ML20052F172
| ML20052F172 | |
| Person / Time | |
|---|---|
| Site: | Trojan File:Portland General Electric icon.png |
| Issue date: | 02/12/1982 |
| From: | PACIFICORP (FORMERLY PACIFIC POWER & LIGHT) |
| To: | |
| Shared Package | |
| ML20052F161 | List: |
| References | |
| NUDOCS 8205120193 | |
| Download: ML20052F172 (43) | |
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- NERCO. Inc. cwl nuning YA m NERCO. Inc. miner c atw teycranmunicatiann mlLTc5t$
Electric Operations Telecommunications Coal MiningOperations i
I Electric servac is provided to more Telephone l?tttities, an Mitf-ow ned Wholly-owned NCRCO has 11 op-than MO,000 custumers in six subsidiary, servcs some 210.000 erating mines in five states. Mines Nucthwest an.i Rocky Mountain telephones in seven staces.
owned produced over 20 million states; the company's sersi(c terri-Wholly-owned Alascom provides cons in W81 and ranked NERCO as tory mnraens rnote than 240 com-kng distan(c, television and other the titib lars:est prmiu(er in the U.S.
raunities. Patifte upctates Inc communications sernces in Afaska NERCO has two subsidiaries steam plants and U hydro generai-via satellite. The group has business engaged in mineral and precious ing stations. The compan3 runs ten music operations in several cities, metals exploration and a third as water systems in three states and has and 15 part owner of three communi-attive in oil and g ss exploration.
oser MK3 steam heat custamtts in (ations equipment manufa(ruters.
downtosn Portland.
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1981 AnmialRepan FimmcialHighlights i t,8, 198,,
Asset s.
$ l.016.820.000 Si.559,071,000 Resenues:
lif et t ric
$ 721,861,000
$ 589,191,000
'Ibletommunications 279.-150,000 23I iG1.000 Slining.
287.242,000 151,838.000 Eral.
$ 1,288.5 5 3,000
$ 975,133.000 Net inc ome
$ 1(37,536,000
$ 133.866,000 Earmngs Per Common Share S 2.82 S 2.53 Dividends per Common sharc S 2.07 5 2.01 Return on Average Common Equity l i.31 cf 12.177f A
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A " II s improvenu nt in 19SI carnings per affirmat n ely to Coneress' 1981 Jecision de-l lbhare to $ 2.S2 f rom $2.5 ; t'or 1980 rtilet ts a lineating those parts of this rit hly endow ed state I
t(am effort, both helped and hindered by out-that are open for mining and other des el-l sale for(es. lin h of the Company 's thrte seg-opments. The emnomy w as turtht r bolstered by ments mntributed to the improsed tmancial a 5 4 billion surplus in the state's general fund for re su l t s.
19SI-S2, from oil and gas royalties w hich are Lt revenuts f rom elet tric opt rations were apet ted to worinue. Alaswm's message s ol-t nhanted by ettet tis e umtrols os er wnstruc tion ume responded to these positise tattors with a and operatmg expenditures, tamrable sales for 210 increase os er an at tis e 19SO.
resale to other utilities. solid improvements m
'lelephone l'tihties' prow th w as slow er than l
steam plant operatmns and more timely attmn m previous > cars, but gains w ere realized in on rate adjustment needs. Although retail rese-resenues, earnings and telephones in sersite.
nues sutfered trom the wnrinued decline of the n.y, 3,, 4 n g.g P.n ific Y 6f thw est u t snomy as nathinal hiiusin e
.The mmbination of promisine prospects, starts slutnped durine the } ear, the w holesale know n problems, and untertainties in the na-market m the I,aufic Southw est for kilowatt-tional ewnomy serses to point up the substan-hours at praes wmparabic to the Company.- s tul advantages to the Company, its insestors retail rates pit ked up the slack. Results for elet-and its c ustomers of the d n ersitied base of opera-t ru operations simw ed a _,;,, mt rease m res e-tions developed during the past in e y ears.
nut s and an improvement of $ 52 milhon or 0,,.,
Many of the untertainties fat me the elettric in carnines bt f ore internt and intome taxes.
N1:RNFs operations fell short of budget, but utihty indusny an prnent to some Agne in our ein uk opuations, induding:
were m erthelns sarnfattory. The wat market wntmues eencrally sott as a ' result or the slower The future of nutltar pow er; intlation pate ot the nationai ewnomy. I ederal lecislation d"d " ""'F '"'t u trends in rate regu-lation; ein t ric loads and wnsers ation enat ted m 19" w huh dnt riminate a e.u n s t Western low sulfur wals. includme N1:Rms levch; enuronmental nteds and re-holdmgs, wntinued to depress th[ markt t for
';uirenients and ru hnological ad-santes and breakthrouchs relarne to 1:uropean and Far these important resers es.
I astern markets h.n e also w eakened in response energy supplies.
to the slowing pate of the worldi ewnow The Comrany's inwivement in nutIcar plants Prmurally as a result of a full > ear s gerati n n dest ribed on page ~ of the text and in footnote or its 5prmg Creek Mme in Montana, NERU) 2 to the wnsohdated tinmaal statements. In posted reunue gams ot ' W to 5 F2 milhon of sumnury, the Company has a Im, inttrest in w hic h $S5 million w ere sales to elet trit i>ptra-c.n h of Units 3 and 5 liw ated at Satsop. Wash-tions. Thn resulttd in a 2', impros ement in mgton. sponsored by the Washineton Pubik cariinigs bttore interest and taxes. Tne lower Power 5upply >3 stem. l'mt ; is I P ; wmpleted rate et grow th m carnings w.n due m part to and mos ing tow ard a ss heduled 19% wmpic-higher than antnipated wsts at the spring tmn Jare. Construction on 1:mt 5, a twin to Creek mine during the first ftw months of optr-linit 3. was terminated by the upply Sy stem s
arion and losses un urred m wal nport opera-J.muary 22.19s2.
tions Ni> signitit ant expiirt sale s are t iin-With rnput to terininated WPP55 l*ni-5 runplarol m 10S2.
we are takmg steps to rulut st appropriate regu-
~l he 5prmg Cnek Mme produced la milhon latory acmuntmg and rate treatment of our in-f ons til a oJl during its first } car of operatie pil. In s estment in that priijec t. We (spn t that regula-19Si N 1' R( ( )i mmo produud 20. i mdhon tory responsn to thne rn;uests will be musist-ti n s, ranking it in titth plate among ['niteJ ent with the inttrests et c usti mers and inses-i Most regulatory unnmissions h.n e allow ed 5tatn mal produu rs.
tors.
t he telemmmunnations group t om prning reun t ry through rato of all or a major part ot i
anbiunts w rit ten ilt! b) other utilities under
'lih plli ile ['tilities and dia%iHn, t sperieihed a 2 I' int rease In res t nuts to $2'9 milhon and a smHlar tiftumstJnt es but at tmn on the Com-in mt n ase in earmnes btfore mrt n st and panyi rojunts t annot be predu tcJ. It a " worst f.i s o 'I hr dlaskJo nonomy n msn We forw ard La[ result wen to ou ur, mwh mp t he tull briskly, sn Wmph unawart o[ the runsmn m w Iite-ott of thn Un est nh n t against tarnings (tR ' b'w t I ti rt)-t ight. ' ()il aihl g.b.u tis it) Jih}
w i(hout an) i)t t se t ting new rt s cHues, thtre i
niint ral aihl t tht r ( splorati ins base rt emhd wisuld be a i'ne-timt ndta tii'n iri carnin s ti>r
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,\\l(Wr ret ently, rl)e ltpl[]!rlU (pf N l,l{(I) a!lij pa r shan. Subs <pu nt to riur one-tune w rite-Llernents I:ncrg), lin. he.uiquartered in ott. carnuin sininhl resuine patterrn t onsnrun
()klaborna (.ir y, e x t ends t he (.oin pa n y's w nh pn s n,os h u ls and prospn r s.
nuercsr s into od. uni gas ( xploration.
() tin r (< onorna aint n yulatory probk nis be-()t inapir ugruto ame in these aupusnions is u tring the unhn nulust r> h.n c sorne "ulu r the opporturury to ounbine the geologn al ral-hn m e s ' f or r he ( onip.my. It eduu d lo.n! grow r h ents, inanagunent < apalohnes and ent n prenui-proin in,ns sn numng Irorn rhe sluggish < < orn rol spirn of it A A. Llernents arn! Niilu A). The oro) and < n< rgy < onu n anon t trorrs h.a c al-( ntlunusm of the people of these three groups Imuil the ( omp.un rou ard the t ornhinol eno rposi.pcaks w(llfor to trun as (onstruction progr.uns. uni rolm e the i nstorners.u ni in u s-the turure.
n.rs' < s posu n s to pnmo hng Ingh o n,ncy u nt s.
As ret ently as IW.' t he Company's relcoun-
% h.n c u r a ( ompan)-u nle goal to inum e at munn ar mns segrnent oinsnted ot t w o small sys-least W. of our osi rail ( ajural in eih t hrough renn in ()ngon and Montana gt nerarmg $6 6 inn rnalls g(nerarol turnis, thn goal n expn red nulhon of n s enues. 'lik phone I:nbrics w as.u -
to be re.n in.1 aro l num t.u m d u nio n t he in st q m red m P>' ;.unt Alast om m P>"'>. Through
< p ar lhi (lu rrn unhn group n also a;cres-g row t h. uni au pusir mns t he u les om munn a-uu13 strn ing to (low the gap he rwi en w har the rions group has deulopol mto the uxth largest n colaron bmin s ik rernmn to be a f.or rare ot.
unferemh nr rt h phone system m the I:mred it rtiril afnl w ilat We tre.ncuall) a!de r's carn hrates. u stil l')hl ristelues t it $2 ) rolllit u).
Ran tihngs b( mg made as promptly.un!
!.oi al cu bange sen n e is proudol in parts or an (f tu n nrly as posul le itt suhs are sin,u mp up ses en Northw esu rn states and long datam e on the honom Inn u n h t he ou r.dl r c o rn on wn n e to all of Alaska I..nmt lu ng of a Com-4 (hi trn ope ranons unpros my ugrut n.mt h m pany -ow ned sau lhu w heduled t'or I)n ernb( r of i
PNI We n i nu il F' rare un reases dormg the rins year eu ruphhes the wope of the tornpany's l
p ar..unountmg to 51i' nulhon of annual n se-operanons and us rn him al t apalohties.
