ML20049A552

Annual Financial Rept 1980

ML20049A552
Person / Time
Site:	Trojan File:Portland General Electric icon.png
Issue date:	02/16/1981
From:	PACIFICORP (FORMERLY PACIFIC POWER & LIGHT)
To:
Shared Package
ML20049A550	List: ML20049A549 ML20049A551 ML20049A552 ML20049A555
References
NUDOCS 8105270394
Download: ML20049A552 (40)

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PACIFIC POWER &IR

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1 1980ANNUALRE

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PACIFIC POWER & LIGHT COMPANY With Major Subsidiaries

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h PACIFIC POWER & UGHT COMPANY Electnc Operations Servu Areas l

TELEPHONE UTILITIES, Inc.

Service Areas NERCO, Inc.

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Coal Fields and Mines (Opeating and Under Development )

.* h AL ASCOM, 6nc.

i Alaska Communites Sered with Tele.

g communcatms System e

ALASKA

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Pa( tin Pirw t r and its prin(spal subsuharles bas e utihts

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( ahtornia N es ada hia be i \\ ton-

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fana u s oming Alabama Indiana and Alaska

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[ lei f ro w ater anit steam heat sers n es are suophed in g

sa w es,crn states in a eas n<i ed m orange on the map NERC() Int a w hoNs -ow ned subudia rs ope ra t es < oal m nes amf manages rest rs es shown on the map in brow n l o( a! telephone eu bances are operated bs subsidiaries 2

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ot M ow ned Tetephone l teht es Int a holding (om-pans The areas se rs ed are < >uthned in blat k

.g long hnes elec i,mmunn ations and related sers nes are d

pros ided for Alaska hs w hoHs ow ned Alaw om. Int and t

.J mans < a the ( ommun tms sers ed bs lo n g - h nes ta( i h t ies are spi tt red < in the map 2

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PACIFIC POWER l

& LIGHT COMPANY l

AND CONSOLIDATED SUBSIDIARIES 1980 ANNUAL REPORT l

l Notae of the 19til Annual Meetmg of Stockholders, u heduled to be held in Portland, Oregon, on June 10, convening at 1:30 P.M in the thiton flotel, will be mailed to shareholders in May along with prosy state-nients.

A copy of the Company's f orm 10 K report to the

$cc urities & I sc hange Commmion for 1980 operations is available upon request, without < harge. Write tr>-

John ii Geiger, Senior Va e Prewlent I% ifa l'owee & lig! t Con p.i.,

920 5 W. 5isth Avenue Portland, Oregon 97204 Telephone (501) 241-1122

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( h.mman of the Hoard and ( h et het utne ()tric er

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VM and lohn H (,eiger. senior

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F W e hedent and ( hief F man (ial onn er l

To Our Stockholders:

erating int ome as rec enth as 1978, and less than 59 l

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N i >u r ( <,mpans a( hies ed ret ord les els m res enues.

In the pages that tolhm, y ou will find separate sec-net im ( >me earnmgs per share and dnidends tions on eat h of the three major operatmg segments in 1481) or the ( ompany Meanw hile. here are some high-i.n h or the three maior ( omponents elet tra op.

hghts f or 198n eratu ms

( < >al min'ng and tele ((immunu atnins

'le( tr u (iperating results w ere bolstered by ten p< >sted g.uns m iiperating results and < ontobuted to rate in( reases approsed m the sn states that the < a erall impo n ement m earmngs Ihe grow th in make up the Compans 's servn e terntory. On an earnmu. to ur 514h t<,52 il per share was partu u-annual basis. these mcreases represent $80 mil-lark m;pressn e m s tew < >t the unpa( t or hntora alk hon of added res enue. Etier tise March 1,1981, high sh< >rt and long-term mterest rates and the ettect ele < tru res enues were raned m ()regon by

(>t n'umg the greatest number

<>t new

<<>m nu>n

$ l9 9 millnin annualh.

shares es er during a smgle t ear ggg g

g Interest ( i nts umler ( redit agieements tred to the residential rate dnpanties were addressed in a pnme interest rate an<l ins (>h mg f unds needed tilr p irise tashnm sith the passage of the Pacific the suppi>n of the Compans s three operatmg (

Northwest I:e( tra Pow er Plannmg and Conser-om-p< ments t< >talol 571 1 nulhon duong the s ear The sation At t last Dec ember. The fasorable impact awrage mterest rate ior these tunds uas 15 1-dur-of this measure on the Compans, its customers mg a s e.u m w hn h the prime rate ranged betw een ann its sto< kholders is dis ( ussed further later in IW c and21

\\lthough mones ( osts represent this report.

< mh one 1.n et < >t the ( ompans s < < >sts ea( h one per

()n balan(e, the operatmg expenente at thc l

< enrage pomt ( hange m the merage mterest rate im-Compam s power plants uas tavorable, and the

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( ompany reah/ed $1(19 million of revenue from

\\ re((ud ~ 9 nulhon shares of ( ommon sto( k u ere the salc at power to other utihties at rates close m.u keted to m.untam adequate ( apital ratnis and to to retail les els.

keep an appropnate relationship between mterest Tom ( ompans c ontmued to pursue ac tively its requaements and net mt ome monalk rn ogm/ed doca (v of energy con-( onsohdated res enues rose N to $<ri 4 milhon sers ation Nn( e starting its uidelv acclaimed m 1980 w hile < >per atmg m( < >me in( remed to $268 4 Home I nergy Analysis sers u e in 1977. the Com-nulhon nom 5318 2 nullnin m PF4 Net inc ome pans has pros ided homeowners with oser greu to $ 1119 nullnin up 19 40 000 es aluations of their residential energy udmg 18 E su( h appraisals I he st iipe < it s < im f < n npa ns s.a tn itles hniadened sa mgs ne W

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(' reek mine in s()uthern Montana anci by year dated rewnues and 44 or operatmg m( ome lhose end began shipments under a M scar c ontract tw o segments timether ( ontnhuted onk 19 ofop-( all.ng for the dehs erv of 181 million tons.

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CONSOLIDATED FINANCIAL HIGHLIGHTS 1980 1979 R es en ues........................... $ 9 75,4 3 3,00 0 $776,901,000 income from operations:

E lec t r ic.......................... 148,853,000 114,631,000 Telecommunicalions--

Includes Alascom since June 1,1979 70,428,000 44,207,000 Nerco............................

49,082,000 49,387,000 To tal........................ 2 6 8,3 63,0 00 208,225,000 N et incom e......................... 133,866,000 112,511,000 Earnings on common stock............ 110,723,000 92,899,000 Earnings per common share...........

2.53 2.46 Dividends per common share.........

2.04 1.95

-NERCO expanded its geographic interests dur-IN MEMORIAM ing the year by acquiring mining properties in Il 'S *'th deep sorrow we record the death of both Alabama and Indiana, setting up a broker-Glenn L lackson, former Chairman of the Board, age operation to market coal mined by others and negotiating its first international sale.

who pawd away June 12,1980, af ter a distinguished career of more than half a century in the electnc

-Alascom made its first full calendar year con-utility industry.

tribution to the Company's consolidated results non was f rst employed by Mountain States in 1980. Revenues and income from operations Power Company in 1925 in appliance sales and then were ahead of projections made at the time by The California-Oregon Power Company in 1929.

these Alaskan long-distance tacilities were ac-lie was clected a vice president of Copco in 1935 quired. Alascom s prospects continue to be and a year later a director. Both utilities subsequent-n@t.

ly merged into Pacific Power. In 1961, he was elect-

--Telephone Utilities enjoyed healthy growth in ed a Director and Vice Chairman of the Company, revenues, earnings and telephones. The man-then Chairman of the Board in 1965 and Chairman agement, engineering and technical personnel of the Executise Committee in 1973. He became a of TU and Alascom were brought together to Director Emeritus in 1979.

broaden the overall technical capabilities and He was active in many civic and public service to realize operating efficiencies.

roles, including 17 years as Chairman of the Oregon

-The newly formed telecommunications group State Highway Commission, and held directorships acquired two promising operations in the un-in numerous commercial and industrial enterprises, regulated segment of the communications field, as well as ownership of 11 Oregon newspapers. His for your Company,1980 was a good year and one philanthropic works in educational and medical fields were extensive.

that speaks well for the future. We all take particular pride in the commitment and dedication of the in a resolution recording his passing, the Board of 8,436 individuals who work for your Company. We Directors noted he was "a great contributor to the extend our congratulations to each of these em-welfare and progress of the enterprise."

ployees. The members of your Board of Directors "He gained wide respect and recognition through-deserve special mention for their thoughtful atten-out his native state for the many constructive ways tion and guidance in the affairs of the Company.

in w hich he gave leadership and support to the prog-finally, thanks to our shareholders for their contin-ress of the region and the development of its human ued support.

and material resourtes. He was tireless in his unas-suming and highly effective labors to find working Sincerely, solutions to problems that affected so many of our fellow citizens.

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ELECTRIC OPERATIONS 1980 1979 R ev e nues........................... $589,191,000 $497,748,000 E x pe n ses........................... 440,338,000 383,117,000 income from operations.............. $148,853,000 $114,631,000 Energy sales (thousands KWH)........

23,005,645 22,843,012 Number of customers (at year end) 643,827 629,569 Number of Fmployees................

4,564 4,294 Improvements in electric operations were helped mainder of the capacity was purchased from other by the full year's availability of the generating capac-systems. During most of the year, power output from ity of the new 5(x),(XX)-kilowatt fourth unit at the one of the system's hydroelectric projects on the Jim Bridger plant in western Wyoming, near-normal North fork of the Lewis River in southwestern Wash-hydroelectric conditions experienced by the Pacific ington was reduced slightly following the May 18 Northwest in 1980 and higher rates effective for util-volcanic eruption of Mount St. Helens. As a precau-ity services for all or part of the year in six states.

tionary measure, the level of the 14-mile-long Swift On an annual basis, the rate increases totaled reservoir had been drawn down about 25 feet to

$81,3(x),000 and helped push revenues from electric, provide 100,000 acre-feet of storage capacity and water and steam service sales to $589,191,000, up the project experienced no physical damage when a i8ri. Income from these operations was $148,853,-

large quantity of debris-mud and uprooted trees-000, up 30'?/.

flowed into the upper end of the reservoir from the Operation and maintenance expenses were southeastern slope of the mountain.

$ 140,065,(xX), up 15ci, with the largest iacreases oc-currin>; in fuel and other production costs. These wcre up partly herause of the staffing and fuel needs Congress Enacts Regional Power Plan of the fourth Jim Bridger unit that went into service in December the Pacific Northwest Electric Power in December,1979.

Planning and Conservation Act, which materially Electric energy sales of 23,005,645,000 kilowatt-modifies the Bonneville Power Administ ation's ex-hours increased less than 101,largely because of the isting methods for marketing federally-produced recession in the forest products industries and other Columbia River basin energy, became law.The Com-segments of the economy, conservation and moder-pany believes that as it becomes implemented the ate w eather.

Act will prove beneficial for all electric consumers There was an average of 16,500 additional cus.

in Oregon, Washington, Idaho and western Mon-tomers and the annual residential usage system-wide tana.The primary benefit to the Companywill be the as eraged 12,609 kilowatt-hours, down 453 kilowatt-availability of lower cost federal hydro power to sup-hours.

ply its residential and small farm customers. This will reduce the disparity between rates of the Company Steam-Electric Plants Dominate Supply and those of publicly-owned systems for those The Company's sesen thermal generating plants, classes of customers. The financing of new generat-principally fired by coal supplied from nearby re-ing plants is expected to be at lower cost because serses, produced 66ci of the energy requirements the Bonneville Power Administration will contract to and 33 hydroelectric planis 15ci. The remaining 19ei purchase the output for blending into a common was provided under long-term contracts and ex-power pool. The Act also provides for cooperative change agreements with other utilities power supply planning and construction and sets A system peak demand of 4,222,000 kilowatt-priorities for how the region's power needs will be hours-a new high-was recorded in January,1980, met. The earliest that any new rate structure might during a prolonged cold spell. The electric sys-result from the Act is October 1,1981. The Company tem's generating capacity of 3,957,000 kilowatts participated actively in the formulation of the legis-was utilized to the fullest extent possible and the re-lation over a four-year period.

