxes accumulatedprior to'1964 resulting from' accelerated amortization of certain 3 j properties under Necessity, Certificates'are being amo'rtized to incomeLover 25-year periods.. m s . RetiremeniPlans--- ESubst' ntially all'empidyees of the Companies are covered utder various retirement plans. Pension costs N' a c are funded as the liability accrues, based on.' actuarial determinat:ons, including amortization over a 30-year - ) period of unfunded prior service. costs? ^ s - j RevenueRecogniS$n ! _~ l a : l Utility operating revenues are' generally recog'nized on the basi of cycle billings rendered monthly. The ' fCompanies do not accrue revenues' for services beyond such cycle billing dates. vg 4_, , : n 1 3 4_ I2.I COMPENSATING BAl.ANCES'AND'SHORT-TERM BORROWINGS: s dubstanti4lly all of the funds inEluded in cash are in'th'e form of demand deposits and_ include compen-
sating balances informally, required by banks under lines of credit with respect to outstanding short-term
, Lloans and unused lines of credit. These balances may' be withdrawn without restriction for use as general Loperating fundsion a day-to-day basis,'provided the Company maintains certain average bank balances. h ! I Dsc$mbe' 31,Y1979 and 1978, the Company's total bank commitments under lines of credit were ~ r r $100,000,000 and $79,000,000, respectively. Minimum compensating balance ~ requirements were $9,150,000 ~ and $7,400,000, respectively,1to be increased in some cases depending on usage. Th' lines of credit are pe-e riodically reviewed by the various banks and may be renewed or cancelled. A $50,000,000 Eurodollar loan N* ? facility which expired in March:1979 was renewed with a $75,000,000 facility expiring in M dwhich no compensating balances are required. Commitment' fees charged in connection with the Euro- , idollar loan facility and the lines of credit are not significant. The Company also has authority to' issue up to
j $100,000,000 in commercial paperf g
gm. -Q r ,U u 't s ,/ *. y y ' " 3[ ' Q' t%' ,n= 32,< - ~ ~ ~ - m :- _m; a h h ,N s , y -%~f@ ~ W.. % Mi .. Ng s 4 <
,. r Os ? $ $...,,,,
3. COMMON EQUITY AND PREFERRED STOCK:
Capital stock issued and Outstanding Number December 31, of Shares .1979 and 1978 O ' Preferred stock: Thousands of Dollars 5% ' preferred, cumulative; authorized, 126,533 shares of $100 par value............... '126.533 $ 12,653 Serial preferred, cumulative; authorized,2,500,000 shares of $100 par value (including 1500,000 shares of Redeemable Preferred Stock-see Note 4): .4.52%........,................ 9,835 984 7.00% s......W........... 18,060 1,806 6.00%..................................... 5,932 593 5.00% %.............. 42,000 4,200 5.40%...........,............................ 70,000 7,000 4.72%'............................ 100,000 10,000 14.56%........................... 100,000 10,000 8.92%............................................. 150,000 15,000 9.08 % '........... ;......... 300,000 30,000 J7.% %............. 250,000 25,000 No par serial preferred, cumulative; authorized,8,000,000 shares; ' $2.48 (stated value, $25)................ 1,600,000 40,000 .. $2.13 (stated vatue, $25)............................................ 1,200,000 30,000 $2.29 (stated value, $25)....... 1,600,000 40,000 Total preferred stock........................ 5,572,360 $227,236 . Common stock, authorized,50,000,000 shares of $3.25 par value: December 31,1979................. 37,999,469 $123,498 December 31,1978..................................... ' 37,407,993 121,576 Generally, preferred stock is redeemable at stipulated prico plus accrued dividends, subject to certain restrictions. ' InLOctober 1978 the Company sold 2,500,000 shares of common stock by an underwri* ten public offer- ,ing for $51,267,000 and in January 1980,3,000,000 shares were similarly sold for $54,813,000. In May,1978 .he Company sold 1,600,000 shares of $2.29 no par serial preferred stock for $38,530,000. 'In' connection with the' Employees Stock Purchase Plan,172,173 and 98,056 shares of common stock
were issued to' employees during 1979 and 1978, respectively. At December 31,1979,247,635 shares of un-issued co'mmon stock were reserved for unpaid subscriptions of the participants in the Plan and 9,053 shares were reserved for future offerings. The Company was trustee for 63,684 fully-paid for shares.
. Under the Dividend Reinvestment and Stock Purchase Plan,292,115 shares of the Company's unissued common stock were reserved for issuance at December M,1979. During 1979, 419,303 (288,582 during - 1978) shares of common stock were sold under the plan. The excess of the net proceeds over par or stated value has been credited to premium on capital stock. The loan agreements of the Companies, impose, among other covenants, limitations either directly or
Indirectly on the payment of dividends. Under the most restrictive interpretation of these c6venants, ap-proximately $56,856,000 of retained earnings was restricted at December 31,1979.
4.#REDEEMABl.E PREFERRED STOCK. On October 11,:1979 the Company. issued 500,000 shares of 9.15% Serial Preferred Stock (par value, $100). LOn October 10,1989 and each October 10 thereafter, so long as any of the 9.15% Serial Preferred Stock is outstanding, the Company.is obligated to purchase 31,250 shares (at par value plus accrued dividends).
At any timc the Company 1is in default.in its obligation to make any such purchases, it may not pay cash
" dividends on its Common Stock. The Comparif also has the option to purchase additional shares aggregating up to 35% of the original ~ t issue. The shares are further redeemable at stipulated prices plus accrued dividends, subject to certain re. strictionsc 22? f'. e -L
m* x e 8. g fB 34lf f.gW ~ r rg *, w u n N.h, a 1* . MM a P ;&:. i k: mL; ~ O:p$5.iLONG-TRM DESTN ^ a r w ~ - ;n u,
y"M. n;;
December 31. ( pingMeAewayag h M,1. .19 1978~~ ~ J December 31 ' ' ; D 7 s*,; , m m L1979 : 6 1978 h',
79 7 Thousands 1
[.... [ nThousands tg=... -S ~ &T a; .f of Dollars 5 n Guaranty of Pollution Control Revenue 1 - of Dollars Y S Fiset Mortgage Sandstly. l: r 431% 9eries dus1900.V.h.G.'.$ 4 $ 9,000l Bonds, County of Sweetwater, Ming: 3 { I $ 4%% Seriesdue June.1,1981.d.i. $5,849i ; 5,849 A f 6% Series 1973 due 20031.. ,$" 25,000 : $ 25,000 i y } We% 5eries'due 1982..... i.'... /12,500[ j2,5007 [8%% Series 1975A due 2005...... 15,000 ' ' 15,000 ' s Ed '.p3%W Series due Sept.1,1982 %..;.. : 7,500J ;7,500. 8%% Series 1975B clue D,ec.1,2005 10,425 ' 10,425 ], j,4%%l5eries"due Oct.13982 l...... f6,157) 'i6,157: 6%% Series 1977 due Dec.1,2007i '51,000
51,000 '
i 9%% Series duo'1983 ?........... L 70,000 - f 70,000 I '.
