ML20126M206

Portland General Corp,Annual Rept,1991

ML20126M206
Person / Time
Site:	Trojan File:Portland General Electric icon.png
Issue date:	12/31/1991
From:	Harrison K PORTLAND GENERAL ELECTRIC CO.
To:
Shared Package
ML20126M198	List: ML20126M194 ML20126M206 ML20126M528 ML20126M535
References
NUDOCS 9301080232
Download: ML20126M206 (44)

Text

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Corporate ProPle Portland General Corpi (NYSDPoN) is a holding company whose principal subsidiary is Portland General Electric Co. (rat). Por. is a regulated electric utility serving more than 60o,0oo retail electricity customers in )

northwest Oregon as well as wholesale electricity customers, chiefly utilities in California. Fundamental Strengths Port-land General's long term goal is to provide consistent and growing earnings and dividends to shareholders by building -

on fundamental strengths: 6 An econ 6mically diverse, compact and growing utility service area: A favorable-economic profile for the electric utility service area points to continuing investment opportunities at pois :5. Diverse, low < cost resources: We continue to make progress in asset productivity, reducing risks and costs of generation and reinvesting in the utility. I Valuable long distance transmissiorilines: We're able to buy and sell power to help us make -

the best use of our system and keep our prices competitive, i Business strategy aligned with public policy: Our y commitment to environmental stewardship, energy efficiency and safety meets our stakeholders' expectations and helps us achieve our business goals, 6 Dedic,.ted, hard-working employees: Our employees have qualities needed for success in the ag?os - flexibility, customer responsiveness, integrity, teamwork, cost consciousness and community, mindedness. Cover photo: With its attractive downtown and waterfront, beautiful parks and neighborhoods, mountain scenery, recreation, low unemployment and good workforce, Portland ranks as one of the country's most livable cities; m i

101

. --r,m m tm ua m m . sm a ,e .

FINANUAt HIGHLIGHTS .

% inaeose 19 91 1990 (Dwease):.

Operating revenues $ 88 9,935,om : $ L 85 2,205,o* - 44" Net operating income $ 13 6,638,o00 $? i76,457,om.: (22.6)-

Income (loss) from continuing :

operations $1 (2o,698,ooo). $ 99,99,ooo NM Net income (loss) .- ' $ (49,867,ooo)- $ 99,952,ooo Nu L-

- Earnings (loss) per average common -

i share from continuing operations '.$(oi3) 4 _$ 2._i 7 NM-Earnings (loss) per average '

common share $(i.o6) ._  ; $2 17 L NM Dividends declared per common share - $ i.2o . $ 1 20, . -

Cash flow dividend coverag t ratio (times) - -

39o '3 10- 25 8L Book value per common shar * - _ $is.25 $i7 49~ (12.8)-

U Return on average common eq ilty* - . (6 3)% L f27%_ NM-:

Net utility plant . $ i ,8oo,501,0N =$i 77 8,723,ooo--

i 2.2 >

Utility construction expenditures $ 138,9os,ooo $ .- s o9,i 16,ooo - -27 3 Cash flow provided by operations : _ _ $ - _ 2 i 66,65 ,o00; - $ 19 8 ,675,mo L Internally generated cash as a percentage of utility construction l- _i16 % 223%' 157)'

Pre. tax times interest earned . i .o i .. 23. 8 - (57 6) - _

After tax times interest earned o.82 i 87 (56. i) -

Kilowatt hours sold (in thousands) to retail customers - 15,71.5,0

• 15 56 4,ooof 1.o Retail customers served at year-end 599,62o' 584,o23 27' Average kilowatt hours used per -

residential customer 12 582 . 2,496 L -o.7-

'Exclaica conna+quarUneanwd Gareutka w-Not Meuungtui.

6

.s

O ntm. am cwm. . somum lfTi!RTO$HARtHOLDER$

i 1991 was a year in which a good decision had costly near-term implications and a prior bad investment required decisive action. These events resulted in a loss of $5ci million for the year. Despite this disappointing near-term performance, the financial health of your Company remains strong. Impor-tantly, we are confident that our dividend can be maintained. $ The decisions we made about our Trojan Nuclear Plant were the right ones, yet we suffered financially in the near term because of those decisions. During the yearly refueling outage we discovered previously undetected corrosion of the Y,$Djf plant's steam generators. In addressing this new information, we were faced a, v m with a number of alternative courses of action. k With the long term

?! 25 2138 it.88 am u.n u.n outlook for Trojan depending on both operational excellence and public and

" regulatory confidence, we elected early on to continue a course that would 2;'8

, 3g

"" "" build that confidence. Our conservative approach was costly in the near term, but absolutely essential for long-term credibility. To emerge from the shadow

1. "p[

1. of uncertainty in which nuclear energy operates in Oregon, we must manage d the plant in a manner beyond reproach. k The wisdom of this cautious approach has been validated both by actions of our state and federal regulators and comments by news editorial boards. We received a favorable ruling from the Nuclear Regulatory Commission (NRc) Feb. 5,1992 allowing the plant am to return to operation. The Oregon Public Utility Commission (euc) also

.gegimo-om

.g gim-um gave us approval to collect excess replacement power costs, and PGE began collecting those costs jan.1, 1992. However, the unreimbursed excess costs resulting from the extended outage depressed 1991 operating income by $67 million. k The Westing-b house steam generators, 1 - -

s,.

which were the root cause of 1 Th* I 8'"Hlio"-

g Lilowutt TrnJan this problem, were repre- .%

i Nuclear Plant's m e .. g 210-foot-long turbine sented to be designed to last ',

[ generates einough 31jM M-the full life of Trojan. With 5 Ji '" 'a ' " PP ' 7 F g g t/ one-fourth of PGE's 2o years remaining in the eo customers the rlan

,, : p. ,

FV1 rhe

/ " ' returnea an sen< ice original planned life, this > p in March 1992.

problem should not be occur- E' as . f-ring. We have made it clear b , [ '

y,,4 "1991 was a year in g4 u hich a ; good deci-slon had cussiv near-4 '

term irnplications ff ?

4 j ' (1 Q;

-)y:

and a prior had investment required

[ 7' QL decisite action."

o

("i w g

O rwan, a. . a.,,,s. i s-n -

~

LilitR TO $HAREHOLDIR$

s to Westinghouse that we believe they have both an ethical and legal responsibility for the near term costs of the problem and the A hase ssader- ultimate replacement of the steam genera-redalmer machine that foods and tors, if necessary. Unless we see progress in sh I or uan 1 at lme hemie, h will in{tiate legal action. Underscor-Renegotiated coal /

and sransportation T j ing the importance of public credibility,

,nad,$h,$t$ n'iIo[ h. two independent "Close Trojan" ballot

,coswmicui sa ron, measure initiatives have been announced j

for the November ign2 election This is --

the third election year in which we have faced such initiatives. Although we have won both prior ballot measures by signi6 cant margins, we will be prepared to

[Urtungs i et Average defend vigorously the interests of our shareholders and customers. gj With omnuon share a nvucnas an eye toward reducing the ever-present political uncertainty regarding t hlared Per share Trojan, we acre ra with the vue to include an in-depth review of Trojan in our $ ff" ' gl.,

long term energy resource plan. This plan, called the Least Cost Plan, entails , ,

substantial public and regulatory involvement and we believe will build a lj ljj broader understanding of the role Trojan plays in voi:'s and the region's long- f term energy supply outlook. k Two significant developments outside the

//

utility hurt us in 199 : Our investment in Bonneville Paci6c created an y unfavorable earnings effect as well as a setback to our long-term plans for

~

growth in the independent power business. This dramatic reversal of fortune at Bonneville Pacific in such a short time deserves explanation.

g/

On Jan.

22 a partial explanation was provided when our Portland General lloldings, -

inc. Subsidiary 61ed a lawsuit against the accounting 6rm Deloitte & Touche, -

the outside auditors for Bonneville Paci6c, and against four Bonneville Pacific ,

~

insiders. The suit alleges that in making the decision to invest in Bonneville ..m ni m Paci6c we relied on a false and misleading portrayal of Bonneville Pacific's 6nancial condition, business history and management abilities. This resulted from material misrepresentations and omissions by Deloitte & Touche and the Bonneville Paci6c insiders we have sued. $ No matter what the reasons, our M

"Ihr 1. cast coss Plan

' .i entails substantint public and regulatory II involtemens und ut f

I -t  :

b<licte u Ul build a

,* hroader understand.

j$ w

!. ing of she role Trojan v.

J. f; a plays in PGE's und w ' the region's lang-term k , , emergy supply outto >k."

.. .J

O runm creu p m m nsa m us LETTER TO SHARIHOLD(RS experience as an investor in Bonneville Pacific has been both costly and painful. My strong belief is that when confronted with such an issue it's best to face up to it, deal with it, and get on with business. We have done so. We will, of course, pursue every avenue of recovery for our investors and defend ourselves against third parties that maintain we were responsible for their investment losses. ( Broad industry and economic forces significantly reduced commercial real estate values across the country in 199i, making it necessary to add $29 million to our real estate reserves. As a part of our previously announced exit from real estate investments, we had no choice but to reflect these lower values. $ While the above described events domi-nated our ingi financial results, it is important to recogni:e the many succes-ses and positive results achieved by your Company in 199i: s Cost contain-ment measures, including a permanent employee reduction of approximately 3co positions, will lower future costs by approximately $14 million annually.

s We have developed a sound working relationship with the vue. Early in the ng;c - db%w an

.. year, it issued an order increas-

- t

.a s .i

[i n.$ U 4

. fi " .

_ m g.g 7g g" ing rates to our customers by 3 4 A city of human ,

j percent, or about $27 million, it wale set in a ditvrse '- '

org;D e nur ural e n riron men t, - h m.4 .Mf . 2, E ==g.: ~

has also responded promptly and Portland offers a =- - . ..

favorably to our request for re-tjualuy oflife that -  : it=:=:

===

continues to attract  !!!~ iM covery of the cost of replacement near residents and hg ,M businesses so e 4,W g W, i .;o q power during the extended out-the area. ~ ' ~ ^*

age and is considering our re-l _

,.. -=.- .- ~ quest for future rate coverage of "J e "% some of the extra cost of the Tro-jan steam generator repairs. s Despite a national recession and slowdowns in some of Oregon's key economic sectors, our energy sales to retail customers rose by 2. s percent over 1990 and we now serve over 600,o0o customers.

s The Company's hydroelectric, coal- and gas-fired generating units operated extremely well in 1991. Because of the Trojan outage, the Boardman and Beaver plants and their operating personnel were called on for record levels of output - and delivered. s The long Trojan outage in r991 should allow us to operate the plant through the remainder of 1992 -until the spring of f

v}.J. -

r "Despite a national

/ recession und slote.

M #

donens in some of

[-{'"f g o regon's licy cronomic sertors, our g

k energy sales to retnil

.\l\

k . "jI customers rose by 2.!

', k fi t b% s percent oter 1990 und

(/. 8 sY w see noir serse na cr M U' 600,000c u st o mers."

O neo amium.. sou llTTER10 SHAREHOLDIR$

1993 - with only a brief economy shut-down during the peak hydro period, but without the usual refueling shutdown. This ushting iechnician Nick Gunder iststalls will contribute to earnings and reduce

,,,,,,,,,,fy,,,,,

Hght bunn during a operating risks in 1992. honger term, reduc, lighting ectrofit to ing the operating volatility associated with The Nature comer.

vanex offices. In Trojan will be our single most important ~

399i,pccaton,a objective. $ In positioning the Company >

j,',",'"g""" 'U' ,

rnidential. com.

f for the long term, we are increasingly look.

mercial and indus.

ing for ways to align our busmess strategy ( t rial cuitomers.

with good public policy. Energy efficiency c Nf g investments, which allow us to better serve 1d52$

customers while at the same time earning incentive returns for shareholders, smtm .4 %.rk are e good example of this. $ Another important way in which we hope to Enern n ;E

• @.:'98'l achieve this alignment is through the previously mentioned Least Cost mm planning process. This proces encourages both public and regulatory input Y7 into our long term resource plans, thus reducing tl e risk of unfavorable regulatory treatment of future resource decisions. y We have previously l M }j 1 reported to you the decision to concentrate solely on the electric utility

{; '

business in the future, it is obvious that the results in our non. utility busines-(/~

• g ses have been unsatisfactory. In recognition of this and the other challenges j immediately ahead of us, a " utility only" focus is the prudent course. $ con E l, has attractive prospects for the future. We operate in what is expected to a ,

,c y {.; continue as one of the strongest economic regions of the country, have a eu diverse, low-cost resource base, competitive prices, and a dedicated, hardworking employee group. These attributes were overwhelmed by events in 1991. We have positioned ourselves to have them come to the fore in 1992 and beyond. ( Thank you for your support during these difficult times.

/

44424#72 Ken L. Harrison Chairman and Chief Executive Officer March 13,1992

( ;'I S W' "We operuse in what is expected to con-ed( ./

pif

• tinue as one of the strongest economic 3 '

') i t regions of the country,

.y } QI have a diverse, tow-f cD$t resource ba,c,

? competitive prices,

.~ ( EJD and a dedicated, ,

s ( hardworking

, employee group."

. _ _ _ . _ _ J

O rwao cm nemem suu n REPORTIO $HARIHOLDERS Advantage: A $trong Etonomy We are fortunate at n - m <~

t ,L;~,V .

Portland General. Not only because we like :~, liv- Q g fe ,/ y w 'f wM ing and working in this part of the country so g: - b* ~? ~ @:T bt' P b3 The Port of Portland much.11ut because our quality of life, skilled _ , .

fM , gg runtuccond omong workers and overall desirability as a place to live g 's h wes coas: ports in wa,,rs,rn, ,,por, and work continue to attract growth and invest- [js w P"#

g ' y',""["l;,', , ,[

ment. n' While many jobs have been lost over w*- 'riba8<$ 'a 8h<

, the past year in the nation as a whole, employ-

._W- increasing economic growsh in iws ment is stable here. Despite a national recession, Oregon continues to fare better than the rest of the country. A growing and increasingly diverse -

industrial base - mostly concentrated in our area-incledes construction, transportation equipment such as trucks, rail cars and ship repair, high technology, paper mills, printing and publishing. Oregon's strategic location on the Pacific Rim also points to increasing exports to the robust economics of Asia, k Where We Find Ourselves Today We are an industry in transition. New legislative initiatives that could alter the industry, such as the proposed amendment of the Public Utility Holding Company Act of 1935 and open qg wwmmmvgyww swwg transmission access, are under

~

consideration. Other changes l

' in energy policy and technol-3.

g

! ogy have released competition into energy markets. We are

, New competitors in s l clectrie m artes,are not the only energy store in gis ing cu<tomers I choices they're more W- m town anymore. In fact, it,s he.

l uccustomed io rnaking in retail I coming a regular energy mall l shop, Jae shese in . , out there, with new com-Porriond s trendy i '* k* E l""""

Northuvs e E Y M:gg s WJ5P petitors opening shop all the neixas rhood. r _ y N

$h u time, k The change that

_ ae -

W ~i; 9 C competition brings will come l j , regardless of what we do. So we O_a 3l are prepared to respond to and Mm N even advocate change, where i4

)' Carol Klingels, corporate

,i Huyer. e Since 1990, Klingele has been cont'erting the Company to recycled paper products. Recycled paper eneelopes alone sose PGE around $2 5.000 each year.