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R< hert ss Mo"nc h stam Lng 4 ' and D.e. d f W Wender High Wiltage Transmission Line and me impamng the abihts of the utihties in the Will link Wyoming-Oregon Systems Pacon Northwest to meet power load forecasts for a

du' late 14Hos and 1990s.

( onstrm tion or a inn uno solt transmission (ircuit u < d has been halted on the Skagit nuclear pror-tha t u 1ll pia n ule ( ap.u its tai deln er energs betw een et L w hn h had been w heduled for construction in the ekutru i,perations large ( < >al-hred generahng western Washington hv its sponsor, Puget Sound

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resonn es m \\\\ s onung and its w estern ss stem m P'*"r A light Compans, and on the Pebble Springs

( )ng >n nu n ed ste.uhls ahead m 1980 on a w hedule nuc lear plant, u hu h w as s( heduled for ()regon by espei ted h > pl.n e the hoe m sers u e m Dec ember its sponsor. Portland General f le( tnc Company. Pu-a ofpml

's lhe r oute < >t the i G nule-long ( in tut estends M"I P"""' * """ 'ns eshganng an alternate site in e Rosernnienbon ned i Unford NU(lear Reserva-t o n o a 1.e ge substa t n in near Medf ord m southern 2

tion m eastern Wa.hino,n w here there is alreadv

( )nw m eastw ard to the Ninipomt substation m estahinhed one <>t the na < >n s lar gest nuc lear indus-ea s t e r n Idahti \\ 'H ) nule segment <,1 the line he-tn ( omplexes Portland (,eneral s plans were halted tween Whoni and a substation at Mahn (hegon.

hs 1980 ( negon fegnlation requmng permanent pl.n ed m sen n e m F ebr ua n. pmu lhe Mahn w as nm lear u aste dnposal ta(ihties to be m plac e before t n ihts n a mapir ternunus tiir the higha oltage Pa.

a state pernut om he iwued and construc tion of any J

< itu Nor thw est-Pac itn sou thw est regional mtertie I""P' sed nuc lear plant to be appros ed hv ()regon lh a is a par t < >t the netuink mten onne< nng the

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PU h also ( onsulenne mos mg the prolect ele < t r u ss stems < >t the West to Washmgton state. Pa(iin Pow er's shares in the 1)ue h > pu n edural del n s and ensironmental hh.

gahon <in routme the new hne is three seats behmd tu o proie< ts amount to 1.2 Anna kdon atts of gen-the inigmal sa haulule a clelas that has presented the mahng<apaih The ('ompans n a parta rpant in two nu(lear plant

( ompans m the mtenm in >m mos mg as adable en.

er gs in >m its \\\\ simung resoun es to tin westmn ss s-units under i onstru< tion by the Washmgton Pubhc me ul)p sh'

. a gn >up <>t Washingum state t<*n) in (1rt gin) llui g hilas als() raise (l !!u' ( (1st in)m i

puhlu k -ow ned ss stems and m tw o coal-tired units an eshmated sin nullum when proposed to $242 at ( (dstop m eastern \\hintana that are under spon-nulln in liei a u se < >f milatnin anal an additninal in

rship of The Montana Power Company The Com-nules in h ngth < aused hs equned reniuhng of the pans s sh.nes amount to M000 kdonatts or capac-2 hne its \\\\ < >rk on these is progressmg although delass h,t()let I { )('ld\\ N [br('d(ell hW()l)lles

}us e oc c m red for sanous reasons and these re-

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< a}u tal < >utlas s < lt $288 nlilluln akhluI $ li mll!n hl be-Ihe ( aplIa! budgCI I()I l9NI dWiluRIN I() b M Wll~

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luin. < >r u hu h $10~ mdhon n asugned to routine hiu the unhal budget he( ause < >t uitrk shppages man n generating proim ts m w hu h PPAl n a partu e dntnhuhon and transmiWon worl~ about the same 1980 Mapir generatn>n and transmnston proje(ts pant as u cIl as a def amined ett u t ti) reduc e spend-as mg l hstr thutnin and (ither ta( dities neede<l tai sen e are awgned $248 nullnin but this amount mas not m( reased ( ustomer h uds and impnne the elet tru be tulk expended he< ause of w ork shppages on and u ater ssuems am innted to S in t nulhon of the generahng proie, ts noted earher.

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hital l)u r mg 19N) the C<>mpans and three other in-Regulah u s agem s (lelas s h t iga t u m restru tn e s eshir-(m ned u t dit res of ()regon and Washington legnlatu m an<l rew heduhng has e sh med rmed % uthw est i nergs s n u es Compans to pro-e w or k on tu o out lear proie( ts and a ( oab roed plant s ale proin t plannmg. ( onstru( tion and engineering 2

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1 hy management and licensing and environmental sup-pact of its energy conservation programs during the port services for generating projects. A staff is being year.

orgamzed and has begun functioning for the pur-In addition to its innovative and widely emulated pose of achieving project completions in predict-interest-free weatherization loan plan, a cash rebate able schedules and within budgets.

plan was introduced for Oregon residential electric space heat customers who install recommended weatherization items. The amount of the rebate de-Research Efforts SurveyTechnologies In Geothermal, Solar, Wind Resources pends n the estimated energy savings.

The interest-free weatherization program, intro-Research activities range over a variety of tech-duced in 1978, weatherized 11,517 homes, including nical programs to improve thermal plant operating 7,325 during 1980. Loans extended under this pro-efficiencies and assess the potential of alternate en-gram increased in 1980 by $11.5 million and totaled ergy resources.

$17.5 million at year end. Loans are made only if Geothermal developments include participation they produce cost-effective results.

in a cooperative effort to establish a prototype gen-The loaned funds are recovered when the resi-eration plant in Nevada and work on an internally-dence is sold or title transferred.

funded study assessing geothermal potential within Oregon regulatory approval has been granted to and adjacent to the electric system's service territory.

develop an experimental cash rebate program for Wind energy development involves installation of s far water heating and heat pump water heating.

a 300 kilowatt capacity demonstration generator to This experimental schedule will be used to collect an provide grid-connected operating experience and information base for possible usein future programs.

serve as the basis for larger scale research in the A central focus of both the rebate and interest-future. The three-blade propeller machine is located free weatherization programs is the Home Energy on a bluff on the Pacific coast south of Coos Bay, Analysis (HEA) service.

Oregon. In a separate project, data will be collected The HEA, an in-home analysis of savings potential during 1981-82 at five wind monitoring installations c nducted by a PP&L energy consultant, is free of to develop wind auditing procedures.

charge and establishes the basis for offering rebates Other programs in energy conservation include r interest-free loans to residential customers. The continued field testing of solar space heating tech-PP&L representative, following collection of all per-nologies and heat-pump water heaters to establish tinent data, transmits information to a central com-measurements for energy savings, puter via telephone. With,in moments a completed analysis is returned indicating the most cost effective Current projects in the area of thermal power savings recommendations for the homeowner.

plant performance are directed at field measure-Over 40,000 HEAs have been completed since the ment of cooling tower performance and joint utility program began in 1977. There were 18,300 com-testing of new materials. Waste water management pleted in 1980.

at the power plants aiso is receiving attention.

Interest in the opportunities for passive solar ap-Close liaison is maintained with national activities plications continues. The Energy Saver Program, un-directed by the Electric Power Research Institute.

der which Pacific Power promotes conservation That orga iization is funded by a large stgment or standards in newly built housing, will be enlarged to the industry and the Company is a contributor.

cover passive solar features in both the design and The electric system broadened the scope and im-construction of new homes.

8

COAL MINING OPERATIONS 1 E u ludes [:et tri( operalisms (oal mining at tivities) 1980 1979 Revenues.

. $215,075,000 $163,652,000 h penses 165,993,000 114,265,000 2

YtY In(ome from operations.

. $ 49,082,000

$ 49,387,000 Tons mined 14,582,905 14,339,155 Number of employees.

1,536 987 T he ( ompans s w holly-ow neu energy des elop-by ()m ker Coal Company in southeastern Montana, omnt and mming subs: diary, NE RC(), Inc estab-north of Shendan. Wyoming Decker is a joint ven-hshed sigmtn ant nulestones m seseral areas of at-ture with a subsidiary of Pe'er Kiewit Sons', Inc. of quiutmns and expansions durmg 1980. NE RC()

()maha, Nebraska, and is one of the nation's largest manages the operation and deselopment a( tivities mines More than i1 milhon tons of coal moved from relating to more than 1. I bilhon tons of surta(e coal the 1)e( ker mines m 1980 to Commonwealth Edison W mlana. Wsoming. Indiana and Ala-Company in Chicago, Detroit ldison Company in reserses m bama. is eng.iged m deselopment of uramum prop-Mu higan. and to a plant owned by the City of er tms m m ommg and a gold and sils er prospe( t m Austm, Texas and the Lower Colorado River Au-( hegon thorrt). De( ker's reserses are estimated at 511 mil-NI R( ( ) s nu ome f rom operations w as $49,082J)00 hon tons of re( oserable low-sulfur, low-ash coal, of as (ompared with $4t l87JXX) m 1979. and contnb-whu h 107 milhon tons are now committed to de-uted 18 l' to 1980 < onsohdated m( ome f rom oper-lisery through 2(x)1 The mines are capable of pro-a tion s ( ompared u ith 21 ' in 1979. ()t total reve-duc mg up to 18 million tons annually.

1980. approumately 28

Hndger Coal Company. tw o-thirds owned by a nues <it $2li o~i o(X) m densed imm transat tions with the Compans s Nf RC() subsidiary, supplies the 2 Axx),00(1-kilowatt w as

( oal-fired generatmg plants (apa(ity hm Bndger plant near Rock Springs, Wyo-T he most important deselopmont was the start oi mmg. and produced 6 45 milhon tons in 1980, a

< < >al pmdm tion m De(ember at the $168 milhon record for the mine. NERC()'s share of production spong ( reek nune in southeastern Montana. The w as more than 4.1 milhon ton < In addition to sup-startup qnaled ( ompletion of the first total mine plvmg the power plant owned jointly by PP&L and des elopment prorm t sin ( e NI RC( ) was tormed in Idaho Power Company. the mine sells 5(x),000 tons lanuars N~ ( oal trom spong Creek is shipped to annually to Prospect Point Coal Company. a Union a subsidian ot f louston Industries. In(. under a 25-Pa( oh Corporation subsidiarv.

scar < ontrat t for 181 nullion tons. shipments are

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expe( tect t< > he i milh< m t(ins m 1981,6 nulhon tons operates under (ontra(t the mine that supphes Pa-m 1982 and nulhon tons m 1981 and ea( h s ear

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bamain 1980 and (oncluded negotiations for ac-an m( rease of approumatels 250 (MN) tons os er 1979.

quisition of the assets of an Indiana (oal operation.

T he t< mnage ( < mt mued f(i tank NI RC() among the The a( quisitions reemphasized NERC() s plan to ten 1.u gest domestu ( oal produc ers Produ( tion is broaden its c oal holdmgs throughout the United expet ted to be approumatels 20 nulhon tons m states NIRC() ac quired Sand Mountam Mmerals.

1o81 Int in f ebruar3.1980. The firm supplied 454.000

()t NI R( () s output.18 w as f rom the ( ompans 's tons to a Tennessee Vallev Authorits plant in 1980.