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i aw s aw.ntmg n gularon a1 Already the n h i onununn arions group has non, u nh rnpn srs aegregarmy $1 m nulhon m reahet d sig rut n.mt benehts by (ombnung the annu.d n u nues. ()r p.nt n ular upmt n.un e thsrnn nu engmeenny and tn hnn at skdh of n
N f.n r t h a t loop sr.unh ng unt.n orable ih s-
~li h phone 1:nbru s w nh those of Alau om. Tins o.n t o s i n r u t t n tlu ( ompan5 's n sa h on d r.nes has t.n ihrared the extenuon of the (.ompany's an I those of m un nughbonne publu agon ics finarn ul ma rcsrs mro non-regulatol phaw s of hau s ittualk.hsappearol w nlun t he last year t he n h t onunun n at oms busmess, nulu.hng
'l ln ( ompam s t h t f ra opranons u di um-minonry uneston nrs m sescral small West r unn to bt m in f rom in st rone. unbnbh d po+
( oast uunp.unes makmg ingh rn hnology prod-rmn m low i nst ( m rey fro m o s hulroi lo r rn m ts in.nl< hnon. rins group t onnnues to seek and t oal hn d gt ot ranne plants l'n h r prm o opport umt n s to.n i p u re other Im al en hange unns of cln Rt ymnal Powe r At t energy for w r-t ompames rhar h.ne c ompanhihty u nh rhn s n e to most of our r soknrul.m i tarm load n phaw or the busmes,
.n.n labh at lionnes die s u hok sah ran s. below I he opporrumr u s for thn mnhunnured rele-tin ( omp on i, ost i urt hennore. por ntul o unrnunn at mas enors to bern to f rom ret h-tmani me arranct on nts on.h r the Att i nh.u n e nologn.d grow th of clus e u itmg unhntry dor-our abihn to nunace f utun power supph on ds mg cln I mus appi ar to be unusually t.norable.
m an i t ononm and i non h narni m.ona r War ( ompany n b( m tinny f rom the geo-NI Rt ()s strong inal munng and marke ong g ra ph n and busun ss dne rsay prmidnl by rs bau prosohsrht i.nh flow f or e s p.un hn e mro rhn e lusn u pments 't he prople ot rin st enter-o latt d < splorarnm an ! nunme in hh l >ur m e pnu s an iomantrt <l to makmg rhur parrn ular t he 1.n r w u ra l u a r t and p.u ta ulath m Pol phau of rin busmess strong and protnable arn!
a n t ulk pl.un n d.n qu nn mu s h ni be en nu !c to g.un f rom t he ealent s. uni opport munes u hn h
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to ta, ihran flus t olarp d s< ope of operanons t he rhn e u gments ott(r one anorht r 'l he e m-
- N u o I nn r n u,al nunes.u. pun d plusasan de do an d to u n a e arnf sound 93 4
- A sohl bau f or ru nn ral ( s plora r mn an.1 growth the Hoanh of I)no tors support and sh u !ornn ne has ly < n e stal.hsin d u nh thi omrnbon torhow obntrnes We tt e l torr on.
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Telecorrirriiniiauioris Cor the aluonununications group,1981 was a A further step in the group's unification is the 1 year marked by strong operating results, start of wastruction of a 10-story headquarters more diversification into unregulated com-building in downtown Vancouser, Washington, munit ations businesses and further steps tow ard at ross the Columbia Riser from Portland.
wrporate wnsolidation of the group entities in Diversification activities picked up pace last 19S 2.
year. In the field of business music, there was a Revenues of the group rose 21; last year to purchase in early 19S1 of the Portland-based reat h a new high of $279 million. Telemm-Audio Group, followed by the auluisition of munications operating income in 1981 totaled Muzak franchises in Seattle Tacoma,
$99 million, up 40'i over the prior year.
Minneapolis-St. Paul, and an independent bus-Wholly-owned Alaswm auounted ti>r $201 iness music operation in Reno. Currently, busi-million of the group's 1981 resenues and $70 ness music operations acwunt for $2.7 million million of its operating inwme. Telephone in annual resenues. These nonregulated service Utilities, in which Pacific Pow er owns an companies wmplement the group's basic busi-S0.5'/; interest, had revenues of $78 million last ness, with strong cash generation and growth year and operating income of $29 million.
pot en tial.
During 1981 the group wntinued the wn-In addition, the group <lso took on a new role I solidation of the Alascom and TU organizations as an investor in promising firms that make and I begun the presious year. The process will wn-sell communications products with high poten-tinue in 1982, starting with the anticipated rial. The largest of the three such investments adoption of a new name for li-lephone Utilities: made last year was the $5 million purtbase of a Pacific Telewm, Inc. TU shareowners will be 20'i interest in Comdial Corporation, a San asked in April to approse the name thange and Francisco-based maker of high technology, g
the issuante of additional wmmon shares to be semi-conductor products for telephone applica-used in the tiirmal au[uisition of Alaswm by tions. The group also bought a 397; stake in Patitic lilewm. Upon wmpletion of that trans-Cidtomm International, another Cahfornia firm at tion, Patitic Power w ill hold a 95'~; interest in that makes and markets telephone produtts, Pat ific Telemm.
int luding a labor saving, remote line diswnnec t Charles Robinson, Alascom's President, was device employed in line testing. Finally, the named Group President and Chief Operating group acquired an option to take a 3F; equity Officer last year. Al Gleason, w ho has diruted position in Cablebus, Inc., a Portland-based Pacific's tele ommunications growth since producer of security and data collection systems 1971, wntinues as Chairman and Chief Execu-that use cable television for transmission.
rive of the group.
In this diversification activity, the group has selected products that offer significant market place potential and are supported by existing managements. These investment decisions are supported by the tuhnical skills of this group's engineering statY and the broad based financial expertise of the enterprise. In addition to the capital and policy support gisen the acquired firm s, the group has buome a customer ti>r several of their produtts.
Cable televismn is another new area of in-whement for the group. Last year, $ 12.5 mil-lion was invested for a 40'; interest in a cable system under wnstruction in Anchorage. The system is due for wmpletion in 1983. Other start-up TV cable situations are being investi-gated, incluchng partiupations m franthise ap-pla ations for unsers ed communities.
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.o qmred anot her operating wmpany. Inter-ka's f ar tlung population by using its satelbre to Island Ttit plume, w lm h scru s 5, 600 rele-ulay instructional teleusion programming to phones on parts of Washmgron state's 5an Juan SS retening wmmunities around the state. The Islan Is Alone with other 5an Juan Islands al-sy stem, built largely by Alaswm, is talled nady sened by an custmg TI' operation. the "I. carn Alaska Netw ork. a p> int etTort of the au;unition muns t'iat Tl' now w n es the entire IJnn ersity of Alaska and the I)epartmen t of nl.u n! ( ham.
IMuunon. This unisiue TV network n designed in adiht o,n, ss su m imprm ement pro t ts to-to utilve telesision and autho to proside lise talhng 5 4 5 nulhon u t re plat ed m P)S t. includ-mterat tn e classes w ah a teacher at a dntant mg t hree tibt r optu hnks and seseral digital lootion. Plans ull tor extendmg the network to (let trona su m hes.
a total of 250 receiving sites by early next year.
'II: aho au;uired a 2S', interest m Cenwm.
A 52.5 mdhon L.5.
government w atract ha. a Rushtord,.\\1mn.-based niephone hold-ret en ed for wns erting the North Bend, w as mg mmpany u nh propernes m Wiswnsm and W4siu n g to-Autown ratihty to elettronic dig-t able outlt es m Wnmnsm and Mmnesota All
.tal su itt mg f rom the elet tro-met hannal told. ( enwm sen es 40.000 telephones. This hardw are.nm m use. Along w ith retrofittmg hn est ment u as made to enhante (:enmmi the f.uihty, w hu h is part of the I)epartment ut e<puty posanin and m rewgmnon of that o.a-1)ctense's w orldu nic wmmuna itions netw ork.
panis grow th potennal.
the tontr.a t also ulls for the group to mamtain Ala st om's purc hase of a sewnd gener.n ion the installation for another 10 3 ears.
sau lhte, w hu h will rept.u e the one now lea,cd, l'nder another order telemmmuniutions is n pa sents by tar the largest item m the eniup's mstalhng new Autown swit hes for the gov-
$1'S nulhon tapital budect for 19S2. The new ernment at toutions outside of Ant horage and sanihte w dl h.n e a tull hte of eight to ten years.
liurbanks. and these will be tied to the North All told, tla Company will spwd 5S 6.5 nullion Hend taohts. This wntract n salued at 5 ;.5
- - iniluihng t he launt hmg tre and unurante - milhon.
on the new saulhte ()tlu t upual items m the Tl' dal not annupate any telephone rate m-months aluad melude new roll sw m hes in An-treases in 1981. but has en file requests for
< horage and 1.nrbanks and the mnonned budd-na rcases m Oregon. Montana and Washmgron.
mg of the mu rouase intu ork th.r w di tunt tion It apprm ed, the inercases will produce an-as a ground. based satellite bac kup. The nucro-nualved reu nue gams of SS mdlion. Ibisions u.n o proict t. u hu h w ill take three ars to on all of cluse appliutmns are expected dunny tunsh at a tost of 5 6' nullion. unohes a wnes et 19S2.
t atioth runnmg 1,9t H) nult s f rom Ant horage to l'.o rbank s. and tla nic mto the Rkon 'li nitory, and t hen sout hw ard through t he Alaskan panhandie to taiihnes of Honsh ( olumbia Iile-
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prn - riun a ha.1 be < n at the u ir's start it was
( a v du s..I oil un t pas n ph.r.n ion ti r oi wnh no longu onh a w( stun ioal tumpany. ah hough au n nies u na red m the ()klahoma. Go!i Loast i
the hrst f ull y ear of produt tnen at the sprmg and Roc ky Mount.un regions N1.RL O uun-I reek Mine I ti M<intaria greatly tiilareed the ph toi t his ilis( rsit u aru m piin h.nc in t he i' pen-( o m pa n y 's wesn rn uul output. It e x p.u n led ing weeks of P>S2 w ah a total unestment in (ast ward (ntt ud the mint rals bosmess and was t u tss of 520 nolln'n.
about to ( nu r the od and g.n ticid e, the par NI:RL() also denomstrated it s grow ing,
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< onunitnu nt n P>s i to se n e expandine soal l The w holly-ow nol subsnhar> \\ inenues last markets by.u qmrmy addnional proputies m s car inc reased ~' v to S C2 mdhon. ()t those the casu rn part et the la Aupusa.ons durmg.
I rnenues. $S5 rulhon or 2 P; tamt f rom sales to the year mtluded tne lorununnus nul nones.
P.n it u Pow er su am gua rat mg plants. Ni:R-Of the tne. one n loc ated m Alab.una, two in (J Is d apt rating iln ione ads alu ed to $b2 mil-s8 Hithern Induna and t wo m stiut heastern Ien-lion. un l, f rom the P>So k u l. ( oal pro ha -
nesst e 'I bete pu n ha s< s. uhuh tollowul earlier non < !anbul 1 r, m 0>81.u.d prodom i n en is r elarol.n ipu su.ons m A la b.u n a and induna, npu red to re.n h approxunattly 22 mdhon tons have pnen NI:RC () a sigrutuant stake m the t!us s car.
casu rn < oal business and un n ased its oserall NI:R( ( rs drne to dnersity bqond (oal nun-hohhnes to 11(oal muu s m tne staus.
mg w as <h monstrated by as ()< tober au pusition A< qu nitions last gar transtortned a one of Resoun e Assos iates ot' Alaska, a nutu rals and pn Jut t unnpany uno a <bu rsitted one ut'lu t-p r.1 -
nu tais t sph ranon firm based m I'.or-mg st rategies lo clopi d ou r t'ie past t :w s cars banks. With that pu n hase t.une t he mineral by the NI:R( () manacena nt oghts to os er 5 milhon.n res of undes eloped N I R L( )'s w estun uul opuations arc t en-1.un! m the nanon's lareest state. Gold. sih er, u red m t he Pow der R n er Hasm of Wronung t opper lead. /itu and rungsten uunpose the and Montana and unoke subbitununous seams billk ist N d1s initu r[ hohlings. The trJns.n -
tip to Sin tot t thu k Tins ciul has a heat (ona nt rion w as s alued at $ 16. I rulhon.
m the 9.200101 l' pc r pound range and n used primaril) b} t he c lu tta uti!n y indust r). Ibc w estern nuno are eqmpped.n high solume op-t ranons tlut tura non un.h r long-rum unar.n ts u nh relatnely few but laret elet tra unlity ins-noners
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()n the otht r hanil, N F.lMus eastt rn opera-The spring Creek mine.ompleted its tirst
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m southera App.datina and the Illinois f ull y ear of production and mined 1.4 million tions liasm are based on multiple, comparatively cons. Approximartly 175 million tons of the 28 3 tlun, lutummons seams. liastt rn mal generally milhon ton resers e are mmmitted to a single mnt uns 11,000 Iri U or more per pound and is c ustomer.
used by both utihty and mdustrial (ustomers.
