ML20055F889

Portland General Corp 1989 Annual Rept

ML20055F889
Person / Time
Site:	Trojan File:Portland General Electric icon.png
Issue date:	12/31/1989
From:	Harrison K PORTLAND GENERAL CORP.
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ML20055F881	List: ML20055F879 ML20055F887 ML20055F889 ML20055F890
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NUDOCS 9007190328
Download: ML20055F889 (46)

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lauhrn:Indmtrin 00MMLinnt. INDt'sTitt Al.

CONSTittrnos Oregon's leadirig marnifacturing

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• t witn-D43 industries are forest pr(xluets, y;,

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d argest i!Kltistry. Oregon leads the IM-i Li 7p 140 hyf '.,

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nation in lumber and soft.

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tion. PGE's w me,o.,on emm uta.. a oa.om, r

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Auric"hure ranks second firms. including Tektronit intel, M

in t le state. PG s Wrvice Epwn, NEC, Sequent Computer l

(df chh h area inellides Illuell of the S)3tems, Wacker Siltronic and l

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$JMg rich farinland of the Wilhunette ; alley MentM Graphies. Oregon is a wudd l

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@dh The valley's farmers alal ranchers leader in parallel processing technol-produce an alullidant liarvest, inellid-ogy. Some 50,000 people work in the ing grass seedh tree fruits alKl11utk liigin teelillology husiness in the state.

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Wliileimahsts predict some trv, after forest products and agri.

slowing o[tlle natiollal economy,

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culture. Portland-a* <ttractions Oregon, particularly PGE's senice l

4 iuelude the (',olumb.a ( orge National area, is expected to outper[orill the

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[,.S,. economy through 1990. llegm, nal

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2' Mt. Ilood, site of year-round skiing estate, a highly educated work force, and recreation.

competitive energy prieck reasolla-

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CorporatePrale Portland General Corp. (NYSE-PGN) is an and from electrie utilities across the nation.

energy hokling company with businesses ofter-PGN operations are subject to federal regulation.

ing regulated and commercial encryy products IburrLink Corp Formed in 19S9, Powerl. ink and sen ices. Almost ell revenues currently will develop and operate electric power plants come from its principal subsidiart Portland providing energy to utilities and industrial con-General Electric Cn (PGE), an electrie utility.

smners outside of Oregon. Powerl ink projects Other husinesses provide long term electricity will compete with other producers of electric sales and sen ices to utilities, independent energy in unregulated markets nationwide, power development and equipment leasing.

Ibrrlarul Geru rul Financial Sernces, Inc.

Ibrtlatul Generall;lectric Co This 100 year-PGFS buvs and leases large capital equipment.

Old electric utility senes about 566,000 retail PGFS's leasing activity is driven by opportuni-electricity customers in an area about the size of ties to manage Portland General's tax liabilities.

the states of Delaware and Rhode Island com-The Company's leasing portlblio at 19S9 year-hined,in the economic, poptdation and cultund end was $450 million, measured in original heart of Oregon. PGE is the 41st largest investor-asset cost.

owned electric utility in the United States in Colmnhia Willamette lhelo;nnent Cn terms of electricity sales. The Company also Portland General will make no further share-sells energy to wholesale electricity customers-holder investment in real estate development, primarily Calilbrnia utilities-through its owner-and plans to sell its operating properties and ship of the largest independent share of the companies, in whole or in part (including the Pacific Intertie transmis-Cornerstone Columbia sion line.

Ikvelopment Cu partner-Ibrtlarul Gencrul ship), over the next three Iachange, Inc. Formed in years. Real estate will be 1985, PGN buts and sells I

presented as a discontin-electricity, transmission fi ued operation in this and ii and related senices to ll Ill future flnancial reports.

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PGEServiceArea andEconom A,

1 Utilities are highly dependent on

• Population: up 1.8 percent in the 12

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thelocaleconomies they sene. Addi-months endedJuh 1,1989-thelargest i%q k.

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NI utility's industrial, commercial and PGE's seven-county senice area grew residential customers profoundly 1.9 percent.

affect revenues and costs of senice.

• Residential building permits: up 57 f

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economy of PGE's senice area has

= Oregon housing starts: up 44 percent.

-s outperformed the nation's,with the w

uildingpermits for commercial a

greatest employment gains coming andindustrialconstruction: up g

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tourism. More Oregonians are work-

" Oregon farm and jgg g (!!

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%jy state unemployment rate dropped to almost 15 percent

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its h> west level in 20 years-an annual over 19S8 to arecord $939 V

f average of 5.4 percent.

million-the fifth consecutive year of g4ggy e

Most measurements of Oregon's recordincome.

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economic growth were up signifi-a Tourism;had a more than $2 billion 4

cantly over 1988,itself a pace-setting impact on Oregon.

year.

8 International trade: The Port of Port-ECONOMIC PEltFOlBIANCE TOP EMPl.OYMENI GHOMTil STATES um Ame Annnalcrnwth lutegenenn tons exported and ranks third in tons of totalexports andimports.

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• Report card: Portland was selected by Forbes magazine (Oct 23,1989)as ao one of the 10 best cities for business 4

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such factors as labor force, business E

costs, economic base, transportation 0

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% increase 1989 1988 (Decrease)

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Operating revenues........................... $ 796,910,000

$ 756,314,000 5.4 Net operating income........................ $ 161,877,000

$ 191,711,000 (15.6)

Income (loss) from eentinuing operations........... $

(9,900,000)

$ 104,568,000 (109.5)

Net income (loss)............................ $ - (26,933,000)

$ 97,309,000 (127.7)

Earnings (loss) per average comersn shze from contin.ang gerations.......,............

$(.21)

$2.27 (109.3)

' Earnings (106) per average common share,..........

$(.58)

$2.11 (127.5)

Dividends b clared per common share............

$1.96

$1.96 Cash flow dd idend coverage ratio (times)..........

2.18 2.65 (17.7)

Book value per enmon share....

$16.52

$19.06 (13.3)

Ileturn on average wmmon equity................

(3.1)%

11.1%

(127.9)

Net utility plant................,.............. $ 1,777,996,000

$1,763,618,000

.8 Utility construction expenditures..................$ 119,089,000

$ 84,155,000 41.5 3

Cash flow provided by opervtions................. $ 197,346,000

$_ 239,527,000 -

(17.6)

Internally generated cash as a percentage i

of ntility construction..........

90 %

177 %

(49.2)

Pre-tax times interest earned (including AFDC)......

1.37 2.56 (46.5)

Pre tax times interest ea ned (excluding AFDC)....,.

1,32 2.52 (47.6)

Kilowatt hours sohl(in thousands) to retail customers.........................

14,901,000 14,210,000 1.9 Iletail customers served at year.end........

565,812 552,154 2.5

= Averagekilowatt.hoursusedper i

residentialcustomer 12,568 12,343 l.S i

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C, from selling aportion ofour Board-er 0.lare10..

S) m a Ceei Pienteea P a i - ie.as y

well as the accelerated amortization of '

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, YourCompanyhasenteredits

. We establishe'l a reserve of $12 mil-certain inwestment tax credits 4 third j second century in business by facing lion,'or 26 cents per share, to cover issue came aboutin hiay1989,when p

• uptoreality:Wecannotaddressthe estimated potentiallosses associated the PUCreverseditselfandordered t

future while hanging on to the past, with discontinuingour real-estate PCE to return interim revenues cover-Jt>

Tobecomewhat we might be,we operations.

ing the fixed and operating costs of the first must sacrifice some ofwhat we a Wereducedthequartedycommon Colstrip 4 CoalPlant.

are/lb become an energyservices dividend to30 cents per share.

Allthreeissuesare thesubjectofan company,we must discontinue trying Theimmediate effect ofthe reserves ongoinglegalchallenge byPGE.Both

'f tobe a realestate company.To meet was to reduce 1989 earnings by$2.18 PGE and the PUChaveput forth pro-

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fidure customer demands and pursue per share. As a result, Portland posals for an out of court settlement, l

J growth opportunities,we cannot pay GeneralCorp.(PGC) incurred aloss but have to datebeen unable to'

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Lout 100 percent ofour earningsin in 1989 of$27 million,or58 cents a achieve a mutually satisfactory result.

' dividends,Tobuildacons" stive sWon revenuesof$797 million We continue topursue a settlement-regulatory emironment, we must first This compres with 19SS earnings and anticipate that one or more of l

• w setasidetheregulatoryconfrontations of$2.11 per share on revenues of theseissues could be settled out of of he past.We cannot continue to talk t

$756 million, e urtduringthefirsthalfof1990.

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. about competition, deregulation and Twoof the rateissues date to 1987.

The reserveallows us to put the f

an uncertain regulatory environment, Theyconcern treatment of the profit financial uncertainty of these events Q. ~. ithout acknovledging that utility behind us,pending the outcome of the returns are not as stable as they IgSI{R^

litigation or a settlement, hicamvhile, R

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once were, DECIARED PER SilARE an umveforward with positive The decisions weinformedyou saw initiatives toexpand ourbusiness.

y ofin February 1990 reflect this reality.

The reserves for unresolved rate l

, At that time, s2.25 matters recognize the reduced equity s

on which PCE can earn.Simplyput,

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c.Weset aside a reserve of$89 mil-T E[cl.

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fH: $-

you can't earn as much from $9.00in lion,or $1.92 per share,to cover all

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G unresolvedissues should Portland 4

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the bank as you can from $10.00.

JGeneral Electric (PC E) fail in its legal H

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' The real estate reserve reflects the q

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challenges of three contested oregon estimatedioss offuture disposalof Public UtilityCommission(PUC) s3 se 8;

ss real estate properties.

rate decisions.

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PORTI AND CENERA!. CORPORATION

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Our Companycould not remain "Ourfocus on energy is not eies, and the early results are positive.

competitive or finance its growth with pnylominant;it is exclusioc. It is Before shutting downin March 1990 the dividend at its presious level. Con-ourfontsfor runc azul trillhehr for refueling, Tndan ran without inter-sequently, your Board reset the divi.

thefutun'."

ruption for 167 dap, a new plant record.

dend at a sustainable h vel.While Second, Portland Generalisindeed painful in the short term, the dividend at Tndan during 1989 resulted in addi-taking action on many fronts todenne reduction was absolutely essential to tional operating and maiatenance its strategy for enhancing its value to Ms oM nnon1wnwe an set your Company on a course for shareholders.

non 1indind mts to puntase power in last year's annual report,I said future growth.

and to produce power from less eco-that Portland Generalwould remain Setting a Councfor Gnneth nomical plants. Further, fines from the predom.mantly an energy senices

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This action will allow us to restore U.S. Nuclear Regulatory Connaission company. lbday,I will amend that.

Our equity base and, thus, our ability (NRC) underscored problemsin the Our focus on energy is not predomi-to pursue along term strategy for management of the plant, nant; it is exclusive. It is our focus for growth in shareholder value.The new Progress has been made.Tndan has now and willhe for the future.Our dividendlevelis sustainable,with a new management team.They are decision to withdraw from unrelated growth potential.

instituting a detailed improvement businesses such as real estate is part when I was appointed Chairman plan to enhance the quality of manage-of that strategy.

g and Chief Executive 00 leer 15 months ment, increase plant output and 5

ago,I set several priorities:

further guarantee safety. The plan has Excelling in the Corelhesiness h_

e To i nsure the operating e.seellence been well received by regulatory agen-A piimary thrust of our strategic and safety of the Tndan Nuclear Plant.

directimiis to excelin managing our OPERATING REVENUES &

• *E * *

• e To establish along-term strategie

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excellence in operating our nuclear p_

directm.n focused on huilding share-holder value.

plant. It means continuing to improve the utilization of all of our assets. It nm e To ensure your Company had the means investing in the infrastructure strategy successfully.

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executive management team and the goo of the utility. It means further Onancial strength to carry out that strengthening ou r customer orienta-tion.These are things we are doing Significant steps have been taken on

$2m already; they are discussed more fully each of these priorities in the past year.

P later in this report.

so First, we are determined to make

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w the Trojan Nuclear Plant a more valu-e o mt=dn-focus. We reduced the 1990 hudget by s

able asset for PGE. Prolonged outages

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$M milliom and we base initiatives in I

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place to furtl$er reduce costs during -

' "Eur txw management team has Dick Reiten, Portland General =

the ) tar. Since PCE's last general price both thecommitment arultalent to President, joined usinJanuary 1989 increasein 1984,we har kept prices.

achicm the goals tw hamset."

to oversee our commercial businesses.

i competitivebyabsorbingover Mr. Reiten successfully ran a company t

$50 million in inflation related cost Changesin theelectric powerbusi-n the highly competitive and volatile increases by finding offsetting redue-ness confinn that unregulated power forest products industry, lie went on

,, - tions.Whilecompetitiveprices development is a siable new industry.

tolead Oregon's Economic Develop-remain animportant objective,we Thisis an arena where we have exper-ment Department during the turna-

. expect to haveinitiated a rate case tise,as we havebuilt and currently round of the Oregon economy.

requestinghigher restnues by the operate almost everyform ofgenera-Kay Stepp,new PGE President and -

time)uu receive this report.

tion including hydro, gas, oil, coal and ChiefOperating Ollicer,has demon-

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c, nuclear. We base experience in acquir-strated great success at achiesing

. PunuingNew Encryg Markets ing transmission and delivering power organ!:ational change and destloping Last yearwe discussed the forma-to diversemarkets.We have been management talent d iringher 11

tion of Portland General Exchange, leaders in negotiating power contracts years at PCE.

Inc.(PGX)to meet the needs ofnew, and,ofcourse,we understand what CD Ifohbs, Senior Vice President

-i unregulated markets forwholesale utilities need, and ChiefFinancialOllicer,has 13

' electric power. PGX was the first busi-A numberofutility-based compa-years experiencein both the regu.

l ness ofits kind. Althoughit has yet nies already has e entered the indepen' lated andcommercialoperations of.

-l toproduce measurable benefits for dent powerindustry. We know this.

Portland General.Ile complements i

shareholders, the skills and talents of willbe a competitive market.Iiut we the team both with his strong Anancial itspeople have been demonstratedin also see an opportunity to create value background and as an insightful stra-several innovative power transactions.

for Pedand General.To speed our tegic thinker.

.Weexpect PGX to makea significant entryinto this rapidlyemerging Leonard Girard, Senior Vice Presi-

. contribution to income no later than market,our eadyfocus willbe toform dent and GeneralCounsel, brings to

.1991.The marketis there andwe are

- a partnership with an operating us two important assets. In addition to confident PGX willemerge a winner.

company,or to acquire one.

being an exceptionally capable attor-Ialsosaid Portland General Third, your new management team -

ney,he had more than 20 years'suc-intended to provide newgenerating has both the commitment and talent cessful experience in utility regulation capacityand earnings through the to achieve the gaals wehave set.This beforejoining us.

development of unregulated indepen-team brings a complenentary,yet dent power resources as this industry diverse, set of skills to deal with both Earninga Premium grows. Since then,we have formed our the regulated marketplace of PCE and The 1970s sawan environmentin

.PowerLink subsidiaryto do that.

the emerging markets for PGX and which the elTects ofunprecedented PowerLink, inflationlargelyovershadowed the

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Vnm left. Ismard A Girard. 5enkw We Prraient atul Gewral Gmnsd, CD ilobbs. 5enn r Vice fresklent aml l

Chef Ananml Oguvr, )len L llarruon. Chairman aml Chief Executwe Of$rrly Stepy Prraient aml Chief portland Generalhas the financial Opratmg Ogu er. PGE: orulluchani G lietta Prrsalent. Portlaml General Grp and management strength to meet qualities of management. Many com-a new capacity for taking action and PGE's growth, as well as to prudently panies prospered by raising prices will result in premiums being placed pursue opportunities in the emerging rather than output. In the 1980s, cor-on profitable, well managed businesses.

markets for independent power, porate restructuring created a similar This management team intends to cogeneration, wholesale power mar-phenomenon, as the use ofIlnancial earn that premium lbr you.

keting and energy services.

leverage (debt) frequently brought With the financial, operating and I am convinced that we have placed I

about near-term results that tempo-management building actions we have Portland Generalon a firm flnancial rarily obscured the elTect of manage-taken, I believe the prospects for Port-footing and have positioned it well for ment decisions.

land General are good. The dividend is the future.