"Hy using recycled paper a hererer possible, tre keep more paper out oflandfdis and sure trees as well ne money."

I

O nimo a.,..amm. , smac REPORTIO SHAREHOLDER $

it makes sense. Better to lead than to be led, we believe. ( As in many competitive battles, the low-cost producer may win. Keeping costs low will test our competence. But today, consumers want more than low prices. They want quality and value. They also apply a new measure: environmental sensitivity. It will not help if you have the best prices and service, but you pollute your neighbor's backyard. This is doubly true in environmentally aware Oregon, k Our regulators want different things, too. They want us to promote alternatives to building power plants. And they have shown their willingness to support our efforts to invest in ways to save energy. kThe utility's traditional role of meeting customer energy demand will continue.

But the challenge will be to supply the energy our customers need, at the lowest cost and best service, and to do it while improving the environment.

k Providing Value to Customers Back in the old days, utilities theoretically didn't have to worry about their customers, since they were supposedly monop-olies and consumers had s'

..P , ,

b -

4. - -

- 4 "i 1

1.;k~

no choice. These days, V

f,. h%,1, &_

m-- increasing competition Leadman wirema" EUR b cienn Price inspects -

1. compels smart companies ehe Griuly subseation -- uaw 4isturi- e = m

~~_ N ur- < = - rja to pay closer attention to on she nicific ~

wrrhwst ine ersi, M[r

[- / a their customers. (n We eransminion line.

liere. PGL recentiv II b '

", L Mieve we've 'always pro-i,uroned a new e7 p gp a ,.

.y e ma4 vided good service. But i i soo4tineois F circui, breater ior increased retiabiliev. }j d

gy' j/d N 7 % N -

we can't be complacent.

We must provide superior

[i 3[ff ity. service. k Take reliabil-rd_!; wa- we&"y 'A ~# mhW'*l

_ , It's about as basic as you can get: Utility customers expect the juice to be there when they need it.

So, besides investing in the heart of our system-our generating plants-we're also investing in the arteries and veins-our transmission and distribu-tion system. - k in 1991, we invested in projects aimed at maintaining and improving reliable and economic service to customers. We added new trans-formers and lines in growing residential and commercial areas. We beefed up equipment to serve many of our high-tech business customers, whose opera.

_.[ Mel Ltdridge, Field Representutive,

. Energy Management.

• E!drhf tge Qs .

helps residential und small commer-

, cial customers understand where o their power zoes and how so reduce n usuge if desired. lle has also eurried T C *P his message to ulevision through

('.p.

the PGE-ciesponsored KGW.IYfurth Aterr Compaign. "My mission is so help customers use energy wisely."

' ,7

'N4

.h. i.

~{\

O I

, u,esas,,s <,~s s ,m s,e 1

REPORil0 $HHtHOLDIM i

_ _ l tions require continuous, high quality electrical service. We plan to continue imr> roving out transmission and distriben. a system. The underlying i

j philosophy: Reinvest in the business, mainte.in your facilities, av! ihey will continue to provide a return on your investment. k Moving indoors, another major project with an overall objective of bettering service involved  ;

I '

nothing short of replacing the company's 25 year old customer information i

computer system. When fully installed in 1994, the new system will help us respond more quickly to customers' needs into the next century, with better information, and do it more cheaply. ( Inucosing Cost Competitiveness All this '

talk of improved service probably has some people running to their cal.

culators. At what cost? $ The fact is, service can't be improved without I

! considering cost. For competitive reasons, we can't simply send our prices  ;

i through the roof. The trick is figuring out what really benefits customers, i k For example, we've saved $a million a year by taking a more efficient i

approach to answering cus. '

l tomer telephone calls. We even tried some projects that l would have been considered I

unthinkable a few years ago, i

l m -

We're working with the local Itt ,+tiuses anel  ! gas distribution company to owns c 65 peerens f, shurcofsh, g ) save costs hy sharing 11 ci  ; k  ;

Pla n t,1<<u s ed 3 ( nobody tried it until we did.

160 miles euns of $ e:

Portland. The plong g ,

j (h We reduced our workforce

- I runfut to months  ; L .1 gr.

( ments on truck helps moinsain postilic regulusory relations and i

l

.e1 enhances nuclear sujety," j a*

i l

O newst osauw-i ssemt.n Rtr0Rt10 $ hat!HOLDIR$

=

w y son said we'd turn Ttojan i i into one of the best nuc.

T rufu n's ,,,.

lear power plants in the tunisuitment to ,

g' [ g;.,, h,8' #q g g Jgsg ,

sujes) tequires G

' initacles overnight. And lontrot room /7 reperators llLt J

[ud - -h , ' g i" AW Dientl%dc to [ . [j [h.a--.[ in 1991, 000 really had to panttipate in n' * >

pf put its rnoney where its b { :s g tegular holning in 4 the runttol eoom y p au ~ mouth is Major compo, simulator, on exact w =1 # ~

eeplitu of f rofun's is b %g nents of a r;uclear plant, controf eoom. lK AN

-} gm steam generators are giant

? -

E 3 ;g .; heat exchangers, like car i

n$,__fadC A .* . . radiators, that turn heat energy frotu the nuclear reactor into steam to drive the turhMe that creates electricity. During each annual maintenance outage, Por has inspected the steamt generators a ' found some deterioration in the tubes. The rate of deterioration wasn't alarming, and the tubes in question were plugged. Or taken out of service. k But starting thre years ago, we noticed increased rates of deterioration, si. :ht at first, then much greater in 1991, including some previously undetected types of cortosion. We followed the most conser-vative route, taking them out of service or repairing them with sleeves fitted inside the tubes. k in Deceml it, por asked the NRC to allow it to restart the plant. The NRC agreed, setting the stage for plant start up in March.

$ What's Next: The Least Cost Plan Getting the plant ru ,ning in 1992 rolved a short term problem. But other issues pqpp e

,,, p .

are on the horizon. We expect to face '

Q F "q; -

M ~. >

, C* *b Gary Wachs,1roJon two hallot measures in November q , 2,orne,,g sp,cstat, aimed at closing Trojan. And for the - N '""' 'h[ll,"'", ,,,

long terill, We Inay have to decide f as s' av<k 3<>as o

• training sessions whettier to replace the steam , ' regulied o/all f% -

• operators six times generators, Currently estilnated to Cost " ; l~ i y,,,,gy p,g,g pg,yg.,

roe up to h135 million.16 it in the best "' d "' k # ""'" """

the activity.

interebts of our C u st oinc ts and shareholders to invest further in Tro-l _

Don Lones Working Foreman, M Meter $ertices.

• When his huss tola him to sun the depursment

• iike it u4:s his own business."

loney impicmented time ,

cost-und paperuwk sating measures. "Alot of thile

' things ran add up to make

' a big aljference.**

?

. . . . _ _ _ .. _ . . . . . . . . . . . . .m

O y ,,g .ip ygg g git RitoR110 5HAR[HOLDIR$

jan? Would it make better sense to invest in other resources! k These are some of the que tions being asked in the two. year update to our ao year 1. cast Cost Pbin. The plans, mandated for all reculated energy utilities in Oregon, require utilities to involve the public in their resource decisions. The plan.

ning process, started in November 199:, is expected to conclude with a fmal plan to the Oregon euc by October. Its conclusions should help the Company make informed choices about Trojan's future in a rational, le5s Political atmosphere. ( Generalbni Reducing the Risks hinke the power t,ystem as reliable, efficient and productive as possible. hiake prudent investments in new resources. hiake them flexible, low cost, environmentally benign and diversified. Reduce current and future risks. That summarizes cot's philosophy as it looks out over the planning horizon for new power resources.

Our power plants are the engine of the utility. We must make smart decisions

' about current and future re-

'* ,,, sources if we're to succeed.

k We statt with our current

, resources. Por has built one of g.

the most diverse power baser, t- -

(

"A  : in the country. We've got a fy ',,,, good mix of our own hydro

1. s. .. 4 to cenelloylon, ,  ; plants, coal, combustion tur-nou,Jmun Coal

}_

p -f"*- , '{

Plans I:quipmen 1 bines, nuclear and long term operosorchetLs a horPet and,,  ?

j ]M contracts, chiefly hydropower. _

onc ol no.namon's .

( At the rate we're grow-

,i,h,,o.,v.a.e,. v m,T 3 w ,

ite... nouramon ece M ghp "

R ~ & ing, however, we'll need addi-new psoducelon . te '

-g q g

,cco,d. in ews. 3~ q tional capacity to meet peak-

,( l~ N

, q ing needs by 1995 or 199 6 Our first step is to make our existing plants more reliable

,ar w '

y 'E N g and productise. j Possibly T-s lqQ .

g the last two years has been the km ("% h @ e h m - . . transformation of our 5 3o-(?4 Doug As crill, Manager, Informa-tion Systems.

• Arerill was i,, stria-h mentalin bringing PUL engether I \ with revo other Northwest utiltale a fo des elop a near cusroener infor.

^

v motinn system, pooling resources M u,td dit iding the cost "Collabor. ,

" ~ y using gites us a near teuy so complete forge projects more quicity and lesi espenii clyr h 4-y L_ _ _ _ _ _ .

O n 3... w.a n.4.m. a....c RIPOR110 $HAR!HOLDiti tuegawatt iloardinan Coal Plant flotn a high cos* tly idle resource to a low cost. lable producer. Re- o V gphyyu,gy 439y)J o o p coal arid rail t r alis- ' -

riego t ia t es 1 w4 1%I. lend Agent Wes portation agreetnetits in 1990, as well Woldron (ce nte r), a nd as iluptoved operations in 1993, have 2 _- , ,

Hrswf and Hande (teja)

(- 4 y and f eed Wlchert (*lght) tuude lloardttlan one of Pnt 's tuost  : oj irigon i ngineering, preductive plants. It's alu one of ihe .

8'l,"'y','jg*'l4'""#7 cleanest in the west: so che Clean Air , f 1 8*lteline's tauer uader N j' < uk the ( niumbia River.

Act Atnetidinents of ivvo will have

) \4i t h, pip,iin, wul ensure no effect on operations through the I

j/ ",'",',',',', ',' "[j"'[,,,p,","

g d i990s. After tha tiene, under inore j stritige7t lequitelnents, we expect to have a strategy in place to continue to operate lloardinan ah a colnpeti+ l#g!AQtMLilaMGCMTJ,7,'2*'?

tive, baseload plant. $ Our e>34 inw deaver cornbined cycle cornbustion plant gives us the greatest ilexibility to incet peak needs. And with construc-tion starting on a 17 inile, $is inillioti pipeline to connect licaver with an interstate pipeline, iteaver's fuel cost and availability will get even better.

$ On the rivers, many of our hydro plants were built just after the turn of the

century and are as dependable as Swiss watches. We boosted their pro-Qy T Lv tian Noachowsu, gy #

7 E'

duction by .3 megawatts in i99: and heri ste in hn(t ia st.

expect increabed generatitig capacity instaHe energy-efhcient l liah Ing ehtoush iti:'s Commeraal t hhsing , 9 v1 e

' ( thb year. k Resources for the Future l'rugram. i neigY Coht-effective hydro, co generation e,3ars ,,s m.s m.se enaronmentonyso nd y[a-and renewables like wind, geotherinal neu ,esoun t.

and solar are potential new sources of energy. We are spending research and development dollars with the Electric Power Research Institute and Oregon State University to study these alterna-tives and ready ourselves for when renewable energy becomes inore cost-effec t ive. $ For now, energy efficiency is our most environmentally sound

-- . . ~ _ .- _ _

,y - . . - - - - . . . . . - - - - - - . . . -

% Com Van Kim, Anahas,Information Resources, and funes thopman, Spedalhe Human Resources infor-4 Ig munion 4psema, e Chapman und

'p kle played key roles in implement.

ing she new fiumon Ecsources payrnH system. "T he system to 6[* designed sofunrelon more fleribly b l In meeting eurporate needs whUr b ecdudng the ( ompun>'s opetution pad maintenante conta."

d .j i

. _a, ,- _._

O n.u.t t,mtuwm. i we .,n

~ Rifoiilo SitiisoiDiiI l resource. We aggressively marketed energy savings in homes, offices and j indtistry in 1991, saving 5,ooo average kihiwatts-enough enerny to power nearly 3,500 homes. We hope to meet at least one-fourth of our new electrical demand over the next 2o years through energy efficiency. Ten percent of capital spending in 1992 will be on energy efficiency. $ rot's increased emphasis on energy efficiency responds to the changing values of society. It's also good business. We now earn an incentive return on our investment in successful energy efficiency installations. In fact, eat earneJ $i.5 million on

, its energy efficiency installed in 1991. k With continuing growth expected, we will need additional resources to meet our future peak requirements. So we are examining ways to " shave the peaks" off energy use. These steps may help defer the need to acquirc expensive peak capacity. $ Even with all the focus on energy efficiency, however, we expect to need additional power capacity in three or four years. We may buy it or build it, with gas turbines being the most i

likely source. Either way, we will look to acquire new resources in small

, chunks, for greater flexibility. And we will continue to use our least-cost planning process as a forum for gaining regulatory and public support for )

our resource decisions before we build. $ The Environment We live in an environmental age, and in a state recognized for its environmental leader- l "M vg ship. For rat, environmental

',- stewardship is more than a matter of complying with the Com m unity ldesourc es

%Qw -

v

[aw, ]t is a key competitive sperfolist 1 ynda Tutum .yC.*h *

• teaches West S3 ttun / ['

• 9 strategy that can improve Middic school eighth- .d I graders ubcut energy I A earnings, reduce operating .

efj ciency. ntonh the ym y"" and financial risks and en-

Enr.yy Smarts prograni, (

the l*ortsund students ;

twer gleen high-perfor- e#

2, hance credibility with our

(

I mance shoint heads #{ constituents. . } PGE,5 under-and Icarned to conduct M ,.J ,,$~s gg g an energv oudit of t -. >

their homes. Fi ' "**g \ yc3gl[ed {n the adoption of a j74. - ' '

corporate environmental po!- ,

Q ya icy in early 1991. The policy

"; ;m.M*4hNL

. mv asserts our commitment to l

4 g l

Randy Nicolav, inspector. Facil. ,

itses Management. e Nicolay has I pla3ed on active role in setting up l PGE's paper curdboard unif wood i

-ecycling and seaste reduction pro-grams. "We inherited our world feoen ourfuthers, but now ste'se burrowing isfrom future generu.

clons. We need to pay the interest."