1)urmg 1981 permitting activities and other
( ompared to the wesrtro properties, the eastern prehminary work on the Antelope mal property sortau nunes optrate at mut h smaller produe in Wyommg got underway, and mine mnstrue tion lesels to serve both the spot sales market, tmn at tivity will commt nte in the months short-f t rm t ontrat ts ami, potentially, export ahtad. Production out of the 298 million ton Inarkets. Attiarilingly, eastern (tial Inay sell in It sers e is expec ted (t) begin late next year ()r ihe 525 to : 'o a con range. tompared to slo to early in 1981. At this time, NI RCO has mm-515 tor the lower heat iontent western mal.
mitted the future mine to deiner 6 million tons
~
in ru ogmtion of the ihtterent.es betw een the a y ear.
t wo pJrts ot its unal busmess, NI[RLO has estab-Oue to sof t prRes and other market wndi-hshul two separate operating managements.
tions, deselopment work with the 250 milhon tas h w ith its ow n head <inarters. The ut stern ton lower (;uality therokee tual reserse, also in propi rties now report to a new Western Mining Wy ommg, has been suspended indefinitely.
Ihusion m 5hernian, Wy onung, and the eastt rn NI:RL()s (apital expenditures this ytar have nunes work un& r an 1: astern Mming thvision been budgeted at 58s million, mmpared with basol m ( nu mnati. ( >hni.
19sFs $51 mdlion. The two biggest items on Nl.R( () s iew s the markt ts of the l'ar 1:ast as the 1982 agenda are the start of wnstruction at haung substantial pormrial for Powder Riar the Antelope mine and the aucleration of Cle-15 l liasm u al. It is at tn cly pursuing the possibihty ments I:ncrgy's explorarmn at rivities.
I of h>ng tt rm agroom.nts w ith elet t ra-utility i nstomers m Japan and south Koru. NI:RLO has iomal u ith or ht r mterestol parties to inses-tipate the possihihties of descloping a det p w att r }kiIt tiir (tial exptitts at A sts tria, I )regt)n.
With dredgmg. sui h an installation would be (Jpa!*1e til at t tifilmi ttlating l(M),lH H)-tain t apat -
it) supt, r (olla rs that (f rau 5 5 fcer. The fat dity would be upable of loaihne 12.5 milhon tons of t oal cat h y ear, and wohl be expanded if re-workmg w ith the r uiroad
<purut. Ni[R( ()
is t om p.un to upgraJe hnes betuten the mines and Astoria. A kg c lunent m any dnision to d( st bip the ptirt w ill be the signing t)t large t tial iontratts to instity the nu est ment m such a iat iht s kmc opt r.nn, D>s I Ioso Rn enun.
. 5 F 2.150,000 $ 215,O' 5,000 I s p( nst s 5(19.N 2 t l.I H H )
l'd.'l') 5 J H IO Insiene f rom s ftrathens (a)
. 5 62. 4 5f).lH H b 5 49.OS2JHIO lhns.>t toal nunal < bi 20.Is5.250 1 i,5 N 2.90 5 N U fllbt r s et k.In pit J) t t s (ar s (ar en(!).
2.1II I l,b Ab
,s s
r 4
Fimmcing in financing,1981 was thc most active year in rained on a basis that is expected to save Pacific Pacific's history. Electric operations new perma-over $500,000 a year at current interest rates.
nent financing totaling $381 million was raised Also enlarged last year from $75 million to $100 during the year, and the Company's short-term million, with an improvement in terms, was the borrowing capacity was increased by $193 mil-Eurodollar credit facility. Next, the Company lion.
renegotiated the bank loan agreement used to Just before the annual meeting in June, the finance the Alascom purchase in 1979. Under company sold 4 million common shares, raising the revised terms, more than $617,000 in inter-nearly $80 million. An additional 569,846 est expense was saved during the last two shares were sold through the Company's divi-months of 1981 alone. Similar savings are ex-dend reinvestment program, which attracted pected to follow until the loan matures in 1985.
$11.2 million from 21,135 stockholders. Finally, Pacific obtained from three banks a Another 461,000 shares were subscribed to by committed credit agreement totaling $150 mil-2,600 employees participating in last fall's em-lion.
ployee stock purchase plan offering.
In mid-December, Pacific raised over $42 Two preferred issues were marketed in 1981. million in cash by transferring to a major energy in Janu.,ry, the Company realized $48 million company the tax benefits related to the newly from the sale of 2 million shares of $3.75 no par completed 500 KV transmission line described preferred. Before Christmas, Pacific placed pri-cisen here in this report. This was made possible varely with institutions 170,000 shares of 15% under the new federal tax law.
serial preferred in a $17 million transaction.
Earlier in the year, Telephone Utilities ob-Proceeds of both prefctred offerings and two rained an $11.5 million Rural Electrification bond issues were used to retire short-term debt Administration loan through the Federal 16 incurred to 6 nance construction.
Financing Bank. Proceeds will be used to up-Pacific offered two first mortgage bond issues grade and expand the facilities of the Sitka Tele-last year. In the spring $75 million of 15%7 phone Company in southeastern Alaska.
bonds, due in 1991, were sold to yield investors in October, NERCO financed the construc-15.7%; in the fail $100 million of 18% bonds, tion ofits new Western Mining Division office also due in ten years, were issued at prices to in Sheridan, Wyoming, through the issuance of yield an 18.4% return. As the year ended, the $4 million Sheridan County industrial devel-Company completed a $45 million tax-exempt opment bonds. Last_ spring Bridger Coal Co.
offering to help finance pollution control (two-thirds owned by NERCO) borrowed $22 facilities at the Colstrip project in Montana.
million to finance a large dragline and in in the short-term area, the Company in June November sold the tax benefits associated with expanded its lines with 34 banks from a total of thulragline for $5.7 million. Theinstallation of
$100 million to $150 million and, at the same new computer and telephone systems at time, arranged to have most of these lines main-NERCO headquarters were financed in De-cember under a five-year, $2.5 million equip-ment lease.
Of the six acquisitions NERCO consum-mated in 1981, four were paid for in cash and two were financed in part by the selling parties.
Cobb Coal Company in Alabama was acquired in June by the issuance of $10 million in debt. In October, NERCO purchased Resource As-sociates of Alaska from its shareholders, who accepted $13 million in notes as partial pay-ment.
In addition, NERCO is in the process of negotiating a $100 million loan package with a group of five banks. This credit facility, which is expected to close by the spring, will be used to prepay the Spring Creek production payment loan and for general corporate purposes.
Shawholder Infornunion Slutreholler fruluiries St&ollrs' CMr inquiries concerning our dividend reinvestment Schedule ofdividend payments - 1982 plan, lost certificates, dividend payments, Common and Preferred Stock on or about change of address and account status for all January 10 Patifk Power & Light Company preferred and April 10 (ommon stock issues shouhl be directed to our July 10 Stock Transfer Agent and Registrar:
October 10 First Interstate llank of Oregon, N. A.
Corporate Trust Division Int estor, IMer, Security Atualyst Conkict P.O. Box 297i Stoc kbrokers, security analysts and others (fesir-Portland, Oregon 97208 ing technical / financial information about Pacific Power & Light Company shouhl contact h,irm 104, the Corporate Finance Department, telephone Upon request, the Company will furnish its (503)243-1598.
sharehohlers, without charge, a copy ofits 1981 Annual Report on Form 10-K, to the Securities l'uhlac infornuttion and lixchange Commission. Requests shouhl be Alembers of the media and those desiring gen-direc ted to the Corporate Secretary at the follow-eral infiarmation about "acific Power & Light ing address:
Company should contact the Communications Pacific Power & Light Company Department at corporate headquarters, tele-920 S.W. Sixth Avenue phone (503) 243-4793.
17 Portland, Oregon 97204
'IMephone (503) 213-1122 Andtors
' "' kI"'# 5'U'
()nhletul Reint'estment l'Lm 1010 Standard Plaza Our dividend reinvestment plan qualifies for the Portland, Oregon 97201 rax intentises provided under the I!conomic Re-coscry Tax Att of 1981. The Ac t provides exclu-sion f rom taxable inwme for dividends paid and reinvested in Company stock from January 1, 1982, through December 31.1985. Individuals may elect to defer federal inwme taxes on rein-vested dividends of up to $1500 each taxable year on joint returns or $750 on single returns.
Shares acquired under rius election will have a zero cost tax basis. liefi>re selling any Company common stock, we advise our sharehohlers to wnsult with their tax advisor on he effect under the new tax law.
Notice of Anmut! Meeting
't he 1982 Annual Aleeting of Stockhoklers is schedulcil to be behl in Portland, Oregon, on June 9,1982, convening at 1:30 p.m. at the Jantzen lle.nh Red Lion A!otor Inn, 909 N.
Ilayden Island Drive, Portlanti, Oregon. A meeting notice along with proxy statements will be mailed to shareholders in early Alay.
p SELECTED FINANCIAL DATA 1981 1980 1979 1978 1977 Thousands of Dollars, except per share amounts 1
Revenues.
$ 1,288,553
$ 975,433
$ 776,901
$ 574,462
$ 458,295 Percentage increase...
32.1 25.6 35,2 25.3 14.7-167,536 133,866
' t 12.511 105,787 88,575-
- Nec Income.
Percentage increase.
25.2 19.0 6.4 19.4 1.9 Earnings per Common Share....
-2.82 2.53 2.46 2.51 2.22:
Percentage increase (decrease)....
I 1.5 2.9 (2.0) 13.1 (10,5)
Cash Dividends Declared per Cornmon Share 2.07 2.04 1.95 1.89 1.80 Percentage increase....
1.5 4.6 3.2 5.0 4.3 Total Assets......
4,016,820 '
3,559,071' 3.128,787 2,469,922 2,420,134 4 -
Percentage increase.,
12.9 13.8
- 26.7 2.1 14.6
' gg 1981 1980 1979 1978 1977-Amount Amount Amount Amount G
Amount Capitaliaation:
Thousands of Dollars -
long. Term Debt and Redeematile Preferred Stixk'...
51,891,270 58 $ 1,718,703 59 $ 1,565,599 60 $ 1,138,395 53 $ 1,283,494 59 Preferred Setx k........
276,'459
'8 226,459 8
227,236 9
227,236 11 187,236 9
Common Equity.........
1,093,675 34'
-967,072 33 808,590 31 778,139 36 698,32 32
- ' Includes Ralcemable Preferred Stock of $67 million in 19'81 and $50 million in 1980 and 1979.
STATISTICAL INFORMATION 1981 1980 1979 1978 1977
. Income Data -
Percent Earned on Average Capitalian.on.
12.02 10.65 9.77 H,85 8.16 Percent Earned on Average Common Equity
~ 13.31 12.47 11.71 12.00 11.23 limes Earned Data (after income taxes)-
. -Total Interest Charges.
1.8 1.8 1.9 2.2 2.2
. Total Interest Charges and Preferred Dividends...
1.7 1.6 1.7 1.9 1.8
,I Common Sttxk Data-Ibok Value per Sharc at Wr.End....
$21.53
$21.06
$ 21.28
$20.80
$ 20.24 Market Value per Share at Wr.End.
17.875 21.125 18.00 19.75 21.25 l
Market to Book Ratio.........