I believe the 1990s willsee renewed at a sustainable level We have narrowed Sincerely, focus on the importance of fundamen-the Ibeus of our business. PGE has

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tal management. This will be particu-sumeient energy to meet its expected gygg larly true in the electrie utility industry.

load growth. The Companfs relation-Icen L Harrison Chainnan and Chief Executive Omcer Our changmg environment will require ship with its regulators is improving.

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c.he fuel suppliers, PGE has held the i

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customers for the past five years. PCE PGE: Costs ofIset growth

= outages totalingabout Ave months reside"ti I""St "m using 1,000 and a fine from the U.S. Nuclear Regula.

kilwatt-hours (kwh) of electricity per PGE enjog d tremendous customer month pay $46.21, while nationally, the i

and sales growthin 1989. Ilut a pro-average cost of 1,000 kwh of electricity ti ges longed outage ofits frojan Nuclear Plant a month is $79.24.

increased costs for maintenance and at the Trojan plant.

Wholesale sales of electricity to other replacement power. The utility offset

= Employees,powerplantsandthe di a d L8 mmr 1988.

some of those costs, however, by secur.

mterconnected transmission system dew 9

i ing low-price. short-term fuel contracts met the challenge of an arctic storm m I

Ms red imtms d' to run its combustion-turbine plants to February 1989 that procueed a record

$92.3 million compared with $83.2 supply base load needs. Through it all, peak load of 3,519,000 kilowatts (kw).

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I PCE continued to adapt to the demands fg ggg,g,g,3 pp of doing business in a changing Ik'sporuling to A,ctellealities lletail sales grew due to e robust g, ;g i

eiwironment.

economy, a e >ld wmter and increased g

g g, D,ps arulDotens ofl959 marketing enorts. Revenues increased l

lenge PGE to do business successfully m.

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o Retail electricity sales increased 4.9 4 percent, to $691.S million, lagging h 1990 Wor steps the Companyis I

percent over 198S, making 1989 one of sales because of a 18 percent decrease dd:

I the strongest years of the decade for in the average price of electricitv to j

• h,aru, g public trust hv demonstrat-m

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energy sales growth.

13Cl customers.

0 12,271 new customers were connected-la order to keep the price of elec.

ing enllent management, operat.

ion a 2.2 percent juinp and thelargest tricity competitive with gos ernment-and safety of Trojan.

subsidized public utility districts and increase in 10 years.

g Polfri.A N D GEN Eh A L M )H PORATIO\\

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"Otir irinskna is to carra ptJdic corig.

The Gompany's current energv derice as a tYdued stip;dk'r dpmfit-resene is an aver ge 100,000 kw, about the capacity of PGE's Bethel Comhus-

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alle cruglj pmdtuts and sercices" tion Turhine Plant. At current growai

-KAY STEPP, PitESIDEAT, PGE rates, PGE forecasts its existing energ'-

resources can meet customers' needs a Finding operating advantages that at least through 1992.

make more productive use of power SOURCES OF El.ECTRIC ENERGY-PGE I dDIS-I (1959 Net Sptem lead) o Developing a compact with the i

Nndear 239 Oregon PUC that alhm PGE to earn gg gq a fair return on competitive energ)

'hfef "

g 4 u,ngtion products and energy elhetenev Turbine 99

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investments, O

Purd 20 9 o Working to serve customers better with higher-quality, higher-margm.

.M PGE Ilydro 149 2

products in competitise retail markets.

. d)e Purchases 189 Potver Stqqdyhirimate o Containing the rising costs of meetin'I new demand for senice hy snend%; ins Nuclear, coal, hydro, and gas and oil PGE milun b/<rmt timd run uith ill non esselltial art'as.

geneTale power makes the electricity

['[^"["g""[,";'"g"'"*"-"""9 a litking an active role in imprcving the i"'

"N quality oflife in the cumuwaty through rom lone mnn pum ases and short-The availability of surplus, economi-economic developnicot, social responsi tenn huyuthen they make econonne cal power at times in the Northwest hility and environmentat cewankhip sense. During 1959, PGE power plants creates unique supply alternatis es far gener ted 10 billion kwh of energs, a PGE. While PGE owns adequate gener-rop 12 percent increase mer 19W ating capacity to meet its customers' nnins of ortmTiov,

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rz needs,it displaces some of that capacity Already,PGEisidentifying and when lower cost energy is available on developing supply-and demand-side the wholesale market.

j options to manage expected load growt h.

PCE's ownership share of coal-

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These options will be a part of PGE's burning plants reflects an investment in proposed 20 year Least-Cost Plan, relatively clean, environmentally sound which will be submitted for approval to the PUC by July 1990. Least cost plan-facilities. The Colstrip and Boardman l

l plants burn clean, low sulfur coal, while ning considers external costs, including the Centralia, Wash., plant, of which I

environmental factors and energy-PGE owns 2 % percent, uses coalwith h}l elliciency options, in addition to the a higher sulfur content. The impact on direct costs of building and operating those plants of proposed amendments to new power plants.

thefederalClean Air Act,nowpending With the PUC's support,least cost before Congress,is uncertain.

planning could help broaden PGE's investment opportunities by allowing CUltilENT itESElWE NIAltGIN g;j g

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newly ree gnized as resources, such as

as n + m m.s

29 9 dn [fMPdf/-Ef]lck nt Future energy efTbiency. This year, the Com-p ny is introducing new and experimen-gonauos Planning new resources to meet tal progrann and demonstration projects projected load growth requires knowl-I

'"""" N 'I""'F^I"""* *P"'

I edge halanced with judgment. Building in ude a new Maing pmgnun fmImu.-

too much, too soon, can plunge a utilitv nmustmners that eventually could rah ua,y.at<

into idle capacity and incomplete rate rnmn to mat 6" relief. I)oing li'..le or nothing, the utility kw [)ower1)lant and a market test of a ImIpulmea,uf n,<r-call}oseinomenttim and fall behind o grney ends thu ifrar

"""'"I" " '" h "" t" f"' h " * """""'-

ettstomer demand.

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--m "We hare clearly stat 4Yl that our ciency upgrades at Company owned during an extended annual refueling and futwr is in enl1Q]HlKl trlall1/

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withlarge customers to ger ate their cialperformance during 1989. Under pnxlucts antisem.

ces.

own pMynm' y,and building current regulatoi y practice, PCE cannot

-KENE nasalsox.cuanunX small, economical p, plants as a recover excess power costs incurred AXD c nEFf:XEClTiUE OTHCf;R backup for when some of the Northwest's when an extended maintenance outage normally large surplus oflow-cost hydro or other factors cause actual power costs Additionally, the Company sponsored poweris not available.

to exceed those forecast in rate proceed-an energy-enleiency symposium in The Company does not currently ings.This arrangement benefits PGE November, bringing together national plan to acquire or build large, central-when actual costs are lower than those experts and Oregon energy decision-station power plants. To do so PCE will used to set prices.

makers to foster understanding and

!1rst need a clear demonstration that Tmjan produced more than 5.5 billion promote public discussion.

the regulatory climate for this type of kwh ofelectricityin 1989. After the On the supply side, PCE has more high cost,long-lead-timeinvestment outage, it ran for a plant record 167 con-resource alternatives than those avail-hasimpmved.

secutive dap of continuous operation.

ablein the 1970s, PCE's most recent PCE will relicense its eight hydro its 1989 capacity factor of 5S percent period of resource development. PGE pmjects during the next 17 years.The compared with 65 percent in 1988.

in 1990 plans to pursuelong term first project license to expire will be the Capacity factor measures the efliciency energy purchases and toimpmve the 108,000-k,v Pelton Dam in 2001. Devel-of a plant, comparing actual pmduction eOleienes dits Oak Grove hydro project.

op ng a hydro relicensing strategy is a as a percentage of full-time, > var-round The Company alsoislocking tolower major priority for 1990.

production at 100 percent power.

fuel costs to be able to hetter use its In October, the Nuclear Regulatory Impmeine.\\. lesibwunr i

Cbd NE'me Beaser combined cycle and Ibardman uc coal plants.

Tmjan provides 25 to 26 percent of mitment to management accountability Other resources under consideration PCE's net load requirements. liigher for safety and operations " deficient" and in the next 20 years include further effi-replacement-power costs and unex-fined the Company $280,000 for failing pected maintenance costs incurred I

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f to have an emergency cooling system in annualratings from the NRCand the to increase at least 2 percent annually proper operating condition.

industry while achiesing its production over the next five years.

PCE paid theline and corrected the and cost targets.

PCE helps customers get more value immediate pmblem.The Company also and comfort fmm their residential "E

has been makinglonger-term changes energy use. Marketing programs help to ensure such problems do not recur.

The Company's marketing and eco-consumers repair or replace their elec-Actions taken include:

nomic development elTorts are paying tric water heaters, enjoy comfort and

= Performing adesign basis verification ff. PGE's 1989 electricalload grew energy efliciencyin existing or new program, which double-checks actual 19 percent over 1988, andis expected homes, and deter crime and enhance plant systems, equipment and material no-tsniAnKrMRENDS L mpany s g 1is toincrease customer against the originalplans.

39 9 ig39 1999 a Making n, nagement changes, satisfaction, and thus retain and expand g

g M

existing markets. Company smven r

enhancing management development

- m -a a m and perf9rmance measurement.

show customer satisfaction with PGE gg g gggg,,,.1933 Improsing worker training. In 1989, y p

, [,

A professional sales force connects PGE completed a new training building commercial and industrial customers and simulator at the plant site. The simu-w th PCE's arrav of resources.These lator is a replica of the plant's control

[

$l h

include electrical technologies such room, at which operators will train to as lighting, power quality and energy handle normal and emergency operating management; energy analyses; eco-procedures.

g nomic development smices;and the

EL.

a Moving all nuclear engineering and ig,mi i,3gg 6;my,a l PGE Energy Resource Center.This support stalTfrom Portland headquar-I educational center features a complete mn vrwa vnyaa%An venwnu an enwna E

ters to a neW k)llkldkIIg at Ib8' p alii site g

g.g gg

.W m PI%'ariW W teckluica i)rary, etnonstration f()()ms The Company's goal for 1990 is to

""* "" "*"M" "' """'d Pm for testing energy-related products and acllieve sustainable iniprovements in its a sta((o[ energy specialists.

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y A9 ample ofits work with busi-p full-senice prmider to its customers.

ers, PGE is imprming elec-During 1989,imestment in PGES ness es N

totaled $500,000. Revenues from PGES trical sen.ce to Precision Castparts to help the company expand its Portland-l j

were $200,000in 1989,with aloss of area operations. A leading supplier of y

$820,000,which was expected due to components for the aerospace industry, l

start-up costs. PGES expects to show Precision has enlarged existing facilities l l, [ll and one of PCE'slargest customers, a modest profitin 1990,with income I

growth over the next five years.

and has begun work on two new plants.

g b"""EO*' I'"Ni"E 'E"N I

A 1989 Company survey found 52 percent of our business customers gave Power costs comprise almost halfof senice fmm PCE's sales representalises

)

the cost of prmiding electrical senice, a perfect score.

including costs for fuel, plus maintaining in 1989, PCEinitiated credit and and operating plants and transmission collection pmgrams that helped achieve lines. By lowering pmduction costs and a lower-than-industry average of collee-raising the pmductivity ofits power

{

tion write-offs,0.36 percent of resenues.

plants and transmission lines, PCE can New initiatives inchided a late-payment business lines: inspection of electrical compete more effectively in local and 1

charge and simplified collections equipment for large business customet s, regional markets.

procedures.

power disturbance consulting sen ices

= A major capital program aims at and product sales, and distribution and increasing the reliability, productivity,

&parvlinein Nete Markets sales of selected energy related products.

efficiency and overalllife of PGE's Formedin 1985, Portland General PGES' operating costs are outside PGE's power plants. This includes a program Energy Systems (PG ES) olTers compett-regulated rates; profits go to shareholders.

to raise the capacity factor of Trojan.

tive energy products and sen ices outside PGES willhelp the utility meet

. PGE is working to settle a dispute the scope of regulated service to PGE m etall corporate earnings growth objee-with a coal supplier and secure an customers. Currently, PGES otters three tives and solidify PGE as the preferred l

l nmnummmms u

l

i 9

4 economic coal supply to operate the poles, wires and equipment-the infra-530,000 kw Boardman Coal Plant.

structure of our distribution system. The The plant is not economic at its current wurk is spurred by continuing economic fuelcosts unless replacement power growth, demana for highedtvls of ser-l vice to businesses with large computer becomes more expensive.

e Portland Generalplans to construct a l

l or electronic equipment loads, the need gas pipeline for its 534,000-kw Beas er for more capacity to serve peak loads, Combustion Turbine Plant, providing and rcplacing old, worn-out equipment.

direct access to alternative pipeline gas The plan includes a seven-year project and needed pipeline capacity to the that began in 1988 to inspect, treat, repair plant.This willenable the Company

]

or replace PGE's 250,000 wood poles.

to operate Beaver as a base-load plant.

= PGEisinvesting$22.5millionto

. Trojan plant emplovees saved $4 million increaseits ownership share of the Pacific Intertie transmission line from by repairing and reusing damaged nuclear fuel, which once was considered waste.

725,000 kw to 875.000 kw. Completion of a third alternating current line is a (:orporate productivity goals in the scheduled for 1993 and willgive PGE 1989 Our Teamworks incentive program n

n n #

ice gre ter access to the wholesale power for controlling operating and mainte, market in California.

nance expenses were surpassed by all Our return on investment depends on Portland Generaldivisions in 19S9.

maintaining safe, efficient and reliable Cooperating with OurItegidaton

= On Dec. 21,1989, PGE's 900 Nuclear assets to generate and deliver energv.

Effective communication with I,GE,,s Division employees completed two Sem 1m j r PGEcapitalprograms regulators gains understanding and million hours without alost time acci-

[ocus on just t}lat.

dent. Trojan's personnel safety record

• A five year plan started in 19S9 calls g

g places it at the top for large industrial for investing more than $200 milhon in plants in Oregon.

u remen c.m h u i olu>uh mm

a

.i 3

"We an' nurking to rnaintain a Makinga Better Place to Lim

• PGE biologists have initiated projects to increase populations of the bull trout nuthlc trgulatan/ cneimninent, one Portland Generalworks toimprove and bmwn tmut,and tolearn more the quality oflifein its community that tvill pmride the opportunit0',,pr bout the spawning and migration of thmugh its eHorts in economic develop-n'aSonahh, n'tunlS En thi,futulT.

w;ld ga} mon, ment, social issues and environmental

-I.EONARDClRARD SEXl0R ViCE stewardship

= To keep Oregon's best scholars at PRESIDENT AND GENERAL. cot 'NSEl' home, PGE annually awards scholar-

= The Company assists state andlocal ships to students who plan to study PCE's Chairman and senior ofTicers g vernment toattract and retam. diversi-take part in public meetings with the fled, stable and environmentally respon-three public utility commissioners sible employers. PGE added more than

= M rethan 20percentofPortland 1,800 new businesses toits customer General employees actively volunteer to emer developments at the utility.

Utilityand PUC stafTalso maintain base during 1989.

in commumty projects.

regular contact.

= PGE's Pmject Kids was created in Outlodfor1990 The Company actively works to 1989 to help fund programs that help Contm.ued strong economie conditions resolve customer complaintslodged prevent child abuse and negiect.The an n nsfied marMngeHorts in with,he PUC. Reflecting a six year Company donated an $80,000 challenge p mt to another year ofload growth.

declinmg trend,194 complaints were grant to the Oregon Children'sTrust PGE s 1990 focus will be in seven areas:

recordi d by the PUC in 19S9, compared Fund and a $20,000 challenge grant me ndn nu& r peradonsand with 27 *in 19SS and 641 in 1983.This to support the volunteer efforts of safety; using assets more productis elv; is thel vest number of complaints on PGE, employees.

recort for PCE in any one year.

= Customers and employees con-taining the generation, transmission The PUC has appmved new business tributed more than $215,000,and the and distribution sptem; promoting lines, such as PGES and a direct mail Company contributed $40,000, to help energy elliciency; contiolling costs; and sersice, that expand competitive ser-l pay heatingbills for needy people tailoring marketing appmaches to cus-vices to retail customers and allow share-l thmugh Project fielp ajoint pmgram tomer needs.

holders to earn additional returns.

of P(;[ and the Salvation Army.