}

_ _ . _ . _ _ __ h~is dumu

O Nmm bau twms : sw.um Ril>oldidiiiif H0tDIR5 mi nimi2it'g waste in p Company operations, m.. g pon natuff,15.t C,$gAgyp Li k.y minimizing tal risk and environmen-takir.g the Inolnsl.t ut the relton.

kaund flutte project, y*y;p* h ["- lead in prornoting energy s

gers teady so f ag a bull pN S**" , , efflCie ncy. ' Por em*

trous, now Hated as u "N '

sensielig species.

Huell]f's eff ons io

' i OY Mb en ployees spent the rest of re? tore the bull trout 'N, I I putting the policy styre trcognited In # '

W b to work. In one Close to*

1991 by the Oregon i Department ofilah home example, we cut and Wilduje.

/ T , - scwy energy 9 use in our own fa-F# ,y cilities. A lighting retro-

~.. fit at our downtown Port-r a .1 land headquarters alone saved $15o,ooo in annual lighting costs, f f rot managers are incorporating environmental sensitivity into their everyday decisions. For example, when we discovered ecologically sensitive areas along the proposed route of a new pipeline to our Beaver plant, we changed the route. On the same project, we plan to tunnel under the Columbia River rather than lay pipe along the river bottom and possibly obstruct migrating salmon. k We made environmental action part of our annual employee incentive prograrn. Employees responded enthusiastically with projects ranging from paper, wood and metal recycling to reducing or even eliminating hazardous materials. h We have consis-tently supported regional efforts to save endangered species of wild salmon in the Columbia and Snake rivers. Hydroelectric projects have been a part of the problem, and their operators - along o -

• - r~mym~ my with other river users-should be a '

part of the solution, While there g ,.a m

o N 3

,$ pon naduf uses a

,,,,,, , n, s ,,,, , o yo ,,, ,,,,a,,,

likely will be power reductions on

"}"'[!,,8 '"

the federal hydro system, the overall ' Hound putte Dam.

The deer use the lake net effect on PGE should he minimal, d os a umn st,urve due to our relatively diverse portfolio W J

. nm s of power resources.  %~ -

b.g Y -

]cff Mong. Ised Computer Special.

ist, Information Processing.

• Wong g_

3 helped choose and install a system

'{ to ausomate 24 hour2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> computer opera.

i. % -

/[ tions, resulting in more efficient

1. and cost-effectie e sers icefor the Y

r Company. *l believe in < hallenging

h. 2 mystif to uvrkfaster and better Q  % while Leeping up with sestarck i \k and supporting others."

k t yy L-

O n,uo w.amm,n i so.m MAllAGIMINr5 D15W1110N AND AHimil Rl5ULilOf OPIRAll0N5 Deerview Portland General showed substantiall> !ower operating tesuhs in i99i due to increased costs awociated with an extended outage of the Trojan Nuclear Plant and work force reductions, coupled with losses from Portland General's nonutility businesses. The performance of Portland General Electric Company (ron ),

Portland General's principal subsidiary, was adversely affected by Trojan being out of service for most of the year while extensive work was performed on the steam generator tubes. Severance costs related to a work-foice reduction also contributed to oimong i:n cour an.i lo"r earnings but will allow for lower labor coots in future 3 ears. Portland GeneraPs Nu Ino w (IM nonutility businesses, under Portland General lloldings, Inc. (lloldings), incurred substantial losses related to investriieiits in noiineville Pacific Corroration, an na o an 100 no) independent power proJucer. In addition, the poor market for commercial real estate

/ depreued market values and resulted in additional reserves taken for discontinued

//// real estate operations. k There were, however, bright spots. rot's service area wntinued to grow despite the national economic recenion, adding the second largest number of new customers in the past decade. The Oregon Public Utility Comminion (rue) granted roi. a temporary price increase to recover a portion of the exceu power I( p

( [ abundant costs incurred during the Trojan outage. An extended spring runoff provided generating plantshydropower, holding opetated well. Lower cost coal and downnatural gas thesupplici costobtained of replacement in power. r the past few years contributed to their economical operation, which also helped hold o =* down the cost of replacement power. Loss Incurred in 993, Portland General incurred a loss of $50 million, or $(i.06) per common share, in i99o, earnings ere

$ioo million, or $2. i7 per cornmon share, including a one. time gain f rom a regula.

tory settlement. In ig89, Portland General sustained a net loss of $27 million, or

$(.s8) per share. The loss resulted frotn the establishment of reserves for pending rate matters and the discontinuance of real estate operations. Trojan Outoge hnpocts Results of Continuing Operations Excluding the effects of loues related to independent power investments,199 income from continuing operations would have been $33 million as compared with $84 million, adjusted for a regulatory gain in 1990, roe incurred substantially higher power costs and maintenance expenses during the Trojan outage.

k raion nAus-Income from continuing operations for 99o, c;cluding the regula.

tory gain, would have been $84 million compared with $74 million in 1989, excluding a reserve for rate matters. Record energy sales due to economic growth and unusual weather and the improved performance of rot's power plants were the main reasons for the 199o earnings increase. Operating Revenues increased 1Jtility operating reven-ues increased $4: million, or 4 8%, over 199o due to higher prices for electricity.

k Retail revenues increased $3: million, or 4 3%, over i9go primarily due to a 3 4%

price increase that went into ef fect February 5, i991. The price increase was granted by the euc :o cover higher operating costs. Additional revenues were also granted to cover higher depreciation and decommissioning provisions for Trojan. This was ro 's

- --- ,f' -

[ 'y , 1 Tommy Atituel, Commesnity YV d -

o Resources Clerk, Karen Hierson, Centrol Region hiunager, Distribu-tion, a nd (. hris hirpless, l'rocu re-t ment $3s <ms Specialist.

• As nuction p; chairperson. Hierson employer colunsters led a team of in raising 4 .y W

W $2 3,em) to benefit Sah otion Q Army's Whhc Shield flomefor teen y mothers. A meaningful goat helps g colunteers pull together into a pro-ff aluctf re and successf ul team."

O neu.,o.,na - osso.un MANAGL"INpl Ol5(U1510N AND ANALY515 first general price increase since 1914. $ The retail revenue increase also included accrueJ resenne3 recorJed after the ruc granted rot a temporary price increase en December si so9t. rot is allowed to recover go% of its excess power costs from November i, avvi, until Trojan returned to service in early March inga. Revenue collections started on January 1, 992, with commercial and industrial rates increas- IOE Mes Growth ing 4 8% and residential rates increasing o.6% ror has the option of requesting a  ?? 'to 91 s.t s.e 6.s .

lower collection rate if its actual excess power costs are less than were anticipated in st ss u its initial request. The additional revenues are subject to reft.nd, pending a ruc y jj 8j review of actual excess power costs incurred and rot's earnings for the 12 month period ending March 3i, i992. The roc review is expected to be completed by mid- /p

/

1992. k Kilowatt hours (kwn) sold to retail customers increased slightly over 199o due to a 3.o% increase in customers.1991 was a normal weather year while 199o had gg

/

unusually high usage by customers due to a hot summer and an arctic storm in Decem. ,,

ber. k Wholesale revenues increased $1o million over r99o primarily due to addi- I p

tional revenues from capacity charges, including a long term sales contract with the f Western Area Power Administration (warr) that started in October 990. WArA is a federal power agency located in California. Capacity charges represent the fixed portion of wholesale contract revenues. k Wholesale kwh sales declined 78E ,

Demand from wholesah customers decreased because most of the thermal generating plants in California and Arirona were in operation and California experienced a. l %',*,

cooler summer in 1991, runon n ARs- rGl's retail revenues increased h)2 million !",[$

in 1990 over 1989 due to a 4 4% ritie in retail energy consumption. liighet kwh sales were primarily attributed to a continuing strong economy in the region. Both 199o and 1989 revenues were favorably affected by weather conditions that drove cusromer VaoaNe pow er G, sis

g, ggg p ,, ,,g,4 ,

y a m in i,7 ru $29 million or 3 % over 19 9. 8 Wholesale kwh sales were up 43% because of a strong

" '3

market created by thermal plant outages in neighboring states during the winter and

/ spring. Surplus hydropower early in t990 allowed roc to make additional energy sales

! / to California utilities. Vorloble Power Costs Rose rot's variable power costs for ig9:

rose i3% compared with 199o, primarily due to increased power purchases and fuel j costs. roe purchased power and increased production from its other thermal plants while Trojan was out of service. The variable costs of coal and gas fire, generating .

l

[ plants are higher than the variable cost of running Trojan. Trojan was taken off line am ,

on March 4,1991, for its annual refueling and maintenance outage and remained out ewww of service for the rest of the year. In 199o, Trojan's maintenance and refueling outage maan.- g enen . lasted from March 19 to July i4 1 Purchased power increased by 15% overig9o. roe was able to purchase 13% more power from other sources due to the abundance of surplus hydropower in the region. Cool weather in the spring extended the annual j runoff about two months longer than usual. k Fuel costs were up 7% when compared with :99o. Trojan's 5 mill per kwh ccu (to mills = cent) was replaced by higher fuel 9g AtiLe Rouse, $mpertisor, World Trade Center Consnuction and g -

Afaintenance. e Rouse managed the

% World Trude Center lightins retrofis 3 4 project. Thefiese ofits Lind in she g I'ottland area, la reduces energy

\~lLg G rests by more than half. *1mproved Ilgkring quality and teliability are

} 6 also essentialcomponents?'

o G

hihast 6f titu (N80pt:06 3 $v Wpatin MANAGITINr5 DISCUSSION AND ANALY515 costs of the Boardman Coal Mant and Beaver Combustion Turbine Plant which operated at increased capacity factors during i99i. Boardman ran for ten months of i991 at an average variable cost of i3 mills per Lwh compared with four months at i6 milh per kwh in 1990. The average variable cost of running Beaver dechned from i7 milh to is mills. rot also received i3% more generation from the Colstrip Coal Plant. rRion Yi Anh - rGli variable power costs in iq90 increased by ia% com-pated with 1989 to ineet increased demand in both the retail and wholesale markets.

PCI Revenue end Voriable Fower Cost Analysis for the Yers [n:hng December 31 (Whons of Dohors) 1991 y 1990 1990 v 1989 Pnce Onnt4 Pme QuentW 1991 Change Change 1990 One Change 1989 lletail Revenues $ 82. $ 3o $ 8 $ 783 $ 05) $ 33 $ 7s8 rdA ddjust!nrnt' (bb) (4) (3) ($V) 7 (66)

Wholesale i3i 17 (7) sai (r) 3o 92 Tot al Revenues 686 43 (2) 854 (2) 63 748 Purchased Power 209 9 23 a77 (18) 33 162 prA Adiustment* (73) (ii) (3) (59) 7 (66)

Wherling 24 -

4 ao (13) i6 17 fuel 67 14 (to) 63 (4) 66 WriaMe Power 227 i2 14 2os (28) So 79 Gross Margin $ 6sg 5 11 $ (i6) $ 644 $ 26 $ si $ 6o5 Sr AJnntnwne icprewnte punhawJ power acJiri newed hora era. Iteneht* are rmwd to nin reudennat and farm miomen ihniugh her pruct Twenty percent more power was purchased at a 9% lower average price per Lwh. Por benefitted from the lower costs of a new 20 year transmission agreement with the Bonneville Power Administration (ner). In adJirion, rot's i990 fuel costs declined 5% while its plants generated slightly more electricity than in 198 9 Higher Margins ro t's 199 gross margin (revenues less variable power costs) was $15 million higher than i99o primarily due to increased retail prices. This Price chance was granted by the rue to cover programs to improve efficiency and safety at Trojan and increased provisions for depreciation and nuclear Jecommissioning. $ raion vtAns - ror's iq90 gross margin increased by $39 million over i98 9. A strong Jemand for electricity contributeJ $6: million in additional revenues while variable power costs increased

$22 million. The strong retail and wholesale demand was met by the improved performance of rot's plants, which were able to reduce the average variable cost of generated power by 6%. Operating Expernes Sharply Higher Extensive inspection and repairs of Trojan's steam generator tubes led to higher operations and maintenance costs in ig9i. ror had detected increased tube degradation since i98 9, but toutine inspections during i99: revealed more tube degradation than in past years. As a result, rot decided to conduct extensive inspection and testing, which exposed a type

- 1 Inlian Corter, i niironmental 4 -

scienrin.

• Carter hui worked so

• fM increuse shr Companis aicure ness

<k/s/

3 C -

of seasce urrums und umte manute-ment issurs Sing!c-handediv. she 1.' L"' S I' I compiled l% L's jtt st e mplowe temte

$h> . t ompany's best intercus to hace M S,*

Jisposal handbook. "lCs in the 4 " minimalimpace on the eniironment."

kbn3

n U

houo Gmm (mma a so,+nc MANACCINP5 Dl5(U5510N AND ANALY515 of Jegradation not previousl> identi6cJ. Tubes with "microflaws" (ie. microscopit cracks and corrosion) were plugged (taken out of service) or haJ sleeves inserted. ec.:

capitalized the sleeving w :L, but the inspections, testing, analysis, and repairs were charged to maintenance. rot has asked the ruc to allow it to recover certain ex ra nuclear expenses incurred during the Trojan outage. A rue decision is expected by mid 992. (Thei99: production, distributmn and maintenance expenses in-creased 28% over 1990 primarily dt.e to a $35 million increase in nuclear operations gy, g,,,,

and maintenance expenses. In aJdition to the steam generator tube work, nuclear 6 Win" nanw operations and maintenance expenses included activities related to replacement of ll [ ,] []

electrical penetration seals in the containment structure and enhanced 6te protec. 34 42 4 "

tion throughout the plant. ( Administrative and other exrenses ro e i8% in ps>

comparison with s9vo mainly due to $13 million in severance costs associated with a program that climinated 3oo positionr. Ot her cont ributing factors included increased gf[ /

' g i

health and medical benc6t costs. f Depreciation and decommissioning expense f mcreased 24% compared with s 990. cor, with the approval of the eve, made a technical change in straight line depreciation to the remaining life technique for the Tmjan Plant and increaseJ its estimate for decommissioning Trojan in 20s: from $ii7 mm million to $488 million. These changes are reflected in the new ietail prices, effective .-