.. Less funds on deposit with trustee : L (7,130). (20,810): , j 38/4% Series due March" 1,f1984.... i8,659I i,659 L Miscellaneous l...................... 415f 492 8 - (i:j 38/s# 5erieAdue 19841.D;i.... J 184001 r 8,000.- Unamortized premium and discount [m j)3%% Serieslue 1985'.."..^.'.. ;.. '., :3%% 5eries due Ag 1,1984 i..; 130,000 ' 30,000 I E*" 3 "8-term debt (.........,_.... ; # ' (8,045) (7,086) - - < -c - - 610,000 _ 10,000 7
Totallong-termdebtof Pacific Power &. Light Company.f.i. 1,141,784 1,040,140:
, 4%% 5eries due May11i1986.... n ~,14,454 : n14,454 : 1 ~ - Subsidiaries: '32 4%% 5eries'due 1985 '............ 315,000 ? f15,000 n... ~ (4%% Series'duefuly1,19ns...... [20,000 (20,000j ' 7-lephdne Utuities, Inc.i jQ10%% 5eries due May 1,1990t'... ; l 60,000, ; 60,000 i J 2%-8% First Mortgage Notes - 15%% Series due 1990 i. in.$..... -120,000 ? ' 20,000 L ? due 1990-2009.................. 2,019 - 1,603 ' " [, T4%% 5eries due 1992 ....... 7i.. ;35,000 c 635,000-- l 5%-10%% First Mortgage Notes y" l P4%% 5eriesidue Dec.1,1992 f...!a J 32,000) ' 32,000 " maturing through 1998........... 14,424 15,621 : .. %% Second Mortgage Note 3 4%% Se?'lue 1993 '.... ;.......? L30,000 : I 30,0003
7 due 1980.......................
11,000 J 4%%'Se's N aue 1994........'..i.. J 30,000 L 30,000 ; % Sek i due 1995........ a.. q30,000, y 30,000 ' - 5%%.9%% Unsecured Notes 0 5 due _1980-2007................ 12,% 1 13,437 e-s 8 % Ser6 s due 1999 ;........... f 25,000 :,25,000 5 ' NERCO,Inc.i S - { 8'/,% 5erid. :lue Nov.1,1999 '...... ( 20,000I d 20,000 " 9%% Series due 2000............ 1 25,000 1 : 25,000. 6%-15.71% Notes due in ~ ~ instalknents through 2002....... 9,477 24,976 " 7%% $eries due'2001............ d40,000) 740,000, , 35,000; i 35,000 - 1 Spring Creek Coal Company : _ 24,000 ' - ? 8 i% Series due' Oct.'1,2001.... J. [ . Production Payment Financing,... m 7sL% Series due'2002 L.......... ~l 30,000- 1 30,000 :
l Capit'alized lease obligations -
~ . 8%% 5eries due 2004.M... :. c... i60,000:; ;60,000 : (See Note 7).................. 18,128 11,888 I (7%% Series due July 1,2006tt....- 10 % Series due 2006 ......r.L. @[75,000 o35,000) 1 35,000.. l PACOM.inc.: ~ 2 75,000 : " s Notes due 1981-1986".......,. 189,000 ! ' i 8%% Series due Dec.1[2006 i... l. a 50,000 i A 50,0001 1 6%% Series' due jan.1,2007tt ".... [17,000 il7,000 - Alasc m,Inc.,8%% Notes 48%% $e,, eau.N.v.,,2w7;.:... ;,wewyupw: ""c""'-'"'-~- 2 - 110%% Series due 2009l...';. A..M 100,000 ' V Other Subsidiaries--- ~ m O Total First Maigage Bonds"....- 1,057,119- ~ 966,119,
11% Notes due M80-1996.......
10,750 11,550 itDue 1985 upon exercise of option by holder 1 ~ '7%-8% Unsecured Notes due in ....s y. ;..., a s 1 installments through 1997........ - 1,056 1,180 E ^ Nisshed to secu're Compariy's obligations'under financing: 7%% Note due 1980............ 7,000 , agreements to pay principal and interest on Collateralized. , > Total long-term debt i Pollution Control Revenue Bonds issued by Converse L e of subsidiaries .............. 371,815 98,255 , iCounty, Wyoming.f c Total king-term debt...........$1,515,599 _$1,138,3%. s. ~ t 4;.
ilnterest rate (16.775% at December M,1979) fluctuates based
( J,. ' m; s upon. the prime rate. t ' ~ , finterest rate (15.555% at December 31, 1979) fluctuates based ~ - s, M E upo.n the prime rate or commercial pw rate. ^, m,-. m _ .s p ,l d ')... {', ..u.>., m, MS$bsta'ntial_ly;all of W.e assets of the Consanies a're subject to liens of mortgages or security a o. m. s _. z..- <. % gat December 31?1979/ subsidiaries of NERCO had unused borrowhgs of $39,000,000 under a cred? ~ ~ @w(agreement and $86,000,000 under a coal production payment financing. o m ~, l?e, pn Nf_ a > ,y n 4. .) 3. u, e y .j, 4 a I. .-Q-I$ MM s [@74' 5_., .-7e.t f y-<~ W W g;::jp ;sm %=b s W D < 4m s% + v ,u n > @c q > Qj' f- ^ k;.my.:,. 3.. xm,.:m%; h-i',. f.ff-.,- e ~.-;. + ] A L.YA a, <' he? Q ~c -s uhf + .. w m -n a mm am t m.: ~* n- ~ -b h [ [5- ~. + @9 ~ ym. a
~, i?%- b A .~ y '6.? INCOME TAXESi,.+ ,,) ? Provisions for income taxes'in 1'979'and1978 wer2 less then the amounts computed by applying the stat- ' %, pfederal income tax rate to income before tax. The reasons for these differences are as follows: ~ c <e <1979 1978- .t,.. . f W a ' Thousands of Dollars +.