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( v ilor.n h >. a nd ( alls f or dein erv of 'KX),(XX) tons an-

! hi. n < luisit u m < >t l'\\ ( < n;n ira t u en p n >lmr t ms hi-nualls ta i begm m Pmt l)eselopment potential of

< ah ul w est < it I s anss dle Inthana, gn es NI R( ( ) at -

the Si nulh'on ton ( herokee reserse. w est of Raw-h i.nuither c i,al pu n ha in en area and an oppor hns is under un estigation i es,

tinu ts h i nu n e m h, the gn iu mg exp< o hng t r.nle w ith Nnc e its h umat uin. NI R( () has plac ed If)() million

\\\\ estern l un ym ilu m m e is t w;mi ted t > pu idin e h >ns in un ds w estern n%erses under long-term con-u n i f H u i h >ns.umnalk I r.u t s, representing an aggregate sales prK e of ap-li i i i n m hna te a tul i n er ser ils easter n mining < >per-

.i t o m s the < < >mpans has estabhshed a numng dn t-P"'x onateN 5171uHuin s l( if) < >1lli t ' ill ( llattan< H >ga I t 'n r l t W st 't ' Nl R(l I ( <tal N ih" ( isnyuns e'staldis ht ui irl maj s ear. is alu) h i-(){her Minerdl Pr()Spe([s [\\pl Ore ()

<alc<l m the ( hat ta nc a iga < >ttu e l he i < ul sales sub-Ni R( ( ) < < >nt mued

• S P padu lpatum m a uran-sul a n.n ts as a < v ul mar keter ho smaher eastern tum s<>lutnin test plant in Wsonung In a pdot plant pn idm en..nul u dl mar ket NIRC()s unt iimnutted pn >m< t designed to es aluate underground uramum ce r e m < i ul pn ulm in,n th the end of the sear-mlutn,n lea < h nunmg. a NLRC() subsidiars. NLDC()

NI R( < > ( ii.d sales had signed as rust mternatninal

,Nm lem l xploratu m and Des elopment Companyi vie ha Pm i deln en i n S x il H in tons i >t Pen nss l-

.md ichin i xpkiratu m Compans. (' asper. Ws ommg, s.una anth r.n in h > an ageru s < a the N >uth Korean esaluated results of tests to produ( e uranium se -

l ei n em n mnt low <ake a tust stage m pniduc hon of nuc les power S h er n ia n \\\\ siimmg was schu ted late m I'mfl as plant f uel thun uranium <>re Although results were the sne < n NI R( ( rs w estern numna dn isu m otin e.

suc < essf ul. no det isnin has been rem hed regardmg in er scemn the u mf ana and Wsiumng pu >pertms

< onunen ul produc hon at the plant.

Its h n alu m u dl m i < onnn ulate the managenwnt < d g yqg q g(3 )

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the three exist mg nurms an<l tur > msen es under de-prm u>us nmtals with the m quisition or reserves of s ch >pnmn t m \\\\ s i m u n e' go!d and siher ore m eastern ()regon. Negotiations ar e < < >ntinumg t<>r ( ont n d < >t the addituinal proper-Anlel()pe f It'l(} [dt MUIP(l f()r l)PVUl()pn1Cnl tms t<i he des eloped by a N1 RCC ) subsidiars. Current

.\\n< >thm sigmtn ant mdesh me w as the progress or plans ( all f or f urther explorahon and. it w arranted.

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< < >uld begin in 1984 N { R('( ) is a l s( > ins estigating

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expansion into other nunerals and c ul and gas ex-serse ( < mn ts w hen nupu red nunmg pernuts were tded m (k h>her it appn n ak are nu ened hs the pluratu m to supplement eustmg operations. Major tmt qum ter in 19a? pn ului tu m is expet ted to start attentnin u dl be gnen to the sast nuneral resources hs late PMI \\ sei < >nd \\ n teh ipe < < ul sales < < >n t ra( t

<>t Alaska and then pidentul for future needs of w as s;gmul in luk anci < ahs h u (lelis en < >t 4 ' nul-natuinal and w <>rld markets 11

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TEl.ECOMMUNICATIONS OPERATIONS Ondudes Atmom sin (e lune 1,1979) 1980 1979 R ev e n ues........................... $ 2 31,4 04,0 00 $142,360,000 l

Expenses........................... 160,976,000 98,153,000 4

income from operations.............. $ 70,428,000

$ 44,207,000 Telephones served by Telephone Utilities................

205,004 185,737 Originating messages................

68,419,000 60,715,000 Number of employees................

2,336 2,262 The strong performance of the Company's tele-The group moved into the unregulated communi-communications operations, Alascom, Inc., and cations field early in 1981 with the purchase of Telephone Utilities, Inc. (TU), prompted the organi-Audio Group, Inc., a Portland-based firm providing eation of a common management group in 1980 to background music, often mixed with commercial provide strengthened support to existing operations messages, to 2,000 offices and commercial establish-and to aid in the development of the long-term tele-ments in most major Oregon cities and in several communications growth objectives of the Company.

neighboring states.

Telecommunication's operating revenues were Other activities in the unregulated field foresee

$231,404,000, up 62.67 from 1979's $142,360,000, extensions of the group's basic capabilities in elec-whic h included Alascom revenues for only seven tronics to gain the benefits of diversification. The months. Operating income for the group was telecommunications group cor*:nues to seek acqui-

$70,428,000 in 1980, up 59.301. The group's contri-sitions of local telephone companies.

bution to consolidated income from operations in Alascom, acquired June 1,1979, was financed by 1980 was 26.27/ compared to 21.24 in 1979.

a five-year term loan from a group of banks. Since Alascom, a wholly-owned operation, provides that date, Alascom settled a rate case with the long-distance telephone and other related com-Alaska Public Utilities Commission covering its in-munication services between local independent ex-tra state tariffs that makes a stable financial base es-changes within Alaska and between that state and sential for effective long-range planning. In a parallel the rest of the world, including same-day service of development, an agreement was reached with network TV coverage. TU, an 8001 owned holding American Telephone & Telegraph Company cover-company, has operating subsidiaries serving more ing interstate toll settlements for a five-year period than 100 communities and rural areas in Oregon, rather than the one-year basis of preacquisition Washington, California, Nevada, Idaho, Montana years. If approved, this will help end over a five-year and Alaska.

period the unfavorable interstate rate disparity for Revenues of Alascom amounted to $166,422,000 Alaska in comparison to the " lower 48" states, while in 1980, while TU had revenues of $64,982,000. Op-at the same time providing a stable source of reve-erating income for Alascom in 1980 was $45,996,000 nue for development of telephone service for Alaska.

and for TU was $24,432,00(L Alascom closed out the year with 1340 employees, and TU ended with 996 New Microwave System Started workers, for a combined work force of 2336 em-By the year's end, Alascom had completed the ployees.

construction of the first leg of a new terrestrial microwave network that will provide needed back-Management Consolidation in Progress up for the satellite system nc,w in service. The first formation of the overall management group is leg runs from Ketchikan to the British Columbia tele-designed to reduce staff and managerial duplica-phone system in Canada. In time, this will be ex-tions and to streamline and strengthen the support tended 1,900 miles northward along the Alaska pan-provided operating units. The management will be handle into the Canadian Yukon Territory at Whita better positioned to se3 pond to changing operatirig iforse, westward to fairl,anks, Alaska, and south to conditions and market opportunities, shifting regu-Anchorage. This project is slated for completion in latory standards and a rapidly evolving technology.

1983 at a cost of $46 million.

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FINANCING IN 1%0 u.~ om,,pe,.m s a soplusin ated < ommunn a -

1 Junng the s e.n the ( ompans marketed tw o issues in o

, stem ah mg the i nms Alaska eni prpehne and

< >t ( < >mmon sti n k and < >ne bond issue that pros uled rn u

'e d s t<> ponuh a s m u l.a sers u e along the rmt pn u ceds ni appn eumaleh $1N 724JHO to re-h kan teg < > t the pu ip< ised natu ral gas pipehne p n shint teon bi o niu mgs apphed to ( onstru( hon.

\\1n m alule it is pn a almg < < anmunn ain ins sen u es In lanua n i i N H U H Hi sha res of ( ommon sto( k w ere h>

< u gani/a t u ms tngaged in (neliniinars vin-ute siihl a t ( < impet!!n e hulding a t a pret e < >t' $ 1H.C l per u t o k <in the hrm share In \\tn 11119 w> shares ut ( ommon w ere sold 1 in.mi d he r to mt h < im os en ed a ser n s to pursuant h > a nghts a nter mg at 51~ 10 per share In imhus tuon!)o Mate <>f \\laska !n id first mortgage honds, hear-un halum edui.on oul l\\ h i 84 < <,mm u n n ing an inhoest rate < a 14 L < due in the s ear 2010,

+,sne-tu l he pn rin, is h o nu ne sta h r uders.n e pn imis-w ere siihl a t < iimpehtn e Imkhng with the under-am w riters reonennu the senes hi ms estors at 99 2m',

( y o u a tir m sulisu ha r n" id ll

( c in t mm d h i m-s tehhng 14 H716' h i ins est< >rs i r ea a - the runnher

<d telephe mr sen ed and thes In l)e( ember the Ihre( tc us nu reased the authori-h da!al 3 G (H HI at s e.n end up inim 1Hi 7 xi h >r the

/ahon f or issumg ( ommen ul paper to $15f) mdlu>n

[o n o sisu b eju minins ed (;n atlanal T i del)hi > n e hi lat ihta h' the sht at-term h< n n in ing program.

( i niy ia ns nea r I a n ha n k s arul NtL a T elephone (iim-T hem als< > is a hne <it < recht agreement with a group pam ms in t heas te u n M a ska.ulded IUJ H )U a nd 9 it H I

< >t iiimmen ul lunks.n the amount of S HX) milhon n e u e.n h h al c h u' h i mter nal gr < m th thniught)ut Il:

ancl a $llH) malhe m h un t u ihty in the l u n >dolla r market

( )n lanuan I i.1981 lik N UXX) shares of 5 U1 No Ill N I(nly {)lSIdhl t' OUMntM ln(IPdsP%

Par Ner d Prehu n'(l were vild hs negtihalnin w ith a lhe m < m as.- in il n%enor refle( ts the steads uniup < n underu nters The guiup reottered the is-i niu th m hing chstaru e uvee as w ell as addit n inal sue h, the puhlu at Sli The s mld to insestorsis li' Meph< au-e s ed snu e them u ere mi rate un reases

( )n \\ tin h i 1981. the sale of 5'i mdlion of hrst

<!ur mg Poi It r pnihabh' the c iimpans u ill tde rate nu n tga ge hv >nds. hea r my an mter est rate < >f I W e'7 au mase apph< a t n ins m ses cral states m the near due m 1'N I. u as negiituted with a gniup ot under-

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Ih<'In\\esh)rs Il I' mf l t

< it u !1it Il b 2 > 's ini!I:s trl W ls yt'nt'r a tf 41 In t<'rnalIs In.nl(llI!< m lkit're' u s'n' Mil.

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[Ill r( llase(I kh sha r<'h< drk rs th rimgh the (lis idend re-s impo n emen ts hudget < a 5 W mdhon T ma p a p< u -

un estment and st u k pun hase plan. w hu h netted t uin u dl I e n o < < on er nnu % stems h > digital cler the (limpans n iHl.fxx) trom the 19J WWI stoc k-su ih h u m w ith nea rls it )

cit its ( e ntral citru 3 hi dders ju rtu 1pa t!ng In ( h h>her 1862 emph> vees lri in l

l!'ms mJim hui hi he elm In >nu hs the en(l < d 1981 par t u ipateil in the ( < >mpans s (>ttenng (>f shares in

\\ smnon ant par t io th eth ut u dl he f unded bs a the emph n ee sh n k pun hase plan.