~

lebruary 5, sqvi. rot increased its derreciation expense by $i4 million per year and its annual provision for Trojan decommissioning frorn $2 million to $in million. The annual provision for decommissioning will increase every 6ve years using a modified sinking fund methoJ. $ Income tax cypense decreased 39% in i99: because of lower earnings. Income tax expense had increased in in9o because of higher taxable income and $4 million in adjustments to income tax provision $. $ rRIOk Tr AR$ - rol s production and distribution expenses stabilized in 1990 after a signi6 cant increase in i989. Fixed power costs increased by $2 million, or 3%, in i990. Nuclear operating expenses increased 8% in 1990, while operating costs associated with other types of var generating resources decreased as the company's cost containment measures took e ff ec t . $ Maintenance expenses decreased 3% in i99o coinpared with 1989 , primar-ily due to an 8% decrease in malatenance costs at Trojan. $ Taxes other than income taxes rose by 5 % in 1990 over 1989 primarily due to increased payroll taxes. Other income and Deductions hosses from independent power totaled $74 million, after tax, in 199i. This included the write-off of Iloidings' equity investment in 13onneville Paci6c and a provision for uncollectible loans and other costs. For further details, see Note 3, loss from Independent Power, in Notes to the Financial Statements k Interest ex pense declined slightly primarily due to lower interest rates, which allowed for the issuance of new long term debt hower cost debt was issued to pay down short-term debt and to pay offisoo million of maturing 6rst moitgage bonds. $ raion nARs- A regulatory settlement with the ruc restored $i6 million to i99o income. In ig89 , vor haJ established an $89 million loss reserve for an unfavorable outcome on three con-k kuss Ilickman, Customer hervice Representative, Iteld Operations. e flickraan helped imprm e meter reader

,i producairity by designing "trum rending" routes as uvtl as strromlining off6cc pro.edures " Company

g. reorganitation led so cico-iy' . rire ideas for more efficient

] work distribution through a teams orL appruach "

O ho.m w tmum a s+wn

$NAGEMINT5 D15(U5510N AND ANRW5 testid rate marters. Subsequently, N,i and the et'c reached a settiement that resolved two of the issues. (1t her income declined in invo due to contributions to the catn-paign opposing the ballot measure initiative that would have shut down Trojan. Addi-tiot ol Reserve for Discontinued Real htoto Portland General reviewed the adequacy of the

$12 million reserve established at year.cnd 1949 and deterinined that an additional reserve was warranted. A loss of $29 million was recorded in the fourth quarter of invi to recognue lower market values and additional holjing costs. The commercial real estate market has softened in the last year due to the combincJ cffects of a weakening market and more restrictive bank lending policies. See Note 2, Real Estate - 1)iscontinued Operations, in Notes to the Financial Statements for further detatis. Oudock locu oN t tt U1RIC UlitITY - Portland General will focus exclusively on its core electric utility business, P01. A substantial t'ottion of Portland GeneraPs nonutility interests will be phased out over the next few years. Divestiture of these Annual bu rew m bann il ( kionn n hnsinesses n not expected to have a material aJser e effect on the future operating in o !6 r! D 91 results of Portland General. ' CUslostt H AND load Ultowlit - rot 's service atea has to 6 6 6 O 14 y g y y y been experiencing continuing growth Jespite an economic recession in other regions S ' 8 " of the country. rui's ructropohtan service territory has had a relatively stable

[ / economy and has not felt the full impact of this necession, roi added another g  ! 14,o00 residential customers to its system during 1991, the second largest arihual increase in a Jecade. roi's service area has seen minirnal effects of the downturn in the timber industri, w hich has significantly affected more rural areas of Oregon.

Ilowever, paper mills, among the largest of rot's industrial customers, have been ex-j periencitig a decrease in demand resulting in reJuccJ energy consurnption. The decrease in usage from these customers has been of fset by the increased electricity

-woum m &

m m o n , used b) new residential End cornmercial (ustomers. ( poi /s weather adjusted retail g energy sales in 199: were 2. i% greater than in 1990. The retail load growth is estimatcJ to be 2.8% in inv2. $ rowtu Corts -In inv2, nor expects power costs to be lower than in ions with Tiojan returning to operation. rot is plantsing a short maintenance outage for Trojan with no refueling in ing2. As a result, ror estimates that its plants will generate ro% to 55% of its power requiiements in 1992 compared i

with 4 % in inni and 48% in 199o. i; ror has recently negotiated three- to seven-year contracts to purchase 4oo megawatts of capacity from nra and two other Pacific Northwest supphers. These contracts replaced a 25o megawatt contract with ura that l expired in October invi. The price of power in these contracts is significantly higher than the price under the c>pirrJ contract. $ coi's reserve margin (the amount of re-l source capacity m excess of customer demand) is narrowing as loads continue to grow in its service territory. It is projected that, under certain scenarios, load / resource balance coulJ occur in the next five 3 ears. As part of its Least Cost Planning process, rGr is evaluating vari jus options to serve the inc! easing demand from customers, in-cluJing energy efficiency measures, purchases of surplus power from other suprliers, M

N Martin Slenda,I ng'neer, Diserb button. e Nyiendo coordinates

(

Q an renergency responst and mein-

, senance controcs u frh hLrronb, one oJ PGl's blgarst commerclut y (natomers. "T he tint crew, generalforeman und I hure cirubrisNed a irry cordial relationship u ith ickreonit, to both companies' benefit."

l I

O blhetB b!s!Ita (0f 464Ms & $tlWith MANAGONr5 Dl5G5510% AND Anum 5 and aJJitmnal combustion turbine units Some of the options under stuJy are likely to be more expensive than existing power supplies. roi plans to file its Jraft least.

Cost Plan with the oce in August :992. The 6nal plan is expected to be submitted in I

Oc tol er 1992. Future power costs may be affected by the reJuced availability of hydropower in the region. The National Manne Fishenes Servue has declared cer-tain pecies of salmon on the Snake River as threatened or endangered. Proposal, to restore these salmon runs meluJe measures to increase the river flows on the Snake and lower Columbia rivers dunne the spring to allow juvenile sahuon to reach the Pacihc Osean faster, resulting in less water available for power generatmn in the fall and winter months. Although cor's hydro projects are not located on these risers, the costs of sewndary purchaseJ power wdl likely increase throughout the region during low water ) Cars. ( OrlH AlloN% AND ht AINTIN ANet - Trojan is scheduled for a short outage in i992, and roi expects inaintenance expenses to be lower than those exper-ienc tJ in i9gi (see graph on page 17). Overall, total nuclear expenses are not expec-ted to mcrean at the growing rate of recent years when rot implemented new safety programs and regulatory requirements. Ilowever, any unplanned outages at Trojan mas incre ase nuclear expenses and adversely affect earnings. $ 1. abor costs are expected to be lower in ing as benehts from the i9vi wort force reduction program are reali:ed. $ UNcmaiNins -Two initiative petitions are being circulated that would prohibit the operation of Trojan until speci6c conditions are met, including the hcenunu of a permanent raJmactne waste disposal site. If enough valid signa-tures are wilected, these miriantes will arrear on the ballot m the November i992 general election. coi believi* that passage of either measure could result in the indefi.

nite shutdown of Trojan. Oregon voters rejected similar ballot measures in 990 and 1956. { Portland General and lloldings are Jefendants in two class action lawsuits fled by mvestors in Bonneville Paci6c The suits allege violations of securities laws and negligent misrepresentation. Portland General and lloldings will strongly contest these acnons. In - whJ matter, liolJings has filed suit against Deloitt. & Touche anJ certain indis iduals associated with Bonneviile Pacific for misrepresenting the fe nancial condition of Bonneville Pacitic. Holdings, a 46% common stockholder and noteholder in Bonneville Paci6c, is seeking $228 million in damages. $ NtW ACCOUNT.

iNo s r4Norans - Statement of Financial Accounting Standards (SI As) No. no7, Disclosure of Market Value of Financial Instruments, ef fective with3 ear end 992 reporting, will require additional disclos ares on receivables, payables, refundable deposits, loan commitments and guarantees, bonds, common and preferred stock, etc.

( in addition, stas No.109, Accounting for income Taxes, sets forth new guidelines which will sigmticantly change current practices related to accounting for income taxes. The new standard supercedes sras No. 96 and is to become effective in 1993

{ Portland General will adopt the new standards as they become effective and does not expect a material impact on its future operating results and financial condition.

[h #8 Dic k flarrere nad 5trer Nkkoloff, f

p ,b -

7' ,,y%% Repair Dispatchers.

• T he link besween customers und repair

'p . ' -( A crews, Nepair Dispatch proeides hgJ4 i Qf V"

/

zq 24. hour customer support to deal

- \ with service problems R storing A .y: ~ [4 ,

i Q jy servit e us quickly and safely as hs 4*N' \., possible is our MuNibf r*Unf JOaj."

., 'x , q fx N .

, n ,et; t,v, w $:,

h

O l ms, vmammm a sa an MANM[ MINI 5 Dl5(U5510N AND ANAmli 1

CAPlitt El50VR(!$ AND ll0lllDlif forficad Genercl forniction Portla.,d General, an electric ,

utility holding company, was organized to provide organizational and financial separation between its utility business, roi, and its nonutility businesses held under  ;

lloldings. The nonutility businesses include leasing, independent power anJ real es- l tate.

I Portland General requires cash to pay dividends to its common stockholders, l Camh: o,o to provide funds to its subsidiaries, to meet debt service obligations and for Jay to day r u o e w operations. Sources of cash are dividenJs from voi, its principal subsidiary, asset sales j j j l and leasing rentals from its nonutility businesses, short and intermcJiate term

• 8 8

• borrowings anJ the sale of its common stock. Cash frdlows Portland General received $p million in dividends from rot in i99 . $ Borrowing activities by i Portland General increaseJ in the last year. In order to minimire its cost of capital, Portland General utilized a $so million commercial paper facility established in j g{ ph October ivos backed by a $$o million committed bank line. It also iss y of notes with maturities between two anJ.a. half and five years. In mid ings, Portland j General began inuing new shares of common stock under its Dividend Reinvestment

[ [ -

and Optional Cash Payment Plan (Plan). Before then, shares of stock under the Plan t L i had been purchased on the open market. Proceeds from the issuance of stock are n t expected to raise additional equity capital of $8 to $io million annually for general g; corporate purposes. k Cash flows from rot common dividend payments, property Cash Mow IWJenJ

• * " * " "" * " d """

sales, tax benefits, lease rentals of nonutility businesses and borrowings are expected

'81 '88 B1 '90 '91 to rueer PortlanJ General's cash needs in 1992. Cash Outflows Portland GeneraPS u u u u n dividend payments in ings were $9 million lower than in i9go due to a reduction in the common dividend, effective with the April 1990 payment. The dividend reduc. 3 tion provided Portland General funds to replenish common equity and to finance }

future capital programs. $ In 199t, Portland General provided $50 million to g,10  ;

lloidings for its nonutility businesses, prirnarily independent power investments, and l' l }4 ,L expects to provide $20 to $3a million in 992 to retire maturing debt. Portland f f General's i992 debt service obligation is expected to be met by asset sales, tax l f I

benefits and lease rentals from Holdings' nonutility businesses and borrowing C l {

i arrangements at Portland General. ( The commercial paper facility is used, along l

with bank lines, to fund day to day operating cash requirements. As of December 3 , m ingi, Portland General had $i9 4 million of commercial paper outstanding. k Port-land Gencial has a stock repurchase program under which it may, at its option, repurchase up to 3 3 million shares of its common stock. To date, no purchases have been made. PorfIond Genml flectric Cornpsy Oprations Cash ilow from operation. is rot's primary source of cash to meet its Jay to day operating needs and to fund it.s construction program, por also obtains cash from short., intermediate , and long-tern borrowings. ( Cash flow from rot operations rose by $43 rnillion in 199:

compared with 199o, despite a $48 million drop in net income. The increase in ingi

cash flow is primarily the result of a $2'/ million tetail revenue increase, effective he D lorn Rak, IIcttrical E ngince,ing h Supert isor, and Isc Felly, $uper-tisor. Manning and Sche tuling.

I -

Trojan. e kuk and Kells deirlope i n rost.suiing method of accurately

( j g testing motor-c.peratcJ :ah es, a hich e are critical in nucteur safety systems.

M. 9- "Mc]cis compelted sofind u more i{ , " .. W cost-effectite and reliabic u cy of i

25% ' ' 4-int rensing she pl. int's safety motgin."

i O

rwao s,saawmms a summ MAN AGl%[Npl D15(U5510N AND l.NALY515 February 5,1993. A significant portion of the cash from operations comes from I depreciation and amortiration of utility plant, charges which are recovered in customer revenues but require no current cash outlay. Operating cash flow in i992 is expected to be essentially unchanged from iogs. $ Futute cash requiren ents may be affected by the ultimate outcome of the ins audit of rot's ig85 WNr+3 abandonment '

loss deduction. The ins has completed its field work portion of the aud;t of Portland General and rot federal income tax returns for the years i9 58 to 1987 and has sent a notice disallowing rot's wur 3 abandonmerit loss deduction. On December 3i, so9i, ,

por filed a protest with the ans. See Note 5. Income Taxes, in Notes to the 14nancial Statements for further details. $ In addition, rot, as a potentially responsible party," is involved in environmental clean up of ec n contaminants nt various sites.

The total cost of clean up is presently estimated at $23 million of which rot's share $17/,

would be about $a million. Should the eventual outcome of these uncertainties result y u .p y 5 in additional cash requiiements, rot expects internally generated cash flows and/or { y y (a, ,s,3j external borrowings to be sufficient to satisfy such obligations, investing Attivities rot invests in facilities for generation, transmission, and distribution of electric energy and for energy efficiency improvements, in 1991, rot's capit al expenditures of

$i48 million were as follows: 29% generation,43% transmission and distribution, 14% nuclear fuel and 14% general plant and other. rot's expenditures included the purchase of $20 million in fabrication services for nuclear fuel and $so million of

.leeving costs related to the work performed on Trojan steam generator tubes.

k Por's 1992 993 construction program is estimated at $i5o million for each year, The i992 construction program includes $i3 million for the completion of the $15 mm y million project to build a natural gas pipeline to the lleaver Combustion Turbine e wes e Plant. The pipeline will improve transmission availability for natural gas to the plant.

The program also includes $7 million for the current year's portion of a $ia millmn project to build a third intertie to California. The intertie project is expected to be completed in 1993 and will increase roe's capacity for selling wholesale energy in that major market. Other planned capital expenditures include $i6 million for energy efficiency, which includes new construction, lighting and appliances. Energy efficiency is a part of the Least-Cost Plan. The ruc has authorized a return on rot's investment in energy efficiency projects, which will help alleviate the aced for.

additional energy resources to support future customer growth. k As part of its updated Least-Cost Plan, to be submitted to the ruc in the fall of r992, roe will examine future investment and operating costs at Trojan, including the replacement of the steam generators. ror estimates that replacement of the steam generators would cost $125 to $200 million, of which cor's share is 67,5E rGE does not now know if it will be necessary to repl' this' equipment and does not anticipate making that decision before submitting its goated Least-Cost Plan, k in March 99i,ros began funding an external trust for the costs of Trojan decommissioning. As of h- Ted flaneroft, Supervisor, Distril,ution luformation hystems.