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Portland GeneralSubsidiaries on the west Coast, sales can be arranged with existmgindependent power Portland Generaloperates subsidi.

in any area of the United States where developers, purchase equity positions there are customers, power sources and in projects under development andin aries in wholesale power marketing, available transmission capacity.

commercial operation, and develop its independent power production (a recent start-up) and tax-advantaged leasing.

1959 Pohnnance. Revenues for 1989 own projects. PowerLink will serve a wue $8.5 mihion on sales of195.4 national market.

The Company's focus for the future is uilli n kwh. The source of revenues was Afarket. More than 50 percent of new exclusively in energy and energy-related p wer contracts signed in 1988 with two electric capacity over the next decade businesses.

California cities, and short-term sales of will likely be generated by independent Portland Generalinchange,Inc.was fonnedin 1988 to but electricity and p wer to another Northwest utility.

power producers. An estimated 750 sep-transmission from diiTerent producers or NetI ss f r the year was $214,000, arate operating projects. representin c a rless than one-half cent per share, net addition of 36.1 million kw of non-owners and packagelong term power compared with a loss of $1.8 million in utility generated power, are projected to sales to utilities. The company acquires its power supplies through contract; it 1988.Totalequityinvestedin PGXis be addedbetween 1990 and 1996. By

$4 million.

the end of the century, it's estimated up owns no generation, transmission or distribution facilities. PGX focuses on Outhdfor 1990. PGXis pursuing a to 12 percent of U.S. electric capacity number fsalesin Californiaandother will be provided by independent power longer term and higher risk sales and is subject to regulation by the Federal western states Formal sales proposals producers, versus about 4 percent today.

fTering to sell over 400.000 kw are now 1989 Perhnnance Start-up operations Energy Regulatory Conunission.

Afarket. PGX operatesm the whole-atstanding and under consideration.

dominated the year. No project transac-Pmmunk Cory was formed in late tions were planned or recorded.

sale electricity market, serving the 1959 to build, own and operate power Outlookfor 1990. PowerLink will be emerging alternative for utilities to pur.

chase rather than produce electricity, plants outside the regulated utility busi-operational by first quarter 1990 and This market is estimated to exceed 30 ness.To establish apresencein the will pursue project opportunities during million kw by the year 2000.While the emergingindependent power market.

the year, both on its own and in partner-Company is concentrating early efforts PowuLink will formjoint ventures

~

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3*f "Our commcirialenergtj Total investment in the leasing company imsinesses are key to maintaining l

l is $142 million.

Outlookfor 1994 PGFS willcontinue Portlanti G,eneral,s posttion as afull-to seek m. vestment opportunities that sert' ice dectric em7Elj company.

g l meet established credit and asset guide-As tlic dectric energyliasiness l

l lines. Due to the mlatility ofleasing

/>ccomes man'(frirgulate(l an(l l

markets, it is not possible to anticipate how much new husiness willbe hooked.

competitive, tcc tvillpmtect our l

Columbia nillamette Development Co.

market position, knotde(lge anil ll Portland Generalin 1989 curtailed any intrStment //y />ccoming an aggn's-l further shareholder investment in reai sitY antlsuccessfulcompetitor estate.The Companyis committed to n

manage and enhance current operating

-HICHARD G lEITfX PRf; SIDE \\T projects and sell its real estate assets, PollTIAYD GE\\'l;RAl.CollP recovering the investment during the

' "t ship with established independent CWDC posted a $5 millionlossin power dewlopers. The majoritv of Powerlink project activity is expected inpr ducingine me,withitsprimary 19S9,or 11 cents per common share, to be in the East and Southeast U.S.,

focus to help manage the tax position compared with a loss of $7.3 million, or with selected Northwest opportunities f the Company through asset-based 16 cents per share,in 1988. Portland investments.

GeneraPs net assets of discontinued also considered.

No nwann. PGFS added $133 real estate operations as of Dec. 31,1989 Portland General Financial Sereice.t inc. huvs and leases commercial inilhon in miginal atuipuu'nt value to were $51.3 million.

airliners, container ships, railcars and its portfolio in 19S9, on an investment Portland Generalwill present real otherlarge capital equipment and of $30 million. The company earned estate as a disantinued operation in this liteilities. PCFS has been successful

$3 inilhon, or 7 wnts pn sharn in 1989.

and Iuture financial reports.

EF\\ IFM (4 OPFI \\TU M 13

j POKrLANDGENF.hALC(CPORATION AND5t$SIDMhlES m

1 1N W ll \\1. NTIMTIC "Ourftutdamental objectice is to arate silan!-

hdder cclue. With thefinancial nsiructtning in 1989, toc are udl wsitional to sup;wrt gniteth, I

both in argulated and corninercial enagy busi tesses, and prvlkle a Curn'nt n'tunt to Otn'shan]Ioldas."

-CD HOBBS, SENIOR VICE PRESIDEAT AND CIHEFFINANCIAI. OFFICER Portland General Corp. is dedicated to increasing shareholder value through price appreciation ofits common stock while pnwiding stable and growing dividend income to its shareholders. Ou r financial strategy includes:

j Building a solid financial base to support opportunities for growth in earnings, di)idends and cash flow, The Company seeks a strong financial base and a balance between earnings retention and dividends. This policy will support development ofgrowth opportunities in energy production and sales. In addition to stock per.

formance, we recognize the importance of stable and growing dividends as a component of total return to share-holders. Our objective is to maintain a sustain' ble dividend, with dividend increases commensurate with gmwth a

in base earnings power of the Company's assets and common equity investment. We have established a target for dividend payuut of 60 to 70 percent of after-tax earnings. Based upon our mix of regulated and unregulated busi-ness lines, their growth oppe iunities and risks, we believe this dividend level is prudent. The Company seeks to achieve returns consistent with the underlying risk ofinvestment.

Making optimum use of deh.

The Company will continue to use debt to enhance shareholder returns as long as the financial risk remains -

reasonable. We believe financial risk has increased in the regulated energy businesses throughout the 1980s.

Our debt target has commensurately decreased to its cunent level of 46 to 48 percent, Aligning the economic interests of management and shareholders.

Portland General's executive incentive compensation plan delivers awards based on earning the maximum achievable return on shareholders' equity, improved cash flows and productivity.

Achieving an effective investor communications program.

Ibrtland General's policy is to provide complete and accurate information to shareholders and potential inves-tors on an equal and timely basis. Our program helps existing and future shareholders evaluate the fundamental value of the Company and builds investor confidence.

16

PORTLAND CENEML CORPORATION AND sVBSIDIARIES

\\1 \\\\ \\(.ITIl N I % I)ls( l WH >\\ \\\\l) \\\\ \\l nis(11 l'l\\ \\\\( 'l \\1 ( ()\\l)lTH )\\ \\\\l) HI Al I B ()) ()l'l H \\Tk )\\s

- RESULTS OF OPERATIONS ful, in addition, the PUC's legal counsel has stated that any In 1989, Portland General sustained a net loss of $27 e ud ruling famable to PCE will be appealed to the highest million, or $.58 per common share as compared to net c urt possible. Any court decision is likely to preside the

' income of $97 million; or $2.11 per share in 1988. The loss

1. "ith additional opportunities to review these issues, resulted from the establishment of resen es totaling $101 PCE recorded an $89 million resen'e and charged 1989 million for pending rate matters and the discontinuance of ine me, $1.92 per share, in recognition that this combination realestate operations.

f f ctors makes it increasingly uncertain how much, if any, of these amounts PGE may ultimately recover. PCE has fully RATE AIATTERS-Portland General Electric Ca (PCE),

reserved for an unfasurable outcome on these issues.

Portland General's principal subsidiary, is seekingjudicial Following February 20,1990 oral argument in this litiga-review ofcertain matters related to its 1987 rate case. The tion, PUC counsel adsised PGE that the PUC intends to litigation focuses on the Oregon Public Utility Commission's schedule a public meeting in April to determine whether or (PUC) decisions on accelerated amortization of certain not the PUC should consider settling certain of the issues. -

1 investment tax credits (l'IC), the allocation of the gain from While PGE continues to pursue an out of-court settlement, the sale of the Boardman plant / Pacific Northwest Intertie t also plans to continue the litigation. Ilowever, PGE does and 19S61987 interim relief for Colstrip 4 Coal Plant.

not expect a finaljudicial decision any time soon. In the event Litigation was initiated in late 1987 following the PUC's of an out of-court settlement or a final decision and subse-decision on accelerated amortization ofcertain ITC and the quent ratemaking action, PCE will recognize related income, allocation of the gain from the sale of Boardman /Intertie-as appropriate. See Note 11, Hate hlatters, for further details.

The litigation was put on hold while the PUC reconsidered

^'

A -Amarend 1989, Portland General dis-its order on interim relieffor Colstrip 4. In hlay 1989, the nunu swa sa perad ns,w en pdma%

PUC reversed its previous order on interim relief and ordered P**" "(

) "" "

a reftmd. PCE added the interim reliefdecision to the presi-U E "

(

ously filed litigation. Since that time, attempts to reach an acceptahle settlement of these issues have been unsuccess-(CCDC). The orderly disposal of real-estate assets is expected to be completed by the end of 1992. A reserve of BOOKYALUE& MARKETVALUE (iwcommon she uof Dec 31)

OPERATIONS-Net income for 19S9, excluding the 83L reserves, wuuld have been $74 million, or $1.60 per share.

m The lower earnings resulted from increased costs associated with the outages at the Trojan Nuclear Plant (Trojan). Trojan s20J was out ofsenice 32 dap longer in 1989 when compared g

g with 1988. With Trojan unavailable during the third quarter, i j PGE increased its purchases of replacement power and kj relied more on its own higher-cost, fossil fuel power plants, 1

slo

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which resulted in approximately $23 million in incremental 7

.ss j

l costs. Excess power costs were not collected from cupomers gy h }

[

because PGE has operated without a power cost adjustment 55 86 87

-88 S9 prosision in its prices since late 19S7. In addition, nuclear D ad Udr operating and maintenance costs were $19 million higher E hief Udr as compared tolast year.

17

T roarinocnteconeounomosteunmns

• Prior Year-Net income for 19S8 was $97 million, or $2.11_

with a 4 % rise. Even though energy sales were up, revenues

- per share compared to $78 million, or $1.69 per share in from retail sales decreased 5 % for the 19S8 period as a result 1987 (before the eIIect of a change in account:ng principle).

oflower prices. The PUC issued an order granting PGE's improved earnings over 1987 resulted from an increase in request for a $33 million reduction in annual revenue

. retail energy sales, greater wholesale revenues and a decline requirements. The reduction went into efTect in the fourth in utility tax expense, liigher earnings were achieved despite quarter of1987. Partially offsetting the retail revenue decline -

lower retail energy prices. Ilesults for 1987 were negatively was a $17 million upss,ing in PGE's wholesale revenues from affected by an after tax charge of $12 million to adjust the sales to California utilities.

' realizable ulue of certain real-estate properties held by CCDC.

M RmMRKEMN

' n 1987, PCE implemented modified accounting guide-i

[ 5' lines for valuing the WNP 3 Settlement Exchange Agree-120 -

ment. The cumulative elTeet of a change in accounting -

- 3.3 "5~

. principle was recorded in the first quarter and resulted in an u

after tax credit to income of $35 million. Earnings,inchiding the efTect of this accounting adjustment were $113 million,

- sa or $2.45 per share for 19S7, 103 -

g 1""

'7 Operating Revenues i

i i

i M

S5 56 87 86 89 Revenues from PGE's retail customers increased $27 Nti-i e Fordaulcel

' rwn C

million over 19SS due to a 5% rise in energy consumption.

L"""

apcty,,g7,5,p,,3,3 i

liigher kilowatt-hour PGESALES GRoMTl!

soum Nil-Ic-ra thca n cA samtwasumn

_ (kwh)saleswerepn, man.ly paonsow L

attributed toacontinuing 20.000 Operating Expenses i

strongeconomyin th PCE power costs in 19S9 rose 16% over 198S due to -

region and theextremely-15 m

~

increased power costs associated with Trojan outages and l

. cold weather experienced,

[b.

a 5% rise in load requirements. During the outages, PCE i

during February 19S9.

,A its combus-l-

Sales tocommercialand PCEPowER cosu industrialcustomers tion turb.me plants, Year to Dateby Quater Oldhons).

3.000 which produced 1.4 -

$250 increased 6% over 1988. In -

=0 I

and dis-addition,residentialenergy placed moreexpensive 3200 a wide,de a iweloued

. purchased power.

?

1 sales rose 4% over 1988 e conmercanaured primarilyfrom aninflux of Il gherpurchased h

customers into PCE's territory. llesidential customers prer costs,despite gioo j

increased byover l2,000in 1989, a3% declinein kwh g'

PGE's wholesale revenues were up $9 million as com-purchased,resulted

$50 E

pared to 19S8, which was attributable to a 9 % increase in the from an 11% increase i

average priceofpower.

so in prim 1" ** 2df 3d*' **

Prior Year-Kilowatt hour sales ofelectricity to PCE retail increasedprices were customers in 1988 rose 5% over 1987 due to economic attributed to reduced 8#

U" growth in the region and relatively colder weather condi-availability of hydro power in the region. Power production tions. Resdential energy sales led the way with an increase expenses in 1988 include $19 million related to the sublease of 7 %, while comniercial and industrial customers followed of15% ofI3oardman.This sublease expired at year-end 1988.

IS -

POlm.AND GEh f ML CORPOMilON AND $l'B5f DM RIES Maintenance and repairs increased $18 million in 1989 average purchase price in 1988. Prices rose in 1988 as a result as compared to 19SS. The increase was due to nuclear main-ofreduced availability oflow-cost hydro power in the region.

tenance on steam generators and a pressure reliefvalve The decrease in administrative and other expenses for duringTrojan outages.

19SS compared to 1987 was largely attributed to PGE's Nuclear operating and maintenance expenses have been

$4 million reduction in research 'and development increasing on the average of 27% annually over the past contributions.

three years. PGE anticipates the trend of rising costs to con.

Taxes other than income taxes rose 12 % for 1988 over

tinue. Unplanned Trojan outages, should they occur in the 1987 due to a higher Oregon property tax rate in 1988 and future, generally result in an increase in nu; lear costs. These a $5 million property tax refund from the State of Montana outages cannot be predicted and related costs cannot be esti-in 1987.

mated. See Note 5, Trojan Nuclear Plant, for further details.

Administratiw and other expenses rose 9 % in 1989 oser IncomeTaxes 1988 due to increases in health and medical benefits and Income tax expense for 19S9 increased 55 % over 1988 start up costs related to commercial businesses.

due to the completed amortization of PGE's excess deferred The decline in depreciation and amortization expenses for tax credits by year-end 1988. Excess tax credits created by

' 19S9 compared with 1988 was primarily due to PCE having the 19S6 Tax Reform Act were passed on to PCE's customers completed (in January 1989)its five year amortization of throughlower prices.

abandoned nuclear costs related to the Skagit project.

1 Prior Year-Income tax expense decreased 40% in 1988 as Prior Year-Power costs remained relatively flat in 1988 compared to 1987 Lower tax rates resulted from the Tax compared to 1987 even though energyload requirements Reform Act of1986. The 1988 decrease also included $6 0

were up 4 %. This uns due to a decline in the average cost million in non recurring adjustments relating to outstanding -

per kwh delivered. PCE uns able to utilize a better economic tax issues, amended tax returns and prior >rar deferred mix of energy as a result ofimproved availability ofinternal tax balances.

generation in 19S8. The combined output from Trojan and Colstrip plant Units 3 and 4 climbed 55% over 1987.The OtherIncome and Deductions j

improvement in PGE's thermal generation reduced the need

1. E"

• I "8 * *'

'E' l

to purchase higher cost power, which resulted in a 15 % drop l

to 1989 income for rate issues currently being litigated.

m total purchased power costs and wheeling expenses. The I

l Items include the accelerated amortization of certain l'IC decline, however, uns partially ofIset by a 13 % increase in the PRETANINTERESTCOVERACE

' CASII Fl.0W DIVIDEND COVERAGE RATIO (ria4 RATIO (rimeg 5.0 3 00 LO j.

p 2.25 b; h

i i hli Ulm 85 86 87 89 E Intmst Campe(hwhuks MDC)

D CashIntmstCamw(bchuks AFDC) 19

PoRrLANDCr.NrMLcGef0MT10N AND $UBSIDIARlr$

" allocation of the gain froin the sale of Boardman /Intertie interest and disidends, investment income includes capital and 1986-1987 interim relief for Colstrip 4. PGE has fully losses of $7 million in 1958 and $5 million in 1987.

reserved for an unfavorable outcome on these issues. See Note 11, Rate Matters, in Notes to the Financial Statements, Discontinued Operations for furtherdetails.