So i nulhiin h un hom the Ruul f la torn atu m Ad-In september i nH( > IL he nrou ed f rom the Bank numst u t u m i,ht.uned in pm() h u use m rehu d< hng its

< n Ti>Ls o 5 il nuunin at a s ar uhle rate near pome on eas tm n ( h egiin [ui,pe r t ies aml( (ins erting them h) an unsec ured hash The h un a tr> he repaid keptem-inn gurts sersue \\tmagenu nt antulpates flut m her 14M i inh 1 it n i l r m e n s i' a n i n cler In im the i N (anern-NI R( ( ) hin o m e(l appn mmatels $62 milhon dur-i m

< imo w b h is < in s a m h u ig t a( ihn at om1%i u hn n u mether w ith the haiance nom lan-

% rth lieml \\\\ askogh m to on clm toi mm hann al uan 1 19Br I h itals vHi mdln m at De( emher 11.1980 ha r du a m h i elm !n n u d;yral at i <i.st <n v i i m d-

<m N s i U! m.h u m spong ( reek Mme pn >du( tu m h in p n ment hn.uu :ne agreement II

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SELECTED FINANCIAL DATA m

1980 1979 1978 n

5t;\\t\\1 ARY CONsOLID ATED INCONtf STATEstENT D AT A Resenues

$ 975,433 5 776,901 5 574,462 Net income 133,866 112.511 105,787 f arnings on Common stoc k 110,723 92.899 88,587 larnings per Common share 2 53 2.46 2.51

( ash Daidends Dea. red per Common $ hare 2 04 1 95 1.89

$L Nist ARY CONNOLID ATED BAL ANCE SHEET D AT A f otal het'

$ 3.5 59,071 53.128,787 52,469,922

( apita'vation long Term Debt and Redeemabir Preferred Sto(k' 1,718,703 1,565,599 1,138,395 Prererred sto< k 226.459 227.236 227.236

( ommon Equits 967.072 808,5W) 778.134 Total ( ap,tabiation 2.912.234 2,601,425 2.143.770

• Inc tudes in 1940 and 19'9 Redeemable Preferred stoc k of $50 m!ihon.

%I A Tl'T IC 5L INF()R Ni AIlON E

2 In< ome Data P. i ent F arr ed on herage Capitahzation 10657 9 '7 ~r 8859 Pen ent t art ed on herage ( ommon [ quits 12 47G 11 71 'T 12.00'T (omoun stos k Data m

Book Value per Share Outstandmg at Year-End 5

21 06 5

21 28 5

20.80 Number of Shoreholders at iear.E nd 125,405 116.749 116,657 limes larned Data-Totai interest ( harges 1g 19 2.2 lotal Interest ( harges and Prefer ed Dnidends 16 17 1.9

[ NI R(.Y N Al F 5 T housands or k dow att hours Rr dent,al 6.940.201 6,991,523 6.526.119

( ommer( tal 4,393,31,

4.898.733 4,465,117 lodustnal 6.590.982 6,489,186 6.149.584

=

(,os er n men t muna ipal and other.

86.699 86.158 83.055 Sales for resale tem po ra rs 3 653.555 1.581.289 4,541.912

-other 840,892 7 %.121 736.052 Total Energs sales 23 005.645 22,843.01?

22 501.839 T

u.+3lIi*

PACIFIC POWER & LIGHT COMPANY Year Ended December 31 1977 1976 1975 1974 1973 1972 1971 1970 Thousands of Dollars, except per share amounts

$ 458,295

$ 399,728

$ 335,672

$ 263,5%

$ 244,949

$ 201,548

$ 180,230

$ 160,617 a

88,575 86,915 72,444 54,129 53,542 47,882 38,884 31,051 74,616 74,540 63,813 45,722 45,135 41,067 33,769 27,358 2.22 2.48 2.30 2.03 2.27 2.25 1.98 1.69 1.80 1.725 1.675 1.60 1.575 1.47 1.40 1.28

$2,420,134

$2,112,702

$1,834,737

$1,591,744

$1,358,599

$1,133,118

$1,030,914

$ 921,546 1,283,494 1,073,475 824,481 749,733 637,840 566,908 537,834 474,580 187,236 157,236 157,236 117,236 117,236 117,236 92,236 62,236 698.732 629,868 560,911 434,623 372,883 321,700 270,508 259,372 2,169,462 1,860,579 1,542,628 1,301,592 1,127,959 1,005,844 900,578 796,188 8.16 %

9.16 %

9.45 %

8.65 %

8.46 %

8.35 %

7.98 %

7.30 %

11.23 %

12.52 %

12.82 %

11.32 %

13 00 %

13.87 %

12.75 %

11.21 %

20 24 5

19.73 18.82 5

18.75 18.10 17.00 15 80 15.22 110,944 102,077 102,685 85,674 77,956 74,952 72,479 73,108 2.2 2.3 2.2 2.1 2.5 2.5 2.3 2.2 1.8 1.9 1.9 1.8 2.0 2.1 2.0 1.9 6,321,687 6,176,938 6,058,874 5,653,332 5,529,310 5,235,260 4,962,472 4,5 8,470 4,225,552 3,927,529 3,727,9 %

3,418,127 3,388,342 3,184,198 2,940,770 2,752,649 5,966,572 5,671,062 5,224,714 5,286,592 5,230,515 5,076,847 4,828,399 4,761,4(,4 88,246 85,342 112,716 157,140 170,546 166,662 153,186 162,9'7 2,420,393 3,555,344 2,562,434 1,434,813 2,864.894 2,394,948 1,091,980 667,991 3

668,865 597,641 562.054 526,575 525,611 509,671 448,132 417,551 19,691,315 20.013,856 18.248,788 16.476,579 17,709,218 16,567,586 14.424,939 13,320,982 J

17 I

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

_g FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES The capital requirements for the Company and its subsidiaries for 1980 and as estimated for 1981 through 1983 are primarily as follows (in thousands):

1980 1981 1982 1983

( omstrut tion expenditures:

q llet tne operations

$272,041

$ 141,024

$ 376,279

$461,584 Ielec ommunic ations operations.

72,439 80,riOO 171,100 88,5(X)

( oal mining operations 113,867 49,647 81,355

_ 92_,161 subtotal 478,347 471,471 640,934 642,247 interest capitahied on equity funds.

16,207 24.248 27,587 41,549 Total 494,554 497.71p 658,521 683,796 statunties of long-term debt and siniong fund requirements.

liet tor operations 9,004 16,919 30,247 73.923 Tele < oinmunn ations operations.

14,676 24,172 23,412 54,590 foal mining operations 4.365 1,202 11,674

, 10,734 f otal debt matunties.

51.0 6 44,311 65,133

_ 139,247 Total (apital requuements.

$547,W9

$542,012

$72 3,854 U12 3,04 3 The Company and its subsidiaries generate funds from their operations to finance a portion of capital requuements, such funds are derived from consolidated net income, depreciation, deferred taxes and deterred insestment tax credits. The ability of the electric operations to fund a portion of its capital require-ments from its operations depends to a great extent on its ability to obtain increases in the rates it charges for utihty service. Such ability is favorably affected by either filing more f requently for rate increases and/or improving regulatory practices such as: being allowed to earn a return on portions of construction work in progress; being allowed adequate depreciation rates: normalizahon of federal income taxes; the use of torward-looking test periods; full current recovery of fuel costs incurred n the generation of electric-ity and, most important, the opportunity to earn a rate of return which is competitive in the capital mark-ets. Throughout 1979 and 1980, the Company has increased the frequency of its rate case filings in all of its sn-state service area seeking higher rates for electric, water and steam-heating services. The Company's subsidiaries have been able to meet substantially all of their normal construction programs thiough their operations but have resorted to external financing for major acquisition or mine development activities.

f or 1978,1979 and 1980 approximately 449, 349 and 277, respectively, of the funds required for the (onstruction programs were generated from consolidated operations.

The Companies continue to meet a significant portion of capital requirements through the sale of shares of (ommon and preferred stock and first mortgage bonds by the Company and other long-term debt by the Company's subsidiaries. The consolidated capitalization ratios at December 31,1980 consisted of ap-prossmately 57el long-term debt,109 preferred stock and 3 F1 common equity. The target 1pitalization ratios are 547 long-term debt,109 preferred stock and 3f6 common equity. The ability to achieve and

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18

1 maintam these target capitah/ation ratios vill depend largely on the allowance of reasonable rates of re-turn by the Companies regulatory (ommissions and market conditions existing at the time of selling se-( urities. For information regarding unused sources of hquid assets, bank lines of credit and other short-term borrowings of the Company, see Note I to Consolidated Financial Statements. Also, see Note 8 to Consohdated financial statem( nts for a desc nption of leases which for rate-making purposes have been treated as operating leases and have not been capitahzed.

The Company and its subsidiaries antiopate that to finance the 1981-1983 construction program, ap-proumately 65r; or $12 bilhon of the funds required will have to be raised through external financing.

Thus far m 1981, the Company has sold 2,000,000 shares of $175 No Par Serial Preferred Stock, cumula-tive, $25 stated value per share iNew Preferred Stock) and $75,000,(XX) principal amount of first mortgage bonds (New Bonds) at an annual interest rate of 15%CI in addition to the New Preferred Stock and the New Honds, the earmngs coverage provisions of the Company's mortgage ieJenture and Restated Articles of In(orporation would at December 11, :980 only permit the Company to i: sue an additional $120,000,000 in princ ipal amount of first mortgage bonds at an assumed annual rate of 15%c/ and $28,000,000 of addi-tional preferred stock at an assumed annual rate of 15"I. Thus, without timely and adequate rate relief the l

Company will have diffn ulty financing its entire construction program. Although the Company cannot pre-l du t future regulatory prac tices and is subject to c hanges in the economy and capital markets, no adverse (hanges are expected whu h might significantly alter its basic financial position or ability to finance future 1

capital requirements.

RI SUL T5 ( H ()PI RAll()NS Increases in electnc revenues are pnmarily attributable to the effect of higher rates and an increase in the number of ( ustomers sersed. Tele (ommunications revenues increased as a combined result of sustained growth m the number of stations served caused by new customers and acquired operations, higher toll settlements and a iate mc rease in early 1978. Telecommunication revenues also increased significantly in 1979 and 1980 due to the int lusion of A!ast om revenues since its acquisition on June 1,1979. Revenues from ( oal minmg operations mc reased in 1978,1979 and 1980 as a resuk of increased prices and produc-tion. T he aserage prit e f or (oal increased approximately 10"; in 1978,47C; in 1979 and Sri in 1980.

Although revenues in reased by approximately 26',

in 1980, net income and earnings on common sto(k in( reased about 19"I beuuse of m(reased operating expenses which reflect continuing inflationary pressures on the (ost of labor, materials and services the higher costs of operating and maintaining ther-mal generatmg units and substantially greater costs of financing. Net income in 1980 includes approxi-mately $ 10,000,000 af ter tax gam on the sale of seturities larnmgs per common share in( reased to a lesser extent, about 3rl, because of the effect of sales of ad-ditional shares of ( ommon stock.

IN F L ATI( )N The Companies are particularh sensitne to inflation due to the large amounts of capital that must be raised for construc tion programs and because utility service prices are regulated using historical cost in the rate bases. The Companies expect to (ontinue to pursue adequate and timely rate relief in the future to off-set the impact of mtlation and other mc reases in the costs of providing utility services and will continue to urge improsemem in regulatory prac tices so that attrition caused by regulatory lag is reduced. The Compa-nies have prepared supplementary mtormation concerning the impact of inflation and changing prices, w hi( h is in(luded in Note 14 to Consolidated Financial Statements.

}

19 L

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PACIFIC POWER & LIGHT COMPANY CONSOLIDATED y

BALANCE SHEETS s

ASSETS DECEMBER 31 1980 1979 PROPERTY, PLANT AND EQUIPMENT:

Thousands of Dollars Utility:

Electric

. 52,415,500 f *,244,800 Telecommunications 556,399 493,'610 Coal Mining 263,628 111,025 Accumulated depreciation and amortization.

(611,718)

(519,028)

Net.

2,623,809 2,330,407 Construction work in progress 566,702

. 401,774 Total property, plant and equipment 3,190,511 1 822,181

\\

CURRENT ASSETS:

Cash and temporary cash investments.

21.177 22,517 Accounts receivable:

Customer 109,389 94,661 Other.

22,803 19,006 Allowance for doubtful accounts (1,625)

(1,532)

Materials and supplies (at average cost) 41,390 39,048 Fuel stock (at average cost) 26,850 19,052 Prepayments.