• Dy imple.

menting innovatles approachen to mappinefor line crews, llancroft

. helped the Company sure more than 550,000 last year. "Coopera-tion f etween people and depart-eh A ments is cost-effective through pooling i,oth resources and ideas." -

O n,um anewes s s...

_MANA0l!!!Nr5 Dl5CU5510N AND ANAttill_

December 3i, avvi, vor contributed $iv million to the funJ and expects to contrib-ute $n milhon in i992 $ Internally generated casb flows provided substantially all of ron's capital requirements in i99: and in9o and 74% in 989, after paying dividends. Internally generated cash flows are expected to meet substantially all of rot's capital requirements in 1992. Financing Activities rot 6 nances its capital requirernents through short , intermediate , and long-terr, debt and preferred stock.

Short term debt, which includes cdmmercial paper and lines of credit, is used for day-to-day operations. Intermediate, and long-term debt and equity are used to fund rot's capital requircinents. The maturities of inactmeJiate and long term debt are chosen to match expected anet lives and maintain a balanced maturity schedule. $ The cost of debt declined during 199i. As a result, roi focused on refunding existing and maturing high coupon debt. On August ia, i99 , rot inued $io4 million of First Mortgage Bonds with maturities ranging from three to 3o years. roo used the proceeds to redeem $ioo million of maturing debentures on October i, iv9: and other matuiing debt obligations. $ To take advantage of the continuing decline in interest rates, rot = inued $63 million of Fir $t Mortgage Bonds on January i3, iv92. Proceeds from this inuance were used to refund, at a premium, the $4i.3 million,9 8o% Series inica-se (,ouwe Rauo (SH : ltna) and the $iv.3 million. u%% Series First hiortgage Bonds. 4y rot's Board of Directors v v v w m omitted the April ana, aly 199o quarterly common stock dividends it would have paid it 1 14 24 o O u.t 9 O tls to Portland General, thereby increasing cona.mn ecuity and cash flow. rot resumed paying common stock dieldends to Portland Ceneral in October i99o at a rate

p

,pd#/ adequate to pay the dividend on Portland General common stock, k The issuance of ges8* additional preferred stock and First Mortgage Bonds requires por to meet earnings coverage and security provisions set forth in the Aiticles of incorporation and the

indenture securing its First Mortgage Bonds. As of December 3i,199i, rot could y'#

v8' issue $iati million of preferred stock and $26o million of additional First Mortgage g

Bondo $ CRtnit RAltsos On October aa, iv9 , Standard innd Poor's lowered its ratings on ror's senior secuted debt, senior unsecured debt and preferred stock, and H

• • " commercial paper to A , BBB+, and A a. respectively. These ratings were affirmed on November ia,199: with the announcement of Holdings' write off of the equity investment in Banneville Pacific. $ Duff & Phelps continues to rate cor's 6tst mmigage bonds, debentures and unsecured debt, and preferred stock at A. A , and A , respectively. Moody's investors Service, Inc. rates rot's securities A3, Baai, and baar for the respective securities. Ilowever, Duff & Phelps and Moody's have placed rat on credit watch. Portland General Noldings, Inc. Operations Operating cash >

flow from nonutility businenes is derived principally from income tax benefits, cash from rentals of leasing investments and the sale of discontinued real estate invest-ments. During ingi, $i3 million was derived from tax bene 6ts and $is million from real estate sales.1992 cash ilow from operations and asset sales are anticipated to be suf 6cient to meet operating needs. Investing Artivities On July i6,199i, Holdings,

\

h$ j Jack Setege, Asiminharath c Supera thor, lleurdman.

• Named 1991 Cititen of the har by the floardman Chamber of Commerce, $trege series numerous local causes.from sitting on the board of the Community Attion Programfor Central Oregon to organiting f undraisers fut $t.

Jude's finspital. " Company support helps me contribhse to 4he community."

C 3

O n,u., om.am.. . s,n ,4.c

~ MAN AGCINT! Dl5Gl5$10.1 AND ANALY111 acquired 3 million $ hates of a new losue of Ilonneville Paci6c common stock in exchange for canceling $ao inillion of debt owed to lloldings and for other consider-ation. This transaction brought Holdings' ownership up to 46% of Bonneville Pacific's outstanding common Stock. On November ia, avvi, lloldings announced its decisions to write-off its equity investment in Bonneville Pacific and to make no additional equity investments in independent power. $ During :99 , Holdings loaned $28 million to Bonneville Pacific and its subsidiaries to help alleviate liquidity problems. As of December 31, ings, these loans remained outstanding. Iloidings recorded a las provision in December t99 against the outstanding loans. Iloldings intends to pursue recovery of the loans but cannot predict what amount, if any, will be recovered k With }loldings' decision to male no new investments in indepen-dent power, nova capital requirements are primarily to meet existing obligations.

Holdings will continue to hold investments in leveraged leases which are providing tax benefits and cash. In addition, cash proceeds from the sale of teal estate and independent power assets are expected over the next two years. Financing Activities lloidirigs finances its cash requirements through borrowing arrangements with Portland General and from bank lines and bank term loans. Holdings' cornmitted line of credit of $50 million expired in 1993. k Scheduled debt maturities for Holdings and its wholly owned subsidiaries through 1993 are 5:5 million in :992 and $29 million in 1993. In addition, in the first half of 992, lloidings may be required to fund $22 inillion to pay debt obligations of Cornerstone Columbia Development Company, a partnership in which lloidings' real estate subsidiary 16 a So% partner.

Holdings does not anticipate entering into any new financing agreements. Existing debt is expected to be repaid from internal sources (including real estate sales, tax benefits and cash from lease rentals) and through borrowing arrangements with Portland General.

i 7

Y.

Sue Olsen, Communtry Resources

-y pc Clerh. o Olsen sparked the hicofer M hy PGI 's "Adops.u-Illg htwit" progra m, uniting the Community Relations crew in cleaning up a two-mile stretch h of the huner It'ghway "We want

( the community so know shut PGL

[ acts on tueha(f ef the ans.ironment?

F;

O he...om omwe.iswaan MAN AGE l INT'5 $ltJIMENT 07 RE5PON51 Bill 1Y Portland 0-neral Corporation's management is responsible for the preparation and presentation of the consolidated fmancial statements in this report. Management is aho responsible br the integrity and objectivity of the statements. Generally accepted auounti.ig principles have been used to prepare the statements, and in cefluin cases iflformt l eblirnates bave been Ubed (bat are based on the best juJgenent of management. k Management has established, and maintains, a system of miernal accounting controh. The controh provide reasonable assurance that assets are safeguarded, transactions receive arptopriate authorization, and fmancial tecords are rehable. Accounting controb are supported by written policies and procedures, an operations planning anJ budget process designed to achieve corporate objectives, and internal audits of operating activities. $ Portland General's Board of Directors includes an AuJit Committee composeJ entirely of outside directors. It reviews with management, internal auditors and independent auditors, the adequacy of internal controls, fmancial reporting, and other audit matters. $ Arthur.\ndersen & Co. is Poitland General's independent public accountant. As a pait of ts annual audit, internal accounting controb are selected for review in order to deteri, ine the nature, timing and extent of audit tests to be performed. All of the corporation's financial records and related data are made available to Arthur Andersen & Co. Management has aho endeavored to ensure that all representations to Arthur Andersen & Co. were valid and appropriate.

Joseph M. liitto Vice PresiJent Finance, Chief Financial Officer, Chief Accounting Off cer and Treasurer Mi 1.a rl %cd, S uperinor, S u bsta tion

%g %taintenance and Construction. e

't hod's Gruerosion F 1ransniission group completely rebulh the fort Hock capucifor station on she Pacific Northwest Souchu est inter-I ric, susing the C ompun) around

(' $150.000. "in-house construction i ' has the awodold benefit of saiing

$ money and pros iding tatuable

_g experiencefor the future."

._. _. - - _._ - = _ .__ __ _ -.- _ - . - - -

O n,us, om.a-.us i ses4..n

_Rtrati OF INDIPINDINT Puttit ACCOUNTANf'

_ _ _ _ _ _ . _ _ _ _ . _ _ ~ _ _ _ _ - . . _ _ . _ _ . - _ . . _

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

We have audited the consolidated balance sheets and statements of capitalization of Portland General Corporation and subsidiaries as of December 3i, 99i and 990, and the related consolidated statements of income, retained earnings, and cash flows .

for each of the three 3 ears in the period ended December 3i,199 . These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these f nancial statements based on oui 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 of material misstatement.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the account.

ing principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation, We believe that our audits provide a reasonable basis for our opinion. In out opinion, the financial state-ments referred to above present fairly, in all material respects, the financial position of Portland General Corporation and subsidiaries as of December p, i99: and 199o, and the results of their operations and their cash flows for each of the three years in the period ended Decernber 3 ,199: in conformity with generally accepted account.

ing principles.

February 4, inga Arthur Andersen 6t Co.

(except with respect to the matter dis. Portland, Oregon cui, sed in the third paragraph of Note t4, as to v.hich the date is February 25, 1992) l flobhye Hrown, Coordinator, lipman Hewurtes Support e in the name of PGl., Hrown has s olunteered many hours ro tonimunity projects

.e" like %treenwalk (part of"i Hunt a Dream) and knining caps and s bootlesfor prematute injunts at p local hospitals. l befine thus caring means sharing- u hether time, salent or money."

t

O ..

e m s .. c ,0.  : s,.u u (ON50tlDAi!D $1AllIINTS Of lMOMI For the Yem Ended Nenher 31 (1hovsonds of Dollm) . 19 91 1990 1989 Operating Revenues $88.935 9 $85*,805 $796 ,9 o Operating tapenses  !

Purchased power and fuel 226,264 aos 27a 18 ,723-  ;

Production and distribution 95,96o go,749 88,65:

Maintenance -9 ,3o4 55,463 57,383

• Administrative and oti.u :24,74 1o5,423 sos 893 Depreciation, decommissioning and amortization 1a,567 9o,523 91,7 8 3 '

Taxes other than income taxes 59,oa 3 59.6oa 5 6,729 -

7o9 292 ' 6o3,o32 577,892 Operating income Before Income Taxes i8o,643 249.o73 aig,oi8 -

Income Taxes 44,ooi; 72,616 57,348

' Not Operating income i36,638 = - 76,457 16s,877  ;

Other income (Doductions)

Regulatory reserves-net of taxes ($r4, 53), $38,878 - 46,o9o (88,83o) loss from independent power-net of taxes $i6,o3 8, $531 (74,144) (3,390). -

Interest expense (8 ,743)  ; (83,532) (8s,55) 8 Allowance for funds used during construction 2,o49_ t.737 3,946-Preferred dividend requirement-par. (i a,913) - (t3,o73) (13 232)

Other-net ofincome taxes 9,417 '5,643 7,924 Income (Loss) From Continuing Operations (20,698) 99,952 (9 900)

Discontinued Operations - .

f 12as from discontinued real estate operations -- - (5,o33) '

Estimated loss on disposal of real estate operations, including . .

provision for operating losses during the phase-out period (29, 69) - (:2,ooo)

Net income (Loss) $ (49,867 ) $ 99 952 : $ (a6,933)

Common $tock Average shares outstandingL 46,333,c 26 4 6,133,3o3 4 ,s 6 i2,255 '

Earnings (loss) per average r, hare .

Continuing operations $ (.43) $ a.17 $(;as) loss from discontinued real estate operations ' -

( st)

Estimated loss from disposal of real estate operations , (.63) . --

(.26)-

Earnings (loss) per average share $ (s.o6)* $ a.i? $ (,5.) 8 Dividends declared per share $"i.ao' $1.ao- $x.96

. 'Indmin $ su fa tax knr6ts imm isor divilena Pomn6 Glattu (otrotauou a Sasumen '

(ONSOLIDAi!D $1ATIMIN110F RilAINID EARNING $ - .

- Ior the Yem inded December 31 (Thousands o' Dollars) - 19 91 - 1990 f 1969 Bolonce of Beginning of Year.-- $i23,88 - $ 79,292 ) $ig6,6o8 Not income (Loss) (49,867 ) 99,952 (26,933). .

74,035 179,244 169,675 Dividends Declared on Common Stock ' $5,6o2 - 55,362 9o 3_83 Bolance at End of Year $ 18,4:3 $ n a3,882 $ 79,292 11w auomp.mems twees m an meegral rart of chaw statenwnts.

{ ,.,,e,

.-r 4 a na p my-%2.7r .-

g -w..ygt.- ya%e+--

O emam.a ts...w.. sma,n (ON50Ll0Ai!D $1ATCENTS Of CAPilAll!All0N

~ At Dmmbw 31(Thousands of Dollars)  ??fl 1990 Common $ lock (quity Common stock, $3 75 par value per share, ioo,ooo, coo shares authorized, 46,525,16 3and 46,145,2o8 shares outstanding $ n74,469 $ 173,o45 Other paid in capital-net 516,497 5:0,277 Uneamed compensation (3o,o7o). (33,789)

Retained camings - 18,4:3 123,88:

' 4 * '

Cumulative l' referred iloth Subject to mandatory redemption

$ soo par value per share, 2,$oo,ooo shares authorized 8.875% Series, 72 ooo and 90,mo shares outstanding 7,2m _ o,o m Current sinking fund. (i,8oo) - ( 3,8oo) =

8.to% Series, $oo,ooo shares outstanding ' - so,om .. . So,ooo 55,4% - 3. $7,200 - 34 .

Not subject to mandatory redemption 7 95 % Series, .298 ,o45 shares outstanding 29,8o4 29,8o4-7 88% Series, 99,573 shares outstanding 19,958 19,958~

8.2o% Series, t99,42o shares outstanding 19,942 19,942

$25 par value per share,6,ooo,ooo shares authorized

$2.6o Series, i,ooo,ooo shares outstanding 25,000 25,0 N long-Tarm Debt -

First mortgage bonds Maturing 99: through 1997 5%% Series due November i, 99: -

5 965 4%% Series due February 1,1993 8,o39- 8,227 -

4%% Series due June i,1993 9,945 10,170 4%% Series due April 1994_ .8,59 6 8,794 4 7o% Series due March ,1995 3,570 3,745 5%% Series due June i,1996_ 5 /46 .- 5,8:6 6.6o% Series due October i, 997- 23443- 15,663 )

Medium term notes-8 35% 9.27% L 115.o5o - 96,ooo ?