V,-
, 7: -- a f " income tan based on' statutory federal income tax rate..................................... $$T.,262 $65,015 ' 2 Reduction,in tan resulting from:, _ i Allowance for funds used during construction......................... '. ;...................... (17,943) (13,117) ~ ' i Excess of tas over book dr wciation (flow.through basis)......................................... (9,947) - (9,082) ? Ad valorem, payroll and sales taxes capitalized 1............................................... (1,412) (674) ' t investment tax c redit restored...'................................... '.......................... ' O,369). ' O,309) ' investment tan' credit flow through......... i.................................................. (2,589) (4,190) Depletion.....................................a....................,....................... (5,515) (4,525) Effect of items' tamed as capital gainsl. 4;,. ;.............................'...................... (740) (610) '., [tiimination of amounts provided in prior years.........................'.,....................... 0,410) f 5 Other items' capitalized and 'niscellaneous differences........................................... (2,676). 182 ' State income tas.,......................... '.,................................................. 3,825 3,364 i , ; Total income tax egense.. i................................................. i................ - $11,486 $33,054 s income tax expense consists of the following: ATames currently payable: ^ 1 Federal.......~................. g........................................................ $ (82 5) ~ $ 6,742 4 ~5 tate:..........................-....................................................... 2,152 3,364 [ Deferred income. taxes: <[ o TDeferred................;............................................................ 16,129 6,955 \\ $ Restored,.'..... i..... ;.. ;..... n................... '......~.................................. (2,899) 0,154) ' f rwestment tax' credit adjustments --net........................................................ O,071) 19,147 ~ E Total income tax expense................... ;.................................................. 11,486 33,054 J Amount charged to other income '......,............................................,,........ (13,324) (2,535)
Federal and state income tax expense (credit) included in operating expenses.......................... $ (1,838)
$30,519 . +, : Deferred income taxes relate'primarily to depreciation timing differences. In11978, pursua'nt to a regu-latory agency's order, the Company reclassified $6,807,000 of taxes accrued to' accumulated deferred in- ~
come taxes.'
i
Unused investment tax credits at December 31,'1979,~ agg' egated approximately $39,000,000,.the ma-r

jority of which may be carried forward and will expire,if not used, in 1985 and 1986.
= 7.) COMMITMENTS AND CONTINGENT LIABILITIES: Y 3e Com'panies have substantial commitments in' connection with their construction programs which 1 ' ( are budgeted at $520,624,000 in 1980. i ?At Decembei31[1979, 'he Company' has' $648,043,0003f net utility plant in service which is jointly I owned with 'other utilities and has'. recorded $230,369,000 of construction work in progress under joint c y - construction. Each participating utility is responsible for funding its share of construction costs and for pro- ? viding its own financing. The costs of operating and leasing the operating plants are similarly shared, and
the Company's' portion is.recordcd in its applicable operations, maintenance and tax accounts.
I oThs Company has invested about $140,000,000 in two nuclear projects sponsored by other utilities for ~ avhich construction has ben delayed due to legidative action and prcblems in obtain'ng licenses and per-L ~ imits. The plant' sponsors' are considering alternative sites, and are currently ~ revising cost estimates and com-
mercial operatioit dates. lf the units'are moved to another site, there may be investments attributable to the
( abandoned site that 'would not be transferrable to the new site.LThe Company would seek regulatory au- ~ J thorization to recover such amounts through its rates. In the Company's 1979 rate order, the Oregon Pub. 1 ~
lic Utility Commissioner disallowed ' amortization of minWabandoned plant under what the company be-1 X ~ ' S lieves to be an erroneous interpretation of Oregon law.'
i The C6mpanies conduct a portion of their operations.using' lea' sed property, including the Company's ~ 5' . general officedarious district offices, transportation equipment, computers, certain coal mining equipment - J and a coal-fired generating plant, under leases expiring during the next 25 years.' Rental payments are cal- ~ c culated upon the basis of elapsed time. Substantially all options to renew existing leases provide for nego- ~?%" ~ ' " .M24: .FR w
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I r E
4, i j; ' - ' + A q 9e
g-u +. ' y + ' ~ ~ t .w s, s. ~ ~ as n m ~ ev E.'tistie A of thd amount of ren'al at tN timdef exercising such options. Except for 'r lativ:ly minor Irases, t f j these are no existing options to purchase or escalation clauses. The Companies are also committed to pay ; ~ $ Vall taxes and empenses of operation (other than depreciation) and maintenance applicable to the leased f Lf property, except for the property under several relatively minor leases;' ~' h 4 JRentals charfed to expense for the years ended December 31,1979 ahd 1978 were as follows: , 91-92 A =1979-1978 i Jg Thousands of Dollars ix ~_. m m s ..........,................. $43,800 - $13,109 K ' $ Total _ rental expense......,,.......... y.'.............. <4.... i. h. ~' lies rekts feom sublisses ; i. ig. 4......'.......... q........ 5..............................., (429) 0 91): 4, 1 Netlentalfenpense -- 7 ........ i.... 4... e...... $43,371 - $12,718 -~- "e ~ , s _. a. ' m ; The"minimumLrental psyments of the' Companies u'nder all noncancelable leases for tiie periods indi-- fcited are as follows: (, . Operating _. Capitalized Less. ' Net - [_ E Leases.' ' Leases-Subleases - Rentals M
n

Thousands'of Dollars' -
a: ~ p 5198D J/. v i. ~.;.h,.h k. it......... /.......~............... $ 33,610 -
$ 1,758
$ 443 $ 34,925 31,032, 1,707-428- . 32,311. 11981.-Ji.....;........u..aia..U........................ L19821.....d...................4..................'...... < 24,314 -- 1,622' 393 . 25,543 J1983)........ Q....f..i............... .1.............. .e: 523,645 .1,569 132 25,095 <1984 M..................i.......................i..... c 22,434 - 1,543 111 23,866 , Thereaftef W........... J......D......'..........'. l...... ~ 349,363 ~ 26,616' 403 375,576
Total

...... l............ n.... i l...................