At year-end 1989, Ibrtland General discontinued its '-

Prior Year-The decrease in interest expense for 1988 was real estate operations, which consist primarily of CWDC and due primarily to the redemption of First Mortgage Bonds a 50% share of CCDC. A $12 million reserve was established and a reductionin short-term debt.

In December 1989 to reflect the estimated loss on future dis-The 1988 decrease in the preferred dividend require-posal of real estate properties. Real estate operating losses ment uns due to the redemption of high cost preferred stock, incurred during 1989 totaled $5 million.

This decrease was partially oliset by the issuance of S.10 %

Prior Year-Results for 19SS were negatively afTected by an Cumulative Preferred Stock in May 19SS.

after tax charge of $12 million to adjust the realizable value of -

Lower investment income was attributed to the liquidation certain real-estate properties held by CCDC.

of marketable securities in 198S and 1987, in addition to CAPITALRESOURCES AND LIQUIDITY Portland General, a diversified holding company, requires dend will reduce the amount of dividends it will require from cash principally to pay dividends to its common stockholders.

PGE. Any dividends declared by Portland General may be It depends on the dividend paying ability ofits two wholly funded through dividends from PGE and Holdings,liquida-owned subsidiaries, PGE and Portland General lloldings, tion of marketable securities, or other sources of cash, Inc. (lloldings) to pnnide it with most ofits cash needs.

including borrowings.

Additional cash may be obtained fmm borrowings. Generally, Portland General has a stock repurchase program under 1

financing and investing activities ofits subsidiaries are per-which it may, at its option, repurchase up to 3.3 million shares formed at the subsidiaries.

ofcommon stock.

o At its February 1990 meeting, Portland Generars' Board R

of Directors declared a quarterly common stock dividend of -

Utility

$.30 per share, or an indicated annual level of $1.20 per share..

PCE's 1990 capital requirement is estimated at $190 mil-This is a 39% reduction from the previous quarterly declara-1 on, ofwhich $151 million is for the construction program -

tion of $.49 per share. Portland General reduced the divi-and the balance for mandatory sinking fund ' ayments and p

. dend following the establishment of reserves totaling $101 debt maturities. The 1991 capital requirement is estimated at -

million for pending rate matters and the discontinuance of

$250 million (including $100 million ofdebt maturities) and realestate operations.

1992is estimated at $160 million.

As a result of the rate matter reserve, PGE's common Capital requirements have risen in the past two years stock equity was reduced by $89 million. Ibrtland General as a result ofincreased construction expenditures for Tr jan reduced the common dividend to a level it believed to be sus-and an increasing customer base. Internally generated cash

' tainable based on its expectations of what PGE can reason-flows are expected to meet substantially all of PGE's capital ably earn with less equity and PGE's need to retain earnings requirements in 1990. Internallygenerated cash flows to replenish common equity and finance future utility p,nvided 74 % ofcapital requirements in 1989 and substan-gmwth.The reduction in Portland General's common divi-tially all ofcapital requirements in 1988 and 19S7.

I i

20

. -.. - ~ ~ ~.

PORTIAND er.NI:IMt. CORPORATION AND 5t'lWIDl4Ril.S '

,+

At its February 1990 meeting, PCE's Board of Directors '

arrangements from domestic and foreign banks and com-1 omitted the April 1990 quarterly common stock dividend mercial paper facilities under which it may borrow up to it would have paid to Portland General, thereby increasing

$150 million.

common equity and internally generated cash flow. PGE PCE cash requirements may be affected by the future

- declared its quarterly dividend on its shares ofpreferred stock.

outcome of uncertainties, including the Boardman coal

' The issuance of additional preferred stock and first mort-supply contract dispute and the Internal Revenue Service gage bonds requires PGE to meet earnings coverage and (IRS) audit of PGE's 1985 Washington Public Power Supply

[

L security provisions set forth in the Articles ofincorporation System Unit 3 (WNP 3) abandonment loss deduction.

and the Indenture securing its first mortgage bonds. As of Should the eventual outcome of these uncertainties result

. Dec. 31,1989, PGE is unable to issue additional preferred in additional cash requirements, PGE expects internally.

stock, but could issue $500 million of additional first mort-generated cash flows or external borrowings or both to be gage bonds.

sufilcient to satisfy such obligations.

In January 1990, hioody's investors Senice, Inc, lowered its rating on PCE's llrst mortgage bonds, debentures and CommercialOperations unsecured debt, and preferred stock to A3, Haal, and baal, Capital requirement for leasing activities and energy-respectively. Among the reasons cited by hloody's for their related businesses is estimated at $64 million including debt action was continued weak financial performance at PGE, maturities of $10 million in 1990. Financing for non PCE u

' the uncertainty regarding pending rate matter issues, and energy related businesses such as wholesale electric power

- financial risks associated with Trojan operations. Standard &

marketing, cogeneration and independent power production Poor's and Duff & Phelps continui to rate PGE's securities is generally expected to be pmject specific. 0ther liquidity at A, A,and A-fortherespectivesecurities, and financing needs will be met fmm internal sources In February 1990, PGE redeemed the remaining $27 mil'

( neluding real-estate sales) and thmugh borrowing arrange-lion of13 % % First hlortgage Bonds due Feh 1,2000 with ments at IIoldings and each subsidiary. At Dec. 31,1989, short termborrowings.

Iloid ngs had a committed line ofcredit and bormwing Cash lidw from operations is PGE's primary source of arrangements under which it may borrow up to $50 million.

liquidity. External borrowings imm banks and the issuance p

ofcommercial paper are used as a normal part ofday to-day E

operations to meet interim cash needs. At Dec. 31,1989, PGE had various committed lines oferedit and borrowing CASilCAPITAtllEQUllll31EX13 CAPITALIZATION phlhom)

(ihiliom)

$175

$2.1

$2.1

$1.9

$19

$1 115 9'

og 41 5

$125

- 4" MS

$100 n

n M

.n1

-CS

.m

.cq

_g,

$50

$25

~

E Conwvm Equity

$0 D PnferredStwA 85 66 87 M

69 E hm @ 4lklit D forticulGeneralCorporathm amlSulnkliaries

. E h>rtlamiGeneralElectricCompany 21 o

o

POffr1ANDCENEMLCCONMTION AND $UBilDialES -'

\\1 \\\\ \\(.i All.NTS N'l \\l L \\ll \\ l ( W hiTh )\\$1Bil.lD Portland General Cornoration's management is responsible for the preparation and presentation of the consoli-dated financial statements in this report. hlanagement is also responsible for the integrity and objectisity of the j

statements. Generally accepted accounting principles have been used to prepare the statements, and in certain I

cases informed estimates have been used that are based on the best judgment of management.

hianagement has established, and maintains, a system ofinternal accounting controls. The controls proside.

reasonable assurance that assets are safeguarded, transactions receive appropriate authorization, and financial records are reliable. Accounting controls are supported by written policies and procedures, an operations plan-1 ning and budget process designed to achieve corporate objectives, and internal audits of operating activities.

Portland General's Board of Directors includes an Audit Committee composed entirely ofoutside directors.

l

. It resiews with management, internal auditors and independent auditors the adequacy ofinternal controls, j

financial reporting and other audit matters.

Arthur Andersen & Co. is Portland General's independent public accountant As a part ofits annual audit, a

internal accounting controls are selected for review in order to determine the nature, timing and extent of audit I

tests to be performed. All of the corporation's financial records and related data are made available to Arthur

~l Andersen & Co. hlanagement has also endeavored to ensure that all representations to Arthur Andersen & Co.

l were valid and appropriate.

CDil0BBS Chief FinancialOfilcer j

i 1

HEP ()RT()F INI)EPENI)ENT Pl'Bl.H AG(:()l'NTANE l

To the Board of Directors and Shareholders of Portland General Corporation:

We have audited the consolidated balance sheets and statements of capitalization of Portland General Corpora-tion (Portland General) and subsidiaries as of Dec. 31,1989 and 1988, and the related consolidated statements of income, retained earnings and cash flows for each of the three years in the period ended Dec. 31,1989. These financial statements are the responsibility of the Company's management. Our responsibility is to express an

.l opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free 3

of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and dis-closures in the financial statements. An audit also includes assessing the accounting principles used and signifi.

l cant estimates made by management, as well as enluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial k

position of Portland General and subsidiaries as of Dec. 31,1989 and 1988, and the results of their operations and their cash flom for each of the three years in the period ended Dec. 31,1989 in conformity with generally accepted accounting principles.

ARTIIUR ANDERSEN & CO.

Portland, Oregon, Feb. 20,1990 t

22-

PoltrLANDCENLRALCordoMTION ANDst'BsIDLAhlEs h

Far the iem Emled Duember 31 (nmundi d thdkn) 1959 1986

'19S7 OPERATING RINFNUFS.

... $796,910

$756,314

$767,244

OPERATING EXPENSES Purchased power...........................

98,632 85,318 93,056 Production.......

136,406 -

119,764 105,751 Transmission and distribution..

35,336 3S,127 42,144 hiaintenance and repairs 57,113 -

39,551' 41,343 Administrativeandother..

100,230 91,790 99,647 Depreciationandamortization..,

91,783 9S,111 95,951 Taxes other than income taxes...........

58,392 55.0S4 49,315 577,892 527.765 530,207 OPERATING INC0hlE BEFORE INCOhtCTAXFS.......

219,01S 228,549 237,037 INC0htC TAXFS.,.........

57,141 36,83S 61,132 NFTOPERATING INC0hlE.....

161,877 191,711 175,905 OTilERINC0hlE(DEDUCTIONS)

Regulatory reserves (net of taxes of $31,876)....

(88,830)

Interest expense..........

(81,585)

(66,372)

(100,378)

Allowance for funds used during construction.......

3,946 3,039 3,120 Preferred dividend requirement of subsidiary......

(13,232)

(12,055)

(17,902)

Investment income.....

5,10S-466 24,345 Other(net ofincome taxes)...

2,816 7,779 6,850 INC0hlE(LOSS)FR0h! CONTINUING OPERATIONS...

(9,900) l')4,56S 91,973 DISCONTINUED OPERATIONS 1.oss from discontinued real estate operations (5,033)

(7,259)

(13,9SS)

Estimated loss on disposal of real estate operations, including provision for operating losses during the phase-out period.

(12,000)

INC0hlE(LOSS)BEFORECUhlUIATIVEEFFECT0F ACCOUNTINGCilANGE,

(26,933) 97,309 77,987 Cumulative effect of change in accounting principle, net of related income taxes of $14,023.......

35,0-14

- NITINCOhlE(LOSS)..

$ (26,933)

$ 97,309

$113,031 C0hlhl0N S1DCK Average shares outstamding..

........ 46,112,255 46,103.648 46,0S4,506-Earnings (loss)peraverage share Continuing operations.....

$(.21)'

$2.27

$1.99 Loss from discontinued real estate operations

(.I1)

(.16)

(.30)

Estimated loss from disposal of real estate operations.

(.26)

AdjustmenttoWNP-3exchangeagreement..

.76 Earnings (loss)per average share.

$(.58)

$2.11

$2.45 Dividendsdeclaredpershare...

$1.96

$1.96

$1.96 e

For the iem Emini December 31 (nmund, d Didhn) 1989 1988 1987 BAIANCE AT BEGINNING 0F YEAR.

$196,608

$189,634

$166.941 NLTINCOhlE(LOSS).

(26,933) 97,309 113,031 169,675 286,943 279,972 DIVIDENDS DECLARED ON C0h!hl0N STOCK.

90,383 90,335 90,338 BAIANCE AT END 0F YEAR.

$ 79,292

$196,60S

$189,634 ne-,unme meure an ummi pe dihe c uemenu 23 -

PoKrLANDCENERAl.coRPCCATioN ANDstBslDIARIEs

( 4 )W >1.11)RLI)Inl AV I sill11'l%

At Dember 31(Timund,dDollari) 1989 19SS ASSf75 ELECTRIC UTI1JTY PLANT-ORIGINALCOST Utility plant (includes Construction Work in Progress of $18.925 and $21,650)...,

42,519,762

$2,419,4 S2 Accumulated depreciation..............

($06,071)

(725,247) 1,713,691 1,694,235 Nuclear fuel-less amortization of $155,912 and $173,700.............

43,181 46,676 Capitalicases-less amortization of $16,194 and $14,611 21,124 -

22,707 1,777,996-1,763,618 (HilER PROPEIUT ANDINVESTMEN73 Lewraged leases.............

142,045 101,519 Net assets ofdiscontinued real estate operations..................

51,338 57,339 Marketable securities at cost which approximates market 39,321 37,324 Consenution programs and other.

66,721 59,6S3 199,425 255,S65 CURRENTASSINS Cash and cash equivalents....

3,397-4,054 Accounts and notes receimble....................

76,303 77,443 Estimated unbilled revenues...........

40,b00 41,000 inventories, at a.erage cost......

57,262 53,04S Prepayments and other.

31,162 23.353 20S,124 19S,89S DEFERRED CilARGES WNP 3 settlement exchange agreement.....

185,067 174,631 Unamortized debt expense..

26,996 31,177 Unamortized regidatory costs.............,,..........

42,874 60,0S8 Other..

39,554 34,440 294,491 300,336

$2,5S0,036

$2,518.717 CAPITALIZATION CAPITA!JZATION ANDLIABILITIES Common stock....

.$ 172,951

.$ 172,887 Other paid.in capit;d.................

509,733 509,399 Retained earnings......

79,292 196,60S 761,976 878,894 Cumulative preferred stock of subsidiary Subject to mandatory redemption.

50,000 60,800 Not subject to mandatory redemption.............,.

94,704 94.704 Long-term debt.....,

816,751 849,292 1,732,431 1,883,690 CURRENTLIABILITIES Long-term debt due within one vear...

46,734 20,2S7 Current sinking fund-preferred stock..

1,800 1,800 Short. term borrowings....

100,600 37,600 Accounts payable and other accruals..

100,774 94.701

- Accruedinterest.

16,162 15.200

- Dividends pa>uble.

26,313-26.312 Accrued taxes 26,758 33,342 Deferredincome taxes 3,184 6,468 -

322,325 235,710 (HilER Deferred income taxes -...

328,245 289.358 i

Deferred investment tax credits.

39,143-41,219 Miscellaneous...

15,777 15,455 Regulatory resenvs(net af tax) 142,115 53,285 Commitments and conti.,gencies 525,280 399,317

$, 0,036

$2,518,m m mmums.m= m alpt m uemena

' 21

~i 00RSatAM:@@h@@K.

At December 31(thousamt,of Dunan) 1959 1958 C0hlhlON S1DCK EQUITY Common stock, $3.75 par ulue per share,100,000,000 shares authorized, 46,120,301 and 46,103,154 shares outstanding..

.$ 172,951 6 172,887 Other paid-in capital-net.....

509,733 509,399 -

lletained earnings........

79,292 196,60S 761,976 44.0 %

878.894 46.7 %

CUhlUIATIVE PREFERRED STOCK OF SUBSIDIARY Subject to mandatory redemption.

$100 par value per share,2,500,000 shares authorized 8.875% Series,10S,000 and 126,000 shares outstanding 10,800 12.600 Current'sinkingfund.

(1,800)

(1,600) 8.10% Series,500,000 shares outstanding...................

50,000 50,000 59,000 3.4 60,800 3.2 Not subject to mandatoryredemption 7.95% Series 298,045 shares outstanding 29,804 29,804-7.8S% Series 199,575 shares outstanding 19,958 19,958 S.20% Series 199,420 shares outstanding.,

19,942 19,942 425 par value per share,6,000,000 shares authorized

$ 2.60 Series.1,000,000 shares outstanding.

25,000 25,000 i

94,704 5.5 94,704 5.0 -

1.ONGTERhl DElfr First mortgage bonds.

hiaturing 1990 through 1995 5% % Series due june l,1990......

6,447 6,747 5%% Series due Nov.1,1991 6,115 6,265 4%% SeriesdueFeh 1,1993 S,415 8,603 1

4%% Series due June 1,1993.

10,395 10,620 4%% Series due April 1,'1994.

9,019 9.244 j

4.70% Series due hlarch l.1995.