83.0%
100.34 84,6 7 95.0%
105.07 Number o(Shartnolders at Wr.End...
122,023 125,405 116,749 116,657 110,914 Number of Employees at Wr.End..
9,137 8,436 7.543 5,478 4,966 y
v a
r
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-ne
.-,-n.,
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w-e-m,en..-._-,,,-----
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p i
I MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS LIQUIDITY AND CAPITAL RESOURCES The capital requirements by operation for 1981 and as estimated for each of the three years 1982 r
through 1984 are as follows:
1981 1982 1983 1984 Thousands of Dollars Const ruction expenditures:
$302,613 $302,689 $326,623 $311,664 Electric operations..
Telecommunicariuns operations.
86,209 178,100 93,500 85,500 50,993 88,402 108,500 61,700 Coal mining operations,
'Ibral,
439,815 569,191 528,623 458,864
- Interest capitalized on equity ftmds 24,738 23,979 30,566 31,969
'Ibcal const rut tion expenditures 415,077 545,212 498,057 426,895 Maturities oflong-term deht and sinking fund requirements:
Elec tric operations.
5,854 37,165 73,835 50,284 Telecommunications operations.
24,571 24,176-60,809 29,793 Coal mining operations.
48,420 14,974 12,015 13,212 19 78,845 76,315 146,659 93,289 Thral debt maturities.
'Ibral capitai rcquirements.
$493,922 $621,527 $644,716 $520,184 l
The operating companies generate funds from their operations to finance all or portions of their i respective capital requirements; such funds are derived from consolidated net income, depreciation, deferred taxes and deferred investment tax credits. Electric operations
- ability to internally generate funds to a great extent is dependent on its obtaining adequate rates for utility services. Such ability
[
is favorably affected by frequency of rate increases and improvements in regulatory practices such as:
allowing construction work in progress in rate base; allowance of adequate depreciation rates; normalization of federal income taxes (expec ted to be allowed commencing in 1982 - see Note I to Consolidated Financial Statements); the use of forward-looking test periads; full current recovery of l
fuel costs incurred in the generation of electricity; and, most important, the opportunity to earn a rate of return w hich is sufficiently competitive in the capital markets to attract additional capital uixm reasonable terms and conditions. Throughout 1981 and thus far in 1982, Electric operations I
has increased the frequency and magnitude of its rate case filings throughout its'six-state service I
area.
While the Company continues to meet a signiGcant portion of its electric operations' capital requirements through the sales of shares of common and preferred stock and the incurrence of i
additional debt.. the telecommunications and coal mining operations have been able to meet l - substantially all of their normal construction programs through theiroperations and have externally i
financesl only for major acquisitions or large new mining projects. On a consolidated basis for 1979, 1980, and 1981, approximately 347, 27% and 44%, respectively, of the funds required for the construction programs were generated from operations.
At December 31, 1981, the consolidated capitalization ratios consisted of approximately 56%
long term debt,107 preferred stock and 34% common equity. The target capitalization ratios are 54% long-term debt,10% preferred stock and 36% common equity. Achievement of these target capitalization ratios depends largely upon regulatory commissions allowing reasonable rates of i
return and market conditions at the time securities are sold.
For information regarding unused sources of liquid assets, bank lines of credit and other i
short term borrowing facilities of the Company, see Note 3 to Consolidated Financial Statements.
l The Company anticiptes that to finance the 1982-1984 consolidated construction program, approximately 50% of the funds required will have to be raised through external Gnancings. The
R amount of external financing obtainable is limited by earnings coverage provisions of the Compa.
ny's mortgage indenture and Restated Articles ofIncorporation. At December 31,1981, under such :
_ provisions the Company could have issued up to an additional $228,000,000 principal amount of first mortgage bonds (at an assumed annual rate of 17%) and $ 187,000,000 of additional preferred stock (at an assumed annual race of 15%). Also, the Restated Articles of Incorporation limit the '
amount of unsecured debt outstanding to an amount equivalent to 30% of total equity and secured debt; under this provision, approximately $609,000,000 principal amount of additional unse-cured, short-or long-term debt could have been outstanding at December 31,1981.
RESULTS OF OPERATIONS 1981 COMPARED WITH 1980 Electric revenues increased generally as a result of higher rates, telecommunications revenues increased due to higher volume and coal mining revenues increased as a result of both higher prices and greater volume.
' Although revenues increased by approximately 32%, net income increased only 25% because of increases in operating expenses of 31%, interest expense increases of 34% and a 1980 $10,000,000 after tax gain on the sale of securities.
Earnings per common share increased to a lesser extent, about 11%, because of the effects ofsales of additional shares of preferrel and common stock.
1980 COMPARED WITH 1979 Electric revenues increased generally as a result of higher rates, telecommunications revenues increased generally as a result of growth in stations served caused by new customers and acquired 20 operations. Telecommunications revenues also rose in 1980 over 1979 due to the inclusion of Alascom revenues since its acquisition on June 1,1979. Revenues from coal mining increased generally as a result of higher prices and production.
Although revenues increased by approximately 26%, net income increased only 19% because of -
increases in expenses (operating 24% and interest 43%) partially offser by a 1980 $ 10,000,000 after tax gain on the sale of securities.
Earnings per common share increased to a lesser extent, about 3%, because of the effects of additional shares of preferred and common stock.
INFLATION The Companies are particularly sensitive to in0ation due to the large amounts of capital that '
must be raised for construction programs and because utility service prices are regulated using historical cost in the rate bases. The Companies expect to continue to pursue adequate and timely _
rate relief in the future to offset the impact ofin0ation and other increases in the costs of providing utility services and will continue to urge improvement in regulatory practices so that attrition caused by regulatory lag is reduced. See Note 13 to Consolidated Financial Statements.
STATEMENTOF MANAGEMENT Management is res[mnsible for the financial information and representations contained in the financial statements and other sections of the annual report. These statements have been prepared in conformity with generally accepteo accounting principles appropriate in the circumstances, includ-ing certain judgments and estimates, as required.
The Companies maintain systems of internal accounting controls and procedures designed to provide reasonable assurance that transactions and disposition of assets are properly authorized and recorded. The Companies have engaged Deloitte Haskins & Sells, independent certiGed public accountants, to perform an examination of the consolidated financial statements, in accordance with generally accepted auditing standards, and render a report thereon. The corporate audic group ;
and operating companies' internal auditors evaluate and monitor the systems ofinternal accounting control, in coordination with the independent auditors.
Results of the work ofinternal and independent auditors, as well as the annual financial reports, are reviewed by the audit committee of the board of directors. The audit committee is composed of Gre independent directors and meets periodically with management, corporate auditing and the independent auditors.
o PACIFIC POWER & LIGHT COMPANY STATEMENTS OF CONSOLIDATED INCOME AND RETAINED EARNINGS Year Ended December 31 1981 1980 1979 Thousands of Dollars
.. $ 1,288.5 53
$975,433
$776,901
' REVENUES EXPENSES:
417,817-324,340 256,308 Operations..
hiaintenante 123,437
-108,298
'82,821 Administrative and general.
I10,094 78,435 60,848 Depreciation and amortization.
129,314 117,381 90,417-Taxes, other than income taxes 116,004 78,616 78,282
'Ihtal 926,666 707,070 568,676 361,887 268,363 208,225
. INCONIE FRONI OPERATIONS.
'21 INTERESTEXPENSE ANDOTiiER:
203,570 159,891 119,405 Interest expense...
(53,037)
(47,496)
(41,032)
Interest capitalized (885)
(11,' 53) 5,855 Other expense (income)....
'Ibral 149,648 101,242 84,228 212,239 167,121-123,997 INCOAIE IlEFORE INCOhlE TAXES INCOhlE TAXES.
44,703 33,255 11,486 NET INCOhlE 167,536 133,866 112,511.
248,315 228,517 209,208 RETAINED EARNINGS, JANUARY I CASli DIVIDENDS:
(30,360)
(23,143)
(19,612)
Preferred sttxk Common stix k (102,325)
(90,925)
(73,590)
RETAINED EARNINGS, DECEhlllER 31
.$ 283,166
$248.315
$228,517 Earninge on Common Stock (Net income less preferred dividend requirements)
.$ '137,176
$ 110,723
$ 92,899 Average number of shares of Common Stock outstanding (in thousands) 48,684 43,831 37,692 Earnings per Common Share (based on average number of shares outstanding).
$2.82
$2.53
$2.46 Cash Dividends De(lared per Common Share,
$2.07
$2.01
$ 1.95 (See auempanying Nora to ConsolidatedFinaniialStatemenn)
\\
s CONSOLIDATED BALANCE SHEETS ASSETS December 31 1981 1980 Thousands of Dollars Property, Plant and Equipment:
Utility:
Electric
$ 2,695,133
$2,415,500 Telecommunications 599,769 556,399 Coal Mining.
347,710 263,628 Accumulated depreciation and amortization (701,017)
(611,718)
Net.
2,938,565 2,623,809 Construction work in progress.
423,595 566,702
'Ibral property, plant and equipment 3,362,160 3,190,511 Current Assets-Cash and temporary cash investments 34,567 21,177 Accounts receivable (less allowance for doubtful accounts - 1981, $2,117,000 and 1980, $ 1,625,000).
165,478 130,567 22 Maters.Js and supplies (at average cost) 48,636 11,390 Fuel stoc k (at average cost).
39,020 26,850 Prepayments 4,315 7,358 T>tal current assets.
292,016 227,342 Other Assets:
Investments in terminated or deferred nuclear projects
$74.234 Excess of cost over net assets of businesses acquired.
58,908 59,409 Deferred c harges 54,219 48,278 Other.
75,283 33,531 Ltal other assets 362,644 141,218 Total Assets
$4,016,820
$ 3,559,071 (see aca,mpanying Notes to Consolidated FinancialStatements)
l CAPITALIZATION AND LIABILITIES December 31 1981 1980 Thousands of Dollars Capitalization:
Common equity
$ 1,093,675
$ 967,072 Preferred stuk,
276,459 226,459 Redeemable preferreti stock,
67,000 50,000 Long-term debt 1,824,270 1,668,703 Total capitalization 3,26 a,40 4 2,912,234 Current Liabilities:
Long-term debt currently maturing.
72,307 40,223 Notes payable 20,000 15,000 Commercial paper 70,500 135,100 Accounts payable.
78,807 66,647 Taxes ac crued 73,102 57,661 Dividends and interest payable 71,395 57,517 Ocher,
53,146 37,167 Total current liabilities 439,257 409,315 23 Deferred Credits:
Dcferred income taxes 161,621 135,736 Deferred investment tax credits,
44,164 37,092 Custc.mer advances for construction and other,
94,031 41,419 Thral deferred credits 299,816 217,247 Minority interest,
16,343 20,275 Commitments and Contingencies-see Notes Total Capitalization and Liabilities
$4,016,820
$ 3,559,071 (See acampanying Notes to Consolidated FinancialStatements)
STATEMENTS OF CONSOLIDATED CAPITALIZATION December 31 1981 1980 Thousands of Dollars C051510N EQUITY:
Common st<xk, $3.25 par value, authorized 75,000,000 shares; 1981-50,800,746 and 1980-45,929,861 shares outstanding,
$ 165,102
$ 149,272 Premium on capital stak 674,505 594,255 Installments received on common setxk 326 63 Capital stak expense (29,424)
(24,833)
Retained earnings 283,166 248,315 Total Common Equity,
$ 1,093,675
$ 967,072 PREFER RED STOCK:
Serial Preferred $ 100 par value per share, 3,500,000 shares authorized Subject to mandatory redemption 9.159 Series, 500,000 shares outstanding 50,000 50,000 157 Series, 170,000 shares outstanding.