' Maturing ig9 8 through ama-7%% 9%% i35,4:3 s i6,9: 5 Maturing; soo3 through am7-7 95 % 9%% 142,i12- 124,6:2 Maturing soi6 through 2os -9 31%9%% I45,000 -100,00o Nilution control bonds Ibrt of Morrow, OR, v-iable rate (Avg 4.i% for appi), due 2oi3 23,6% - 23,6m City of Forsyth, MT, variable rate (Avg 4 3%47% for 199i),

duc2o3 through 2oi6-_ n 8,8oo _ u8,8oo Amount held by trustee . (7,92 2 ) (7,4:3) fbrt of St. Helens, OR,~due aoio and zei4 (Avg variable 4.i%4.7% for 199 ; fixed7%%) - - $ s,6N! - 51,6m Amouut held by trustee - -

(195) 8% [kbentures due October i, 99:. --

s oo. coo to% lkbentures due March . 2oi8 _

. So,mo so,o

• Medium. term notts maturing 3994 through 1996 - 7 2358.o9% 50,000- -

. Notes maturing 99i through 1993 -- 8+ 56 E 8.83% 33,ooo 18,ooo Capital lease obligations . 17,643 19,438 Other i4,777 i3,525 94o,528 883,262 Long term debt due within one year (13,626) (i s 9,924) 926,9o2' 52.8 ~ 763,338 45 3

'. Total (epitalliation - $1,756,3: 5 ' oo.o% $i,686,657 i im.o%'

s.T1= ncmannvins emin m an 6nus=1 pn of de= einwnwntt 1

+ N'-' y W g *r p yN 'twP- g hWw $ p N wwa(- y -'

-f* q "J-1rf*-'u g { V *g-= " *N w" sr -u*

O. t

,,,n... o.i.. c..,,u,is. s..u. ..,n .  ;

(ONSOLIDATID 8ALANCE $ Hilt $

At Deiemba 31(1hononds of Dullo,5) _

1991 1990 .!

Assets doctric Utility Plant - Original Cost _ _

Utility plant (includes Construction Work in Pn>gress of $43,86 5 and $2t,4 _ 69)_ $2,726,768 $2,6:9,6:8 ,

Accumulated depreciation and decomminioning (989,624) (889,832)?

]

'3,737,344 1,729,786'  :!

Nuclear fuel-less amortization of $2o8,399 and $2o4,736 45,714 29,499 ,

Capital leases-less amortization of $:0,675 and $i7,88o - 17,643 19,438 1,800.$o t .8,778,723--

Other Property and Investments Leveraged leases 154,125 - '850.350 ,

Net ansets of disconti. sued real estate coerations 3,o3o 37,7 : -

-Nuclear decommiuloning trust at' cat which approximates market ~2o.n o4 -

investinent in and advances to af61iates 987 - 35,8 3Y ' I Conservation loans and other 88,287 ' 79,823 J

266,513 3o2,893 ,

Current Assets Cash and cash equivalents . '2,o2 ' .14,68 4 Accounts and notes receivable 82,453- 86,276'-

Estimated unbilled revenues 57,834 - So,ooo Inventories, at nyerage cost $7,369 -$8,12o -: ,

Prepaymente and other 40,779- 31,o6o -

239,75 -6' 24o,14o _'

• Defeated Chorges I WNP 3 tiettlement excllange agreement 188.130 194i3831  ;

Unamortized debt expense 26,536 28,251 1 Unamorti:ed regulatory costs .71,555- '30'488, Other 24,28o - 4 7,765 --

-380,528! 309,83 5 -T ,

$2,6s 7,31 ' $2,6 31,57 :1

'I The accorngwnystig runes are an ,ntegral gurt si diese statenients, r

6 r

lt

-i

---y - - , . . - . - _ -.-s,- . - _ . -- _ - - - --

_. ---.. .z__

7 - - - - . ___

yg e=w ou-. ' . w <t ek - - , - - - ,- re e p ,.w,vwy ,y m w w g - w -- e.w-,- -&~.s ,.%e-.m L a , e, p .,4 .Q , <- , -y,-++- .*-m-e n . , -

._.m

. . . , . - - . ._ -- _ ._ . m o -

,m .. 6, m to.. .ssm .. ,

(ON10tIDAi!D BALANCE $HLETS At Deamber 31 (iiiousands of Dolists) 19 91 1990 Capitalization and Llobilities Capitalization __

Common stock - $ _174,46 9 $ 173 o45 I Other pald in capital 5 6,497 5 o.a77 Unearned compensation (3o,o7o)- (35,789) >

Retained earnings . 38,43 23,882 l 69,3o9 7 771,43 ,

Cumulative preferred stock of sulsidiary ,:

Subject to mandatory tedemption $5,400 57,200 l Not subject to inandatory redemption 94,7o4 94,7o4-

- long term debt 923.902 763,338 i,756,3 5_ t ,686,637-Current liebilities long term debt and preferred stock due within one year 5,426 tas,724 Short termletrowings . 92,473  : 3, 74.

Accounts payable and other accruals i a 7,o63= 8 ,o34 Accrued interest 23,68: _ 2 o,o49. .  !

Dividends payable - 7,549 17 5:n '

Accrued taxes 39,6 4 ' 42,2 5 T 3 : 5,8o6 ' 397,743 1 Other-Deferred income taxes - 379,663 - 3 63,42:

Deferred investment tax credits 7 ,$4 . 73,69o :

Regulatory reserves-net of taxes - 75,926 _ _ 76,727 +

Miscellaneous _

- 18,o6o 3 ,333 .

Commitments and contingencies -

'545, 90- 547,17 f i

- $a,617,31: $2,63 ,57a 3; The Acongw.yistg swes is,v an integral gwrt (4 dwse statements. -

ai

~ - -

T- t q 9 w- - y 1 p-y -

g y y --e-

O w.. oma..... sm,.2 CON 50uoAt10 $1AitutNT10F (. ash f tows fos the Yoors inded Dnember 31 (Theosonds of Dollots) 1991 1990 1989 Cash Provided (Used) By -

Operations Net income (low) $ (49,867 ) $ 99,952 $ (26,933)

Adjustments to temncile net income (loss) to net cash provided by operations:

Fquity in losses (earnings) of unconsolidated affdiates (356) 2,62: (456)

Ikpreciation, decommissioning and amorti:ation 115,285 803 387 808,979 Deferred income taxes-net 1,20o 43,199 32,405 Other noncash revenues (4,i6o) (6,75) -(8,878)

WNP 3 ex(hange agreement amortization 6,23: (9,3i4) (1o 436)

Amortization of deferred charges 9,798 8,3m 28,591 Regulatory reserves-net of tax - (16,o9o) 88,83o Non-cash loss from independent power 83,493 - -

(Increase) Decrease in receival 8es (3,75o) (19,377) _ a,14o (Increase) Decrease in inventories 758 (858) (4,214)

Increaw (lkcrease) in payables 25,2o8 (36o) 453 Other working capital items-net (1,895) 1o2 ._

( 7,8o9)

Net assets of discontinued operations 34,758 83 557 6,oo t Deferred charges ( 5,435) (24,i39) ( :,586)

Miscellaneous-net 15,4o2 4,i6o- 6,8os

-2:6,656 398,675 i96,89o investing Activities:

Utility construction ( 3 8,905) (tog,i 6) (i 9,o89)

Leveraged leases -

(5,374) (: 36,o8o)

Rentals received-net of interest paid 11.o99 7,o86 7,443 Nuclear decommissioning trust (20,1o4) - -

Marketable securities-net 2,7o8 36,759 (2,997)

Advances to affiliates (42,494) -(36,779) -

Other (i6,851) (11326) ( 3,374)

(2o4,547) (1 i8,55o) (263,o97) ,

Financing Activities: _

Short-term lurrowings- net (22,7os ) 14,574 63,ooo leng-term debt issued 78,ot6 12o,7oo 12,00o i long term debt retired (119,oo4) (99,3o6) (16,578)

Nontecourse borrowings for leveraged leases -

4,omo 1o3,682 Repayment of nonrecourse terrowings for leveraged leases (n o,3o4) (7,270) (4,77o)

Preferred stock rented (1,80o) (1,8co) (1,8oo)

Common stock issued 6,585 4o8 398 Unearned compensation - (36,ooo) -

Dividends paid (55,564) (64,16 4 )- (9o,32) 8 (24,772) (68,838) 65 550 Inuson (Decrease) in Cosh and Cosh Equivalents (12,663 ) ii,28 7L (657)

Cash and Cash Equivalents at the Beginning of Period r4,684 3,397 4,oS4 Cash and Cash Equivolonts of the End of Period $ 2,o2 $ 14,684 $ 3,397 Supplemental disdosures of (csh flow information Cash paid during the yean Interest $ 7 6,326 $ 82,334 $ 77,3o7 Income taxes 23,56 o 18,462 28,983-The aunmrenymg rotes are an integral g%t of these statemenn.

O u.m a,% % u m s, -

N0il510 hNOGM $1m3Hf 5 Ncte 1. 5vmmary of Significent Accountirg Policies Portland General's policy is to collect for tax liabdities con sot i n At ion eniscirii s-The consohdated

'"'" "E b"'"'" '"""' E""""'"'*"""I"*'""

hnancial statements include the accounts of Portland and n inbuWidann for radienetas unh:ed in its tax General and all of its majonty-owned subsidiaries. Smmh.

I"*'"" 'd

• 0"* E""' ""' ah u , when appnirnate, cant interwmpany balances anJ transactions have been for potential t x aJjustments. Deferred income taxes are cluninated.

DASis of AlcoU NTiNo- Portland General and its P" N "" *"

subsidiaries wnform to generally accepted accounting I"""ne tax seporting. bec Note 5, income Taxes, for more detaih.

principles. In addition, con policies are in accordance with the acwunting requirernents and the ratemaking m Defened Taxes & nc- m is limited to record.

mg deferred income taxes to the extent permitted by the practices of regulatory authorities having jurisdiction.

at vr Nuts- rot acciues estimated unbilled revenues rUc fonaternabng purpa Tax redudionuesulung (nnn n e are deferred and amorti:ed to income aver periods not for ,ervaes proviJed to month end.

to exceed 2 5 years, the approximate lives of the related rU ncu An n rowi n- rot credits purchased power wsts for the net amount of benefits receiveJ through a P'"P"" I" Deferred income taxes are provided on timing differ-piwer purchase and sale contract with the era. Reductions m punhased p>wer costs that resuh from this exchange are " "' " """ I " ' " d " O ?"'peny placed in service and depredated since :9 8 1, For property plac ed in service prior passed directly to con residennal and unall farm custom-to i9 i,8 defened taxes were provided for only a pirtion of ers in the form of lower prices.

nt eni cl AT loN - eGI's depreciation I% computed on b*** O#" N"*

the straight line methoJ based on the estimated average U""' " 3 ' ' "> 9 " '" '""N "" "I"*" *" ""' "I

,crvice lives of the various classes of plant in service. In ^' U"e'ffnencn for au nrning w taxes have not ch deferred early :99 , the Oregon Pubhc Utility Commission (rUc) k"" '#*'d"d " "* "PP'"* I* '"IY I 3 3 4 '*III""' ""' ""'i'I' approved a technical change in straight line depreciation P" 0"' N *ilI""""I"'"d<"'"'"'"* P"Y**"

through rato charged customers.

for the Trojan Nuclear Plant which is now based on the remaining hfe of the plant's license. The rUc also approved

'""""'"""^"*~ "

• h " U " *"" " l'"

an increase in the estimate of decommissioning costs. See ing (cwia a subsiJiary of Portland General Holdings, acqwres and leases capital eqmpment leasn that quaMy Note 6 Trojan Nuclear Plant, for further Jetails. Deprecia-as duect fmancing leases and are substantially fmanced rion and decommissioning expense as a percent of the we nonrecourse debt at lease inception are accounted for related average Jerreciable plant in service was approxi-mately 4 3% in iv9t, 3 6% in i990 and3 .7% in :989. as levnaW leen w mvennwnt in kasa a dw The costs of renewah and replacement of property units sum f the na connacu recchaW and the estimated residual value, less unearned income and deferred rre.

are charged to plant, and repairs and maintenance are charged to expense. The cost of utility property units Unearned income and deferred ne are amorti:ed to inmnw ma the Ufe of the leasa to provide a level rate of retired, other than land, is chargeJ to accumulated depre.

return on net equity invested.

daim NUCL L An FUt1 - Arnorti:ation of the cost of nuclear D "'" P""""" "I '

• O ""' I""" * ""' I" I" '"' "' I cember 3t,199i and in9o are as follows:

fuel is based on the quantity of heat produced for the generation of electric energy. @*"A E E ALLOWANCt tor F UNDS USEn DURINO cONST RUC- Lease contracts receivable $689,o4 7 $ 732,49 :

TION ( AF nC)- Atoc represents the pretax cost of bor- Nonrecourse debt service

~

(s66,7:9) (6o9,64o) towed funds used for construction purposes and a teamn. Net conuacts receivable 22,328 i22,8 5:

able rate for equity funds. Arne is capitah:ed as part of the Esnmated residual value SS,noo 68,2o7 cost of plant and is credited to income but does not Leu neamed inwnie (46,i35) (5o,250) represent current cash earnings. The average rates used by rot were 8.oS% 8.6 % and io.22% for the years 199 , investment in leverh leases i6,33 48 i60,848 1990 and ioS9, respectively. Less-Ikferred nc (1o,258) (i0,68) 9 INCOME tax e s- Portland General (des consolidated -

Invennwnt in leases, net 5:54, i a s $ iso, iso federal income tax returns which include its subsidiaries.

iniecil Ness, Stationers Coordi.

tg ' > nutor. e Ness des cloped a program As to recscle unused stark ncrv items f 'f# ) that's nasing the Compan[$4,000 E '. D3'f< to $6,000 a month. "I try to sus e

[, '$d ts .

the Company money u-herecer pmsb ble, ev en it it takes a utile extra l, - ~ al t( Qgo J

effort. Ihrugh recycling appUes, I can pH orders more quicAlv too "

A, l

O Poenm Gmm Comunes s $mun Notts to flNANCIAL $1All.". INT 5 CA6H AND CASH E QUIVAt.t NTS- Dighly llyttid Operating results prior to discontinuation are shown investments with maturities of three months or less are separately in the consolidated statements ofincome. Such clam 6ed as cash equivalents, amounts are net of related income tax bene 6ts of $3 pt i L RRI D C H ARot S- PGF defers certain costi for inillion in i9 9.8 operating revenues from discontinued which revenues will be provided in future periods. Bal. real estate operations were $i7 5 million in i989, ances are amortired over the period in which revenues are The Cornerstone partnership has future lease obliga.

collected, prirnarily on a straight line basis. The wwe.3 tions, totaling $t 2 million at December 3i, ings, that are Settlement Exchange Agreement, which has been not reflected in the above e,tatement. Under its master excluded f.m tet4 rate base, is carried at present value leases, Cornerstone (lessee) guarantees it.ture rent pay-and amortized on a constant return basis, ments to the lessor over the lease term. Should partnership Rt cLAssitICA11oNS-Certain amounts in prior years resources be insuf6cient to meet obligations, cwne could have been reclawi6ed for comparative purposes. be jointly and sevetally liable for guarantees and commita ments of the partnership.