3,920 4,095 10%% Series dueJune 1,1995,.

60,000 60,000 hiaturing 1996 through 2000-5%% 13 % %..

126,511 134.577 hiaturing2001through2005-7%% 8%%

83,399 83,399 hiaturing2006through2016-SM% 9%%.

181,078 181,078 lbilution controlbonds Ibrt of hlorrow, Ore., variable rate (Average 6.4 % for 1959),

I dueOct.1,2013 23,600 23,600 City of Forsyth,3 font., variable rate (Average 6.5 % for 19S9),

dueJune 1,2013 through Dec.1,2016..,

I18,600 118,800 j

Amount held by trustee.....

(7,416)

(7,457)

Ibrt of St. Ilelens, Ore., variable rate (Average 6.4 % for 1959),

due AprilI andJune 1,2010 36,900 36,900 8% DebenturesdueOct.1,1991-100,000 100,000 101 Debentures duc hlarch l,20lS......

50,000 50,000 Capitallease obligations...

21,124 22,707 Other.

25,178 20,431 663,455 669,579 Long term debt due within one par.

(46,734)

(20,2ST) 616,751 47.1 549,292 45.1 Totid capitalization

.. $ 1,732,431 100.0 % $1,883.690 100.0 %

The atompanmg notes are an energrd part of thne urnwnts l

25

l'ORTIANDCENrMt. Cot &oMTioN AND$ebsIDIARIEs f

lur the iem Lndnt Desemin 31 (Dmsand,d Dunari) 1989 1988 19S7 CASil PROVIDSD(USED)BY-OPEhuoNS:

Net income (lo.s)

,,..$ (26,933)

$ 97,309 4 113,031 Adjustment; to reconcile net income (loss) to net cash provided by operations:

(35,044)

Change in accountingprinciple....

Depreciation and amortization 101,979 102,640 99,572 Deferredincome taxes-net.

32,405 9,839 18,319 (11,314)

Colstrip 4 revenues.......

Other non cash rewnues.

(8,878)

(6,05S)

(8,737)

WNP.3 exchange agreement amortization (10,436)

(10,357)

(9,418)

Amortization of deferred charges,..

2S,591 41,676 19,214 llegulatory reserves (netof tax) 6S,830 (Increase) Decrease in receivables 2,140 774 11,953 (Increase) Decrease in inventories.,,

(4,214)

(7,306)

(9,540)

Increase (Decrease)inpayables....

451 7,535 11,403 Other wurking eapitalitems-net..

(7,809) 7,165 (6,43S)

Net assets of discontinued operations.

6,001 4,302 (40,05S)

Deferred charges

. (11.536)

(15,578)

(8,835)

Miscellaneous-net,,.,,

6,505 7,5S6 18,437 197,346 239.527 162,545 INVESTING ACTIVITIES:

Utility construction.

(119,0S9)

(64,155)

(75,246) lxveragedleases......

(136,050)

(70,540)

(99,756)

Rentals received (net ofinterest paid)...

7,443 3,0S.1 2,603 Saleof marketable securities,

2,845 103,504 311,99S

- Investment in marketable securities (4,545)

(3,701)

(33,600)

Other investments.

(13,830)

(9,235)

'10,958)

(263,553)

(61,043) 95,041 FINANCING ACTIVITIES:

Short-term debt-net,

63,000 (130,751)

' (7,749) 73,600 20,000 1.ong-term debt issued Long-term debt retired,,,

(4,576)' -(126,899)

(94,714)

Non-recourse borrowings for leveraged leases..

103,682 49,99S 77,126 Repayment of non recourse borrowings forleveraged leases.

(4,770)

(3,63S)

(2,278)

Preferred stock issued.

49,492 Preferredstock retired.

(1,800)

. (3,600)

(135,4S6)

Commonstockissued..

393 339 972 (655)

Common stock retired (20,593)

Capitalrestructuringcosts.

Dividends paid...

(90,382)

(89,459)

(95,421) 65,550 (181,573)

(25S,143)

INCREASE (DECREASE)1NCASil ANDCASilEQUIVAllh'13..

(657)

(3,0S9)

(557)

CASil AND CASil EQUIVALEh'13 AT Tile BEGINNING OF PERIOD.

4,054 7,143 7,700 CASil AND CASil EQUlVAIES'13 ATTilE END OF PERIOD

,.8 3,397 4 4,054

$ 7,143

. Supplemental disclosures ofcash flow information Cashpaidduring the year:

Interest.

$77,'307

$8'1,812

$96,064 Income taxes.

25,9S3 20,SSS 3,6S6 The atrongun>ms notes are an mt,cul pari d thew stateuwntt 28

PolmANDCrNilateoHPoMTION ANDsUMIDMRIEs

MMUT)EIK4IA1>SNBiliNit NOTE L SUMMAlW01-mg from subsidiaries that generate taxable income and reim.

SIGNIFICANT ACCOUNTING POLICIES burse subsidiaries for tax benefits utilized in its tax return.

P rtland General adjusts its income tax prosision, when CONSOLIDATION PRINClPLES-The consolidated finan-cial statements include the accounts of Portland General and appmpri te, for potennal tax ac1)ustments. The IRS com-all ofits majmity mvned subsidiaries. Significant intercom-pigd an namination of PGE,s tax returns through 19S-1 and -

has issued a Mutory not, ice of tax deficiency which is bemg pany balances and transactions have been eliminated.

appealed by PCE. Management believes that it has appropri-BASIS OF ACCOUNTING-Ibrtland General and its sub-ately prmided for any probable future tax assessments.

sidiaries conform to generally accepted accounting princi-Deferred income taxes are prmided for timing differences ples. In addition, PGE's policies are in accordance with the between financial and income tax reporting. Portions of accounting requirements and the ratemaking practices of -

deferred income taxes are classilled as current to the extent.

regulatory authorities hasingjurisdiction.

the related assets are current.

REVEN U ES-PGE accrues estimated unbilled revenues PCE D(ferred Tarcs-PG E is limited to recording for senices prmided to month end.

deferred income tax to the extent permitted by the PUC for PURCil ASED POWER-PCE credits purchased pow er ratemaking purposes. The Tax Reform Act of1986 created excess deferred tax balances as a result oflow er tax rates.

i costs for the net amount of benefits received thmugh a power purchase and sale contrabt with the Bonneville Power Admin.

PCE's excess reserves related to non depreciation timing istration (BPA). Reductions in purchased power costs that differences have been fully amortized to customers as of result fmm this exchange are passed directly to PCE's res.

Dec. 31,19SS.

dential and small farm customers in the fonn oflower prices.

PGE prmides deferred income taxes on timing difTerences associated with property placed in senice and depreciated DEPRECI ATION-PGE's depreciation is computed on the since 19S1. For property placed in senice prior to 1981, straight line method based upon the estimated average deferred taxes were provided for only a portion of the excess senice lives of the various classes of plant in senice. Depre-accelerated depreciation over book depreciation. At Dec. 31, ciatmn expense as a percent of the related average deprecia-1989, PCE's cumulative amount of all timing differences for ble plant in senice was approximately 3.7 % in 1989,3.6%

which deferred taxes have not been recorded was appmxi-in 198S,and 3.7% in 19S7.

mately $.130 million. PGE anticipates it will recover related Trojan depreciation includes prmisions for plant decom' future tax payments through prices charged customers.

m_issioning costs. See Note 5 Tmjan Nuclear Plant, for PGE IE-Tax reductions resulting fmm FIC are defs red further details.

and amortized to income over periods not to exceed 25 rars, 3

The costs of renewids and replacement of property units the appmximatelives of the related properties, are charged to plant, and repairs and mamtenance are Statement of Financial Accotmting Standards (SFAS) charged to expense. The cost of utility property units retired, No. 96, Accounting for income 'Iaxes, will significantiv other than land,is charged to accumulated depreciation.

change current practices related to accounting for ineome NUCLEAR FU EL-Amortization of the cost of nuclear fuel taxes. Portland General will adopt the new standard when it is based on the quantity of heat pmduced for the generation becomes effective. At this time, management cannot esti-ofelectric energy.

mate what impact the new guidelines will have on its finan-ALLOWANCE FOR FUNDS USED DURING CON.

cialstatements.

STRUCfl0N (AFDC)-AFDG represents the pretax cost INVESTM ENT IN LEASES-Leases that qualify as direct

' of borrowed funds used for construction purposes and a financing leases and are substantially financed with non-reasonable rate Ibr equity funds. AFDC is capitalized as part recourse debt at lease inception are accounted for as lever-of the cost ofplant and is credited to income but does not aged leases. Recorded investment in leases is the sum of the represent current cash earnings. The avenge rates used by net contracts receivable and the estimated residual value, PGE were 10.06%,0.7%,and 8.2S% for the years 19S9, less unearned income and deferred ITC. Unearned income 19S8,and 19S7,respectively.

and deferred ITC are amortized to income over the life of the

'lNCOME TAXES-Portland General files consolidated leases to provide a level rate of return on net equity invested.

federal income tax returns which include its subsidiaries.

- Ibrtland Generats policy is to collect for tax liabilities result-1 27

\\

d' Por' nano (;rNI:lAL(Cf'(CAT 1oN ANDWilslDislills The components of Columbia Willamette trasing, im s NOTE 2 PORTLAND GENEllAL 110LDISCS,1NC.

net investment in leases as of Dec. 31,1959 and 195S are AND Sl'BSIDIAltlES as foHmm i

,,,u,,A,,,,,,,

erw:n m =Aatuum 1959 1955

• "' 3' M"*" D '"*"'

I959 19hh

1. ease contracts res eivable..

..... 6762,4 2 $535,557 investment in marketable secunties at Non. recourse debt service..

. (640,25D (441,011) cost which approsimates market

.$ 39,467 6 37.622 Net assets ofdiwontinued Net contracts weeivable.

122,221 94.546 real estate operations.

52.010 59.623 Estimated wsidual value....

h6,605 50.512 b=.erned leaws 142,045 101,519 Less-Unearned income.

(55.247)

(36.707)

Other..

17.213 8.966 Imer.tment in Itteraged leases.

153,542 114.651 Total Assets.

.... 6250,735 6207.730 Less-Defened DC....

(11,497)

(13,132)

Investment in leaws, net

.8142,045 6101.51I)

Notes payable.

..$ 57,456 6 35,651 Deferred income tates.

66,967 54,807 Otherliabilities 7,$32 5,614 CASil AND CASil EQUIVALENTS-liighlyliquid invest.

Ecluity 98,450 111,625 m.

ments with maturities of three months or less are classified Tntal1.iabilities and Ecluity.

.8250,735 6207.730 as cash equivalents.

DEFElu,ED Cll AllGES-PGE defers certain costs for

"..."a."w*.n*t wi ai which rett aue; will be pnn ided in future periods. Balances Da M-wNum 1959 19hS 1957 m amortized over the period in which revenues are col-Ihennes

,.$ 19,101 5 8.635 $ 5,465 lected, primarily on a straight line basis. WNP 3 Settlement Expenses

. (16,053)

(10,771)

(4,762)

Exchange Agreement, which has been excluded from PGE's income tax benefits 637 3.971 3.636 rate base, is carried at present value and amortized on a con-Income imm continuing stant retdrn basis, operations..

3A55 1,835 7,339 RESTATEMENTS AND llECLASSIFICAfl0NS-At year-

, r i >Yls...".

.... (17,033)

(7,259)

(13.956) end 19SC.e, Portland General discontinued its real estate Netincome(loss),

.$(13,148) $ (5.424) 4 (6.647) operations. Current and prior yes amounts have been segregated in the accompanying finanelal statements as dis-NOTE 3. RETillEMENT BENEFITS continued operations.

In addition, other amounts in prior years have been Portland General has a non contributory pension plan reclassified to conform with 19S9 elassifications, covering substantially all of its employees. Benefits under the plan are based on years of sen ice, final average pay and covered compensation (a 35 year moving average of the Social Security wage base). Ibrtland General's policy is to contribute annually to the plan at least the minimum required under the Employee Retirement income Security Act of 1971 but not more than the maximum amount deductible for income tax purposes. In the last two years, the plan has been amended to comply with provisions of the 1956 Tax lleform Act and m provide benefits comparable to industry norms. The effect of these changes increased the pmjected benellt obligation by approximately $26 million.

Portland Geneial contributed $5.8 million to the plan in 19S9 and $6.5 million in 19SS. No contributions were made l

to the plan during 1987 due to favorable performance of the l

plan assets. The plan's assets are held in a trust and consist piimarily ofinvestments in common and preferred stocks, corporate bonds. U.S. government and agency issues, mort-l gages and guaranteed imestment mntracts.

l l

es

nwrmocmucnamomosessmmm Portland General determines net periodic pension cost NOTE 4. INCOME TAXES

~

according to the principles of SFAS No. 87. The following table sets forth the plan's funded status and amt unts recog-The fo&> wing tap shows the detail of taxes on income nized in Portland General's financial statements (thousands and the items used m computing the dilTerences between ofdollars):

the statutory federal income tax rate and Portland General,s effective tax rate. Note: The table does not include income 1959 1955 taxes related to the regulatory reserves and discontinued Actuarial present value of benefit obligations:

real estate operations.

Accumulated benefit obligation.

including vested benefits of $105,314

• • "*"*W"'""D""'"'

1959 I9hb E

and 690.479.....

.. 8112,036 6 96,050 Income'Ihx Expense Effect of future compensation levels..

37,556 38.079 Currently payable....

.$24.282 6 26.265 $39,362 Pndected benefit obligation.......... 149,922 134,129 Defeited income tases Plan assets at fair value.

190,950 156,700 Accelerated depreciation.. 41,937 34,328 34.075 Adjustment to WNP 3....

4,033 4.003 3.671 Plan assetsin ewess ofpndected Abandoned nuclear pndect (1,158)

(4.739)

(5.610) benellt obligation...........

41,055 22,571 Unbilled nvenue (3,2 54)

(3,329)

(7.255)

Unrecognlied net experience (gain)....

(22.4h5)

(2,498)

Nuclear fuel storage,..

5,734 Unrecognized prior senice costs.....

14,507 12,376 Debt expenses..

(1,430) 2,244 (1,201)

Unrecognized net transthon asset being Trohn sung costs......

(79) 3,565 recognized over 1b rars

. (29,363)

(31,320)

ItegionalIbwer Act (3,494)

(3.372) 3 Pension prepaid cost...

.8 3,717 6 1,129 lease income.

(10,501)

(7,022)

(3,668)

Non.n course debt interest., 10,$31 7,527 4,497 Excess federal deferred Net pension expense (income) for 19S9,19SS and 19S7 ta ws *.............

(10,322)

(3,721) included the following components (thousands of dollars):

Other..

(710)

(10,739)

(4,617)

Investment tax credit 39g9 399g 3937 adjustments..

(3,619)

(1,052)

(1,813) l Servicerost,

.$ 5,090 $ 4,955 $ 4,197

$ 56,805 $ 37,330 659.454 Interest cost on proveted benellt obligatio,i

..... 12,267 11,376 6.617 Provision Allocated to:

Actual teturn on g!an nsets..

(34,096)

(14,031) (10,220)

Operations..

. 857,141 $ 36,838 $61,132 Net amortizatio i an/ deferral.

19,950 642 (3,870)

Other income und deductions.

(336) 492 (1,678) j Net periodic penn expense

$58,505 $ 37,330 559,454 (income)...

....... $ 3,211 $ 2.944 & (1,276)

ETectise Tax Itate Computation 1

l Computed tax based on l

statutory federallacome tax The weighted average discount rate and rate ofincrease i$5

[,[3 $...$ 46,150

$ 4s.2s4 560,607 in future compensation levels used in determining the actu.

Increases (Decreases) 1 arial present v?lue of the projected benefit obligation were resulting imm.

8.5% and 6.5%, respectively, as of Dec. 31,19S9 and 9%

Accelerated depreciation 5,693 4,53S 4.599 and 7%, respectively, as of Dec. 31,19SS. The expected State and local taws-net 5,540 7,405 2.23s long. term rate of return on assets was S.5% for 19S9 and Imtstment tax credits (3,657)

(4,712)

(5,432) 19SS and 9% for 1987, I "" "lusion.

@ 9)

(1,106)

(6,m)

Pn ferred dis.idend Portland General also provides senior ollleers with addi.

requirement..

4,499 4,099 7,161 tioPl benefits under an unfimded Supplemental Executive Ewess federaldeferred R

ment Plan (SERP). Projected benefit obligations for tases*.