17,000
'1 Total Subject to hiandatory Redemption.
67,000 50,000 Not subject to mandatory redemption 4.529 Series,2,065 shares outstanding 207 207 7.009 Series,18,060 shares outstanding.
1,806 1,806 6.007 Series. 5,932 shares outstanding 593 593
~- -
5.007 Series,42,000 shares outstanding.
4,200 4,200 5.409 Series,70,000 shares outstanding.
7,000 7,000 4.729 Series, 100,000 shares outstanding 10,000 10,000 1.569 Series, 100.000 shares outstanding 10,000 10,000 8.927 Series. 150,000 shares outstanding 15,000 15,000 9.087 Series, 300,000 shares outstanding 30,000 30,000 7.964 Series, 250,000 shares outstariding.
25,000
? ! " se 59 Preferred, $ 100 par value, 126,533 shares authoriecd and outstanding.
12,653 12 653 l
No Par Serial Preferred, 16,000,000 and 8,000,000 shares authorized, respectively
$2.18 (stated value, $25) 1,600,000 shares outstanding 40,000 40,000
$2.13 (stated value, $25) 1,200,000 shares outstanding 30.000 30,00C
$2.29 (stated value, $25) 1,600,000 shares outstanding 40,000 40,000
$ 3.75 (stated value, $25) 2,000,000 shares outstanding 50,000 Total Not Subject to Alandatory Redemption
$ 276,459
$ 226,459 ISa ammpanying kra to Connlidated FinansialStatmicuss)
I De(ember 31 1981 1980 Thousands of Dollars 1.ONG-TI:.RM delit:
First Afortgage lionds Maturing 1982 through 1986 3%7 Series duc 1982 12,500 3My Series due Sept. I,19H2 7,500 4%7 Series due Oct.1,1982 6,157 9%7 Series due 1983 70,000 70,000 3M'Y Series due March I,1981.
8,659 H,659 3h7 Series duc 1981 H,000 H,000 3h9 Series due Aug.1,1981 30,000 30,000 3%9 Series duc 1985 10,000 10,000 447 Series due Afay 1,1986 14,451 14,456 Maturing 198H through 1991 - 4 % 7 - lH'i 290.000 115,000 Maturing 1992 through 1995 - 4 % 9 -5 7 157,000 157,000 Maturing 1999 through 2001 - 7%'T-9%7 115,000 1/.000 Maturing 2002 through 2006 - 7M9-109 250,000 250,000 Maturing 2007 through 2010- 6%'i.I iM4 267,000 267,000 23 1,250,113 1,101,270 Guaranty of Pollution Control Revenue llonds Sweetwater County, Wyoming 6'i--8 49 due 2003 through 2007 101,125 101,425 City of Forsyth, RosebuJ County, Monrana, duc201l' 45,000 Funds held by trustees.
(32,478)
(1,74 1)
First Mortgage Notes 5,19-15.87 Maturing through 1998 15,383 16,102 29-H'T Maturing through 2016.
11,255 6,786 (Jnsecur d 87-14.59 notes due through 2007 44,676 43,650 119 Notes due through 1996.
9,150 9,950 Notes due through 1985" 147,000 168,000 Mh'.T Notes due 1983 through 1997 90,000 90,000 69-18M9 Notes due through 1997 66,293 12,11i Production payment finanong"*
41,266 85,589 Capiealired lease obligations.
42,599 42,327 linamortized premium and distount.
(11,825)
(8,3H3)
Mistellaneous 1,113 1,617 571,157 567,433
'Ibral I.ong-Term IAbt.
$ 1.H21,270
$ 1,668,703
- Interest rate (7.759 at Ibember 31,1981) tluctuates, not to exceed 207 per annum, based upon an Interest Index of selected federal income tax exempt securities.
" Interest rate (12.609 at Ikember 31,1981) fluctuates based upon terrificate of deposit rates.
'" Interest rate (15.759 at December 31,1981) fluctuates based ulwn the prime rate.
(Sac aaumjunyng Nota to ConnlidateJFinanaalStatem<nts)
STATEMENTS OF CONSOLIDATED SOURCE AND USE OF FINANCI AL RESOURCES Year Ended December 31 1981 1980 1979 Thousands of Ikitars SOU RCE OF 1:lN ANCI AL RLSOURCES:
Operations:
Net intome
$ 167,536
$ 133,866
$ 112,511 Items not requiring (prosiding) current resources-Depreciation and amortization 129,311 117,381 90,117 Defttred income taxes - net 25,216 21,268 13,230 Investment tax (redit adjustments - net 7,098 (812)
(3,071)
Interest capitalized on equity funds.
(21,738)
(16,207)
(23.5-11)
Alinority interest.
10,808 6,031 1,360 Oc her - net 12,610 2.701 (2,735)
Ltal from operations.
327,871 261,231 191,17I l'inantings:
Long-term c ebt.
210.255 187,378 351,571 Common stm k 93,562 138,685 11,257 26 Pref t rred stuk 18,220 Redeemable preferred stm k.
16,970 49,885 inc rease(de(ruse)in short term debt and temporary ins estments-net.
(77,032) 78,381 17,8 0 i Leal from financings.
321,975 10 1,l17 163,520 sale of tax benefits.
12,810 Leal
$692,659
$668.678
$651,(#1 USE 01: l'IN AN( I AL RESOURCES:
Construc tion e ::penditures (excluding interest capitalized on equity funds).
$ 115,077
$ 178,317
$ 331,217 Operatmg companies acquired:
Propert y -- net 50,916 15,703 271,981 Other assets and liabilities - net 2,952 6,921 (7,070) long-term debt awumed.
(25,701)
(l 855)
(90,000)
Investments in affiliated companies.
23,782 DividenJs 132,685 111,068 93,202 Long-rcrm Jcht reduction.
78,815 53,015 33,650 Other use (sourees) 2-1,319
( 10,29 %)
(l,213)
Increas:(de(rease)in working capital (excluding short-term debt and temporary insestments)
(10,216) 15,7 10 19,951 Total
$692,659
$668,678
$651,691 t% awapanyng Mto in con >JilatcJl'inandalStawnenta
NOTES TO CONSOLIDATED FIN ANCI AL STATEMENTS Decernlier 31,1981,1980 cm l1979 1, 5U51MANY OI SIUNiilCANT
~
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I ACCOUNTING POLICIES llasis of Prewntanon Interest Capstah:ed The vinsolidated finanual statements indude Debt and equity costs of funds applicable to those operations of a urdity nature, primarily utility properties are capitalized during con-liturric and Teluommunications, and Coal struc tion. Generally, the composite capitaliza-mining, induding a 509 interest in the assets, tion rate used was 8.57 for 1979,9'J through liabilities, and results of operations of a com-November 1980, 10.59 through September mercial coal mining joint venture ("Com-1981 and 11.59 thereafter. Interest capitalized panies"). All operations are induded sin (c dates on (oal mining properties represents interest of orgamration or autuisition. Significant inter- (ost incurred to finance tonstruction. The Com-(ompany transactions and balantes have been panies do not (apitalize interest applicable to climinated. The Companies' investments in af.
projc(ts on which significant activity has been filiates are auounted for on the equity basis.
suspended (see Note 2).
Resenues indude (oal sales to a joint venture f
,.g partner of $32,303,000, $18,879,000, and
$ 11,12 5,000 in 1981,1980 and 1979. respec-Deferreil Taxes - lilurric operation's tax re-t ivd y.
duttions relating to the differen(e between tax y
depredation and book depreciation fi>r assets Replatorv Anthoritics added prior to 1981 were generally flowed Auountmg tiir the utility operations is in through to income. For assets added in 1981 the confiirmity with generally auerted aucunting Electric operation computed tax depreciation principles as applied to regulated public using the Aaclerated Cost Recovery System utilities and as prescribed by Federal agendes ( ACRS) and provides deferred income taxes fi>r and the resputive uimmissions of the sarious the excess of the tax reductions attributable to states in which such utility Companics operate.
ACRS over Guideline depreciation lives and methods applicable to tax basis of assets. In 1982 Pr$ tty. Plarit druf lipapincrit the Electric operation expects to racive appro-Property, plant and equipment are stated at priate rate treatment te fully provide fi>r de-original cost of umtraued services, direu labor ferred taxes for differentes due to book versus tax and material, interest capitalized during um.
depreciation lives and methods eith respect to struction and inihrut charges tiir engineermg, P"u 1980 property additions. Telewmmunica-supenision aad similar overhead items. The tions operations provides deferred taxes for the unt of depreciable urdity properties retired, total tax redouion of tax versus book deprecia-induding the sost of removal, less salvage, is tion. Deferred inoime taxes are not provided fiar (harged to auumulated & pru iation.
(crtain other differentes, principally interest (apitaliied, between book and taxable income of Dcpteciation aruf Amoin:ation the utility operations. Under regulatory prac-Depreciation n uimputed generally under the tites to which the utility operations are subject, straight-line method over the estimated useful it is expeued that income taxes not provided for lises of the related assets. The utility operations' (urrently will be recoverable through revenues provisions for depreoarion were 3.WJ,3.75g when such taxes become payable. Deferred in-and 3.397 of aserage depreciable property. (ome taxes are provided fi>r all timing differ-plar t and eqmpment for 1981,1980 and 1979, ences of the Coal mining operations.
respu ris ely.
Invemnent Tix Credits - Federal inwmc tax The eu en of one over net assets of businewes reduuions resulting from the investment tax auluired is generally being amortised over 10 (redit relating to Electric operation's plant years. Coal mine development unts are induded placed in service prior to 1981 have been deferred in property, plant and equipment and amortized and amortiied over an eight-year period; in-over the hfe of the related mine.
vestment tax credits for plant placed in service
Y **
subsequent to 1980 are expected to be deferred, Construction of the Pebble Springs Nuclear as utilized, and amortiied over the useful lih of Project in Oregon, n which the Company has a the related asser. Investment tax credits relatieg 29A% interest, was effectively deferred by the to Telecommunications operations are deferred adoption of Oregon Ballot Measure No. 7 on 1
and amortized over the useful life of the prop-November 4,1980. The measure provides that s
erty. The Coal mining operations flow invest-no cite certificate for a nuclear-fueled thermal ment tax credits through to income in the year power planc,o y be issued until the Oregon the credit is rcalized. investment tax credits Energy Facility Siting Council has found that an f
generated by Electric operation, but not esti-adequate repository for disposal of high-level. 1..','
mated to be realizable by such operation, have radioactive waste produced by nuclear generat-4 been flowed through to income to the extent ing facilities has been licensed for operation by
- ;Y currently realizable on a consolidated return the appropriate agency of the federal govern-
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basis.
ment. The measure also requires voter approval Revenue Recognition "I""Y 5i'"*"ifi("'.e. As of December 31,1981, ~
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the Company had mvested, excluding nuclear Utility revenues are generally recognized on fuel, $77,996,000 in the Pebble Springs Proj-the basis of cycle bilhngs and are recorded when ect. The Company suspended capitalization of customers are billed.
interest on the Pebble Springs Project as of De-3 *1..
Sale of Tax Benefits cember 1,1980 and has reclassi6ed the costs of In December,1981, the Electric operation this project as " Investments in Terminated or sold tax benefits allowed by the Tax Act of 1981, Deferred Nuclear Projects."