7,358 4,724 Total current assets 227,342 197,476 OTHER ASSETS:

Excess of cost over net assets of businesses acquired.

59,409 53,769 Deferred charges.

48,278 24,565 Other 33,531 30,7 %

Total other assets.

141,218 109,130 TOTAL ASSETS

. 53,559,071 53,128,787 (See accompanying Notes to Consolidated financial Stateme nts) 20

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CAPITAllZATION AND LIABILITIES

?

DECIAtBER 31

{

1980 1979

)

CAPITALIZATION:

Thousands of Dollars Common stock, $3 25 par value:

Authonted 1980--75,000,000 shares; 1979-50,000,000 shares Outstanding 1980--45,929,861 shares: 1979 - 37,999.469 shares 5 149 172

$ 123,498 Premium on capital stock.

594.255 478,292

'{

installments received on mmmon stock.

6l 142 Capital stoc k eywnse 12411111 (21,859)

Retamed earnings 24H,115 228,517 Total mmmon equity.

967.072 808,590

.[

Preferred stock 226.439 227,236 p

.[

Redeemable preferred sto(L.

50Ju o 50,000 Long-term debt 1.6#4 701 1,515,599 Total capitahration 2.912.214 2,601,425 m

CURR[NT LIABillill5:

Long-term debt c urrently matunng.

40.221 53,733 Nates payable.

Isnu 10,000 Commeroal paper 115.100 56,000 Accounts payable 66.647 66,437 Tases accrued.

573A1 54,236 Dividends and interest payable.

57.517 51,079

'Jther s7,167 38,830 Total current habilities 4tr#.115 310,315 D[f f RRID CREDITS:

Deferred income taxes.

135,716 114,687 Deferred investment tax credits.

173r#2 37,536 Customer advances for construction and other.

44.419 26,824 Total deferred credits.

217.247 179,047 MINORl!Y INTtREST 20.275 18,000 CONtNilTMENIS AND CONTINGENCIES-See Notes TOTAL CAPITAllZATION AND LIABILITIES

. 51.559.071

$ 3,128,787 b

ISee accompanying Notes to Consolidated financial Statements) 1 21

STATEMENTS OF CONSOLIDATED INCOME

'AND RETAINEDzEARNINGS Year Ended December 31

~1980 1979-1978 1housands of Dollars REVENUES 5975 411

$776,901

$574,462 EXPEN5ES:

Operations 127.19, 258,620 168,741

' Maintenance 108.29H 82,821 43,074 Administrative and general... :.

75 409 58,536 35.381 Depreciation and amortisation 117,531 90,417 70,213

' Taxes, other than income taxes.

..~

7a v It, 78,282 57,744

. Total 707.070 568.676 375,151 INCOME IROM OPERATIONS _.

Jute l 208,225 199,309 INTEREST EXPENSE ANDOTilER:

Interest cupense 159Ji91 119.405 85,101 Interest capitalised i 4 ;49r.i (41,012)

(27,328)

Other expense (income).

t 11.15 b 5,855 2.691 Total 101.242 84,228 60,468 lNCOME BF,f 0RE INCOME TAXE5 I r>7,121 123,997 138,841 INCOME TAXE5 11 255 11,486 33,054 NET INCOME '.

IlLHM.

112,511 105,787 RETAINED EARNINGS, JANUARY 1 228.517 209,208 187,450 CA5tl DIVIDEND 5:

Preferred $tock....

(2 t 14 0 (19,612)

(17,200)

Common stock.

i90.92%

(73,590)

(66,829)

. RETAINED EARNINGS, DECEMBER 31 5243.111

$228,517

$209,208 Earnings on Common Stock (Net income less preferred dividend requirements) 5110.721

$ 92,899

$ 88,587 Average number of shares of Common Stock outstanding (in thousands) 4 in 11 37,692 35,319 Earnings per Common Share (based on average number of shares outstanding) 52 s1

$2.46

$2.51 Cash Dividends Declared per Common 5' hare,

52 04

$1.95

$1.89 (See accompanying Notes to Consolidated financial Statements)

This 1980 Annual Report has been prepared by the k

Company to provide general and statisticalinforma.

i tion concerning the Company,and not in connection with any sale, offer for sale or solicitation of an offer to buy any securities.

22

STATEMENTS OF CONSOUDATED SOURCE AND USE OF FINANCIAL RESOURCES-Year Ended' December 31 1980

'1979 1978-Thousands of Dollars,

$OURCE OF flNANCIAL RESOURCES:

Operations:

Net income 5111,Hu,

' $112,511 -

$105,787 Items not requinng (providing) current resources:

Depreciation and amortization.

117,581 '

90,417, 70,213 ;

Deferred income tancs-net.

21.2tA

.13,230 3,801 Investment tax credit adjustments-net.

<3 t h (3,071) 19,147 (tr,.2on -

(23,541)

(15,986)

Interest capitalised on cquity funds H.7 55 1,625,

2,873 O*ber-net 264.211

~ 191,171-

. 185,835 Total from operations.

financings:

Long term dcbt 187.178 354,574 53,237--

Common stexk 158.t,85 111,257' 59,119..

1. 49,885 -

Redeemable preferred stoc k.

Preferred stock.

38,530 Inc rease in short-term debt less temporary investments.

78.584 47,804 20,665 404.447

' 463,520 '

171,551 Total from financings.

Sale of project constructed for Icaseback.

.211,453 Other sources-net 10,294 4,243 8.788 -

TOTAL.

Sh7H,972

$658,934

$577,627 USE Of flNANCIAL RESOURCES:

Construction cupanditures (enduding interest capitalised on equity funds).

547H347

$334,217 '

$294,187 Operating companies acquir M:

15.701 274,984 -

5,388 Property-net Other assets and liabilities-net

(.924 (7,070).

I4,8%

~ (90,000)

L--

Long-term debt assumed.

114fw,8 93,202; 84,029 Dividends 51,045 1 33,650.

.186,806 Long term debt reduction Increase in working capital (exclurhng 15 740 19,951 7,217 -

short term debt and temporary insestments)

TOTAL.

5678.972

. $658,934

$577,627 -

4 (See accompanying Notes to Consolidated IinancialStatements) 23

Notes to Consolidated Financial Statements December 31,1980,1979 and 1978

1.

SUMMARY

OF SIGNiflCANT ACCOUNTING POLICIES:

Basis of Presentation-The consolidated financial statements include those operations of a utility nature-Electric, including steam heat and water, and Telecommunications-and Coal mining, including a 507 interest in the assets,lia-bilities, and results of operations of a commercial coal mining joint venture (" Companies"). All wholly-owned and majority-owned operations are included since dates of organization or acquisition. All signifi-cant intercompany transactions and balances have been eliminated.

Revenues include coal sales to a joint venture partner of $18,879,000, $14,423,000 and $11,603,000 in 1980,1979 and 1978, respectively. Payments to an affiliate of a joint venture partner for equipment con-struction, development cost, and management services aggregated $1,758,000, $4,290,000 and $18,525,000 in 1980,1979 and 1978, respectively.

Certain reclassifications have been made on the consolidated financial statements for years prior to 1980 to conform to the 1980 presentation which includes coal mining operations on a consolidated (rather than combined) hasis. Such reclassification had no effect on consolidated net income.

Regulatory Authorities-Accounting for the utility operations is in conformity with generally accepted accounting principles as applied to regulated public utilities and as prescribed by Federal agencies and the respective commis-sions of the various states in which the Companies operate.

Property, Plant and Equipment-Property, plant and equipment are stated at original cost of contracted services, direct labor and mate-rial, interest capitalized during construction and indirect charges for engineering, supervision and similar overhead items. The cost of depreciable utility properties retired, including the cost of removal, less sal-vage,is charged to accumulated depreciation.

Depreciation and Amortization-Depreciation is computed generally under the straight-line method over the estimated useful lives of the related assets. The utility operations provisions for depreciation were 3.759,3.399 and 3.167 of aver-age depreciable property, plant and equipment for 1980,1979 and 1978, respectively.

The excess of cost over net assets of businesses acquired is generally being amortized over 40 years. Coal mine development costs are included in property, plant and equipment and amortized over the life of the related mines.

Interest Capitalized-Debt and equity costs of funds applicable to utility properties are capitalized during construction. Gen-erally, the composite rate was 8%G for 1978 and 1979,99 through November 1980 and 10%% thereafter.

Interest capitalized on coal mining properties represents interest cost incurred to finance construction.

Income Taxes-Deferred Taxes-Generally the tax reductions relating to the difference between tax depreciation and book depreciation for Electric operations are flowed through to income. For Telecommunications operations deferred taxes are provided for the tax reduction of tax versus book depreciation. Deferred income taxes are not provided for certain other differences, principally interest capitalized, between book and taxable income of the utility operations. Under regulatory practices to which the utility opera-tic,ns are subject,it is expected that income taxes not provided for currently will be recoverable through revenues when such taxes become payable. Deferred income taxes are provided for all timing differ-ences of the Coal mining operations.

24

Investment Tax Credits-Federal income tax reductions resulting from the investment tax credit re-lating to Electric operations are deferred and amortized, generally over an eight-year period. Investment tax credits relating to Telecommunications operations are deferred and amortized over the estimated useful 4fe of the property. The Coal mining operations flow investment tax credits through to income in the yea, the credits are realized. Investment tax credits generated by Electric operations, but not esti-mated to be realizable by such operat;ons are flowed through to income to the extent currently realiz-able on a consolidated return basis.

Revenue Recognition-Utility revenues are generally recognized on the basis of cycle billings and are recorded when custom-ers are billed.

Retirement Plans-Substantially all employees are covered under various retirement plans. Pension costs are funded as the liability accrues, based on actuarial determinations, including unfunded prior service costs which are amortired and funded over a thirty-year period.

2. PEBBLE SPRINGS NUCLEAR PROJECT:

Approval to construct the Pebble Springs Nuclear Project in Oregon, in which the Electric operations has a 29.44 interest, was deferred by the Oregon electorate on November 4,1980. The electorate voted that no site certificate for a nuclear-fueled thermal power plant may be issued until the Oregon Energy facility Siting Council has found that an adequate repository for disposal of high-level radioactive waste produced by nuclear genera:ing facilities has been licensed for operation by the appropriate agency of the federal government. Also, voter approval is required for issuance of any site certificate. As of Decem-ber 31,1980,1979, and 1978 the Electric operation had invested $86,300,000, $77,700,000 and $66,300,000, respectively,in the project. If it is determined that the work performed to date must be abandoned or relo-cated, the Electric operation intends to request rate relief sufficient to recover its costs over a reasonable number of years. The granting of such an amortization request,in Oregon,would require a modification of the Public Utility Commissioner's interpretation, with which Management does not agree,of a previous bal-lot measure which prohibits the inclusion in rate base of any property not presently used for providing utility service. No provision for loss has been made in the consolidated financial statements, since the amount,if any, cannot be reasonably estimated.

3. COMPENSATING BALANCES AND SHORT-TERM BORROWINGS:

Short-term borrowing arrangements include $132,000,000 of lines of credit with domestic commercial banks, a $75,000,000 loan facility in the Eurodollar market and authority to sell commercial paper up to

$150,000,000 outstanding at any one time. The compensating balance requirement under the lines of credit at December 31,1980 was $9,150,000. The lines of credit are periodically reviewed by the vari ~ss banks and may be renewed or cancelled. The Eurodollar loan facility expires in March 1981 and it is the intent of Management to renew and expand the facility to $100,000,000. Commitment fees charged in connection with these borrowings are not significant.

4. COMMON EQUITY AND PREFERRED STOCK:

In connection with the Employees' Stock Purchase Plan,232,782 and 172,173 shares of common stock were issued to employees during 1980 and 1979, respectively. At December 31, 1980, 244,735 shares of unissued common stock were reserved for unpaid subscriptions and 1,779,171 shares were reserved for future offerings. Pacific Power & Light Company (Company) was trustee for 134,507 fully-paid for shares at December 31,1980.