(10.322)

(3.721) the SERP are $8,952,000 and $7,318,000 at Dec. 31,19S9 Other.

(1,091)

(10,656) 919 and 198S, respectiwly.

8 56,505 5 37.330 $59.454 in addition, Portland General pro \\ ides certain health care EfL etive tax rate 41.55 %

26.29%

39.24 %

i and hfe insurance benefits for retired employees. Employees who reach retirement age while working for the Company

%=*wh uw We ww w+ m received bendits through the operation of a qualified plan i

under the Internal Revenue Code. Related expenses are immaterial.

29

'I PoKrtAND0rAIMtJDlWMTION ANnMMmidill3

' lbrtland General and PCE federal income tax returns for to 65% in 19S8. Operating and maintenance expenses

. the years 1985 to 1987 are currently under audit by the IRS.

(excluding fuel) were $69 million in the 1989 period as As part of his audit, the IRS audit team has proposed to dis-compan.1to $50 million in 19SS.

t allow PGE's 19S5 WNP-3 abandonment loss deduction on Tmjan completed 126 dap of continuous operations when the premise that it is a taxable exchange. This action is not a it was taken off line in early April for annual refueling and formal notice of tax deficiency but represents the lilS audit maintenance. hiaintenance work, originally planned to be team's position on the specific issue.

completed in June, was extendehnto mid August due to PCE disagrees with this position and will take appropri-steam generator repairs. In mi4 September, Trojan was ate action to defend its deduction. PGE will assert its posi-taken out of senice for 19 days for repair to a pressure relief tion to the audit team during the fieldwurk portion of the vahr During 82 days of unplanned outages, PGE incurred audit process and, if necessary, through administrative and appmximately $23 million in incremental costs for replace-judicial appeals hianagement believes that it has appmpri-ment power. Since October, Tmjan has been operating con-ately prmGd for probable tax adjustments and is of the tinuously at near capacity.

opinion that the ultimate disposition of this matter will not in October, the NilC lesied a fine against PGE for pmb-have a material adverse impact on the financial condition lems with a water recirculation system at Trojan. These of Portland General.

problems were identified and corrected in July. The NilC also cited a need for PCE to improve management account-NOTE 5.TIlOJAN NUCLEAll PLANT ability and emplo>re performance at Trojan, in response, PCE is implementing a plaa which includet new manage.

Trojan is a 1.1 million kw, pressurized water nuclear phmt ment assignmen's, improved management assessments, of which PCE has a 67% % interest and is the operator. 'l he

..ing the engineering support gmup to the plant site plant has been operatmnal since 1976 and its license period and stepped-up training activity in the new Trojan control runs thmugh the >rar 2011. The plant s nuclear steam room simulator.

supply system was designed by Westinghouse.

PLANT INVESThlENT AND DEC0hthilSS10NING-Trnjan, PGE's largest single generating source of energy, pmvides about 25% 28% of PCE's net load requirements.

As of Dec. 31,1959, PCE's investment in Tmjan amounted The plant's average annual capacity factor for the past five to $526 million including construction wurk in-progress.

years is 62% as compan-bo a national awrage of 59% for Depreciation resents of $181 million have been accumu-all nuclear plants. Trojan's annual refueling and maintenance lated. Trojan depreciation includes prmisions for decommis-outages are scheduled during the springtime to take advan.

sioning costs. A sinking fund method is used to detennine tage of decreasing energy demands and favorable indroelee, the annual decommissioning cost which is included in tric conditions in the region fmm snowpack runoll'and prices charged to customers. For ratemaking purposes, ample precipitation. Outages are scheduled for about 70 80 decommissioning costs are estimated to be $117 million.

days but, in the past three years, have averaged 122 dag.

NitC regulations issued during 1988 require an external During unplanned outages, replacement power costs in trust fimd to be established for funding decommissioning excess of those used for settirg existing prices adversely costs of radioactive components. PC E will submit a funding l

afTect earnings performance. PCE has operated without a plan to the NRC by mid-1990 and begin ftmding within one l

power cost adjustment pmvision in its prices since late 19S7.

>rar after the plan isilled.

l REGULATION-The Nnclear Regulatory Commission NUCLEAR FUEL DISPOSAL-Under the Nuclear Waste (NRC) regulates the licensing, construction and operation Policy Act of1982, PCE entered into a contract with the of Trojan. Safety and envimnmental regulations involve U.S. Department of Energy (USDOE) for permanent dis-testing, evaluation and modification of plant operations. The posal of spent nuclear fuel in USDOE facilities. These dis-Oregon Department of Energy (ODOE) also monitors the posal senices are now estimated to commence no earlier operation of Trojan. The NRC and the ODOE can close the than 2010. PCE pays the USDOE.le per kwh generated at plant if there is an imminent danger to the public.

Tmjan for these future disposal services. Payments are made quarteriv. On-site storage capacity should accommodate fuel 1989 OPERA'l, IONS-In 19S9,,froj.an generated 3.7 bilh.on fmm the normal refueling schedule of Tmjan thmuch the kwh and sened 23% of PCE s net system load comnared t year 2007. Revenues are prmided to emtr estimated costs 1.3 billion kwh and 28% of ne, tem load in 19SS. Njan Ndispoul.

operated at a capacity factor of 5S% in 1989 as compared 30'

MORANo GEMlatfoKf'olanou%D setNol31Fs s

NUCl.EAlt lNSURANCE-The Price Anderson Amend.

coverage is pnnided for losses up to $500 million. The ment of 195S limits pubhe liability claims that could arise remaining portion is prmided sulsect to a maimum retro-fmm a nuclear incident to a muimum of $7.8 billion per spective premium adjustment of $5.1 millkm per policy year.

incident.The masimum primary insurance coverage avail-Replaecment power insurance pnnides indemnity pay-able is currently $200 million, and the remaining $7.6 billion ments for up to three years. A retrospective premium of up is corred by secondary financial protection required by the to $3.7 million per policy year may be assessed in the event NRC. This secondary emtrage pan ides for loss sharing member losses exceed the accumulated funds available for among all owners of nuclear reactor licenses.

this coverage. These insurance coverages are prmided PCE has purchased the mainium private primary insur-primarily through insunmee coi ipanies owned by utilities ance, in the event of a nuclear incident in which the amount with nuclear facilities.

of the loss exceeds this limit, PGE could be assewd INITIATIVE PETITION-An initiative petition has been r'etrospective premians of up to $46.9 million per incident, submitted that would pmhibit the operation of Trojan until limited to a maximum of 60.8 million per incident in any one spec Ge conditions are met, including licensing of a perma-year under the secondary financial protection coverage, nent radioactive waste disposal site. If enough signatures are PGE maintains $1.7 billion of emtrage for property validaic 4, the initiative will be placed on the ballot in the damage, decontaminatim. and replacement power costs Nmembe 1990 general election. PGE vigorously opposes at Tnsan. Primary property damage and decontamination the initiativo.

NOTE 6. CONINION AND PREFEllRED STOCis The following changes occurred in the cocimon stock, cumulative preferred stock of subsidiary and other paid in capital accounts (dollar amounts in thousands).

Cumulative l' referred Common Stock Stock of Subsidiarv Other Number

$3.75 Par Number

$1001%r

$25ihr thid in ofShares Wlue af Shares Wlue Wlue Capital Dec. 31,1986.,

. 46,075,550 $172,783 6.895,040 $ 59,501

$150.000 $516,241 SOS Sales oistock.,,

43,5S2 164 lledemption of stock..

(5,036.000)

(3,600)

(125,000)

(6,RsG)

Unrealized losses on marketable securities.

(2,796)

Dec. 31,1987

.46,119.132 172,947 1,559A10 85.904 25,000 507,367 Sales of stock 15.252 57 500,000 50,000 (220)

Hedemption of stock....

(31,200)

(117)

(36.000)

(3,600)

(538) 2.796 Unreahed losses on marketable securities.,...

Dec 31,198$

.46,103,lh4 172,557 2,323A10 132,304 25,000 509,399 331 Sales of stock..,

17.117 64 lledemptionofstock.

(1h,000)

(1,500)

Dec. 31,1959

.46,120.301 $172.951 2,305,040 $130,504

$ 25,000 $509,733 COhlhlON STOCK-Shares of common stock were issued CUhlVLATIVE PREFERRED SECK OF SUBSIDIARY-under an employre stock purchase plan and shares were No dividends may be paid on common stock or any class of redeemed due to the termination of a long tenn incentive stock over which the preferred stock has priority unless all pmgram, in addition, Portland General has a dividend rein.

amounts required to be paid for dividends and sinking fund vestment plan under which it may either purchase sh es in payments have been paid or set aside.

the open market or issue new chares of stock, in February The 5.10% Series preferred stock has an annual sinking 1989, I ortland Generats Board of Directors approved the fund requirement which requires the redemption of 100,000 termination of the Stock Owners'aip Program that was elTec.

shares at $100 per share beginning in 1994. At its option, tive hlay 31,19S9.

PCE may redeem, through the sinking fund, an additional Portland General may, at its option, repurchase up to 100,000 shares each year. This Series is redeemabh at the 3.3 million shares of coomon stock through a stock repur-option of PGE at $107 per share to April 14,1990 and at chase prognun, reduced amounts thereafter.

3!

rom.wnermeomemomostwnum PGE is n quired ta redeem annually 18,000 shares of Short term bornwings and related interest rates were the 8.875% Sdt, prefern d stock at $100 per share. At its as follows (dollar amounts in thousands):

option, PCE uay redeem, through the sinking fund, an m

3939 39g 393 '

additmnal 18.000 shares each year. This Series is redeem-

^"'N *C"d M *)"d" able at the option of PGE at $103 per share to April 30,1990 and at reduced amounts thereafter.

outstamding NO Pall CUM UIATIVE PREFEllHED S'IUCK-Nrtland llankloam

. $100.000 $ 31,600 $ 69.500 General and M;E each have 30,000,000 shares of no par cominercial paper -.

6 6 S00 $ 9s.551 WeSted averageinterest eumulative preferred stock authorized. No chares have mie on sho%nn &

been issued.

outstanding COMMON DIVIDEND RESTHlCflON-PGEis Bank loans.....

9.4 %

9.9%

7.9%

lestricted from paying dividends or making other distri.

Cmmnercialpaper.

9.4 %

8.2 %

nuwd annmhtedines butions to Portland General, without prior PUC appnnul, 05,W $255SW $255SN to the extent such payment or distribution nuld reduce I"' d* F"""d"h PGE's common stock equitv capital beknv 36% ofits total capitalization. At Dec. 31,1989, PGE's common stock

• [,r rn $">'t equity capital was 41% ofits total capitalizaticm.

outstanding llankloans

... $ 35,416 6 32,301 6 45,.103 NOTE 7. Sl10HTTERM HOlli!OWINGS Comercial paper 723 4 34SO4 $ 99.025 We.ghted daily errage

~

At Dec. 31,1989, Portland General and subsidiaries had interest rate combined committed lines of credit totaling $205 million, liank loam....

9.6%

6.1 %

7.3%

1

c. spiring f.om 1990 through 1993. These lines of credit cmmnercialpaper 9.2 %

7.3%

7.0%

Maxinnun ain unt dshmt-currently require commitment fees and/or facility fees

" "8 ranging from %o to % of one percent and do not require

[r'

. 0 00, 2 043.54 OEM compensatmg cash balances. Other short term sources of

""*""'"""'"#"""""'"d'"

funds include various uncommitted offering lines from domestic and foreign banks. PGE also has funds available

- through a $100 million commercial paper facility. % back up PGE's commercial paper, the total unused committed The Indenture securing P(;E's 11rst mortcage bonds lines of en dit at PGE must be at least equal to the amount constitutes a direct first mortgage lien on substantially all of commercial paper outstanding. It is intended that the utility property and franchises, other than expressly emount of short term horrowings outstanding at any point in excepted property.

time will not exceed individual committed lines of credit.

The following principal amounts oflong. term debt funds from committed and ofTering lines are mullable at become due for redemption through sinking funds and rates reflecting current market conditions and generally at maturities (thousands of dollars):

or below the prime commercial rate. Portland GeneraPs 1990 1991 1992 1993 1994 aggregate short term borrowings in 1989 were below the Sinking Funds $ 6,731 $ 4,914 $ 4.914 $ 4,501 $ 4,276 prime commercial rate, Maturites.

40.704 115.761 11,913 19.60S 10,259 The sinking funds include $2,701,000 a year for 1990 through 1994 which,in acconlance with the terms of the Indenture, PGE may satisfy by pledging available additions equal to 166%% of the sinking fund requirements.

1' l

l 32

MilmAND CIMiitt eoliMGTloN SD srbMoMFil.s

_.w~...

... ~.

---..~-.-..-.~.-aam NOTE 9. C0hthilTMEN'IS LEASES-PGE has leasing arrangements for its head-quarters complex, combustion turbines and its share of the PUllCll ASE C0hthilThlENTS-Purchase commitments coabhandling facilities and railmad cars for Boardman.

- outstanding, principally construction, totaled appmximately PGE's aggregate rental payments charged to expense

$27 milhou at Dec. 31,1989. Cancellation of these purchase amounted to $21 million in 1959. Rental expenses for 1958 agreements could result in cancellation charges, and 1987 were $38 million and $40 million, respectively Commitments have also been made under long term including $17 million per >rar for leasing a 15% share agreements to purchase fuel for PGE s thermal generatmg ofBoudW plants. Such agreements ma>l be termmated and nuld PCE has capitalized its combustion turbine leases.

require payment of termmaton charges.

Ilow rr, these leases are considered operating leases for PCE is disputing commitments under the Boardman ratemaking purposes.

coal supply contract. PCE is seeking price adjustments tied As of Dec. 31,1989, the future minimum lease payments to power market conditions or relief from certam obligations tmder non-cancellable leases are as folknvs:

or both, in late 1959, a settlement agreement was reached capital Operating 1. eases by the parties. This agreement, however, is contingent upon w nautu

'""d' d

• k""5

• d "" "*

""I PGE being satisfied with certain conditions. Termination charges,if any, resulting from a final settlement must be IWO.....

.8 3.016

$ 15,' a

$ 18,165 I

approved by the PUC prior to being recovered in future g

prices charged to customers. hianagement believes termi-1993..

3,016 15.673 18.6S9 nation charges willbe recovered.

1994......

3,016 16.061 19,0~7 INTEllTIE AGilEEM ENT-PGE and llPA signed a long.

Itemainder.

13.400 228,779 242.179 term agreement in July 1988 regarding the management Total 25,450

$307,566 4330.046 and the expansion of the Pacille Northwest Intertie. With imputed Interest..... (7.356) expansion, PCE would gain an additional 150,000 kw of Present value of scheduling rights at an estimated cost of $23 million. The hiinimum Future agreement also provides that if BPA is unable to obtain Net 1. ease Payments $21,124 linancing for its share of the expansion, BPA can request PCE to assist in its financing arrangements.

Included in the future minimum lease payments schedule PURCilASED POWEll-PCE has long term power pur-above is appmximately $160 million for PGE's headquarters chase contracts with certain public utility districts in the complex.

state of Washington and with the City of Portland, Ore. PGE is required to pay its proportionate share of the operating NOTE 10.WNP 3 SETTLEMENT and debt senice costs of the projects whether or not they EXCilANCE AGREEMENT

~

are operable. Selected information is summarized as follows:

PCE and BPA reached a settlement in 19S5 related to

% ars contracts expire....

... 2005-2018 1 tigation surrounding the suspension of construction of llevenue bonds outstanding at WNP 3. In 1987, PCE began receiving imm BPA about Dec. 31,19S9.....

.....,651-202 milh.on 65,000 average annual kw for appmximately 30 years under Ibreentage ofoutput

.. 12-100%

Share of net capability by project.

.36-170 hlW the WNP 3 Settlement Exchange Agreement (WSA). In -

exchange, PGE will make available to BPA energy fmm its PCE receives 36,000 kw imm the City of Portland and a mnbustion turbines or from other available resources at an total of 619,000 kw from the public utility districts. PGE's share of the annual costs, including debt senice, totaled agmed to price; I" 1986, PGE agreed to a regulatory recovery of the value

$18 million in 1989 and $20 million in 198S and 19S7. PGE's f,SA under Oregon junsdicton. Proposed revenues were share of debt senice costs, excluding interest, will be basd on Gnxpdd benefits to be received by customers.

appmximately $4 million for each of the years 1990 through Total futum rmnues to bmeived are measured at their 1991. The minimum payments through the remainder of discounted present vidue. A reserve us recorded in 1956 the contracts are estimated to total $127 million, which reduced the WNP 3 investment Irom $235 million to

$106 million and resulted in an after tax loss of $72 million.