.p related to a major transmission line and received The Company intends to seek rate relief to t
2H
$12,810,000 in proceeds. Such pmceeds were recover, over a reasonable number of years, its ;
recorded as other deferred credits and will be investment in Unit 5, including termination :2 amortized to income over 30 years, the book life costs (estimated by the Supply System to be of the asset. In November,1981, the Coal min. $20.5 million) net ofincurred common facilities 4
ing operation through a two-thirds owned sub-costs (estimated by the Supply System to be m
sidiary sold certain tax benefits, related to a $22.4 million) to be transferred to Unit 3, twin.
dragline and received $5,734,000 in proceeds. of Unit 5, and net of tax benefits and salvage, if Such proceeds were recorded as other income any. If it is decided that the Pebble Springs and deferred taxes were provided.
Nuclear Project must be abandoned, the Com-r pany intends to seek similar rate relief. The Retirement PLms granting of such rate relief in Oregon would a c.; '
Substantially all employees are covered under require a modification of the Public Utility various retirement plans. Pension costs are Commissioner's interpretation, with which the...
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4 funded as the liability accrues, based on actua-Company does not agree, of a 1978 ballot mea- :
rial determinations, including unfunded prior sure that prohibits the inclusion in rate base of -
service costs which are amortized and funded any property not presently used for providing - -
,4 over a thirty-year period.
utility service. The ultimate recoverability of ~
investments in terminated or deferred nuclear -
3
- 2. NUCLEAR PROJECTS pmjecu cannot presently be determined, and no ? w<'
allowance for any loss that may result has been im estments in Terminated or Deferred Nuclear made in the financial statements.
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Projects Washington Public Power Supply System
(" Supply System") terminated construction of Other Nuclear Pmjects nuclear generating units 4 and 5 on January 22, At December 31, 1981, the Company's in-1 1982, due to the inability of the Supply System vestment in other nuclear projects, excluding ;
to continue project funding. The Company has a nuclear fuel, consisted of a 20% interest in the 10% interest in Unit 5 and as of December 31, Skagit/Hanford Project, $74,797,000, and a J
1981 had invested, excluding nuclear fuel, 10% interest in Unit 3 of the Supply System, w
$96,238,000 in the unit. The Company sus- $ 127,127,000, both of which are included in a pended capitalization ofinterest on Supply Sys-construction work in progress.
rem Unit 5 as of October 1,1981 and has reclas-Preconstruction and licensing activity is con-sified the costs of this project as " Investments in tinuing on the Skagit/Hanford Project. The.
s,.'. 4 Terminated or I)eferred Nuclear Projects.'
owners of the project have amended the Nuclear 5
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Res;ulatory Commission application to move was $1,580,000 at December 31,1981. The the project from Skagit County, Washington, to lines of credit are periodically reviewed by the the United States Department of Energy's llan-various banks and may be renewed or cancelled.
ford Reservation near Richland, Washington, Commitment fees charged in connection with and have filed applications for new Washington these borrowings are not significant.
site certification and other necessary permits.
Construction of Supply System Unit 3 is con-
- 4. COhihiON EQUITY AND tinuing and as of December 31,1981 was ap-PREFERRED STOCK proximately 43% completed. On November 3, in connection with the Employees' Stock 1981, the Washington voters passed Measure Purchase Plan, 301,039 and 232,782 shares of No. 394, the " Washington State Energy Financ-common stock were issued to employees during ing Voter Approval Act. As applied to the 1981 and 1980, respectively. At December 31, Supply System, the Act requires approval of 1981,386,395 shares of unissued common stock voters in the local governmental units that are were reserved for unpaid subscriptions and members of the Supply System for issuance after 1,336,472 shares were reserved for future July 1,1982 of any revenue Imnds, general obli-offerings. Pacific Power a Light Company gation bonds, or any other indebtedness, if the (Company) was trustee for 103,758 fully-paid proceeds are to be used to construct any of Sup-shares at December 31,1981.
ply System Uru,ts under construction. The con-Under the Dividend Reinvestment and Stock stitutionality of the Act is being challenged in Purchase Plan, 2,156,565 shares of the Compa-court by Indenture Trustees of Supply System ny's unissued common stock were reserved for bonds. This Act could delay, and, if held con-issuance at December 31, 1981. During 1981 stitutional, make difficult the construction of and 1980,569,816 shares and 565,701 shares of 29 Unit 3 as currently contemplated.
common stock were sold under the plan, respec.
3, COhiPENSATING BALANCES AND Nl3 ed$ "ilP*"Y ""$"<",**e,"3i i9$i,
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p SHORT-TERhi BORROWINGS Generally, preferred stock is redeemable at Short-term borrowing arrangements include stipulated prices plus accrued dividends, subject a $ 150,000,000 bank credit agreement, to certain restrictions. Upon involuntary
$ 150,000,000 of lines of(redit with domestic liquidation all preferred stock is entitled to par commercial banks, a $ 100,000,000 loan facility or stated value per share.
in the Eurodollar market and authority to sell Changes in shares of capital stock and the commercial paper up to $150,000,000 out-excess of net proceeds over par or stated value standing at any one time. The compensating credited to premium on capital stock are as balance requirement under the lines of credit follows (in thousands):
Shares Shares Premium Common Preferred On Capital Stock Stoc k Stoc k Balance, January 1,1979 37,408 5,572
$468,841 1979 - Sales to employees 172 2,408 Sales to public.
119
' 0 63 Balan(e, Dec ember 31,1979 37 199 5,572 478,292 1980 - Sales to emplo>ees 233 3,103 Sales to public.
7,698 112,442 Purc hases (7) 418 Balance, lhember 31,1980 45,930 5,565 594,255 1981 - Sales to employees 301 3,939 Sales to pubhc.
4.57()
2,000
_76,31i Balance, December 31,1981
_50f01--_ _
_ _565
_ _ _ _$674 y 5
_7, va.
- 5. REDEEhiABLE PREFERRED STOCK Mandatory redemption requirements begin-The shares are also subject to redemption at ning in 1988 on the 170,000 shares of 159 the Company's option at the following prices:
Serial Preferred Stock ($100 par value) are 9.159 Series at $108.19 per share to October 11,333 shares annually and beginning in 1989 31, 1982, 159 Series at $ 115.00 per share to on the 500,000 shares of 9.159 Serial Preferred January 10,1987, plus accrued dividends. Each Stock ($ 100 par value) are 31,250 shares annu-Series is redeemable at reduced amounts, to par, ally; both at par value plus au rued dividends. If after such respective dates.
the Company is in default in its obligation to make any such purchases, it may not pay cash dividends on Common Stock.
- 6. LONG-TERh1 DEBT Substantially all of the assets, including the Additional First Mortgage Bonds of the ownership interests in certain Coal mining and Company, may be issued in amounts limited by Telecommunications operations, are subject to property, earnings and other provisions of the liens of mortgages or security agreements. At mortgage indenture.
December 31,1981, the Coal mining operation Maturity and sinking fund requirements for had unused borrowings of $22,000,000 under a the years 1982 through 1986 on the long-term coal production payment financing.
debt outstanding are as follows (in thousands):
30 1982 1983 1981 1985 1986
%ta! requirements.
$76,315 $ 116,659
$93,289 $ 138,796
$37,310 Portion of total payabic in cash 72,307 142,824 89,664 135,583 34,395 Property additions certifiable in lieu ofcash' 6,680 6,392 6,012 5,355 4,858
- Cash sinking fund requirements may be satisfied on the basis of 60'V of property additions.
- 7. RESTRICTIONS ON CONSOLIDATED RETAINED EARNINGS The loan agreements and preferred stock Under the most restrictive of these covenants agreements of the Companies impose, among consolidated retained earnings available for other covenants, limitations either directly or dividends at December 31,19 81, was indirectly on the payment of common divi- $ 2 36,000,000, of which $130,000,000 was dends.
available from retairied earnings of subsidiaries.
- 8. COhihilTh1ENTS AND CONTINGENCIES Construction smd Other The Companies have substantial commit-millior, cons of coal, beginning in 1988, for its ments ;n connection with their construction use rr sale to others.
programs which are estimated at $545,000,000 Major project construction includes several in 1982.
electric generating facilities which have been in February 1982 the Company entered into a delayed. (See Note 2) 35 year agreement to purchase a minimum of 40
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Jointlyou ned and lxased PLmts At December 31,1981 the Electric operation's interests in plants jointly-owned and jointly-leased ure as follows (in thousands of dollars):
Electric Construction Operation's In Accumulated Work In Share Servic e Depreciation Progress Jointly-ow ned Plants Operating:
Centralia.
- 47. 5 ?f
$ 151,460
$42,036 35 Ji n Bridger IJnits I,2,3 and i 66.7 575,288 74,904 10,333 Trojan 2.5 13,486 2,195 1,071 11nder Const ruc tion:
Colst rip.
10.0 71,332 Supply System Unit 3 10.0 127,127 Skagit/Itanford.
20.0 74,797 Jointly-leased Plant Operaring - Wyodak 80.0 3,
Each participating utility is responsible for whice are included in r,nerations expense. The funding its share of construction costs and for Electric operation is required to fund their por-providing its own financing. The costs ofopera-tion of the debt whether or not any power is ring and leasing the plants are similarly shared, produced. The purchase arrangements provide and the Elettric operation's portion is rewrded for firm power and most of them also provide for in its applicable operations, maintenance and additional power, withdrawable by the owner tax a(counts.
upon one to five years' notice. For the year 1981.
Substantial amounts of power are being pur-purchases under these arrangements approxi-(hased under long-term arrangements with mated 11.6'?; of the Electric operation's energy Washington public utility districts. Such pur-requirements; 15.2% was obtained through chases are made from non-affiliated persons on a other purchase and ner interchange arrange-
"wst of service" basis, with the Electric opera-ments. The Electric operation has been notified tion buying a stated percentage of project out-that the capacity available to it will be reduced put and paying a like percentage of project an-111,130 kw from 1982 through 1985.
nual (osts (operating expenses and debt service)
A summary of the arrangements is as follows:
Electric Operation's Share at December 31,1981 Generating Year Contra t Capacity Percentage l'aulity Expires (kw) ofOutput Costs
- Wanarum.
2009 188,519 22.7
$3,191,000 Pnest Rapids 2005 136,215 17.3 2,410,000 Roc Ly Reath 2011 69,297 5.3 1.195,000 Wells 2018 74,328 9.6 1,416,000 Suitt No. 2 1983 70,000 100.0
,1,488.000
$9,730,000
' Annual debt servne ($5,9 35,000 in 1981) and operating cost
lxases The Companies conduct a portion of their at the time of exercising such options. Certain %
operations using leased property, including the leases provide for options to purchase at fair Wyodak coal-fired generating plant, under market value. The Companies are also commit-leases expiring during the next 25 years. Sub-ted to pay all taxes and expenses of operation stantially all options to renew existing leases (other than depreciation) and maintenance ap-provide for negotiation of the amount of rental plicable to the leased property.
Rent expense for the periods indicated was as follows (in thousands):
1981 1980 1979 Total rent expense.
$67,637
$ 59,483
$43,800 Less rent from subleases 782 2,082 429 Net rent expense
$66,855
$57,401
$43,37 i At December 31, 1981 minimum rentals under noncancellable leases are as follows (in thousands):
Operating Capitalized Less Net Leases Leases Subleases Rentals 1982.
$43,037
$ 4,623
$ 571
$47,089 32 1983.
38,816 4,519 346 42,989 1984.
37,562 4,366 311 41,617 1985.
34,472 4,212 271 38,413 1986.
27,627 4,211 205 31,633 Thereafter.
330,686 57,991 187 388,490 Total.
$ 512,200 79,922
$ 1,891
$590.231 Less imputed interest.