Under the Dividend Reinvestment and Stock Purchase Plan, 2,726,411 shares of the Company's un-issuad common stock were reserved for issuance at December 31,1980. During 1980 and 1979, respec-tively,565,704 shares and 419,303 shares of common stock were sold under the plan. The Company was trustee for 174,925 shares under the plan at December 31,1980.

25

At December 31,1980 and December 31,1979, the Company had outstanding the following shares of cumulative Preferred Stock:

Shares Outstanding 1980 1979 5% Preferred (par va!ue, $1001-Authorized 126,533 shares.

126,533

.126,533 Serial Preferred (par value, $100)-Authorized 3,500,000* shares 4.52 %....

2,065 9,835 7.00 %

18,060 18,060 6,00%.........................

5,932 5,932 5.00%...

42,000 42,000 5.40%..........

70,000 70,000 4.72 %....

100,000 100,000 4.56%................................,......................

100,000 100,000 8.95 150,000 150,000 9.08 %.............

300,000 300,000 e

7.% %.

250,000 250,000 No Par Serial Preferred - Authorized 8,000,000 shares

$2.48 Stated value, $25) 1,600,000 1,600,000

$2.13 htated value, $25)......

1,200,000 1,200,000

$2.29 6tated value, $25).

1h00,000 1,600,000 Tetat shares outstanding........

5.564,590 5,572.360 At par or stated value...

$226.459,000

$227,236,000

'3,500,000 shares at December 31,1960,2.500,000 shares at December 31,1979-including in both years 500,000 shares of Redeem-able Preferred Stock-See Note 5.

Generally, preferred stock is redeemable at stipulated prices plus accrued dividends, subject to certain restrictions. Upon involuntary liquidation all preferred stock is entitled to par or stated value per share.

Changes in shares of capital stock and the excess of net proceeds over par or stated value credited to premium on capital stock are as follows (in thousands)-

Shares Premium Common Preferred on Capital Stock Stock Stock Balance, January 1,1978.

34,521 3,972

$417,630 1978. Sales to employees............

98 1,586 Sales to publ c...

2,789 1.600 49,575 Balance, December 31,1978....

37,408 5,572 468,841 1979 -Sales to employees.

172 2,408 Sales to pubhc.......

419 7,043 Balance, December 31,1979.

37,999 5,572 478,292 1980. Sales to employees.....

233 3,103 Sales to pubhc...

7,698 112,442 Purchases.....

f7) 418 Balance, December 31,1980...

45,930 5,565

$594,255 in January,1981, the Company issued $50,000,000 of $3.75 No Par Serial Preferred Stock, $25 stated value.'

4

5. REDEEMABLE PREFERRED STOCK:

On October 11,1979 the Company issued 500,000 shares of 9.15W Serial Preferred Stock (par value,

$100). On October 10,1989 and each October 10 thereafter, so long as any of this stock is outstanding, the Company is obligated to purchase 31,250 shares at par value plus accrued dividends. At any time the Company is in default in its obligation to m ake any such purchases,it may not pay cash dividends on Com-mon Stock.

The shares are also subject to redemption at prices declining from $109.15 at December 31,1980 to par value at October 31,19W and thereafter, plus accrued dividends. However, the shares may not be redeemed prior to October 31,1989 if the effective cost on indebtedness or preferred stock incurred for the purpose of redemption would be less than 9.15% per annum. Upon involuntary liquidation these shares are entitled to $100 per share.

26

6 l( % M RM Dilti l ong term debt outstanding at Der ember 11.1980 and 1979 was as follows Un thousands):

r.c. m ( ompam l>n em ber il December 31 i

u, a t o,,,e son, h 1980 19'o 1980 1979

.i dor h,nc 1 1981 5

5 i 849

(,uarants of Pollution Control Resenue Yr.s due 198 12 is u i 12 500 Bonds. County of Sweetwater. Wyoming-s pt 1 1982 15's) 1500 67 senes 1973 due 2003.

25,000 $ 25,000 2'.,scoc due e

t.',

%,i dor (nr ! Iw2 6.13' 6.13, HM Senes 1975 A due 2005 15 000 15,000

. 19ai

'o os u r N (uw) 8%7 senes 1975B due Dec.1. 2005 10,425 10,425 u.m h 1 1986 8.659 8 639 6'aq 5enes 1977 due Dec.1. 2007.

51,000 51,000 se.

t'..

se r s <h,e 1964 Hidul HJun; Less funds on deposit with trustee (1,744)

(7,130) e e d o.

-\\ u g 1 1984 lo f s so infa))

Unamortried premium and dncount 5

s on long-term debt.

(8,383i (8,045) 0., se r s due Umi 10 (x x)

U l (W W) eHa neom W

G 4'.', se: i - d ue Mas i 1966 14.434 14 454 l,143,704 4

se. dur I ma liluo lifx/)

TotJI l,192,979 4*.

. - due h a 1. 1 %H jf U r x)

Jo t a u '

s s bsidiarles u

1-y,a, d u.

h I l'rN it oo J M N )

N i ol N s 2 7 -87 First Mortgage Notes

.. dae U.90 lo ( N x)

JI) ( M W) due 1990-2009.

6.786 2.019 l'.'

wr.

d u.

Ure sijNM) lifxx) 5 j c;-lo'/.7 First Mortgage Notes a

s r. d u e l le<

1 1 #9.'

12 on)

U 000 matunng through 1998.

16,102 14.424 l'.

. due 1991 to 000 toj a n) 5%q.17 lig Unse( ured Notes l'

doe Pr.4 to ( n o in, g ju due 1981-2007 43,650 12.961

.u.

P W, i< u w u i to r n i 117 Notes due through 1996.

9,950 10,750

%. s due 1999 li < x ni J i ol a

'7 -87 Unsecured Notes due in installments through 1997.

929 1.056 s.

. s due % n i P r #9 20 Iw u) 20 olo Notes due 1981-1985*

168.000 189,000 vr..

dm anni

<io Jithwi MD*7 Notes due 1983-1997 90,000 90,000

%ris d.:.

3wil 4< > or n )

4;) t u, 67 221459 Notes due in due<ht 1 2' r :1 1; noo ti U00 installment, through 2002 12,114 9,477

%r4 do. Ji m i.

it i i n n i in(nx>

due 'i d 14 60 l H )t l N)(WWI se a

capitahied lease obhgations.

42,32' 18,128

,_to,

__o o)

. a = >n

.3

( o.*

l{lfg

INN, i

l N N) kkh}

Tofal 475.724 371.815 W

% i due ! h I Ji 4 a>

io(wai in ono

+.

. ae w I axPtt l ' o, n i 1 awo Iotal long-term debt.

, $1,668,703

$1,515,599 do.

'in 1 anc t t n j oi n i

pateyn, s.

.s a.

• !nterest rate t22.1459 at December 31,1980 > tluctuates based

,. M x '4 1 m rxxi l'n)(MNi i.

upon the pome rate

e, s..

a m.

on io -

• In teres t rate 123 659 Jt December 31, 1980) fluctuates based s a: 1.a vo s,ecnords 1o co i oi11 p' upon the pome rare n n,e o m s u pon, s.,

, orcoron hs hoider m<l*ise<ure< C gahir umler '.nani mg ago ernerts to

>a ! a n< f i n t. n ' t < m ( r dlJ'er d v ed s < >H u h. in ( on -

us g-a H mds seres 19 't, anJ U#",, sued m ('on -

K s mo e

s e t vts n s umng l

substantialk all of the assets. m(iuding the ownership mterests in certain Coal mining and Telecom-mun u a t n ins opera t o ms. are sub e(: to liens of mortgagcs or security agreements. At December 31,1980, i

Gial nonmg operations had unused borrowings of $12.000,000 under a credit agreement and $24,411,000 under a iial pnidut rion pas ment financmg.

Additu mal f ust Mortgage Bonds may be issued in amounts limited by property, earnings and other pro-s mons in the mm tgage mdenture Matuots and smkmg tund requirements for the years 1981 through 1985 on long-term debt are as fol-h m s < m thousands.

l 1981 1982 1983

- 8419 __.

_1985.-

\\

Tota:

np.

ii n t,

544.313

$65. 33 3

$139.247

$85,936

$131,587 l

Porn,,pasah4

, ash 40 221 61.325 135,412 82.311 128,374 l

ro.pem adaoims m ; u or < ash

• 6 817 6 680 6,392 6.042 5.355

% ash nk og rund 'e p ements <nas be sat %ed on the basis of 6 )q of properts additions l

27 e

7. RESTRICTIONS ON CONSOLIDATED RETAINED EARNINGS:

The loan agreements of the Companies impose, among other covenants, limitations either directly or indirectly on the payment of common dividends.

Under the most restrictive of these covenants consolidated retained earnings available for dividends at December 31,1980 was $165,000,000 of which $51,000,000 was available from retained earnings of sub-sidiaries.

8. COMMITMENTS AND CONTINGENCIES:

The Companies have substantial commitments in connection with their construction programs which are estimated at $475,000,000 in 1981. Major project construction includes several generating facilities which have been delayed, and may face future construction delays, due to legislative action and problems in obtaining licenses and permits. (See Note 2)

The Companies conduct a portion of their operations using leased property, including the Compan-ies general offices, various district offices, transportation equipment, computers, certain coal mining equip-ment and a coal-fired generating plant under leases expiring during the next 25 years. Rental payments are calculated upon the basis of elapsed time. Substantially all options to renew existing leases provide for ne-gotiation of the amount of rental at the time of exercising such options. Except for relatively minor leases, there are no existing options to purchase or escalation clauses. The Companies are also committed to pay all taxes and expenses of operation (other than depreciation) and maintenance applicable to the leased property, except for the property under several relatively minor leases.

Rent expense for the per;ods indicated was as follows (in thousands):

Year Ended December 31 1980 1979_

1978 Total rent expense.

$59,483

$43,800

$13,109 Less rent from subleases..

(2,082)

(4291 (391)

Net rent espense.

$57,401

$43,371

$12,718 At December 31,1980 minimum rentals under noncancellable leases are as follows (in thousands):

Operating Capitahzed less Net leases Leases Subleases Rentals Dd1

$ 41,837

$ 3,308

$1,901

$ 43,244 1982 42,399 3,805 1,888 44,316 1983 37,831 3,717 853 40,695 1984 35,729 3,687 321 39,095 1985 33,840 3,673 281 37,232 Threafter.

356,936 62,740 315 419,361 Total

$548,572 80,930

$5,559

$623,943 Less imputed interest.

(37,554)

Present vzlue of minimum rental payments.

43,376 Less current portion...

(1,049) long-term capitalized lease obligations.

$42,327 The various state regulatory agencies have treated the Electric operation Wyodak Project lease as an oper-ating lease for rate-making purposes even though the lease otherwise meets the accounting criteria for a capital lease. In accordance with generally accepted accounting principles as applied to regulated utilities, this lease and several minor leases have not been capitalized, but rather the lease payments are charged to operating expenses. Had these leases been capitalized, December 31,1980 assets and liabilities would have increased approximately $178,400,000 and $196,000,000, respectively, and December 31,1979 assets and liabilities would have increased approximately $193,200,000 and $207,300,000, respectively. The effect of such capitalization on operating expenses before income taxes would have been an increase of $4,800,000,

$5,200,000 and $3,300,000, in 1980,1979 and 1978, respectively. Management believes that the majority of such increase would have been reflected in additional revenues if capitalization were accepted for rate-28

making purposes and that operating income, therefore, would have been substantially unchanged. Future minimum rental payments pertaining to these leases total approximately $415,000,000 with minimum ren-tais approximating $18,500,000 annually through 2003.

At December 31,1980 and 1979 Coal mining operations held property under capital leases totaling

$45,300,000 and $28,700,000, respect;vely. These amounts are included in property together with $4,300,000 and $3,000,000, respectively, of related accumulated depreciation and amortization.