33

l'Olm.ANDGIMial.(UliPolaTION ANDSt%IDidil5 in 1987, the Financial Accounting Standards Board issued nrnt of an out-of court settlement or a final decision and amended technical guidelines for SFAS No. 90, primarily to subsequent ratemaking action, PGE will recognize related j

cla ify the method for establishing the appropriate discount income, as appropriate.

rate in calculating the present value and the accounting for GENERAL RATE CASE-In September 1987, the PUC tax elk ets. PGE adjusted its investment in a manner consis-issued an order deciding two rate cases filed by PGE in tent with the rensed gmdelines and recorded an after tax hlarch 19S6. The order, among other things, rhersed prni-credit to income of $35 millma. The adjustment was recordal ous accotmting orders issued by the PUC related to certain as a cumulative elTect of an accounting change. Amortiza-investment tax credits (11C) and the gain from the 19S5 sale ton of the investment is made on a constant return basis

• of portions of the Boardman coal plant and the Pacille PGE withda w the WSA from Oregon jurisdiction and Northwest Intertie, will sell the power to the Western Area Ibwer Administra-INVESTM ENT TAX CRED113-in 19S3 and 19S4, PGE, tion (WAPA). PGE and WAPA entered into a 25 year power sales contract whereby PGE will sell WAPA the energy acting upon appnned PUC accounting orders, acet lerated received under the NSA beginning in October 1990.

the amortization of pre 1981 deferred 110, which reduced Revenues from the WAPA contract are expected to be sufil-inemne tax expense by approximately $26 million and cient to support the carrying value of PGE's investment.

$42 milli n, respectiely. PGE sought regulatory treatment consistent with these orders. The rate decision rejected the pri r orders and stated that PGE should restore the 11C for NOTE 11. RATE hl ATTERS ratemaking purposes.

PGE is seekingjudicial rniew of certain rate matters BOARDhlAN/INTERTIE ASSET SALE GAIN-PGE related to its 195, general case. The litigation focuses on the n quested final disposition of the $95 million efter tax gain f

PUC s decisions related to the accelerated amortization of from the 1985 sale of portions of Boardman and the Intertie, certain 110, the allocation of the gain from the sale of

.i he PUC originally directed PGE to defer 50% of the gain Boardmanllntertie and 1986-19S7 interim relief for Colstrip pending fmal determination in the rate case. The rate order 4 (see beknt). The PUC reversed its prnious decisions related allocated $79 million of the gain to customers over a 27 war to these issues, hlanagement believes that the rate treatment period on the basis that the transaction more closely resem-sought for llc the Boardman /intertie gain and 19861987 bled a power sale, interim relief for Colstrip 4 is appropriate and that the PUC PGE filed a complaint in the Marion County (Oregon) orders are legally deficient and lack factual support.

Circuit Court seeking rniew of the PUC's decisions on PGE has pursued settlement with the PUC since the last 11C Boardman, and several procedural issues. Of the adverse decismn in May 1989 To date, PGE has been mysue-

$S9 million resen e, $65 million reflects the maximum net cessful in reaching an acceptable settlement. T he PUC s charge to income PGE faces if the order on these matters legal counsel has stated that any court ruling frorable to is upheld' PGE will be appealed to the highest court possible, causing any court resolution to be lengthy, costly and uncertain. In INTERIM RELIEF-In January 19SS, the PUC requested ad'dition, any court decision is likely to prmide the PUC briefmg foneconsideration of the interim relief granted with additional opportunities to re iew these issues. PGE PGE in June 1986 to cover the fixed and operating costs of recorded an $S9 million reserve and charged 1989 income Colstrip 4. The interim relkf became fmal with the issu-in recognition that this combination of factors makes it ance of the September 1987 order which included the increasingly uncertain hmv much,if any, of these amounts Colstrip rate case. In May 1989, the PUC reversed its prei-PCE may ultimately recover. FGE has fully reserved for an us decisi n and ordered PGE to restore $3S million plus unfavorable outcome on these issues.

interest to the balance sheet for the purpose of prosiding

~

a n6uid to its customers.

Following February 20,1990 oral argument in this litiga-tion, PUC counsel advised PGE that the PUC intends to in July 19S9. PGE filed an amended complaint in the schedule a public meeting in April to determine whether or Marion County (Oregon) Circuit Court adding this issue to

]

the 11C and Boardmanlintertie issues. The resen e of $ S9 not the PUC should consider settling certain of the issues.

While PGE continues to pursue an out of court settlement, million includes $24 million for the maximum net charge l

l It also plans to continue the litigation. Ilowever. PGE does to ine me if the refund order is upheld. PGE will accrue not expect a finaljudicial decision any time soon. In the interest expense until a final determination of this issue.

l l

34

loirrt.ANDCI'NI.larlCPoldTION AWst'bsRMIM;s NOTE 12. LEGAL MATTERS NOTT 13. DISCONTINUED OPERATIONS PCE and three other imestor-owned utilities (IOUs) are At year-end 19S9, Ibrtland General discontinued its imtihul in litigation surrounding the proper allocation of real-estate operations, which con 0 primarily of Columbia shared costs between Washington Public Power Supply Willamette Development Co. and a 50% share of Corner-System Units 3 and 5. A court ruling issued in May 1989 stone Columbia Development Co., a partnership with stated that Ilond Resolution No. 890 controls disbursement Weyerhaeuser Real Estate Company. The orderly sale of of band proceeds for the construction of Unit 5. It is the these operations.ls expected to be completed by the end of IOUs' contention that at the time the project commenced 1992. The estimated loss on disposal of $12 million (net there was agreement among the parties as to the allocation of related income tax benefits of $6.6 million) results of shared costs and that this agreement and the Bond lleso-primarily from properties expected to be disposed ofin lution are consistent such that the alkication under the 1990. Since the plan of disposal was adopted as of year end agreement is not prohibited by the Bond Ilesolution. Oral 19S9, the estimated loss on disposal does not include 1989 argument was held in September 1989 and a decision operatinglosses.

is pending.

At Dec. 31,1989 and 1988, the net assets of real estate in another matter, the Central Oregon People's Utility operations were composed of the following (thousands of District (COPU D) and an individual fiksi a complaint dollars):

against PGE seeking a declaratory ruling to acquire PGE's 1989 19ss Pelton and Round Hutte Dams at the time of their relicens-ing in the year 2001. The complaint also sought $290 million tse development.

.......... 84 7,14 8 $37,267 in damages for breach of contract for the distribution of NetimestinentinCornerstone.

2,719 5.630 power from the Pehon Dam. The trialjudge dismissed all of current and other assets.

27,139 19.875 COPUD's claims. Ilowever, the plaintiffs have appealed the wtal assets.

. 77,006 62,772 dismissal to the Oregon Court of Appeals-1.iabilines i.egal counsel cannot predict the outcome of the above long.tenn payables and other...,....., 10,690 1,178 litigation. llowever, based on discussion of the underlying Currentliabilities...

2,978 4.255 facts and circumstances with lcgal counsel, in manage-Etalliabihties........

. 13.668 5.433 ment's opinion, the ultimate disposition of these matters fleserve for discontinuance-net..

..... 12,000 will not have a material adverse effect on the operations or Net Assets

. 851,338 $57,339 f

financial condition of Portland General.

]

Portland General and certain ofits subsidiaries are party i

to various other claims, legal actions and complaints arising Operating results prior to discontinuato.n are shown

~

in the ordinary course of business. In management's separately in dm consolidated statements ofincome. Such opinion, the ultimate disposition of these matters will not amounts an' net of nlated inemne tadenents of $3 mibon have a material adverse elTect on the operations or financial in 1989, $4.4 million in 1988 and $10.9 million in 19S4.

condition ofIbrtland General.

Operating revenues from discontinued real estate opera-tions were $17.5 million in 19S9, $6 million in 1988 and

$6.4 million in 1987.

35

J MCH.4%DCIMidl.colLPolano% CAD set 4IDIAlill3

( 1l \\l'l i lil i ( ( >\\ll'\\liN i\\ l ( lli Im \\ \\lYHW l M)] I I I )

(m.m hdtam March 31 June 30 Sept.30 Dec.31 1989 Operatingnwenues.

4219,560

$173.220

$161,154 8222,956 Net operating income.....

58,925 21,796 27,396 53,760 Netincome(loss)8 37,5S3 327 4,114 (6$,957) i Common stock Average shares outstading.......

.46,105,768 46,110,062 46,114.348 46,118,643 1

Earnings (loss)twraverge share 8.62 8.01 8.09

$(1.50) 1 1968 Operating nwenues...

$208,95S

$170,307

$173,569

$203,160 Net operating income..........

63.658 27,771 39,411 60,871 1

Net i ncome........................................

36,591 4,628 16,692 39,19S Common stock Averagesharesoutstanding..

..... 46.121.216 46,093,500 46,097,678 46,101,897 Earnings per average shand

$.79 8.10

$.36

$.65 3l0 Nic knitti, sjuartte d 19869, Mlad (.ft tira! ellMIInderd fetervM lisalsfig $101 iallumilin gienilarig riise matkvi arid Ost discalitatinasue d real estate inlievatsinn see Non H arnt 11 in On Notei > 0w hawuul stairmenti. 6e furdier detak

' As a e sult d ddotne clinii d dwei tuurd durms de peral. ipaneel earmngs pn d.are conme le skinl to erene at anmial earnings pet dwe numire 3

\\1 \\Bkl'I' \\\\l) I)h ll)! \\I)l\\H )R\\1 \\lh )\\

COMMON 5R)CK lbrtland Generats common stock is publicly held and traded on the New York and Pacific Stock Exchanges (trading symbol PGN).

The table below reflect s the dividends on Ibrtland Generats common stock and the stock price ranges as reported by Tle WallStrret Jounalfor 1989and1988.

1989 19SS Quarter ist 2nd 3rd 4th 1st 2nd 3rd 4th l iigh............

.22% 25 % 25 % 24 %

24 % 24 % 23 % 22 %

lu,v..

....... 21 21 % 22 % 20 %

21 % 21 % 20 % 20%

4......

Closing price

..... 21 % 24 % 22 % 21 %

21 % 22 % 20 % 21 Cash dividendsdeclared(cents).

...... 49 49 49 49 49 49 49 49 At its l'ebruary 1990 meeting, Ibrtland General's Board of Directors declared a quarterly common stock dividend of $30 per share.

This is a reduction from the pavious quarterly declaration of $.49.

l..

The approximate number of shareholders of record as of Dec. 31,19S9 was 5S,0SO.

l l

h PREFERRED SR)CE OF SUBSIDIARY The $2.60 Series of preferred stock for PGE is listed on the New York Stock Exchange. The following table shows the high and low sales prices on the composite tape (as reported by Tlr WallStrretJournal) for the respective periods. Four of the remaining preferred series are 3

traded infrequently m er the counter and disclosure of quarterly price ranges is not meaningful.

19S9 1988 i

Quarter 1st 2nd 3rd 4th 1st 2nd 3rd 4th

$2.60 lligh....

. 26% 2S% 25% 29 %

2S 27 % 27 % 27 %

low

....... 25% 25 % 27 26%

26 % 26 % 26 % 26 1

Quarterly cash dividends were paid on each class of PGE's preferred stuck at its stated rate during 19S9 and 19SS.

36 l

'\\

un.womarutamunown sensuum.s

, sll \\hl ll( 4 I 4 li INI( di\\1 \\ll( t\\

SilAREI10LDERSEllVICES PGE 62.60 Series Cumulative Preferred Stock is publicly traded and listed on the New York Stock Exchange. Tle Wall Communications imching dhidends, stock certificates, Stwf fournallists this stock under the notation IbrtlndGen pf, dhidend reimrstment statements, address changes, stock trans-while most other nmspapers use the notation IbrG pf.

fer, and other administrative matters should be dintled to our Tn'nsfer Agent, U.S. Bank. Be sure to mention in all communi-DIVlDEND PAntENTDATES cations with the Agent that >uu are a shneholder ofIbrtland General Corp or PGE. If possible, include >vur wrount number The Board of Dinetors has historically declanxl quarterly as well.The mailingaddirssis:

common and preferred stock dhidends payalle on the fifteenth US. Bank of the months ofJanuary, April, July and October. The trconi Cmporate Trust and Agencies Department dates E>r these dividends in 1990 are planned to be htarch 26, P.O. Box 3550 June 25, Sept.25,and Dec.26.

Ibrtland,0R 9720S INVESTDR PUBLICATIONS Phone:(503)275-6474 llaruldelieery ofcertificates for transfer may be made to:

Copies ofIbrtland General shareholder reports, Ibrtland U.S. Bank General Fact ikiok, and the Shareholder Guide may be obtained Corporate Trust and Agencies Department by wTitten nquest to the Shareholder Senices Department at 309 S.W.6th Ave., Fifth Fkior thelistaladdress.

Ibrtland,OR 97204 F ollhi10 K DIVIDENDilEINVESTh!ENT PLAN Ibrtland General and PGE annual n ports to the Securities lbrtland General common shareholders of recon] are eligible and Exchange Commission (Form 10-Ks) are available upon to participate in the Dividend Heimestment Plan (Plan). New wTitten request to Crieg L Anderson, Controller and Assistant common shareholders of record (not " street name" holders)

Treasurer,at thelistaladdress.

automatically nteive Plan information and an Authorization i

Form when they become shareholders.1 hese documents are EXECUTIVE OFFICES available to all c'ommon sharehoklers of nrord at any time from Ibrtland GeneralCorp or U.S. Bank, the Agent for the Plan.

Ibrtland General Electric Ca The Plan alkms reimrstment of dhidends toward the One WorldTrade Center purchase ofIbrtland General common shares on the open 121 SK Sdmon St.

market. It also allows quarterly optional cash purchases. The Ibrtland,OR 97204 i

optional cash purchase period begins on the Common Stock Phone:(593)464 SS20 I

Dhidend Payment Date and may continue for 30 dass following t

that date, Cash payments must be received by the A' ent no later if>uuw uldlike, reinformation aboutbeingashareholder i

i g

(

than live business dan prior to the expected dhidend date. Dhi.

in Ibrtland GenerMorp or Ibrtland General Electric Co.,

h l-dends paid on comm'on shares purchased through the Plan and pleasecontact us directly:

L hekiin the Plan Account are automatically reinvested by the Ibrtland GeneralCorp i

Agentin additionalcommon shares.

orIbrtland General ElectricCa l

lbrtland Genera' pays the administrative costs of the Plan, but Sharehokler Senices Department participants pay a brokerage commission as a part of the cost of One World Trade Center common stock purchased or sold in open market transactions.

121 S.W. Salmon St.

1 The commissions are expected to be at a sharply discounted rate Portland,OR 97204 l

because of the large mlume of transactions under the Plan.

Phone:(503)464 8599 Sharehoklers should read the Prospectus describing the Plan for moredetailedinformation.

NOTICE OF ANNUAL AIELTING i

STOCK EXClIANGE LISTINCS The 1990 annual meeting ofIbrtland General Corp common shareholders will be held at 2 pm., Tuesday, Af ay l

Common stock ofIbrtland General is listal on the New York S,1990 at PCE's Western Region Center,14655 S.W. Old and Paclic Stock Exchanges and is quoted in the daily stock Scholls Ferry Road, Beaverton, Ore. Common shareholders i

tables of Tir Wall StnytJounwl under the notation IbrtlndGen.

of neord at the close of business on hlarch 21,1990 wil!

' hiost other newspapers use the notation IbrtCC.

be entitled to vote. All common shareholders are welcome to attend.

37 i

J

POKPLANDCI:NI:lat.CCilC ATION LND $thlDl41(il'.5 Nill ( ll l)ll\\ \\\\t l \\l ll\\l \\ \\\\l) Nl \\llNllt N 1949 19M FORTL4VD 6 El RISl'ln(DIOUMNDS)

CLYlA4L 0;rrating ikwmes...

.8 796,910

$ 756.314 CORP 0lL4 TION Net Operatmg lucone'.

8 161,h77

$ 191.711 Finarvial lintune (losi) fnun Continuing 0;rratkua'.