$484,401 34,815 $1,910 $517,306 ' m &,T K Less imputed interest. ;.. ; J........ i............... a... ca ^ . (15,886). , i Present value"of rninimum rental payments 'i s J... '............ 18,929 i % L Less current aciounts payable :.. J. i....... ; 4.,............, (801) .v; _ f Long. term capitalized lease obligation....................... $18,128 son June 8,1978, tlN Company lehtered into a lease for the Wyodak_ Project. The lease has an initial term
of 25. years ' ith renewal options aggregating 20 yea.rs. The Company receives 80% of the plant's output w
f and is unconditiorially committed to pay _80% of the lease. rent, replacements, operating expenses, and ~ L maintenance..The1various state r_egulatory agencies have ind.icated that such lease will be treated as an - 1 operating lease for rate-making purposes,-The Wyodak lease and severali iinor leases meet 'he account- , n 4 ing criteria for capitalleases.'In accordance with'generallp accepted acco.nting principles as applied to fregulated utilities,:the, Company.has not capitalized _these leases, but ratl er charges lease costs to operat-Hing expenses.'Had~the Company capitalized these leases, the total December 31,1979 and 1978 assets ^ jand liabilities'would have increased by.approximately $184,700,000 and;$189,000,000, respectively. The ~ Mffect of such capitalization on. operating expenses before incom' taxes would have been an increase of e scy ~ 4 $5,200,000 in 1979 and 1978, respectively. The Company believes th' t the majority of such increase would a have been reflected in additional revenues if capitalization were accepted for rate-making purposes and q
g. J that operating ir come, therefore, would be substantially' unchanged.;Tr.e future minimum rental pay-
~ ' ' ments pertaining to these leases total approximately $429,000,000,with minimum rental payments approx-d imating $18,000,000 ann'ually throughl2003. ~..... .. i At' December 31,1979 and 1978,' noriregulated subsidiaries held property under capital leases totaling , W '$18,600,000 and $12,413,000,irespectively. These. amounts are recorded as nonutility property, together-Jwith'$811,000 and $293,000, respectively, of related accumulated provision for_ depreciation and amorti-4 < f 2.tionh < '~i~~ ~ v. x. . N O, . Y.?.~ d ( 8.? EMPLOYEES'.. RETIREMENT PLANSi 1979 1978 _s Thousands of Dollars Retirement'pla'n' costs were u follows: i" ..c ,~, _ Current Jervice.......
4.....S. a 4. i. a........................................................ $6,944
$5,340. ' : 5 PriorftervlAe..... @...Ti... u...j n.. g.......y................ i 4. 2,870 2,102 N1 Total i~.g.. s.. a%.................. i....... '......................................... $9,814 ' $7,442 - bg[$ Portion charged to construction 5....GJ.....i.i ~ $3,363 '. $2,787 ' y ~.. <,.. .e. _... . ~. -,. ~- 4 i r :...,. .l.yg At January 1(19,79(vested benefits exceeded the, pension fund assets by approximately f 30,000,000; ,y gg ^, ,j{'M 'O ,9 e ,wp sq3x u,. %y; - 25 - l y k - M2, 7K s C $. z,, e^ . dh - z ~ f M s s r_. -r3' 9.,,.,. c%, j
y 4
W .Qf ( ' Mi 'L.s ~
4 g.
.i
9. SUBSIDIARY ACQUISITION:
Effective June 1,1979, a wholly-owned subsidiary of the Company, PACOM Inc., acquired by purchase all of the outstanding stock of Alascom (formerly RCA Alaska Communications, Inc.), which provides tele-communications service in the State of Alaska and between Alaska and other points within and without the United States. Alascom's operations since June 1,1979 are included in the consolidated financial state- . ments. The purchase price of $208,831,000 exceeded the value of the net assets acquired by approximately $35,226,000, with such excess being amortized over a 40-year period. The acquisition was financed by a $210,000,000 six-year term loan, for which common stock of Alascom was pledged. Pro forma'results of operations assuming acquisition of Alascom at the beginning ofl978 are as follows: Year Ended December 31, 1979 1978 Thousands of Dollars Operating revenues...... ..... $703,201 $639,996 Operating expenses.................. 527,232 461,044 Net utility operating income.... 175,969 178,952 ' Other income (deductions)-Net........... 55,049 34,486 Interest charges-Net. 115,614 101,340 Ne t in come.................... 115,404 112,098 Preferred dividend requirements....... 19,612 17,200 Earnings applicable to common stock....... ... $ 95,792 $ 94,898 Average number of common shares. 37,692 35,319 Earnings per common share.. $2.54 $2.69
10. INDUSTRYSEGMENTS:
The Companies operate principally in three domestic industry segments: electric utility, coal mining and telecommunications. Total revenue by segment includes both sales to unaffiliated customers, as re-ported in the Companies' consolidated income statements, and iitersegment sales of coal at contract . prices or mining cost. Op(rating income consists of operating revenues less operating expenses, in computing operating in-come, none of the following items have been added or deducted: other income (deductions), except for coal mining operations; minority interest; interest charges; and federal and state income taxes. The coal mining segment includes mines which produce coal for Company plants (see Note 1). 1979 1978 Operating revenues: Thousands of Dollars Unaffiliated customers: Electric.. $487,855 $453,393 Coal mining............... 136,552 67,943 Telecommunications........ 142,360 44,698 Other.................................................. 9,893 8,428 ' Affiliates: Coal mining.................. 73,008 54,099 Eliminations... (45,908) (35,524) As reported in the Statements of Consolidated income: Utility operating revenues.................. . $640,108 $5%,519 Coal mining revenues.... 163,652 86,518 $803,760 5'i93,037 Operating income: E lect ric................................ . $112,829 $159,366 Coa l mi n ing............................. 49,387 20,223 ~ Telecom munications........................................... 44,207 17,954 ' Other 1,311 1,244 207,734 198,787 Other income (deductions).... 22,537 17,644 . Minority ' in teres t................................... (4,360) 0,829) interest cha rges...................................... . (101,914) (73,761)
Income taxes........................................
_ _ _ '11,486) (33,054) Net income $112.511 $105,787 26
+. ><. s - -r A ._3 .k', v [ldentHiable Assets--.
(identifiable assets are those assets that are used in'the Companies' operations in each segment. Cor-j porate assets are principally cash, temporary cash investments and other investments or special funds.
~ M . Depreciation ^' - Identifiab!e. ' Capital and Assets Expenditures - Amortization + s19791 1978 '1979 1978 1979-1978
Thousands of Dollars Elect ric i........................ $2,277,247

; $2,083,413. l.
$230,383 ~ $242,823 $56,157 $53,382 , Coal mining........ i.,......... .267,425. 198,705 ? 64,069 > , 46,270.. 13,078-8,980 Jelecrimmunicat:ons !......,.....
519,1961 131,327
'58,729-17,234. 20,231 7,258 s Other %....i........,3.......'., 32,372 : f 29,485 - - 4,580 ' 3,846 951 593
Corporate assets ;....;..........
2 32,545 -26,992 - 3,128,787 J _ $2.469,922 $357,758 $310,173 - $90,417 $70,213 =.11.. QUARTERLY INFORMATION'(UNAUDl'TED): . Net Utility.. Earnings Eamings . Operating. Operating, Net Applicable to Per Common 1 Revenues
income :
Income ' Common Stock Share Qharter Ended Thousands of Dollars ' March 31,1978_..... n............ ' $143,478 5 $47.313 $34,144 $30,411 $0.88 June 30,1978..... 6.............. 119,943 36,982 26,240 22,070 0.64
September 30/1978.................