Note 2, Real fitole-Discontinued Operations Management believes that it has adequately provided for .

Ibrtland General is divesting its real estate operations, accounting losses to be incurred during the disposal of real _

estate assets. Prior estimates will be continually monitored -

which consist primardy of Columbia Willamette Develop, ment Company (cwnc) and a So% share of Cornerstone during the liqudation perial.

Columbia Development Company (Cornerstone), a part- Note 3. Loss from independent Power nership with Weyerhaeuser Real Estate Company, in : 99, 8 an estimated loss on disposal of $12 million (net of telated in late 1991, lloldings, a wholly owned subsidiary of -

Ibrtland General, recorded losses totaling $74 million, net income tax benefits of $6.6 million) was recorded on an of tax bene 6ts of $16 million, related to the write off of estimated completion of divestiture by ) ear end 1992.

Portland General teviewed the adequacy of the $ia iloidings' equity investment in Bonneville Nci6c and a million reserve established at year end 1989 and deter, provisi n for encollectible loans, project development and mined that an additional reserve was warranted. A loss of ther costs.

lioldings owns 9 8 million shares, or 46%, of Bonne.

$29 million (net of related income tax bene 6ts of $i7 million) was recorded in the fourth quarter of in9 to ville Sci 6c's common stock. The write off followed a re-view of the Bonneville hci6c investment, which raised recognize lower market values and additional holding mious concerns including the carrying values ofcertain of costs. The commercial real estate market has softened in the past year due to the combined effects of a weakening its assets, the lack of progress by Bonneville Pacifc to economy and more restrictive bank lending polkies, complete agreed upon project selldowns and Bonneville Paci6c's poor 6nancial performance.

Ibstland General expects that the liquidation of projects in December ings, Bonneville Paci6c voluntarily 61ed_

will be substantially completed over the next two years, At December 3i, i9gi and io9o, the net assets of real . for protection under Chapter si of the Bankruptcy Code.

estate operations were composed of the following: lloldings also has $a8 million of secured and unsecured loans outstanding to Bonneville Paci6c ud its subsidiaries.

(Ihouseds of Delim) 1991 1990 lloldings recorded a provision in December 1991 against AmTs the outstanding loans. lioldings intends to pursue recovery Real citate development $ 39,798 $44,66 : of these loans but cannot predict what amount, if any, may

Current anets 2o,433 i 9,4 o9 be recovered. See Note i4, Legal Matters, for further

.- Total anets 60,231 64,o7o deteils.

LIABILITIES Long term payables and other :o, iga io,566 Cunent liabilities 26,i55- t2,388 Total liabilities . 36 ,447 22,954 Reserve for discontinuance-n'et ao,754 3,335 Net Anets $ 3,o3o $37,78 l

a - Emmert Wheatfall, EqualI uployment Opportunity 5pecialist.

• Through she Work force Direesity Challenge Com mirsee, Whearfull was in sirm

'{ ,

, mentalin heightening Company awareness of she benefits of cultural

=

^ diversity. "There is roem at she

, , . sable for everybody. WeJuss need I so enpand our seu Ing cupacity"

,d

~

_ .M I , . . . .. Z ._ .1

- - - - - . _ - - - - - - . . . - - - . . - - . . ~ . - - . _ - - - . - - - . - - - -. ._ - . - - -

O Postan tunu (mmuos a Sms.mn ,

4 Nott$ TO IMNCIAL STAf[ MINTS I  !

4 Note 4. Retliement Benefits Net pension expense for eggs, 990 and 1989 included the Mming components-  :

PE NsloN PL AN-Ibrtland General has a noncontribu-tory pension plan covering substantially all of its employ, (Thmonds of Dollan) 1991 1999 1989 1

ces, Benents under the plan are based on years of service, Service cost $ 5,627 $ 4,788 $ 5,o9o final average pay and covered corupensation. Portland interest cost on reo 43,64 : sa.o74 s2,267 c Generafs policy is to contribute annually to the plan at Actual retum on plan least the minimum required under the Employee Retire- a nets (45,693) (3) (34,oq6) ment Income Security Act of 1974 but not more than the Net amortization and inaximum arnount deductible for income tax purposes. deferral 3o,o29 ( 5,272) 9,95o The plan's assets are held in a trust and consist primarily Net periodic pension ofinvestments in common and preferred stocks, corporate expense $ 3,6o4 $ i,587 $ 3,2 :

bonds, U.S. government cnd agency issues and mortgages. -

Portland General determines net periodic pension Assumptions: 19 91 1990 1989 e pense according to the principles of Statement of hnan- Dacount rate used to cial Accounting Standards No. 8 7, Employers' Account. calculate reo 8.oo% 8 75% 85o%

ing for Pensions. The following table sets forth the plan's Rate ofincrease in future funded status and amounts recognized in Portland Gen, compensation levels 6. a 5% 6.25% 6 50 %

eral's 6nancial statements: kms term rate of return (lhmonds of Dollon) 1991 1990 Actuanal present value of bene 6t OTHER Po3TRE'tIREk4ENT BENEF T PLANS-Portland obliptioni: General accrues for postretirement bene 6ts other than Accumulated bene 6: obligation, pensions during the employees' service years. Employees mcluding vesteJ benefits of are covered under a De6ned Dollar Benent Plan which

$i3o,469 and $i 4,5oo $i4o,289 $saa 9 limits Portland General's liability by establishing a -

Etfect of projected future maximum contribution per employee. The projected '

compensation levels 32,456 28 9oo bene 6t obligation for postretirement health and life insur-projected 'oene6: obligation (roo) 72,745 5 ,800 ance lwne6ts at December 31, i991 was $3o million, for plan auets at fair value a :Q,oa 4 103 ,396 which there was $a s million of assets held in trust.

plan auets in excess c( reo 46,279 3 ,596 Portland General also provides senior of6cers with Unrecognized net experience gair. (38,667) (19,378) additional bene 6ts under an unfunded Supplemental Unrecogni:ed prior service costs i8,oo9 8,o85 Executive Retirement Plan (sEne). Projected bene 6t Unrecognized net transition asset obligations for the sEnP are $i3 and $ix million at being recognized over 8 years (as 448) (27,4o6) December 31,1991 and 1990, respectively.

pensian prepaid cost $ 73 '$ a.697 9

l

\ y .+

~ ~

c, g ~ "' HobJames, Supertiser, Sertice #

9y I. Design, Sanford Kondo, Engineer, and Tom Ktmeser, Sales Exten,

'slee.

• Krueger, Kondo sadjames helped design PGE's Hagest

.t energy efficiency project to date.

.'. 1 le quallftes customer Intel Corp.

.]O,

,, for 4 afoie energy tax credit of sente g, lm shun $1 mittlen and sci!! see the a~ Company 30 to 40 unillion

-; Lilowatt.kours a year. '

O PDihatD bit!til (Ot%4&%I L hf MB:4IM Noits To ONGWL $ FATE .ENT1 Hote 5. Intcme Taxes Ven [nded Decemte 31 (Souseds of Dolks) 19 91 1990 1989 inwme Tax Expense Currently payable $ 2 2,52o $ 3o,42: $ 24,282 Deferred income taxes Accelerated depreciation 26,258 3 % 543 41,937 Adjustraent to wur 3 (2,57o) 3,756 4,o33 Unbillai revenue (s oSi) (3,i84) (3,284)

AM4x coal contract (i.o$o) 16,7o8 -

I(enionalIbwer Act -

679 (3,494)

Energy efficiency programs 2.859 - -

Trojan replacement power 5,c'84 - -

Trojan sleeving costs 4,o8o - -

lxase income (i4,82) 9 (12,949) (10,504)

Nonrecourse debt interest 2,156 52,532 10,8 3 Other (3,759) (5,3:9) (3,377)

Investment tax credit adjustments (4,589) (4,946) ( 3,6:9)

$ 45,oI6 $ 7ba4: $ 56,8os Provision Allocated to:

Cycrations $ 44,oo5 $ 72,616 $ 57,14:

Other income and deductions i,oin 625 (336)

$ 45,o16 $ 73,24: $ 5 6,8os Effective Tax Rate Computation Computed tax based on statutory federal income tax rates applied to income before income taxes $ 33,477 $ 54,567 $ 46, iso increases (Decreases) resulting from:

Accelerated depreciation 7,763 5,o98 5,693 State and hical taxes-net 5,766 5,o95 5,84o investment tax credits (4,589) (4,946) (3,657)

Adcistments to income tax reserves (393) 4,4o4 583 Prefered dividend requirement 4,39o 4 445 4,499 Other (1,398) 3,687 (2,3o3)

$ 45,oI6 $ 73,24: $ 56,8o5 Effective tax rate 45 7% 45 6 % 4i.9%

The t.LL above shows the detail of taxes on income and General's tax returns for the years 985 to igS7 and has the items used in computing the differences between the issued a statutory notice of tax deficiency, which Portland statutory federal income tax rate and Portland General's General is contesting. As part of this audit, the ins has effective tax rate. Note: The table does not include pmposed to disallow rot's ig8 5WNr 3 abandonment loss income taxes related to regulatory reserves or the losses deduction on the premise that it is a taxable exchange. ece from independent power and diwontinued real estate oper- disagrees with this position and will take appropriate atioris. action to defend its deduction. Management believes that The ins concluded its audit of rot for the years 1981 to it has appropriately provided for probable tax adjustments i9 84, and PoE's appeal Was !,ettled in 199 . The settlement and is of the opinion that the ultimate disposition of this had no material impact on ect's 6nancial results. matter will not have a material adverse impact on the The ins has also completed its examination of Ibrtland 6nancial condition of Ibrtland General.

.g_,A('

f*

• Rick Rock, Chemist, Heater Plant, o Reth autoinated the Heater irater plant and substituted liquid aypo-

, chloriac (bleach)for <-blorine gas - money-spriing in no-t utions that enaLe the plant

• safer and m. ore ecliable, "I flLe N being able to impicment I creatise ideas that help lacrease productit (sy."

A

O

%.%uom i su o n NOTis To FIN ANa At STAitmis Note 6. Trejan Nudeer fiant Tropn generateJ 958 rnilluin kilowatt hours in 199:

and served 6% of voi s net system load compared to 4,100 3rojan n a 1.100 megamitt, pre %uri:ed water nuclear plant of whu h foi, the operator, has a 67 %. interest. mdlion Idowatt houts anJ 24% of net s) stem load in 1990. Operatine and inamtenaise expenses (excluding

_Ile plant has been opetatninal sint'e s v76 and its hcem.e .

, fuel) were $ to$ million in 1991 as compared to 27o peraid runs throuch the year 20it. The r ,. ant s nudear steam supply system was designed and manufactureJ by million in iv9o.

,d,est mthouse.

PLANT iNvi s1MI NT AND DiCoMMissioNINo- As

.I .rolan, col s largest single generating source of energy, of December 3i, i991, rot s investment m Trojan arnuunted to $ 579 ruilhon including construchon wor,n in proviJes about 2 5% to 2 5,6 of coi s net load requirements.

pmgress. I.kpreciation reserves of $2 33 rnilhon have been Trojani capacity factor Jec hned to is,% in 199: Joe to an ,

accumulated, m.cmJmg $2 5 million for decommissioning extenJed outace. The plant,s average annual caraca.s not has esumated the decommissioning cost of its share of fat f or f.or the past five gears n 50,b compared with the Trojan m 20:n to be $488 milhon. roi n recording an natmnal average of 64%. for all nuclear power plants.

annual provision of $ n nuthon. Costs are being collected

_Tmpn,s annual refueling and mam, tenance outates are from customers, and the collections are being deposited in scheJuleJ dunng the springtime to take advantace s f an external trust fund. The annual provision will increase decreasme energy demanJs and favorable h>Jroelecinc every fne years using a mothficJ sinking fund method.

wndan>ns m the region.

Ibr ratemalme purniscs Trojan costs are based on a Num an m t oisemat-m kn a conuact with 6 3% annual capac ay factor. Replacement power costs m the US Department of Energy (uspot) for permanent excess of those used for settmg rates may adversely affect dnposal of spent nuclear fuel in usoot facdities. These dnposal servicn are now estimated to commence no earlier carmnes. Por has operated without a power cost aJjust-ment provision in its rates since late iv8 7. However, 6an m m pm se moor a pn m enented at during Trojaii ' s i9vi extended outage, the ruc granted han 6r dese future epod seMm Nymenu are made qu nny On-she norage capacity should accommo-tecovery of a portion of roti excess nower costs. See Management s Dncussion and Analysis for further detaih.

date fuel from the normal refuehng schedule of Trojan ni o u t A r ios - The Nuclear Regulatory Commission duouch the year 2007. Revenues are provided to cover estim ted costs of disposah (Nne) regulates the hcensing, construction, anJ operation At dus cady date, the ducevar diffnence between on-of Tropn. The Oregon Department of Energy (onot) also monnors the operanon of Trojan. The Nuc and the oooi Ine Morage c pacity nd the availability of the usnor.

hcdity does not, and is not anticipateJ to have, a matenal can dose the plant if there is an imminent Janger to the ' '

bk i*P"C ' "" ""' ' f* "C i"I C "d " I""'

An anti-nuclear group has requested that the Oregon ""*^ n iNsu n4 Net-The Pnce Andason Arnen&

Energy Facihty Sinng Cooned hold hearings to investigare '"""' "I '90 k*us puh habdny dainn that could anse fmni a nuclear incident to a maximum of $7 8 billion per the overall safety of Trojan. In January 1992, the Council rejected a similar request to hold hearings on safety issues incuent. m im puntased the maximum primary insur-related to steam generators.

ance coverage currently vailable of $2o0 million. The maining $7 6 billion is covered by secondary (manCial 199: ori n AlloNS- Routme msprCtmns during the 199 maintenance outage revealed mereasing deteriora- I"* " " '"4 * '" b' " "" U"' '#""d"'Y **" " d*

tion of the steam generator tubes and a tsce of degradation P* d "I"'I"h 'i"R"*""E II "*"C f ""CI" '

'#"'*' ""S*'

not previoudy Jetected rot deciJed to keep the plant off-in the ew nt of an mciJent at any nuclear plant in which line in order to conduct extensive mspections to assess the die arnoont of 6e loss exceeds $2o0 million, rot coulJ be extent and causes of the tube decradation. Tubes that were assessed retrospective premiums of up to $45 million per found to have microtlaws were plugged (taken out of service) or had sleeves inserted. On February 5,1992, the inc&nt, hmued m a madnmnW7 m@on pu mWent m any a ye r under the secondary fmancial protecoon NRC approved a license amendment modifying the repair M

critena to be used Juring the upcoming operating period

• \"I rope'r'ty damage, decontamination and decommission-The repair criteria were developed by por in 199 and are based on a methodology that better measures tube ing mvemge n pmvided for losses at Trojan up to $337 strength.

million primary and $t.4 billion excess. $844 milhon of

, - f%,

s 7'

,1,c . ,

y ' ',' Hus f auth,1ine Crew Generui

) *

~

f oreman, %alem. und Duce %nn g

((.