35,570 Present value of minimum rental payments 44,352 Less current portion 1,753 term capitalized lease Long igations.
obl
$42,599 State regulatory agencies have treated the $5,200,000, in 1981,1980 and 1979, respec-Electric operation's leases as operating leases for rively. Management believes that the majority of rate-making purposes even though some other-such increase would have been reflected in addi-wise meet the accounting criteria for capital tional revenues if capitalization were accepted leases. In accordance with generally accepted for ratemaking purposes and that operating in-accounting principles as applied to regulated come, therefore, would have been substantially utilities, the WyoJak jointly-leased plant and unchanged. Future minimum rental payments other capitalizable leases have not been pertaining to these leases total approximately capitalized, but rather the lease payments are $ 399,700,000 with minimum rentals ap-charged to operating expenses. Had these leases proximating $18,650,000 annually through been capitalized, December 31,1981 assets and 2003.
liabilities would nave increased by approxi-At December 31,1981 and 1980 the Coal mately $172,900,000 and $195,500,000, re-mining operation held property under capital spectively, and December 31, 1980 assets and leases totaling $47,900,000 and $45,300,000, liabilities would have increased approximately respectively. These amounts are recorded as
$ 178,400,000 and $ 196,000,000, respectively. property, plant and equipment, together with The effect of such capitalization on operating $6,200,000 and $4,300,000, respectively, of expenses before income taxes would have been related accumulated depreciation and amortiza-an increase of $5,000,000, $4,800,000 and tion.
P 9
l 9. INCOMETAXES Provisions for income taxes for ihe three years ended December 31, 1981 were less than the amounts computed by applying the statutory federal incorne tax rate to income befi>re tax. The reasons for these differen&s are as follows (in thousands):
1981 1980 1979 Computed income tax based on statutory l'ederal inoime tax rate.
$93,731
$71,872
$5 5,262 Reduction in tax resulting from:
Interest (apitalized during construction.
23,308 16,916 17,913 lixtess of tax over book depreciation (flow-through basis).
8,6 12 8,517 9,9 17 AJ valorem, payroll and sales taxes apitalized 1,089 1,217 1,112 Insestment tax c redit 11,188 6,291 5,958 Depletion.
7,092 6,402 5,515 I:ffet t ofitems taxed as opical gains 55 2,168 740 l'.limination of amounts provided in prmr years 3,180 1,7 12 3,110 Other items capitaliecd and miscellaneous differentes 478 2,311 2,676
~3 3 l'ederal tax reduttions 58,332 15,930 17.601 l'ederal income rax - net.
35,102 28,912 7,661 State income tax.
9,301 1,313 3,825
'Ibral income tax cxpense
$ 11,703
$33,255
$ 11,.186 In(ome tax expense (onsists of the following (in th >usands):
_1981 1980 1979
'Lxes currently payable (refundable):
1ederal
$ 6,776
$ 10,974
$ (825)
State.
5,613 1,825 2,152 Deferred ino>me taxes:
Depret iat ion iht ferent es.
13,106 12,710 8,073 Mine developnient (osts.
9,198 9,778 1,097 Other.
2,612 (1,250) 1,060 Investment tax (redit ad ustments - net 7,098 (812)
(3,07I) i
'Ibral inc ome tax expense
$11,703
$ 3 3,255
$11,486 Unused investment tax credits at December 41,1981, aggregated approximately
$ 58,868,000, which may be carried forward and will not expire before 1994.
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- 10. EMPLOYEES' RETIREMENT PLANS The Companies have several pension plans annual contributions to the plans equal to the covering substantially all of their employees, amounts accrued for pension cost.
Pension cost f or 1981.1980 and 1979 was The fullowing rable sets forth, as ofjanuary 1,
$16,789,000, $ 11,3 i8,000 and $9,811,000, the date of the most recent actuarial study for respectisely, which includes the amortization of that year, certain information regarding actua-prior service costs over 30 years. Of these rial present values, using weighted average as-amounts, $12,531,000 in 1981, $7,588,000 in sumed rates of return of 7-89 in 1981 and 1980 and $6,151,000 in 1979 were charged to 5-6,59 in 1980, and plan net assets (in operating expenses and the balance was charged thousands):
to construction acmunts. The Companies make 1981_
1980 Actuarial Present Value of Auumulateil Plan lienefits:
Vested
$ 121,839
$ 110,105 Nons ested 10,811 8,313 Ltal
$ 132,680
$ 11H A 18 Net Assets Available for fiendits
$102,431
$ 81 A83
\\s
11, INDUSTRY SEGMENTS The Companies operate principally in three
(!omestic inclustry segments: Electric, Tele-communications and Coal mining. Ltal reve-nue by segment indudes both sales to unab filiateti(ustomers ant! intersegment sales of coal at (ontrat t prices.
li-le-Consoli-lilimina-comrnuni-Coal dated tions Elec tric cations mining Thousands of Dollars
%ar ended Detember 31,198I Res enues - Unaffiliated customers $ 1,288,5 5 3
$721,861
$ 279,450
$287,242
- Affiliated customers
$(115,191) 115,191 Ltal.
$ 1,288,5 5 3 $(115,191) $721,861
$279,450
$ 102.436 income f rom operations
$ 361,887
$200,909
$ 98,618
$ 62,330 Interest expense and other 119,618 income taxes 11,703 Net in(ome
$ 167,536
=
'35 Depreoarion
$ 129,511
$ 69,277
$ 35,632
$ 24,405 Capital ex penditures S 415.077
$280,368
$ 83,716 3 50,993 war ended Duember 31,1980 Res enues - Unat61iated t ustomers $ 975,433
$589,191
$231,404
$ 151,838
- Affiliateil(ustomers
$(106,120) 106,420
'Ibral.
$ 975.133 $( 106,420) $ 589,191
$231,401
$261,258 Inusme from operations
$ 268,363
$ 148,85 3
$ 70,428
$ 49,082 Interest expense and other 101,212 in w m ctaxes 33.255 Net income
$_1H,866 Deprn iation
$ 117.381
$ 65,046
$ 36,018
$ 16,317 Capital expenthtures
$_:178,(17
$272,011
$ 7_2 A39
$ 13 3,867 Year ended De(ember 31,1979 Res enues - Unatiiliated (ustomers $ 77(i,901
$ 197,748
$ 142,360
$ 136,793
- Affiliated (ustomers
$ (73,008) 73,008 Ltal.
- -.7.__6,901
.$ (73_,008)
$ 197,748
_$ 142,360
$209,801 7
inmme from operations
$ 208,225
$114,631
$ 11,207
$ 19,387 Interest expense and other 8i,228 income tases i1,186 Net income l_12_,511 Deprniation 90,117
$ 57,108
$ 20,2 31
$ 13,078 Capital expent';tu res
$ 334,217
$211,i19
$ 58,729
$ 61,069
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Identifiable assets are those used in the Com-p >nies' operations in each segment. Corporate assets are principally cash, temporary cash in-vestments and other investments or special funds.
1981 1980 1979 I let tric operation.
$2,818,768
$2,543,33 4
$2,309,619 Telecommunications operation.
636,785 572,826 519,198 Coal mining operation.
51.',031 405,090 267,425 Coy. orate assets.
49,236 37,821 32,545
$ 1,016,820
$ 3,5 59,071
$ 3,128,787
- 12. QUARTERI'llNFORMATION (Unaudited)
Summariecd quarterly financial data for 1981 and 1980 are as follows:
Income Earnings Earnings from Net on Common Per Coma.on 46 Quarter Ended Revenues Operations income Stoc k Share Thousands of Dollars Alarth 31,198i
$ 310,911
$ 108,636
$48,196
$ 10,933
$0.89 June 30,19H1 303,632 81,639 36,187 28,528 0.60 September 30,198i.
325,358 70,251 30,809 23,151 0.16 December 31,1981 318,622 101,358 52,311 41,56-1 0.88 Afarth 31,1980.
212,704 75,310 33,724 27,931 0.68 June 30,1980 238,856 67,814 29,161 23,380 0.55 September 30, 1980.
230,07-1 50,248 23,981 18,201 OAO De(ember 31,1980 263,799 71,961 46,991 41,211 0.90 A significant portion of the business of the Companies is of a seasonal nature. Net income for the quarter ended December 31,1980 in-cluded an approximate gain of $10,000,000 on sale of securities.
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- 13. EFFECT OF ClIANGING PRICES (Unmlitect)
The auompanying supplementary informa-fura tional dass depreciation rates to the respec-rion has been prepared in auordance with the tive dass indexed plant amounts.
guidelines provided in Statement No. 33 of the Fuel inventories, the cost of fuel used in gen-Financial Auounting Standartis lloard (SFAS eration, and purchased p>wer have not been No. 33). Such statement was issued in an at-restated from their historical cost in nominal tempt to provide information concerning the dollars. Regulation limits the recovery of fuel dfeus of both general in0ation and changes in costs through the basic rate schedules to auual spedfic prites on operations and financial posi.
(osts. For this reason fuel inventories are effec-tion. The methods used to calculate the effe t of rively monetary assets.
changing prices involve numerous assumpHons, As prescribed in Statement No. 33, income approximations and -stimates; thus the resub-taxes were not adjusted.
ing information shouhl be viewed as a highly Under the raremaking prescribed by the regu-subjeuive ntimate of the approximate effea of latory commissions to which the utility com-in0ation.
panies are subject, only the historical cost of Constant dollar amounts represent historical plant is recoverah!e in revenues as depreciation.
(mis stated in terms of dollars of equal purchas-Therefore, the excess of the cost of plant stated ing power, as measured by the Consumer Price in terms of constant dollars or current cost over Index for all Urban Consumers (CPI-U). Cur-the historical cost of plant is not presently recov-rent wst amounts redea the changes in specific crable in rates as depreciation, and is reDected as prices of property, plant and equipment from a redouion to net recoverable cost. While the date of autuisition to the present, and differ raremaking process gives no recognition to the 37 from wnstant dollar amounts to the exte nt that current cmt of replacing property, plant, and specific prites have increased more or less equipment, based on past praaites, the utility rapidly than the rate of general in0ation.
companies believe they will be allowed to earn on the increawd cost of their net investment Comt mt Dolbr when replacement of facih, ties actually occurs.
.I.he historical cost of property, plant and i
equipnient was adjusted to average 1981 dollars During a period ofin0ation, holders of mone-by application of the CPI-U as of the date the
'd'F d"5 ('Id I
- 5 '" 'IV' " b *'d 5"* ) '"II" d I"" "I C""dI P"f'hasing Imwer while holders E
plant was plated in servite or, for long duration projeus, CPI-U trended wnstruaion balances.
of monnary H bihn.es (obligations to pay a fixed sum) experience a gain. % further reDe t the Cunent Cmt economics of rate regulation, the reduction of The currcnt tost of propecty, plant and net property, plant and equipment to net remv-equ pment was iletermined by indexing with crable wst should be offset by the gain from the the apphcable llandy-Whitman index, or for dedine in purchasing power of net amounts eleuric generating plant other than hydro, by owed. The gain from the dedine in purchasing estimating on the basis of an engineering study power of net amounts owed is primarily attrib-of (urrent wst per megawatt of replacing the utable to the substantial amount of debt and present mix of nudear, wal, oil and gas turbine preferred stock (treated as debt) which has been generating plant. Unmined coal reserves have used to finance property, plant and equipment.
been reucued at wrrent wst by use of a specific Since the depredation on plant is limited to the industry index.
rewvery of historical msts, the utility com-The provismn fi>r depreciation on the con-panies do not have the op;mrtunity to realize a stant dollar and wrrent ont methods were de-hading gain on debt and is limited to recovery termmed by applymg the Companies' auual only of the embedded wst of debt capital.