118,299
32,129 20,881 16,232 0.46 l December 31,1978 l..... !..........
124,799 31,620 24,522 19,874 0.53 R. March 31,1979;................... . 152,6 % 44,922, 33,732 29,083 0.78 June 30,1979.... i................. " 153,985 - 38,752-28,230 23,582 0.63
September 30,1979................ l 156,102.
33,049_ 22,389 17.740 0.47 Wecember 31,1979 '177,323 43,463 f '28,160 '22,494 0.58 { A slg;6ificant portio'n of the b'usiness of the Companies is of a seasonal nature. 212.: k' HANGING PRICES (UNAUDITED):,. ~ _ ' inflation? evidenced in part by high fuel costs and interest rates, exempts no one. Consumers struggle ?t2 stretch;their budgets; while corporations strive to maintain sufficient earnings to compensate their
owners and to support adequate growth._The business, regulatory, and academic communities have been.
1 developing methods forl measuring the impact of inflation on business enterprises. Recentlyjhe Financial Accounting Standards' Board issued Statement No. 33, " Financial Reporting i and Changing Prices /' requiring large business enterp_ rises to measure and report the effects of changing' prices (inflation). The.following schedules and commentary.were prepared using Statement No. 33 and a ? FAS8 U.tility Task Group report for guidelines.The 8uidelines only require disclosing the inflationary impact "on certain assets and expenses. The information should be viewed as an estimate of the approximate effect 3 f inflation, rather than as a precise measure.L ~ ' Constant dollar' a' mounts represent historical costs stated in terms of dollars of equal purchasing pow-L er, as me'asured by_the Consumer Price.index' for all Urban Consumers'(CPI-U). Current cost amounts re-i flect th~e changes in specific' prices of plant from the date the plant was acquired to the present, and differ ifrom constant dollar amounts to the extent that specific ' prices have increased more or less rapidly than '. pricesin generai. N j OThe current cost'of property,' plant, and ~ equipment represents the estimated cost of replacing existing i plant assets and was determined as follows:. l Generating plantiThe current cost of electric generating plant'was estimated generally on the basis. J of an engineering study.of the current cost pe'r megawatt of replacing the Company's present mix of nu-iclearl coal,oiland~ gas turbine' generating plant. Hydro production plant original cost was trended using e. {the Handy-Whitman in_dex of Public_ Utility Construction Costs. _. [ Traritmission arid dissibution facilities-The Hsndy-Whitman Index for~ the _several regions in which {the Company operates.was' applied to the original cost of electric transmission and distribution facilities. [ ]S} w ~ 27-m ~ ~ p m: - ~ N} Y+: L - Aah~ ' % =. gy:&, .w. -u 'L'
~~ ~ 3 ~ " - g F [ y%d [j] - ~ p[', Of a' if e, ? _v u s , ~. F ' ' GeneralMThe original cost of electric general plint'w:s trended using various govzrnment and Ms industrycostindices@( jf. ~ 4 XTelecommunications plant-Telecommunications plant current cost was developed using the Handyt c z", i ; Whitman inden for theindustry.1 ~ .J Water arid steam heating plant @The~o'riginal cost of water ahd steam heating pl' ant 'was trended using 4 l ',1 23o'the Handy-Whitman index; J
f, l
(Constructionfwork in progress--Projects'of short duration were reported 'at historical cost, while i ~ longer term projects were trended 'using the Consumer Price Index. '~ ~ NOther utility plan'--Various cost indices and unit costs were used to trend miscellaneous properties. l t ~ , - Nonutility propertp-Various governmentfand 'ndustryLcost' indices were used to trend nonutility i .g 7e, property. _ ' &..n ~ '___ .The provision for depreciation on the constant dollar and current cost amounts of property, plant, and 1 j (, equipment was determined by applying the Company's actual functional class depreciation rates to the re-l ' l Spective class indexed plant amounts'f, l. ' ; D'^ c 1 Fuelinventories; the cost of fuel use' in generation, and purchased power have not been restated from d -9 ,j ' < f their historical cost in nominal dollars. Regulation limits'the recovery of fuel costs through the basic rate n schedules to actual costs. For this reason 'uel inventories are effectively nioneta'ry assets. . As prescribed i_n Statement No. 33, income taxes were not adjusted. Also, disclosure is not currently re-T guired for unprocessed natur'ai resources such as unmined coal reserves." '
Under the ratemaking prescribed by;the regulatory commissions to wh'ich' the Companies are subject,
lonly the historical cost'of plant is recoverable in revenues as' depreciation.Therefore, the excess of the cost Jof plant stated in terms of constant dollars or current cost over the historical cost of plant is not presently
" recoverable in r' tes as depreciation, and is reflected as a reduction to net recoverable cost. While the rate- ~ a w? J making process gives no' recognition to the current cost of replacing property, plant, and equipment, based i L Ton past practices, the Companies believe they will be allowed to earn on the increased cost of their net in- .? vestment when replacement of facilities actually occurs. ~ 93 =' ?To properly reflect the economics of rate' regulation, the reduction of net property, plant, and equip-E ment should be offset by the gain from the decline in purchasing power of net amounts owed. During a
period of inflation, holders of monetary: assets (claims' to receive a fixed sum) suffer a loss of general pur-l chasing power while holders of ' monetary liabilities _(obligations to pay a fixed sum) experience a gain. The

gain from the decline in purchasing power of net amounts owed is primarily attributable to the substantial
,~ = amount of debt and preferred stock (treated ardebt) which has been used to finance property, plant, and ~