9. INCOME TAXES:

Provisions for income taxes for the three years ended December 31,1980 were less than the amounts computed by applying the statutory federal income tax rate to income before tax. The reasons for these differcnces are as follows (in thousands):

1980 1979 1978 Computed income tax based on statutory federal income tax rate

$74,872

$55,262

$65,015 Reduction in tax resulting from; interest capitahted during construction.

(16,916)

(17,943)

(13,117)

Excess of tax over book depreciation (flow.through basis).

(8,517)

(9,947)

(9,082)

Ad valorem, payroll and sales taxes capitahzed.

(1,247)

(1,412)

(674) investment tax credit.

(6,294)

(5,958)

(7,499)

Depletion..

(6,402)

(5,515)

(4,525)

Effect of items taxed as capital gains.

(2,468)

(740)

(610)

Elimination of amounts provided m prior years.

(1,742)

(1,410)

Other items capitahied and miscellaneous differences.

(2,344)

(2,676) 182 State income tax.

4,313 3,825 3,364 Total income tax expense.

533,255

$11,486

$33,054 income tax expense consists of the following (in thousands):

1980 1979 1978 Taxes currently payable (refundable):

Federal

$10,974

$ (825)

$ 6,742 State 1,825 2,152 3,364 Deferred income taxes:

Depreciation differences 12,740 8,073 958 Mine deoelopment costs.

9,778 4,097 2,446 Other (1,250) 1,06r) 397 investment tax credit adjustments-net.

(812)

(3,071) 19,147 Total income tax expense.

$33,255

$11,486

$33,054 Unused investment tax credits at December 31,1980, aggregated approximately $61,356,')00, the ma-jority of which may be carried forward and will expire,if not used,in 1986 and 1987.

10. EMPLOYEES' RETIREMENT PLANS:

The Companies have several pension plans covering substantially all of their employees. Pension cost for 1980,1979 and 1978 was $11,348,000, $9,814,000 and $7,442,000, respectively, which includes the amortization of prior service costs over 30 years. Of these amounts, $7,588,000 in 1980, $6,451,000 in 1979 and $4,655,000 in 1978 were charged to operating expenses and the balance wasi harged to construc-tion accounts. The Companies make annual contributions to the plans equal to the amounts accrued for pension cost. As of January 1,1980, date of the latest valuation, the actuarial present value of vested and nonvested accumulated plan benefits were approximately $110,105,000 and $8,343,000, respectively, at weighted average assumed rates of return of 5-6%%. The plans net assets available for benefits were ap-proximately $81,483,000 at January 1,1980.

29

11. INDUSTRYSEGMENTS:

The Companies operate principally in three domestic industry segments: Electric, Telecommunications and Coal mining. Total revenue by segment includes both sales to unaffiliated customers and intersegment sales of coal at contract prices or mining costs.

Consoli.

Elimina.

Telecommuni.

Coal dated tions Electric cations mining YEAR ENDED DECEMBER 31,1980 Thousands of Dollars Operation information:

lievenues-Unaffiliated customers...........

$975,433

$589,191

'. $231,404

$154,838

-Affiliated customers............

$(106,420) 106,420 Tota l.......................

$975,433

$(105,420) :

$589,191

$231,404

$261,258 income from operations....................

$268,363

$148,853 -

$ 70,428.

$ 49,082 Interest expense and other...................

101,242 i ncome ta xes.............................

33,255 N et income.............................

g Other information:

Deprecia tion...........................

$117,381

$ 65,046

$ 36,018

$ 16,317 Capital expenditures........................

$478,347

$272.041

$ 72,439.

$133,867 -

YEAR ENDED DECEMBER 31,1979 Operation Information:

Revenues-Unaffiliated customers....

$776,901

$497,748

$142,360

$136,793

-Affiliated customers............

$ (73,008) 73,008 Total.............

$776,901

$ (73,008)

$497,748

$142,360

$209,801 Income from operations,,...............

$208,225

$114,631,

$ 44,207

$ 49,387 Interest expense and other.

84,228 Income taxes..........

11,486 Net income..

$112,511 Other Information:

~

Depreciation

$ 90,417

$ 57,108

$ 20.231

$ 13.078 Capital expenditures..

$334,217

$211,419

$ 58,729

$ 64,069 YEAR ENDED DECEMBER 31,1978 Operation information:

Revenues-Unaffdiated customers.....

$574,462

$461,821

$.44,698

$ 67,943

-Affiliated customers.....

$ (54,099) 54,099 Total.

$574,462

$ (54,099)

$461,821

$ 44,698

$122,042 income from operations..

$199,309

$161,133

$ 17,953

$ 20,223 Interest expense and other..

60,468 Income taxes..

33,05 f Net income...

$105,787 Other Information:

Depreciation.......

$ 70,213

$ 53.975

$ 7,258

$ 8,980 Capital expenditures......

$294,187

' $230,683

$ 17,234 5 46,270 Identifiable assets are those used in the Companies operations in each segment. Corporate assets are principally cash, temporary cash inv.stments and other investments or special funds.

1980 1979 1978 Electric operations.

$2,543,334

$2,309,619

$2,112,898 Telecommunications operations................

572,826 519.198 131,327 Coal mining operations......

405,090 267,425 198,705 Corporate assets...

37,821 32,545 26,992

$3,559,071

$3,128,787

$2,469,922 30

11 l(JiN fly 4 MN!D AND LE ASID PLANT At De( ember 11,1980 the llectric operations mterests in plants jointly-owned and jointly-leased were asfolh>ws in thousands of dollars' fin tnc Construc tion J,, min m ned /%nt s Operation s in Acc u mulated Work in share 5eruce Deprecation Progress

< 3p,., a t, n g

( entraha 4754

$150,756

$ 36,621 86 j.m Hndger Un ts 1.' I and 4 66 7 573,862 57,518 3,363 inyan 25 12.973 2,027 U nder ( onstrue tu,n

( oM ip 10 0 30,935 V (Tw Una, I and 5 10 0 149,214 sLagit 20 0 71,519 Pebble spr.ngs 29 4 86,318 I< u n tlr cr ed 1%n t

( )per a h ng usodak 80 0 Iat h partn ipating utihty is responsible for funding its share of construction costs and for providing its ou n tman( mg The costs of operating and leasing the operating plants are similarly shared, and the Elec-tm operations portion is recorded in its applicable operations, maintenance and tax accounts.

substantial amounts of power are being purchased under long-term arrangements with Washington pubin utihts districts. Such purchases are made from non-affiliated persons on a " cost of service" basis, with the llet tru. operations buying a stated percentage of project output and paying a like percentage of proje( t annual ( osts !operatmg expenses and debt service) which are included in operations expense. The pun base arrangements provide for firm power and most of them also provide for additional power, with-drawable bs the ou ner upon one to fne years' notice. For the year 1980, purchases under these arrange-ments approumated 11', of the Electric operation's energy requirements; 89 was obtained through other pun base and net mterc hange arrangements The Electric operation has been notified that the capacity as ailable to it u ill be reduc ed approximately 122,770 kw from 1981 through 1984.

\\ summars <,t the ar rangements is as follows-Electnc Operation's share at December 31,1980 Year Contract Capaoty Percentage i a( mis E spires ikw) of Output Costs

• n anapum 2009 194.891 23 4cf

$ 3,174,000 Unest Rapnis 2005 142,289 18 0 2,414,000 R<oi Rea<h 2011 64,297 53 1,138,000 n.-

2018 75,876 9.8 1,148,000 sw.tt %.'

1981 70.000 100 0 1,195,000

'se nua' iicht sers e e and i rper ating ( o-r

'3 yll AR H Rt Y INf( )kM ATI()N (Unaudited):

Nummarized quarterh finant ial data for 1980 and 1979 are as follows:

Earnings Earning:

int ome trom Net on per Common k senues Ope ra hons income Common Stock Share (Juaner i nded Thousands of Dollars -- --

Mar < h 41 1980

$242 '04 5'5 110

$ 1 U2 4

$2',9 31

$0 68 june 10 1980 218 856 67,844 29.164 23,380 0 55 s ptember lo 1980 210.0~4 50 248 23.984 18.201 0.40 e

lin emho 11 1980 261f 99 74.961 46,994 41,211 0.90 uarth 41 19'4 169 51' 55.510 33 732 29.083 0.78 lune in 19N 189.961 53,088 28,230 23,582 0.63 september in 19'9 1% 858 41,279 22,389 17,740 0 47

[in ember 11 19'4 221 565 58 348 28,160 22,494 0 58

\\ significant portion of the business of the Companies is of a seasonal nature. Net income for the quarter ended December 31,1980 included an approximate gain of $10,000,000 on sale of securities.

Resenues and income trom operations have Wen restated, from that reported on the respective Forms 10-Q to conform with the December 31,1980 pr: sentation.

31 l

l l

l.

14. EFFECT OF CHANGING PRICES (Unaudited):

The accompanying supplementary information has been prepared in accordance with the guidelines provided m Statement No. 33 of the Financial Accounting Standards Board (SFAS No. 33). Such statement was issued in an attempt to provide information concerning the effects of both general inflation and changes in specific prices on operations and financial position. The methods used to calculate the effect of changing prices involve numerous assumptions, approximations and estimates; thus the resulting in-formation should be viewed as a highly subjective estimateof theapproximateeffect ofinflation.

Constant dollar amounts represent historical costs stated in terms of do!!ars of equal purchasing power, -

as measured by the Consumer Price Index for all Urban Consumers (CPI-U). Current cost amounts reflect the changes in specific prices of property, plant and equipment from date of' acquisition to the present, and differ from constant dollar amounts to the extent that specific prices have increased more or less rapid-ly than the rate of generalinflation.

Constant Dollar The historical cost of property, plant and equipment was adjusted to average 1980 dollars by appli-cation of the CPI-U as of the date the plant was placed in service or, for long duration projects, CPI-U trend-ed construction balances.

Current Cost The current cost of property, plant and equipment was determined by indexing with the applicable Handy-Whitman index, or for electric generating plant other than hydro, by estimating on the basis of an engineering study of current cost per megawatt of replacing the present mix of nuclear, coal, oil and gas turbine generating plant. Unmined coal reserves have been reflected at current cost by use of a specific industry index.

The provis.ons for depreciation on the constant dollar and current cost methods were determined by applying the Companies' actual functional class depreciation rates to the respective class indexed plant amounts.

Fuel inventories, the cost of fuel used in generation, and purchased power have not been restated from their historical cost in nominal dollars. Regulation limits the recovery of fuel costs through the basic rate schedules to actual costs. For this reason fuel inventories are effective!y monetary assets.

As prescribed in SFAS No. 33, income taxes were not adjusted.

Under the ratemaking prescribed by the regulatory commissions to which the Companies are subject, only the historical cost of plant is recoverable in revenues as depreciation. Therefore, the excess of the cost of plant stated in terms of constant dollars or current cost over the historical cost of plant is not presently recoverable in rates as depreciation, and is reflected as a reduction to net recoverable cost. While the rate-making process gives no recognition to the current cost of replacing property, plant, and equipment, based on past practices, the Companies believe they will be allowed to earn on the increased cost of their net investme it when replacement of facilities actually occurs.

During a period of inflation, holders of monetary assets (claims to receive a fixed sum) suffer a loss of general purchasing power while holders of monetary liabilities (obligations to pay a fixed sum) experience a gain. To further reflect the economics of rate regulation, the reduction of net property, plant, and equip-ment to net recoverable cost should be offset by the gain from the decline in purchasing power of net amounts owed. The gain from the decline in purchasing power of net amounts owed is primarily attribu-table to the substantial amount of debt and preferred stock (treated as debt) which has been used to fi-nance property, plant, and equipment. Since the depreciation on plant is limited to the recovery of historical costs, the Company does not have the opportunity to realize a holding gain on debt and is limit-ed to recovery only of the embedded cost of debt capital.

32

i STATEMENT OF NET INCOME ADJUSTED TOR CHANGING PRICES

- FOR THE YEAR ENDED DECEM8ER 31,1980 Constant Dollar. Current Cost Historical Average 1980 Average 1980 Cost Dollars Dollars Thousands of Dollars Nevenues..........................................................