]
.==
STATEhlENT OF NET INCOhiE ADJUSTED FOR CHANGING PRICES FOR THE YEAR ENDED DECEh1BER 31,1981 Constant Dollar. Current Cost.
Historical Average 1981 Average 1981 Cost Dollars Dollars Thousands of Dollars Revenues
$ 1,288.5 53
$ 1,288,5 5 3
$ 1,288,55 3 Expenses:
Operation, maintenance and administrative and general.
681,318 681,318 681,348 Depreciation and amortization.
129,31-1 227,270 293,717 Taxes, other than income taxes 116,001 116,001 116,001 Income taxes.
I1,703 41,703 11,703 Interest expense and other 119,618 119.6-18 119,618 1,121,017 1,218.973 1,285.120 Net income (excluding reduction to net rewverable cost).
$ 167,53(3 69,580 3,133 Increase in spetific prices hurrent cost) of property, plant and equipment held J iring the year
$ 799,530 W
Redut t mn to net remverable cosi
$ (188,338)
(251,107)
Effect of inc rease in general prite level (667,313)
Extess of increase in general price level m er increase in specific prices (after reduction to net recoverable cost).
(121,890)
Gain from decline in punhasing gmwer of net amounts owed.
201,151 203,451 Net.
15,113 81,561 At December 31, 1981, current cost of property, plant and equipment, net of accumulated depreciation was $8,339,956,000 which encompasses utility property, plant and equipment current cost of $7,898,710,000 with related historical cost or net cost recoverable through depreciation of $3,531,818,000, including the reduction to net recoverable cost, the net loss for 1981 on a constant dollar basis would have been $118,758,000.
I I
- HVE-YEAR COMPARISON OF SELECTED SUPPL _EMENTARY FINANCIAL.
DATA ADJUSTEDIOR EFFECTS OF CilANGING PRICES Year Ended De ember 31 1981 1980 1979 1978 1977 ilistorkal (mt information atllusted for g(nerJl inflatmn Revenues
$ 1,288,5 H $ 1,076,612
$973.119
$800,836
$687,821 Net int ome' 69,580 12,903 6i,271 Earnings per < ommon share
- 0.81 0.10 1.07 Reduction to net rec overable (mt.
188,338 281,091 310,412 Net auers at > car-enti, at net ruourable tost 1,058,320 1,019,168 958,069 Curre nt (ost information Net income' 3,133 (2,221) 8,221 Earnings (loss) per (ommon share *
(0. 5 5)
(0.63)
(0.=13) 39 Reduc tion to net recoverable a mt.
251,107 806,007 809,-l19 Eness of increase in general prk e leul over int rease in spuifk praes (after reduttion to net rewterable w st) 121,890 238,967 251,550 Net aut ts at > car-end, at net rnmerable tmt 1,058,320 1,019,468 958,069 General inf ormation Purt basing power gain on net monetary liabilities owed.
203,151 283,330 261,550 Cash disidends dulared per mmmon share 2.06 2.23 2.42 2.62 2.69 Marker prhe per common sharc ar ycar-end.
17.30 22.27 21.33 26.52 31.10 As trage wnsumer prke index 272.-l 2 16.8 217.4 195.4 181.5
'Enluihng reduction to net recmcrable cost.
The following information is presented in accordance w ich the guidelines provided in Statement No. 39 of the Financial Accounting Standards lloard.
CO AL OPE R ATIONS SUPPLEMENTARY OPER ATING STATISTICS Year Ended Daember 31 1981 1980 Pros en and probable reserses at thember 31 1,516,000,000 tons 1,169,000,000 tons Amonnt mmed,
23,202,179 tons 17,132,700 tons Reserses purt haseJ (sohl).
66,000,000 tons Aserage market prue
$15. 76 per ton
$ 1 n.38 per con
OPINION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Th the Directors and StocGolfers of Pacific Potter & Lignt Company:
We have examined the consolidated balance sheets and statements of consolidated capitalization of Pacific Power & Light Company and subsidiaries as of December 31,1981 and 1980 and the related statements of consolidated income and retained earnings and of consolidated source and use of financial resources for each of the three years in the period ended December 31,1981. 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 pnxedures as we considered necessary in the circumstances.
As discussed in Note 2, the Company has invested in Unit 5 of Washington Public Power Supply System nuclear plants and in the proposed Pebble Springs Nuclear Project in Oregon. Construction of Unit 5 was terminated by the Supply System on January 22,1982, and construction of the Pebble Springs Nuclear Project was deferred, subject to the availability of a radioactive waste disposal facility and Oregon voter approval of a site certificate as required by a 1980 ballot measure approved by Oregon voters. The Company intends to seek rate relief to recover its investment in Unit 5 and, if abandoned, its investment in the Pebble Springs Nuclear Project. The ultimate outcome of rate relief efforts and, accordingly, the recoverability ofinvestments in these projects cannot presently be determined, and no allowance for any loss that may result has been made in the financial statements.
In our opinion, subject to the effects on the consolidated financial statements ofsuch adjustments, if 40 any, as might have been required had the outcome of the uncertainties referred to in the preceding paragraph been known, the above-mentioned consolidated financial statements present fairly the financial position of the Companies at December 31,1981 and 1980 and the results of their operations and the changes in their financial position for each of the three years in the period ended December 31, 1981, in conformity with generally accepted accounting principles applied on a consistent basis.
M M /ov M e
PortLmd, Oregum Febnury 12,1982 COMMON STOCK MARKET PRICE, DIVIDEND INFORMATION AND RELATED SECURITY HOLDER MATTERS The Company's Common Stock ($3.25 par value) is listed on the New York and Pacific Stock exchanges. The symbol on the exchange ticker tape is "PPW". The following table shows the high and low sales prices of the Common Stock during the respective periods indicated as reported in T/x trld/StnttAmul for the composite tape:
1931 1980 Quarter:
Isr 2nd 3rd 4th 1st 2nd 3rd 4th High 21'a 21%
21%
19 %
18's 19 %
21 22 %
Low 19 %
18 %
16 %
16 16 %
16 4 18 %
18 %
Quarterly cash dividends were paid at the rate of 51 cents per share for the four quarters of 1981 and 1980. The Company expects to continue to pay dividends 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 Companies' 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 average 4Si to $ff annually.
As of December 31,1981, there were 122,023 holders of record of the Company's Com mon Stock.
)lRECTORS AND OFRCERS OARD OF DIRECTORS OFFICERS-Corporate Policy Group ll ARLES M. BINKI EY F<uelunks, Atala DON C. I RISBEE Cluurnun of the Ibid anf uknr. Alaka Raeruuu frw.
Clacf Esco u:ne otfact DAVID E ICLENDER Esau ee \\ic Prcsdon-
- . M. BIsilOP, JR. Porrtud ( hee,n Ek'rnc O c7dno"'
- }
P Lesdent. Podlann L&n MJh, 1anuf utuw of w&n ya ntsu car G. ELDON DRENNAN Picklent-k)N C. IRl5BI E P<ntlnd (hcgon GERARD K. DRUMMOND Presdcnr NERCO. Inc.
Aurnun,,f the lLurd and Clucf Escouae Uguer L,111i ORD l' 11 ANSEN 1.6 kwn, W$onung A. M.GLEASON Ch urnunanlClucfEscaanc()gwcr-n.cn.nrnurucanoru L uuher anl for ma W v.nu ng Goi crn< w and U. S. Sennor l
ROBERT E LANZ \\ke Presdent lTANI EY K. II ATilAWAY Clumennc, W9ening intner. Ilarluu as, Slecht an! Kurk Arn nncu at lau WARNE NUNN Corporare Scaer.ny ornwr G< nanor of Wynnungaid Secraan of the Inrerow OFFICERS - Electric Operations
?R. BETTY E. IIA %TilORNE C,,+alln, Orce,n G. ELDON DRENNAN Presdent fcan ol Nh,,l of florne Econonucs
- cern krare 1.'na crsay DAVID E BOLENDER, Execurac \\ke Presdnr ONRAl)E 1.UN10REN Kalnl it Monrast, W M E 4 W N.H. &nn L Nsa.km amoicr, Four scawns Mon n inn ard W Glaac BRUCE G. BEAUDOIN \\ke Presdent tenantdc Cornluni Marcl. stores. restainants C. P DAVENPORT \\ke Pwsdent OUIS B. l'ERRY P.ntlnd ( begon M. WAYNE GOIN \\ie Predient odcnr. Stanlad inuaance C.nnluny ELWOOD B. IIEDBERG \\ke Presulent ite. hc.drh ani.a o.fcnr unuran<c g
.ENNETil W. SEli P.nrLud ( hcg""
ROBERT B. LISBAKKEN \\ ice Presdent
, e ner Cluur nun of dw lt i tr.l. F rcrglidnav Corj= nation huk manufaaunng Cil ARLES 0. PARKER \\ ice Presdcnr
^
1 ' GENE 1.. Silll 1.DS Lkoru. W alungnai icu. lent..slucLh ikig & Pnnnna ComIuns FREDRIC D. REED \\ke Preskru b '. SMITIi \\ke Presd nr L W SWLET Com ihn t hegon E. E Amnun of the itud Whron Bank IOWARD Vol i UM Pontud ( hee.n Aurnun of de IturJ. Tctrrmus. Inc. \\tanufacture.nti RW W MCm W Pwsknr untenngof ckannut Jnptn nd nw<ourenwnr c ituPnwnr JACK T. STILES \\ke Presdent LOY A. YOUNG Idu.a. Neu WL KARLllOFIMANN Tre aurcy f.nuong I Arn o n - It nce Thompwn Instaurc
- J AMES T. WATSON Contn&r
- grnill Uruicnas
- uh nwmic of dw B.ud of Ihwaan saw on at ka'r one OFFICERS -
rdw N n,annomnurrca Ewaaac Anla.Pasoral.
Telecommunications Orerations nu,wc. unuuung an! Res.anh.
A. M. GLEASON Ch.urnun anlCluef Excaan c Oficer
)lRECTORS Eh1ERITUS CI:
, E. ROBINSON Prc3denr aniClucf
(' 's Cl MMINS McJf.nJ. (hrgon ClI ARLES E. PFTERSON Sennw \\ke Presknr DilN DlERDORI F Por Lad (hre,n VERN K. DUNilAM Scuor \\ke Preslou
. IlOWARD L ANE Pmrlud ( hegon JAMES !! BEST \\ke Pwdicnr Al'L E MURl'l(Y Piertnd ( bce,n EDWARD R. GEIGER \\ke Presknr IENRY 11. l'RINGl E MedforI. Orce n JollN E. McGILL \\ke Prewicnr i E 5ANDO/ Asimu. (hee n ggg gggg,gp 10N All SilLRWOOD \\UJLi Wldit Llungton C. LEE WAREllAM \\ ice Presknr BRI AN M. WlRKK ALA \\ke Prcwicnr and Scocran JENERAL COUNSEL
. tot t, RIVES, BOL EY,1-RASER AND WYSE OFFICERS-
[d),*.M'""'
Coal and Niineral Operations, NERCO,Inc.
_ _ _ _. - - - - - - - GERARD K. DRUMMOND Pwstknr GARTil A. DUELL Souor \\Le Prcudent ANDREW J. FRANKLIN Senne lice Prewicnr CllARLESC. ADAMS \\ke Prcwknr ROBERTJ. DEURLOO \\ie Prcwicnr l
ELLSTORTli P. INGRAll AM \\ke Preaknr I
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