equipment. Since the depreciation on this plant is limited to the recovery of historical costs, the Company Edoes not have'the opportunity to realize'a holding gain on debt and is limited to recovery only of the em-bedded cost of debt capitalJ ' ;
f ' i STATEMENT'OF NET INCOME ADJUSTED fOR CHANGING PRICES - ' ?_ s
FOR THE YEAR ENDED DECEM8ER 31,1979 1
. Historical Cost m Constant Dollar-Current Cost- . Average 1979 Dollars Average 1979 Dollars 1 s, -[ _ . Thousands of Dollars 7 s 1 ( [ Ut'ility opera' ing revenues 4...... k.....,. &.....~.............'..... _ $640.108 $ 640,108 $ 640,108 t s ? Utility operating expenses:,. i ? Operation and maintenance j....., a..; 4 v;........................ 367,348. 367,348 367,348 r Depreciation ;.w...... /.V........... s....................... 76,161 J 133,675 177,733 l Tames e.......... n.., ; 4 ;...........'...i....A.........., ;....... ~ 4 s W 36,413 36,413-36,413 r " : Otherincome(deductions)-net: ' * ~ M-lation ~..... i. ;.. i 4..... '................ i :... a........... 9,602. 13,302 13,978 ,a' M~ .G......i..G M..R.......'.i.... 4,.d................. J (63,841) . - (63,841); (63,841) ? Interest charges-net..h... '....i pi,...... a. 4.. o...,,...... /., f : 101,914 101,914 101,914 w Ob s ' ^1-. X' t 527,597 588.811 633,545 , '. m / / Net Incomeleucluding reductS to net recoverable cost) (.... J. ;..... ;. - $112.511 ' $ 51,297 6,563 m% ' i lacrease in' specific' prices (current cost) of property, planfand -; equipment held during the year....'...;............. G.....,..... ? $1,065,317 _ ) Reduction to net recoverable cost...... i.j.... <.... ;............... $(247,761) (645,990) Q E#ect of increase in general price level :...).... ;;... //.., t.T.......... (620,087) j Excess of increase in genersi price level over incresse'in specific ? s r_ _ a prices after reduction to not recoverable cost.'...................,.. (200,760) s i / Y{ Gain from decline in purchasing power of tiet amounts owed.......,.... ~ 211,135 '211,135 i/ ;,. [Not is.y.}.l. 4 g.ii;.f. %.Q.s.T...;.i........i... i...:...... L $ -(36.626) $ 10,375 ykL m w: X Yz, " y y u Y 1 s y .~ - I "' x; [ m f e v - k.\\ Y .h , l_ _ _ ~ + ~,, ^ t G l lg d ^ < > 2%, : "* i .V
[ I otal' depreciation expense for 1979 is $85'763,000, $146,977,000 and $191,711,000 on tha historical T 0 cost, constant dollar, and current cost basis, respectively. [ @~ lincluding the reduc' tion to net recoverable cost, the net loss for 1'979 on a constant d ^ have been $1%,464,000 ' Ri ' At December' 31,1979, current' cost of property, piant and equipment, net of accumulated deprecia- ~ [' ' S $ tion, was $5,793,270,000, while historical cost or net cost recoverable throu8h depreciation was $2,781,- x 590,000. FIVE. YEAR COMPARISON OF SELECTED SUPPLEMENTARY FINANCIAL DATA ADJUSTED FOR EFFECTS OF CHANGING PRICES Years Ended December 31 1979 -1978 1977-1976 1975 Historical cost ink >rmation adjuited for generalinflation Thousands of Average 1979 Dollars Revenues: . Utility ' operating revenues.......'. 4................ $640,108 $564,583 - $484,358 $452,593 $406,382 Coal min ing.........~............,.................. 163,652 - 95,776 86,212 71,027 50,430 Ne t in come *......................................... '51,297
Earnings per common sha re*..........,.................
0.85 ~ Reduction to net recoverable cost '....................... 247,761 Net assets at year-end, at net recoverable cost.,............ ,764,626
Current costinformation '
Ne t income *..........................,.,,.......... 6,563 ~ Earnings (loss) per common share *........................ - (0.34) Reduction to net recoverable cost'........................ 645,990 - Excess of increase in general price level over inuease in i c specific prices after reduction to net recoverable cost.... 200,760 Net assets at year.end, at net recoverable cost.............. 764,626 ~ Ceneralinformation
Purchasing power gain on net monetary liabilities owed......
. 211,135 ~ , Cash dividends declared per common share................ . $ 1.93 '$ 2.09 $ 2.15 $ 2.19 $ 2.25 . Market price per common share at year-end..~.............. 17.02 21.16' 24.82 30.09 26.64 Average tonsumer price index :.......................... ' 217.4 '195.4 181.5 170.5 161.2
! 'Ex'cluding reduction to net recoverable costf ACCOUNTANTS

OPINION -
To the Dir-lors and' Stockholders of s PACIFIC POWER & LIGHT COMPANYi LWe h' ave examined the consolidated balance sheets of Pacific Power & Light Company and subsidiaries as c f December 31,1979 and 1978, and the related statements of consolidated income, retained earnings, and l changes in" financial position for the years then ended. Our examinations were made in accordance with a
generally accepted auditing standards and, accordingly, included such tests of the accounting records and i such other auditing procedures as we considered necessary in the circumstances.-
! In our opinion,' the above-mentioned consolidate' financial statements present fairly the financial position d s ' if the compati;es'at December 31,1979 and 1978,and the results of their operations and the changes in - ;their financial position for the years then ended,~ in conformity with generally accepted accounting prin- ~ iples applied on a consistent basis.L c
DELOITTE HASKINS & SELLS:
JPortland, Oregon;, i Februa.ry 28,1980; v .V-o 29 4 -q s N
? CONSOLIDATED; FINANCIAL RATIOS (Asof Decemw33r 1979 1978 1977 1976 1975 1 CAPITALIZAflON: > ~ ^ Thousands of Dollars ' Mortgage bonds'. $1,057,119 3.966,119 $ 971,070 $ 858,570 $ 727,694 %gj i Guaranty of pollution control bonds--net 94,295 - 80,615 65,478 50,425 44,062 1 ,1 ' indirect guaranty of Wyodak Project, 182,729 .102,717 Long-term subsidiary debt 371,815 - 98,255 69,989 66,550 56,475 ' 3
Miscellaneous 1.
315-492-492 557 836
c..........