$975,433

$ 975,433

- $ 975,433

'Eupenses:

Operation, maintenante and administrative and general....................

511,073 511,073 511,073 Depreciation and amortisation............ '............................

117,381 212,376 253,260 Tames, other than income taxes...................................

78,616 78,616 78,616 I n c ome ta xes.......................................................

33,255 33,255 33,255 in terest empeme and ot her............................................

101,242 101,242 101,242 841,567 936,562 977,446 Net income (excluding redu(tion to net re(overable cost)'....................

$133,866 5 38,871 (2,013)

- Incrrse in specific prices (current cost) of. ~

$1,271,392 property, plant and equipment held during the year......................

Reduc t km to net rec overable cost.........................................

$(257,392)

(730,259)

E ffc(t of inc rease in general pric e level...................................

(757,642)

Exc ess of inc rease in general price level over increase in specific prices (af ter reduction to net recoverable cost).....

(216,509)

Cain from decline in purchasing power of net amounts owed.................

256,701 256,703 Net............

(689)

$ 40,194 At December 31,'1980, current cost of property, plant and equipment, net of accumulated deprecia-

- tion was $7,322,417,000 which encompasses utility property, plant and equipment current cost of $6,981,-

124,000 with related historical cost or net cost recoverable through depreciation of $2,886,179,000.

Including the reduction to net recoverable cost, the net loss for 1980 on a constant dollar basis would have been $218,521,000.

FIVE. YEAR COMPARISON OF SELECTED SUPPLEMENTARY flNANCIAL DATA ADJUSTED FOR EFFECTS OF CHANGING PRICES Years Ended December 31 1980 1979-1978 1977 1976 Ilistorical cost information adjusted for generalinflation Thousands of Average 1980 Dollars R even ues.......................

$975,433 ' $881,965

$725,574

$623,180

$578,609 Net income'...............

38,871 58,234 Earnings per rommon shart'....

0.36 '

0 96 Reduction to net recoverable cost........................

257,392 281,267

. Net assets at year-end, at net recoverable cost..............

923,659 868,030 Current cost informatiort nit income (loss)*..

(2,01%

7,451 Earnings (loss) per common share *................

(0.5a (0.39)

Reduction to net recoverable cost.......................

730,259 733,350 Excess of increase in general price level over increase in specific prices (after reduction to net recoverable cost).....

216,509 227,910 Net assets at year.cnd, at net recoverabic cost.

923,659 E68,030 Generalinformation Purc hasing power gain on net monetary liabilities c,Aed.....

256,703 239,688 Cash dividends declared per common share.............

2.02 2.19 2.37 2.43 2.49

- Market price per common share at year-end........

20.18 19.32 24.02 28.18 34.16 Avera ge c omumer price index..........................

246.8 217.4 195.4 181.5 170.5

• Excluding reduction to net recoverable cost.

The following information is presented in accordance with the guidelines provided in Statement No.

39 of the Financial Accounting Standards Board.

COAL AND URANIUM OPERATIONS SUPPLEMENTARY

' OPERATING STATISTICS IOR THE YEAR ENDED DECEMBER 31,1980 Coal Uranium Proven and probable reserves at December 31.1980..........

1,469,000,000 tons 2,736,400 lbs.

A mou n t mi ned.......................................

17,132,700 tons 4,400 lbs.

Reserves purc hased (sold)..................

Average mar ket price........ g..........................

$14.38 per ton

$35 per Ib.

33

OPINION OF INDEPENDENT CERTIFIED PUBUC ACCOUNTANTS To the Directors and Stockholders of Pacific Power & Light Company:

We have examined the consohdated balance sheets of Pacific Powei A laght Compans and subsidiaries as of December 11,1980 and 1979 and the related statements of consohdated incon,e and retained earnings and source and use of financial resources for each of the three years in the penod ended December 31, 1980 Our examinations were made in accordance with generally accepted auditing standards and, accord-ingly, included such tests of the accounting records and such other auditing procedures as we considered ne(essary in the circumstances.

As discussed in Note 2, completion of the Pebble Springs nuc lear projec t is subject to the availability of a radioac tive waste disposal facility and Oregon voter approval of a site certificate as required by a ballot measure approved by Oregon voters. If the project is relocated or abandoned, recosery of nontransfer-able charges is subject to the Company receiving adequate rate treatment. Accordingly, the recoverability of the Company's investment in the Pebble Springs project cannot presently be determined. In our report dated February 28,1980, our opinion on the 1979 and 1978 consohdated financial statements was unqual-ified; however, in view of the uncertainty referred to above. our present opinion on the 1979 and 1978 con-sohdated financial statements, as expressed herein. is different from that expressed in our previous report.

In our opinion, subjet t to the effects on the consolidated financial statements of such adjustments, if any, as might have been required had the outcome of the uncertainty referred to in the preceding paragraph been known, the above-mentioned consolidated financial statements present faidy the financial position of the Companies at December 31,1980 and 1979 and the results of their operations and the changes in their finarnial position for eac h of the three years in the period ended December 31. 1980, in conformity with generally accepted accounting principles applied on a consistent basis.

/

Portland, Oregon February 16,1981 l

COMMON STOCK MARKET PRICE, DIVIDEND INFORMATION AND RELATED SECURITY HOLDER MATTERS The Company's Common Stock ;33 E par value) is listed on the New York and Pacific Stock exchanges.

The symbol on the euhange ticker tapes is "PPW'. The following table shov. the high and low sales prices of the Common 5tock during the respective periods indicated as reported in The Wa# Street lournal for the composite tape:

1980 19'9 Quarter 1 st 2nd hd 4th 1st 2nd ud 4th High 18 %

19 %

21 22'/s 21 %

22 %

21 /s 20t's 7

low 16 %

16 %

18 %

18 %

19 %

. f '.

19 17 Ouarterly cash dividends were paid at the rate of 48 cents per share for the four quarters of 1979 and at the rate of 51 cents per share for the four quarters of 1980. The Company expects to continue to pay disi-dends at a rate which will be sufficient to attract additional equity funds on a reasonable basis. The ability to attract additional equity funds will be dependent on the regulatory commissions' response to the Com-panies' requests for timely and adequate rate relief; the seeking of such rehef by the Company has been premised on its belief that its investors expect dividend increases to aserage 4' < to 5S annually.

As of Dectmber 31,1980, there were 125,405 holders of record of the Company's Common Stock.

34

DIRECTORS AND OFFICERS BOARD OF DIRECTORS OFFICERS--Corporate Policy Group CHARLES M. BINKLEY fairbanks, AlasAa DON C FRIS8EE Chairman of the Board President, Alaska Riverways,Inc.

and Chief Executive Officer C M. BISHOP, IR. Portland, Oregon G. ELDON DRENNAN President and Executive President, Pendleton Woolen Mills.

Officer-Electric Operations hfanufacture ol nuolen sportm ear IDHN H. CEICER Senior VicePresident DON C ERES8EE Portland, Oregon and Chief financialoffscer Chairman of the Boardand A. M. GLEASON President of Telephone Utilities,Inc.

Chief ExecutiveOllicer and Executive Officer-Telecommunications Clif FORD P. HANSEN fackson, Wyoming GERARD K. DRUMMOND President,NERCO,Inc.

Rancher and former Wyoming Governor and U.S. Senator STANLEY K. HATHAWAY Cheyenne, Wyoming ROBERT F. LANZ Vice President Partner, Hathaway, Speight and Kunz, Attorneys at law former Governor of Wyoming and Secretary of the Interior WARNE NUNN Corporate Secretary DR. BETTY E. HAWTHORNE Corvallis, Oregon Dean of Schootof Home Economics OFFICERS-Electric Operations Oregon State University G. ELDON DRENNAN President and Executive Officer CONRAD F. LUNDGREN Kalispell, Montana DAVID F. 80 LENDER Senior Vice President Co-rm ner, four Seasons Afotor inn and West Glacier Mercantde Company. Motel. stores. restaurants RO8ERT W. MOENCH Senior Vice President 8RUCE G. BEAUDO N VicePresident LOUlS 8. PERRY Portland, Oregon Preu, dent, Standard Insurance Company.

C. P. DAVENPORT Vice President Ide. health and accident insuranc e M. WAYNE GOIN Vice President KENNETH W. SELF Portland, Oregon ELWOOD 8. HED8 ERG VicePresident former Chairman of the Board, freightliner D. CLIFFORD lONES Vice President Corporation. Truck manufacturinR ROBERT 8. LIS8AKKEN Vice President EUGENE L. SHIELDS Yakima, Washington CHARLES O. PARKER Vice President President,Shselds Bag & Printing Company FREDRIC D. REED Vice President A. W. SWEET Coos Bay., Oregon Chairman of the Board, n estern Bank E. E. SMITH Vice President HOWARD VOLLUM Portland, Oregon ROBERT M. SMITH Vice President Chairman of the Board, Tektronix,Inc. Manufacture and GLEN W. SPICER Vice President marSeting of cIcctronic display and measurement equipment IACK T. STILES Vice President ROY A. YOUNG lihaca, New York KARL HOFFMANN Treasurer Managing Director-Boyce Thompson institute CorneII University DAMES F. PIENOVE ControIIer Eac h member of the Board of Directori serves on at least one of the following committees: Executne, Audit, Personnel, Nominating OFFICERS--Telecommunications Operations and Research.

A. M. GLEA5ON Group Executive Officer and President of Telephone Utilities, Inc.

DIRECTORS EMERITUS CHAREES E. ROBINSON President of Alascom,Inc.

CHARLES E. PETERSON Senior Vice President A. S. CUMMINS Medford, Oregon and General Manager of Telephone Utilities lOHN DIERDORFF Portland, Oregon CEORCE R. ROBERTS SR. Senior Vice President C HOWARD LANE Portland, Oregon VERN K. DUNHAM Vice President PAUL F. MURPHY Portland, Oregon MICHAEL E. HOLMSTROM Vice President HENRY H. PRINGLE Medford, Oregon DOHN E. McGILL Vice President T. F. SANDOZ Astoria, Oregon DIANA E. SNOWDEN Vice President DONALD SHERWOOD Walla Walla, Washington BREAN M. WIRKKALA Vice President andSecretary OFFICERS--Coal and Mineral Operations GENERAL COUNSEL es t,

O, Inc.

STOEL, RIVES, BOLEY, FRASER AND WYSE

%0 5.W. Sth Avenue GARTH A. DUELL SeniorVicePresident Portland, Oregon ANDREW l. IRANKLIN Senior Vice President CHARLES C. ADAMS Vice President ROBERT 1. DEURLOO Vice President AUDITORS RANCE R. EXLINE Vice President DELOITTE HASKINS & SILLS ELLSWORTH P. ENGRAHAM Vice President 1010 Standard Plaza WILLIAM W. LYONS Vice President Portland, Oregon WILLIAM C SCOTT VicePresident 35

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Electronic Manufacturi'.g-Lumber, Plywood, Hardboard and Chipboard-Mobile Home Factories-Shipbuilding-Meat Packing Plants Truck, Rail and Earth Moving Equipment-Sportswear-Woolen Textiles-Flour Mills-Creameries-Leather Processing and Products Paper and Pulp Industries Producing Broad Range of Products-Chemical Industries-Duplicating Paper-Cement Plants-Rock Quarrying Summer and Winter Recreation Complexes Centered in Mountains, on Rivers and Lakes and Ocean Shores Throughout Six Western States Wineries-Seafood Packing-f ron Ore Mining and Beneficiation-Zirconium and Titanium Smelting-Nickel, Coal and Uranium Mining Uranium Refining-Trona, Bentonite and Gypsum Extraction and Processing-Fruit and Vegetable Canneries and Freezing Plants l

Oil and Gas Field Pumping and Oil Refining-Irrigation Pumping-Pipeline Compressor Stations-Beet Sugar Production-Glass Containers

1980 ANNUAL REPORT 9 920 $ W. $ nth Asenue PAC IFIC P()WER A llGHT C()MPANY Pubh( sers a e Building l

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