8 (9,900) 8 104.565 1

Comparkra Dacontimmloperatkms..-..,

5

.8 (It,011) 8 p,259)

Extraordmar/Cumulathe Elks t Itena'.

Net lixome(Ims)

.8 (26,933) $ 97.309 Earnings (las) Fnun Continuing Operathms h r Skre'.

8(.21) 42 27 i

las Ennn Dacontinmtl Operatkms IVr Share8

(.37)

(.16)

Estraordinary/Cumulathe Eileet items h r Share

• l'ARNINGS(II)SS)PER SilARE 8L54) 42.11 DIVIDENDS DECIARED PER $11ARE 81.96

$1.96 RTIALASSI'l3

.82,540,036 82.516,717 bUuddm' COMMON SR)CE EQUfl1(Ul0l'MNU5).

8761,976 Shih.894 TatuityArul Ikok Vahr Ivr Wre.

816.52

$19.06 f.rmg.7mn Ikht Divkk uds Paklh r Share.

81.96 81.96 (thmthv31)

Average Shares Outstiuxling.......

.46,112,255 46,103,64S PREFERRED SR)CE OF SUBSIDIAR)'(Tilot'MNDS).

8153,704 Sl55,5N Dnkk nd ik quirement.

$13,232 412,055 Eminkks! Cat.........

B.5%

h.5 %

II)NG. TERM DENT (Illot' SANDS).

8516,751

$449,292 Interest......

879,421 530,737 Emlckk d Cost.

B.7 %

8.5%

i 1.nydoyer tha NUM elER OF EM PIDYE13 (DfdEM BER 'll).

3,444 3,147 OPERATING PA)RolJ,(ril0PMNDS)...........

893,063

$47,623 CONSTRUCIlON AND (TrilER PAi~ROIJ.frilot'MNDS).

$42.215 834.424 PGEl.11CTRIC ElliMA1T.llOl'ES SOI.D(MiljJONS)

OrlA4Tl0VS Ik skk ntial..

6,159 5,924 Sales Arul C*mmercial.

5,141 4.565 Cmtmm Imlustrial.,

3,509 3,326 Miscellaneous.

b3 95 Sales kir Ik sale.

2,9%

2.935 Total.

17,h49 17,145 OPl: RATING REVENUES (Til0UMNDS)

Ik skk ntial..

8293,722 42h6,034 Commercial.

261,345 253.970 laulustrial.

133,331 127,948 Miscellaneous.

3,362 (3,314)

Sales liir ik sale.

92,323 C.206 Total..

8754.083 8747,644-Average Priec h r Kihmutt llour (sales to retail eustomers).

4.69f 4.77f I

CUSR)MERS(ATiTAR.END)

Ik sklential..

496,165 4h4,293 Commercial.

65,821 67,N3 Industnal.

196 193 Miscelkmcons.

630 625 Sales for Resale.

12 8

Tot.d.

565,824 552.162 RFSiDENTIAl. SERVICE (AVER AGE PER CUSR)MER)

AnnualUse(likmutt. hours).

12,56ri 12,343 i

Annualikwrme...

$399.3S

$595 96 Price IYr Kikmutt llour.

4.77f 4A3e hmtSupply ElliMA1TilOl'ROU1WT(Mil.lJONS)

Generated (net)-liglro..

2,260 2,210 -

Gmerated(net)-Tiennal.

7,719 6,674 Purchaml-Primarily llgiro.

9,090 9,373 19,069 iS.257 Imes and Companylise 1,140 1.112 Total.

l7 h49 17.145 Ivakload kw-Winter (thmmuxh).

3,519 2.893 Utihty Plant GROSS ADDITIONS (Ill0UMNDS),

8121,035

% S5,634 CROSS PIANT(Ill0UMNDS).

.82,759,173 82,677.236 i imimles the no,ctim a 6,u,ime tai espense k ativuumairly 542 mdl m in 1%4 and 426 mdlam in in1 rnaltme innn anim b the Pt'c autinum the accelerated amortuatum dmtain enam.vtimlimntment tu emhts see %4e it. Lac Wuert d %dn > the nnamial Statements e 1%9 im4uiles n.gulatir3 enencid $% enllum Gir ctrtain rateluucs hev Nite H. hte Wtten d Nits k tlu l'aiaricial Statements 19% aval1%4 luulmk net charrnin livinne d $7 nidium avid

$47 aullam, rnrectneh.m a result dattptments eit:F simntment in WNPa $re Nde tR WNP 3 %4tlement F.nchange A-reement.d Neci en thr hnarrial stahments 1%%mlmleian dieres

. g sam asr utium imm the thuninunanterw s.sc.sre Nac u. Ntr Wenn insaml i9sa nicimir dier.iaisharges wirminne d e: mdl. i t 9 mill.m.rnpertnets ret ird io the at r knin!

$Let himr Pryect 19s2 int hab s an dier las kisid $ so onllem related b the aleinkerd I%ldr Sprmgs kirar Pryert.

1957 1956 19 %

1954 1943 1952 19hl 1950 1979 8 767.244 6 7%Jh9 4 526,M3 5 722,0M

$ Sh6,4M S 572,193 4 594Jh9

$ 450.237 4 349.951 8 175,905 8 191.360 8 203.h29 8 271,317 8 209,465

$ 2M,0f

$ th4,479 6 132,193 6 65,2h9 8 91,973

$ 22367 8 134.h57 6 123392 8 79,334 4 43,433

$ 95,9M S 72,593 8 32,292 8 (13.956) 8 (6,437)

$ 35,N4 t 53.617

$ 113.031 8 15.h30 6 134 M7 8 123,h42 4 79,334 4 97,050

$ 95.9M

$ 72,593

$ 32,292

$1.99 4.45 82 97 82A0 ll A7 41 06 82.54 82.03 81.06

[30)

(14) 1.32 36 52 45 8.34 42 97 82 ho 81 A7 62 3h

$2 54 62.03

$1.06 41,96

$1.945 ll M llAl 41J7 8134 4131 4130 41J0

- J2.621,693 823h4,161 42A56Ah!

$2,545.957 82.442A93 82,396 153

$2.293.243 82.103A75 81.h5R.331 lh69,94h 6 % 5,965 8920,420 6551,555

$7h9.027 6755,526

$703,990 8627,069

$551.612 418 56 llR54 820.13 819.05 llh.t h

$1547 417.63 417,39 417,55 81.96

$1.93 81 66 41 A0 lif6

$1J4

$1J0 4130

$130 46,0M,506 46.031,$0h 45.341,310 44,221,525 42,512,9W 40J37,d17 39,024,435 35f85.621 30,403,911 4109,lM

$237JN 8249,WO 4262,093 4265,393 42M,676 4146,993

$145,500

$150,000 817,902 632J26 634.101 634,472 434 h10 426,956 113,373 413,607 413,630 639 13.3 %

13.14 13.0 %

13 0%

12 9 %

9.0%

9.1 %

9.1 %

lh92,316

$971J36

$596,623

$975.466 8959.526

$1,045,M4

$1,099,20%

$1,0%,570

$756Jh2

$90,197

$97,3M

$102J23 4107,437

$112.674 4115.137 4124,365 495.630

$71,356 hAS 919 10 l %

11 0 %

10.34 1044 10.54-11.5 %

0.3%

3.107 3,093 3,146 3.135 3.212 3,240 3,244 3.106 2169 5 %,321 652,543 thlJ49

$79J71 475 M 0 663,564 li?,MB

$ 46,590

$37,105 633.063 429,496 426,595

$27,011

$27,627 633,071 833.134

$32301

$25 lh3 5,553 5.572 5,M2 5J%

5,4 34 3,f43 5.349 5.526 5f31 4,672 4,495 4,379 4209 3,925 3,925 3A44 3fli 3Jil 3,178 3,068 3.026 3,071 3,002 3,227 3.695 3.479 3,555 95 95 97 96 99 93 107 110 112 2.952 4.346 4,306 2.240 1.M2

'999 2,312 1,042 513 16,450 17.552 17.fdd 15,354 14.302 14q 15.307 13.h74 13,652

$267AM

$269,019 8283,415 4257,996 8212,590

$203,405

$212.463 8201,192 6159,135 259.524 247,h67 247,513 227,660 173,401 169,932 149,507 127,165 96,402 12h,191 134,316 142,305 140,034 109.133 11h,270 116.295 94,452 72 h39 40,967 32,h2h 31.h05 29.073 d6,524 (4329) 17,6%

21,431 9,414 66,360 75 M0 121,572 67,105 54J56 85,415 9S.636 45,967 12.131 8762,927 4759,912 8526,643 8722,068 5%6,4N 8572,193 4594Jh9

$490,237

$344.951 4.93t 5.00f 5.12e 4A4e 4 04f 3A7e 333e 3W 2.54e 476,4hl 470,156 461,076 454J32 454,950 445,563 441414 3,527 423,359 66.821 64 059 62,245 60,575 59,551 57,914 56,6 6 55479 54,029 191 IM 191 155 190 191 197 193 IM 624' 622 00 5 631 633 629 1,397 1,373 1,367 6

6 6

6 4

3 4

3 2

M4,125 535,011 524.156 516.129 315.32h 507400 501J10 490.375 47 i971 IlJ51 11,957 12J51 12,644 10,027 12,691 12,151 12,910 13,614

$5fAh8 457hih

$620.07 65M61

$470.51

$45536 64h3A2

$470.01

$3S3.54 4.hf e 4A3e 4A5e 4.47e 3.9:e 3.59e 3 97c 3 Me 23he 24S6 2,509 2,405 2.995 2,641 2,644 2,205 2311 2,255 4.336 6.337 6,003 4J44 3.352 4,003 5,MS 4.941 4,513 jl.259 9J71 10,352 h,451 6.9%

9,002 h,196 7J79 7354 17,MI 15,617 ISJ40 16,190 15,151 15 649 16,2h9 14.991 14,562 1331 1,035 1,140 606 579 742 952 1,117 910 16.450 17.M2 17.650 15.3M 14.302 14.907 15.307 13A74 13452 2309 2009 2,933 2,562 3.166 2JM 2 M7 3.041 2,954

$75,922 451,955

$10$340 ll2h.957 4191 131 8305J65 8294,651

$292A33 82'>l359

$2.607JOS 42.551.428 42321,476 82.626.193 82,5$3.549 82,556,016 82.413,600

$2,171,598

$1,929,163 8 At teaknd 19% l'ordmd General disvntmued its rea! estate op ratom Cunent and prwr years' amounh are not rebcted la operatuut resenues and net uprratmg imwne

• 19'd im bles the tumulaine ebct of tknge in attowdmg prmciplr related to l'Gl. s mmtrewnt in WNP& See Note 10. % W3 4ettlenen' Lu hange %greenwnt, of Notes to the I'nwinal statwnents IM2 incimici an estranrdmm gam from debtwret) em hanges 39 x

un.wocmu acenos nostesromos si \\lt >l; < il i It 'l lis a

PORTLAND GENERALCORPORATION PORTLAND GENERALELECTRIC COh!PANY KEN LllARillSON EN LllARRISON Chainiwn ofIhe Boani arul ChiefDnstite Officer Chainnan of the Eken! and Chig'hecutite Ofscer RICilARD C.REITEN F.KAY STEPP Prekicnt PreskimtandChiefOperatingOf]lar LEONARD A.GIRARD LEONARD A.GIRARD SeniorYkePersklent GennulOninsel,oralSecretanj Senkt Vice President, General Counsel, atul Sectrtanj CDilOBBS CDIl0BBS Senior Vice Presklent arul ChkfFinancial Ofiar Senior Vice Pursklent and ChiefFinancial Officer JOSEPilhl.lilRKO WILLIAh!j.LINDBlAD 11rasunr Senior Vice Persident arulI hkf Technical Ofsar GRIEG L ANDERSON JOSEPilhl.lllRKO Ominiler,;nd Assistant Treamrer Treasunr DON E KIELBI,0CK DON E KIELBl.0CK VicePresident,lluman IVumrces VicePreskinst,IlumanIVsources I

D.WID K.CARBONEAU POllTIAND GENERALENClIANGE,INC, Vice Pn>& lent, Infonnation Iksourres ALVINALEXANDERSON GRIEG L ANDERSON Prrsident Contniferand Assbtant Trrasunr CilAllLES LllEINRICll Senior VicePrredent.

ENERGYSERYlCES DIVISION i

J0llN A.CAhlERONJR.

DONALDII. LENGACllER VicePresident Smkw VicePtr&lmt ROBERTE hicCULLOUGil CLARK G. ANDERSON ViceFresident Vice Prr& lent, blarleting and Custorner IVlations FRED 11.LAhl0UREAUX YacePresklent,Dutrilmtion hilCllAEL E.COBERLEY Yice Pursulent, Planning arul Contnd GENERATING DIVISION WALTER ht.lllGGINS Senior VicePresident

- DAVID W. COCKFIEl.D*

VicePresklent, Nuclear RICilARD E. DYER VicePresident,nnarhianagement PEGGYY F0WLER VicePersident,PonarProductkm

%eaumuno 40 M..

l'oRHANDGENLhA14UlfoMTION ANo sel61D14hn.s lu niu > < il i >toi t n >lo,

I G\\\\TNETHGAMBLEBOOTH CAIXERTKNUDSEN hirs. Booth is a n porter and producer for Oregon Public h!r. Knudsen is Vice Chairman of the Board and a Director

. Broadcasting telnision. She is active in civic, arts and swial of hiachtillan Bkiedel, Ltd., a Vaneomer, ll.C., forest products sen ice organizations. Elected a Director in 1981, she sents firm lie also owns Knudsen Vineptds in Dundee, Ore, on the 11uman llesources, Nuclear ikwiewlPublic lblicy Mt Knudsen sents on the lluman Iksources # ~ Executive and Nominating committees.

committees. lle was elected to the lloard in 195tx i

PETER].BRIX WARRENE.McCAIN Mt Ilnx 3 Chairman and Chief Executive Omcer of M r. McCain is Chainnan of the Board and Chief Executive lirix Maritime Cn a Portland-based marine transportation Omcer of Albertson's, Inc., a retail food and drug chain oper-company, lie was elected to the Board in 19S3 Mr. Brix ating in 17 Western and Southern states, head <luartered in sents on the Nominating, Executive and Finance Boise,Idahn lie was elected a Director in 1989 and sents committees.

on the lluman Ik sources and Nominating committees.

EDWARD L. CLARKJR.

RANDOLPHL. MILLER Mt Clark is a partner in the Salem,0re., law linn of Clark, President ofThe Moore Cn, a Portland electronies, com-Lindauer, McClinton, Krueger, Fetherston & Edmonds.

puter and omee products distributor, M t Miller is active in Mt Clark sents on the Nnelear ikwiewlPublic Policy, numerous civic projects. Elected a Director in 1987, he Nominating and Executive committees. Ile was elected to sents on the Nuclear IkviewlPublic Policy, Audit and thelloardin 1986.

Finance committees.

WILLIAM W GALLAGUER ROBERTWROTH l

Mt Gallagher brings a depth ofexperience in the financial M r. Ikith joined the Board in 1972. lie is the retired Presi-j industry to the Board. lie is President of the regional im est-dent and Chief Executive Omcer ofJantzen,Inc., a sports.

ment banking finns ofGallagher Capital Corp and Gallagher, wear and swimwear manufacturer with mots in Ibrtland.

I Platt & Ca A Board member since 19S6, Mt Gallagher Mt ik>th sents on the Audit, Nominating and Executive serves on the iluman lksources and Finance committees committees.

KENL, HARRISON BRUCEG. WILLISON Mr. llarrison is Chainnan of the Board and Chief Executhe Mt Willison is Chairman and Chief Executive Omeer of Omcer ofIbrtland General Corp and PCE. Ilejoined the First Interstate Bank of Oregon. Mt Willisonjoined the Company as Assist;mt to the President of PGE in 1975 with Board in January 1989 llis community act.,ities include a background in banking and imestment management, work with trade and higher education groups. lie sents on Named President ofIbrtland General and elected a Director the Finance,iluman Besources and Audit committees.

In 19S7, Mt liarrison was appointed by the Board to his current positionsin December 1958.

DR.]ERRYE. HUDSON De lludson is President of Willamette Universityin Salem, Ore, lie earned a doctorate in American history from Tulane Uni vrsity. Elected to the Board in 19S4, Dr. Iludson sents on the Audit, Nuclear FeiewlPublic lblicy and Finance committees.

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