. Unamortized premium and discou'nt on debt. 2 (8,045) (7,086) (7,435) (5,344) (4,586) 4 . TOTAL LONG. TERM DE8T:. '1,515,599 1,138,395 1,282,323 1,073,475 824,481 ( Preferred 5tock..i........ 227,236 227,236 ~ 187,236 157,236 157,236 l Redeemable preferred stock. 50,000 {' ' Common stock and retained earnings D. 808,590 778,139 6'18,732 629.868 560,911 TOTAL CAPITALIZATION i. $2,601,425 $2,143,770 $2,168,291 $1,860,579 $1,542,628 RATIOS: l Mortgage bonds. 40.64 % f45.07% 44.78 % 46.15 % 47.17 % Cuaranty of pollution contas,I bonds-net. 3.63 3.76 3.02 2.71 2.86 Indirect guaranty of Wyodak Project :. 8.43 5.52 .. Long-term subsidiary debt ' 14.29 4.58 3.23 3.58 3.66 - Miscellaneous. 0.01 0.02 0.02 0.03 0.06 '. Unamortized premium and discount on debt, (0.31) (0.33) (0.34) (0.29) (0.30) , TOTAL LONG-TERM DE8T:. 58.26 53.10 59.14 57.70 53.45 Preferred stock 1 8.74 10.60 8.64 8.45 10.19 Redeemable preferred stock '. 1.92. Common stock and retained eamings.. 31.08 ' -36.30 32.22 33.85 36.36 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % TOTAL CAPITALIZATION ENERG SALES, CUSTOMER and OTHER STATISTICS ~ ENERGY SALES (Thousands of. kilowatt-hours): 1979 1978 1977 1976 1975 Residential ; 6,991,523 6,526,119 6,321,687 6,176,938 6,058,874 Commercial L. '4,898,733 4,465,117_ 4,225,552 3,927,529 3,727,996 Industrial '.... 6,489,186 6,149,584 5,966,572-5,671,062 5,224,714 Govemment and Municipal. 66,103 67,553 - 72,128 72,540 99,246
TOTAL GENERAL 8USINE55
.. 18,445,543 17,208,373 16,585,939 15,848,069 15,110,830 i Sales for resale-temporary.. 3,581,289 4,541,912 2,420,393 3,555,344 2,562,434 -other ' ' - 796,123 736,052 668,865
597,641 562,054 Interdepartmental... s
'20,055-15,502 16,118 - 12,802 13,470 1 ....... 22,843.012 - 22,501,839 19,691,315 20,013,856 18,248,788 TOTAL-ENERGY 5 ALES,.
Power plant output-including power purchased -
. -24,757,024 24,544,811 21,732,885 22,027,088 20,079,342 (Thousands of kilowatt-hours) '. '. . Kilowatts of generating capacityinstalled at year-end... ' 3,970,181 - '3,631,142 3,365,645 3,365,645 2,828,837 i Number of customers at year-end:- ~ ( ElectricL. N. .-- 629,569. 608,728 584,616 560,178 547,307
Water L.
27,101 .'26,031 24,754-23,356 22,281 l I [ . Steam, heating ; y. ~c. '. 518 530-549 578 603 m Residential electric service statistics: p ~- Number of customers at yeanendl....... 544,620 527,442 S06,615 485,087 472,809 13,062. 12,614 12,738 12,876 12,856 E c' ^ L Kilowatt:hout sales per customer-average a... - $U3.36 $316.79 $282.01 $238.06 $225.16 ,. Revenue per customer-average. ?; - cTelephone stations served.. ;,'.. -L185,737 c (170,719 ' 155,192. 138,625 125,402 ()/. 3J s&j
MARKET AND DIVIDEND 'lNFORMAT!ON ' COMMON STOCK: $"[ The Company's Common Stock ($3[25 Par Value) is listed on the New York and Pacific Stock Exchanges. The following table . shows the high and low sales prices of the Common Stock during the respective periods indicated as reported in The Wall street fournal: 3979 397g Quarter: 1st 2nd 3ro 4th 1st 2nd 3rd 4th c High.............. 21 % 22 % 21 % 20 % 21 % 22 23 21 % Low............... 19% 19'/a 19 17 20 % 20 % 21 19 % Quarterly cash dividends were paid at the refof 45 cents per share for the payments in the first two quarters of 1978, and at the ' rate of 48 cents per share in the las* quarters and in the four quarters of 1979. ' PREFERRED STOCK: The following table shows the high and low sales prices of the Company's 5% Cumulative Preferred Stock, $100 Par Value, on'the American Stock Exchant,e. 1979 1978 Quarter: 1st 2nd 3rd 4th 1st ind 3rd 4th . High........... 54 53 % 54 51 % 58 % 59 57 % 56 % tow.............. 49 50 50 % 45 55 % 53 % 52 % 48 Ten of 10 Company's eleven series of Serial Preferred Stock, $100 Par Value and the three series of No Par Serial Preferred (stated value, $25), are traded over-the. counter. Although the following table of quarterly price ranges for 1979 and 1978 is based on the best available bid prices for the periods indicated, the stock is closely held, except for the No Par Serial Preferred, and in. frequently traded and, therefore, the prices quoted should be treated as reasonable approximations: 1979 1978 Quarter: .1st 2nd 3rd 4th 1st 2nd 3rd 4th 4.52.1 High............. NQ NQ NQ NQ NQ NQ NQ NQ Low. ..............NQ NQ NQ NQ NQ NQ NQ NQ 7.00% High....... . 69% 69 % . 66% 57 % 76 74 % 76 % 75 % Low............ 67%. 60 % 63 % 52 % 74 % 71 % 67 % 70 % 6.00 % High............... NQ 65 % 61 % 53 % NQ NQ NQ NQ Low.............. NQ 61 % 58 % 49 % NQ NQ NQ NQ 5.00%. High.. . 49% 49 % 48 % 42 % 54 % 52 % 54 % 55 % low............... 48% 47 % 46 40 % 53 % 51 50 % 50 5.40 % H igh...........,,. 5 3 % 53 % 51 % 45 % 58 % 57 % 59 % 60 Low............. 51 % 50 % 49 % 43 % 57 % 55 % 54 % 53 % 0.72 D High............. 46% 46 % 45 % 40 % 51 % 49 % 52 % 52 % tow.............,.45%- 44 % 43 % 37 % 50 % 48 % 47 % 47 % 4.562 High........... 45 45 43%~ 38 % 49 % 49 50 % 50 % Low '.............. 44% 42 % 41 % 36 % 48 % 47 % 46 45 % 8.92 2 High............. 88%. 88 % 85 76 % 97 % 95 % 98 98 % - Low.............. 85% . 84% 81% - 72 % 95%. 92 % 90 89 s 5/ 9.08 1 High.............. 89% 89%. 87 % 77 % 98 % 96 % 99 % 100 Low ~............. 87% ' 85% 83 % 73 97 % 94 91 % 91 % 7 96 7 High............... 78%. 78 % 75 % 68 % 86 % 84 % 89 % 88 %
Low............... 76%
74% - 72 % 64 % 85 % 82 % 80 % 79 % $2.48 ' : High.............. 24% _ 24%. 23 % 21 % 26 % 26 % 25 % 25 % Low.............. ; 23% 22 % 22 % 19 % 25 % 25 % 24 % 24 % $2.13 High........... 20% 21 % 20 18 % 22 % 22 % 21 % 22 Low.............- 20% 19 % 19 % 16 % 22 % 21 % 21 % 20 % $2.29. High....,.......... 22% 22 % 21 % .19% NQ 24 % 24 % Low................' 21 % 21 20 % 17 % NQ 23 22 % - NQ-No quote available, The Company's $2.29 No Par Serial Preferred Stock was not issued until May 18,1978. ' Quarterly cash dividends were paid on each class of the Company's Preferred Stock at their stated rates during 1979 and 1978. { 31 c h U:
r 5 DIRECTORS AND OFFICERS BOARD OF DIRECTORS OFFICERS--Corporate Policy Group CHARLES M. 8INKLEY fairbanks, Alaska DON C FRISSEE Chaloman of the Board President, Alasks Riverways,Inc. and Chief Esecutive Officer C ?k 8C' tor, lR. Portl2nd, Oregon G. ELDON DRENNAN PresidentandExecutive . Prehlent)endleton Woolen Mills Officer-Electric Operations Manufactureof wool.'n sportswear - DOHN H. GEIGER Senior Vice President . DON C FRtSEEE Portland, Oregon and Chief financial Officer Chairman of the Board and A. M. GLEASON President of Telephone Utihties,Inc. Ch:ef ExecutiveOfficer and Execative Officer-Telecommunications ' CLiFFORD P. HANSEN fackson, Wyoming GERARD K. DRUMMOND President,NERCO, loc. ' Rancher and former Wyoming Governor and U.S. Senator STANLEY K. HATHAWAY Cheyenne, Wyoming OFFICERS-Electric Operations Partner, Hathaway, $peight and Kunz, Attorneys at law Former Governor of Wyoming and Secretary of the Interior G. ELDON DRENNAN President and Executive ' " ^ iYs " 'E AL N C BA T OL E Senior Vice President an o hoolof con Oregon State University ROBERT W. MOENCH Senior Vice President CONRAD F. LUNDGREN KalispeII, Afontana BRUCE G. BEAUDOIN Vice President Co-owner, four Seasons Motor inn and West Glacier DAVID F. BOLENDER Vice President Mercantile Company-Motel, stores, restaurants c p. DAVENPopT Vice Presidentand LOUIS 8. PERRY Portland, Oregon Assistant to the Chairman President. Standard Insurance Company ELWOOD 8. HED8 ERG VicePresident life, health and accident insurance R. 8. LISEAKKEN Vice President KENNETH W. SELF Portland, Oregon CHARLES O. PARKER Vice President fc8rmer Chairman of the Board, freightliner Corporation-Truck manufacturing FREDRIC D. REED Vice President EI! GENE L SHIELDS Yakima, Washington ROBERT M. SMITH VicePresident Pr+sident.Shtelds Bn & Printing Cornpany DACK T. STILES Vice President A. W. SWEET Coos Bay, Oregon KARL HOFFMANN Treasurer Chairman oi the Board, Western Bank WARNE NUNN CorporateSecretary HOWARD VOLLUM Portland, Oregon Chais. nan oithe Board Tektronix,Inc., Manufacture and 9gggc39gg gyggg395 marketing of electronic display and measurement equipment ROY A. YOUNG Uncoln, Nebraska A. S. CUMMINS Medford, Oregon Chancellor, University ol Nebraska DOHN DIERDORFF Portland, Oregon GLENN L. IACKSON Medford, Oregon C HOWARD LANE Portland, Oregon GENERAL COUNSEL PAUL F. MURPHY Portland, Oregon HENRY H. PRINGLE Medford, Oregon STOEL, RIVES, BOLEY, FRASER AND WYSE 900S.W.Sth Avenue T. F. SANDOZ Astoria, Oregon Fordand, Oregon. DONALD SHERWOOD Walla Walla, Washington FISCAL AGENTS PREFERRED STOCK BONDS TRANSFER AGENTS AND REGISTRARS: TRUSTEE, REGISTRAR AND PAYING AGENT: UNITED STATES NATIONAL BANK OF OREGON for first Mortgage Bonds of the Company: P.O. Box 38%0 MORGAN GUARANTY TRUST COMPANY OF NEW YORK Portland, Or n 97208 30 West Broadway, New York, New York 10015 . MANUFACTURERS HANOVER TRUST COMPANY OMR EURARS M PMG AGMS: N York N ork 10015 for first Mortgage Bonds of the Series Due June 1,1981; COMMON STOCK Oct.1,1982; March t,19at, and May 1,19as: TRANSFER AGENTS AND REGISTRARS: WELLS FARGO BANK, National Association, San Francisco CONTINENTAL ILLINOIS NATIONAL BANK AND TRUST UNITED STATES NATIONAL BANK OF OREGON COMPANY OF CHICAGO P.O. Box 3850 Portland, Oregon 97208 for first Mortgage Bonds of the Series Due lune 1,1981; I THE CHASE MANHATTAN BANK, National Association Oct.1,1982; March 1,1984 and May 1,1966: l One New (ork Plaza-14th Floor THE CHASE MANHATTAN BANK, National Association, l New York, New York 10015 New York i ~ 32 -
v, 3 T PACIFIC POWER A LIGHT COMPANY
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tg DIVISION AND DISTRICT OFFICES AND MANAGERS MID-OREGON DIVISION SOUTHWESTERN DIVISION COLUMBIA BASIN DIVISION WYOMING DIVISION Headquarters Headquarters Headquarters Headquarters Portland, Oregon Medford. Oregon Yakima, Washington Casper, Wyoming Glen W. Spicer E. E. Smith D. Chfford Jones Bruce G. Beaudoin District Offices District Offices in Oregon District Offices in Washington District Office in Idaho District Offices b Albany-Richard D. Jones Coos Bay-Jack B. Dunham Yakima-Robert E. Peterson Sandpoint-Dale D. Addington Casper-Bruce Fritzler Astoria-R. Dale Co!! ins Grants Pass-John E. Mooney Sunnyside-R. M. Poff District Of. ices in Oregon Laramie-R. L Blankenship Bend-Harold G. Baughman Klamath Falls-William L Scholtes Walla Walla-M. C. Edberg Pendicton-Melvin E. Joy Rawlins-Robert Gerlach Corvallis-Kenneth C. Medearis takeview-Dave Cavaya District Office in Montana Enterprise-Stanley 1. Walker Riverton-Gene Caston Cottage Grove-Mike Dungan Medford-Bill R. Parrett Kalispell-Charles E. McQueary Rock Springs-Joseph R. King Hood River-Roy Cederstam Roseburg-Bert Leonard Wortand-Robert E. West Junction City-Dale Foresee District Offices in California Lincoln City-Jerry A. Warner Crescent City-Dennis G. McFarland Portland-John Reed Yreka-Donald E. Pierce
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ML19323C821

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ML19323C821

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