-/ '[> Mentern. e Ajacr mptrys returned llossu.u, Distnburh.n Alu naga,

4' .d O'k i3 I

t i 1' Yq so new on soirm.arra point poles.

jj %in fissuv and lauth dra rloped

& fz  ; y a prottum'to provide used poles J

Q > 'i L special t platforms to protect und (neulation both I.irds and pourr.

1J A . lines. "M'r feel a responsiNHn so

(% doment u hur's rightfor in ihr course of ourihrwm eniiron-L."

-d .; y

O IDirdPS biblist (Ol'oll't04 4 5 Dill 34f'll Notts To FINANClAt $1mMINT5 the excess is provided subject to a potential maximum this coverage. Insurance coverage is provided primarily retrospective premium adjustment of $5 million per policy through insurance companies owned by utilities with year. The NRC requires that, in Case of an incident, insur* nuclear facilities.

ance pr ,ceeds must 6rst be deJicated to stabili:ing and INITI ATIVE etTITION-Two initiative petitions are decontaminating the reactor. This could reduce the being circulated that would prohibit the operation of amount of proceeds avadable to repair, replace or restore Trojan until specific conditions are met, including licens-the property or otherwise available to the trustee for ing of a permanent radioactive waste disposal site. If applicanon under ect's 6rst mortgage bond indenture. eat enough valid signatures are gathered, these initiatives maintains $3 64 million coverage for replacement power would appear as ballot measures on the November 1992 costs Replacement power insurance provides indemnity Oregon general election ballot, rot believes that passage payments for up to three years A retrospective premium of of either measure could result in the inJefmite shutdown up to $5 million per pohcy year may be assessed in the of Trojan. Oregon voters rejected similar ballot measures event losses exceed the accumulated funds available for in ig9o md iq86.

Note 7. Common and Preferred Sto<k Cumulative Preferred Common 5tod Stod of Subsidiary Other Number $335 Por Number $100 Par $25 l'r Poid-in iheamed (lhousands of Dallars) of Shares V*e of Shores Value Value Capital Compensvien December 3t, i988 46,so3,iS4 $ i 72,887 2,3 2 3,o4o $ 13 2,3o4 $ 2 5,ooo $5o9,399 -

Sales of stock 7, i i 7 64 - - -

334 -

__ _ Redemption of smcl _ - - ( i 8,ooo) ( i,8co) - - -

December 31, i989 4 6,12o,3oi 172,95: 2,3o5,o p 13o,5o4 2 5, C'00 509,733 -

Sales of stock 24,907 94 - - -

3i4 -

Redemption of stock - -

( i 8,ooo) (i, Boo) - - -

Loan to esor - - - - - -

$(36,ooo)

Tax benefits tsor dividend - - - - -

23o --

Repayment of tsor loan and other - - - - - -

21:

December 3i,199o 46,i45,208 73,o45 2,287,o4o 28,7o4 25,ooo 5 o.277 (35,789)

Sales of stock 381,342 i,43o - - -

5,i6: -

Reden rion of stock (1,387) (6) (38,000) (i,8co) - - --

Tax benefits Esor dividend - - - - -

992 -

Repayment of tsor loan and other - - - - -

67 5 719 becember 31, 199: 4 6,525,i63 $ i 74,469 2,269,o40 $ 126,9o4 $ 25,o0o $516,497 $ (3o,o7o)

COM mon SToC K- As of December '3i , aggi, Portland match contributions of rot employees were purchased General had reserved t.7 million authori:ed but unissued from a $36 million loan from por to the tsor trust in late common shares for issuance under its dividend reinvest- 199o. This loan is represented in the common equity ment plan. In addition, new shares of common stock are section as unearned compensation. Cash contributions issued under an employee stock purchase plan. from ect and dividends on shares held in the trust are used Portland General has an Employee Stock Ownership to pay the debt service on rot's loan. As the loan is retired, Plan (Esor) which is a part ofits 4c i(k) retirement savings an equivalent amount of stock is allocated to employee plan. Employee contributions up to 6% of base pay are accounts. In 1991, total contributions to esor of $6 matched by employer contributions in the form of Esor million combined with dividends on unallocated shares comrnon stock. Shares of common stock to be used to of $3 million were used to pay debt service on rot's loan Hob Weber, Corporate 1.ibrar-

.4 ian.* By setting up a CD ROM

. '[, , system with on line indexing, y Weber has provided employees h'[\'

"pcMr' 4 4 u ich immediate. focused access to hundreds of utility

~

I and business periodicals.

lf J

.N* *informa<hn is power, We want to maximize its efficient and economic s.sc, not reintent the wheel."

a

O psaimummu s-m Notts io FINANUM $1A11 MINT 5

($3 million of interest). Shares of common stock used to mercial banks. At December 3i, iggi, Portland General match eontnbunons by emplo3 ees of Portland General and had total committed lines of credit of $175 million.

its other subsidiaries are purchased on the open market, Ibrtland General, the parent, has a $5o million comum Portland General has a Long. Term Incentive Master ted facihty expiring in July i992 and ror has two commit.

Plan under which 2 3 million shares of Portland General ted facihties totaling $ias million expiring in July ing3 common stock are available for stock. based incentives to These hnes of credit have commitment fees and/or facihty key employees. Of the stock available, 900,o00 stock fees ranging from W to % of one percent per year and do options have already been granted, io,ooo were exercis- not require compensating cash balances. The facihties are able as of January 3i, iq9i and an additional so,ooo were used primarily as back-up for luth commercial paper and exercisable as of September 3o, i99i at a price of $is 75 borrowings from commercial banks under uncommitted per share. The remaining 88o, coo shares are exercisable lines of credit. At December 3i, ingi, there were no beginning 6ve years from the date of grant (in years iv95 outstanding borrowings under the committed facilities.

and i996), at prices ranging from $i4 to $i8 per share. Ibrtland General, the parent, and eat have commercial Portland General may, at its option, repurchase up to paper facilities of $5o inillion and $ico million, respec.

3 3 milhon shares of common stock through a stock tively. The amount of commercial paper outstanding repurchase program. cannot exceed each company's unused committed lines of NO PAh CUM U L ATivE PRE F E RRED STOCK-Portland credit, General and rot each have 3o,000,000 shares of no par Commercial paper and lines of credit borrowings are at cumulauve preferred stock authori:ed. No shares have rates reflecting cunent market conditions and generally, been issued. are substantially below the prime commercial rate.

cU MULATIV E rRt F E RRL n STOCK OF SUBSiDi ARY ~ Short-term borrowing 5 und related mterest rates %cre as No dividends may be paid on common stock or any class follows:

of stock over which the preferred stock has priority unles* 1991 1990 1989 December 31 (Nusads of Col!d' all amounts required to be paid for dividends and sinking -

fund payirents have been paid or set aside. ^'4 'he *"d "f 'he Ye"'

The S. io% Series preferred stock has an annual smking ^

• e 8"' e d"'" "'"

debt outstandmg fund requirement which requires the redemption of B.mkloans $ i6,ooo $ 60,s00 00o,600 toe,noo shares at $1oo per share beginning in i994. At its Commercial paper 5 7 6,473 $ 54,674 -

option, rot may redeem, through the sinking fund, an Weighted average additional ioo, coo shares each year. This Series is redeem- interest rate able at the option of rot at $ios per share to April i4, Bank h>ans 6. 8% s.7% 94%

1992 and at reduced amotints tbeceafter. Commercial rarer 55% e.3% -

rot is required to redeem annually i8,ooo shares of the Unused comnutted 8.875% Series preferred stock at $ioo per share. At its imes of creda $i75,ow $ 2 m.ow $ 2 o 5,o00

~

option, PGE mJy redeem, through the sinking fund, an ,*or the year enJed:

additional i8,oco shaies each year. This Series is redeem- Average daily amounts able at the option of vot at $ica per share to April 3 o, of short term debt 1992 and at reduced amounts thereafter. outstand mg COM mon DiVf DEND RE STRICTloN OF SU BSIDI ARY- Bank laans $ 5 6,579 $ 6 5,979 $ 35,4 8 rot is restricted from paying dividends or making other Commercial paper $ 3o,339 $ p,666 $ 7n distributions to Portland General, without prior ruc h dailYSve' ace W 8 'ed i"'" e" 'd'e approval, to the extent such payment or distribution would reduce PGE's common stock equity capital below 36% ofits

" "k ! "^ '* '%

Commercial paper 65% 83% 92%

total capitali:ation. At December 3i, iggi, rot's common g, n, stock equity capital was 42% of its total capitali: anon. outstanding during Note 8. Snort-Term Borrowings

[nrerest rates exdude the effect of commitment, bcdity fees and other Portland General meets its liquidity needs through the (m.mtmg fees issuance of commercial paper and tvrrowings from com-F p fleckv Geruid, Clerk, T rojan Plant Servicen e Named PGE's 1991 Volunteer of the icar, Gerald

'A

"- %_ deentes personal time (including M s ocation) to charitabic en .ses

% "?A such as helping eldeity eiltens and Aleticun orphans and wo: Ling on PGF's United %y campaign.

" Volunteer work girn me great sathfaction. The Cornpany's sup-

._s pors en Wce me to do nen more."

O romus Gisits (onocimos a Someine Notts To flNANCIAt 51A11p, INT 5 Hote 9. Long-Term Debt ect's share of debt service costs, excluding interest, will The Indenture securing PoE's first mortgage bonds be appnWmately $5 million for each of the years 992 through 5996. ,The minimum payments through the constitutes a direct first mortgage lien on substantially all tem inder of the contracts are estimated to total $i no mil-utility property and franchises, other than expressly excepted property. ,

ur s E s - Por has leasing arrangements for its headquar-

. The following principal amounts of long-term debt ten wmplex, mmbunion tubines and the coal-handling become due for redemption through sinking funds and f'CIIities and railroad cars for the Ibardman Coal Plant.

maturities:

Pot,s aggregate rental payments charged to expense 1992 - 1993 1994 1995 1996 (Thousands of Ddors) amounted to $2i million in ig9 , 99o and i989 Sinking Funds $ 4,664 $ 4,25: $ 4,o26 $ 3,85: $ 3,7oi Pot has capitalized its combustion turbine leases. How.

Matuntics si,4:3 62, 78 4 4 ,289 7 ,356 57,528 ever, these leases are considered operating leases for The sinking funds include $2,45i,ow a year for i992 through in96 which, in accordance with the terms of the "(($***hi

, , i i, the future minimum lease payments under noncancellable leases (excluding lever-Indenture, PoE may satist b l l h!c additions -

aged leases) are as follows:

equal to i66WL of the smly king fund y p edgmg avai a requirements.

Operating leases Note 10 Commitments MrInding - (Net of '

Deumber 31(thousands of Ddars) . Capitolleases sublease Rentals) lotal PURCH ASE COMMITMENTS-Purchase commitments outstanding, principally construction at PoE, totaled i992 $ 3,on6 $ 16,8 9 $ 19,835 i993 3, 16 6,o5 i i 9,o67 approximately $3o million at December 31, ip9 . Cancel-5 lation of these purchase agreements could result in cancel- -

lation charges, 3,o i 6 i 6,28o i9,296 i996 iNTE RTIE AGREE M ENT- PGE and BPA agreed to an Remainder 7,36s 200,iB4 2o7,s52 expansion of the Pacific Northwest Intertie. With the Total $ 2 2,448 $28 ,49: $3o3,939 expansion PoE would gain an additional 250 megawatts of scheduling rights at an estimated cost of $ia million. It is imputed Interest (4,8o5) scheduled to be completed in ign3. The agreement also present value of provides that if BPA is unable to obtain fmancing for its Minimum Future Net share of the expansion, nPA can request PoE to assist in its Lease Payments $i7,643 fmancing arrangements.

PURCH ASEn POWER-PoE has long-term power pur- Included in the future minimum lease payments -

chase contracts with certain public utility districts in the schedule above is approximately $ iso million for PcE's state of Washington and with the City of Portland, Ore. headquarters complex. --

gcm. PGE is required to pay its proportionate share of the operating and debt service costs of the hydro projects whether or not they are operable. Selected information is summari:cd as follows:

(thousands of Dollars) Rody Reach Pnest Rapids Wanopum Wells Poitiand Hydro Revenue bonds outstanding at December 3i,199: $ i94,156 $ i oo,582 $ i 28,195 $2on,595 $ 43,920 Pos's current share of output, capacity, and cost llrcentage of output i 2.0% .i39% i87% 21.0 % 100 %

Net capabibty in megawatts 154 i25 37o 17o 36 Annual cost, includmg debt service 199: $ 3,800 $3,400 $ 4,000 $4,300 $3,800 i990 3,400 2,900 3,400 3,400 4 900 men 3,200 2,3oo 3,3oo 3.800 5,100 Contract expiration date aosi 2005 2009 2018 20:7 v . fn 3 -.

D.un Jones, Supertisor, Materials g Y.

1 Q-'M Management; Dan Rynearson and

^

', /4A f ' Norman Hale, Information Systems

(~ '

h_ ,

Analysts e lonen,itute and Rynearson helped in,ptement a

,L I y i Y. payment purchase systemfor Contpun.

orders that climinates G paper invoicing. "Through bener teomwork und quider payment of orders, the Company is able to d sete money by capturing more hf discou nts for early payment."

O houo Giunt (otronte): Senmatin NOTis To FIN ANCIAL $TATEMENT5 Note 11.WNP-3 !at;iernent Exchange Agree:nent Note 13. Rate Matters rot is selling energy received under a WNr-3 bettlement roe had sought judicial review of three rate matters Exchange Agreement (wsA) to the Western Area lbwer related to a 1987 general rate case. In 198 9, rot reserwd Administration (wArA) for 25 years, which began October $89 million for an unfavorable outcome of these matters.

i990. Revenues from the WArA hales Contract are expected in July i99o, rot reached an out-of-court settlement with to be suff cient to support the carrying value of rot's invest- the rue on two of the three rate matter issues being ment. litigated. As a result of the settlement, $i6 million was The energy received by rot under wsA is the result of a restored to income in 199o. The settlement resolved the -

settlement related to litigation surmunding the abandon- dispute with the ruc regarding treatment of accelerated ment of wNe-3. rot receives about 65 average annual amortization of certain investment tax credits (ire) and megawatts for approximately 3o years from neA under the io86-i9 87 nterim i relief. As a settlement of the interim wsA. In exchange, rot will make available to bra energy relief issue, rot began refunding to customers approxi.

from its cotubustion turbines or from other available mately $i7 million over a 2 month period beginning resonarces at an agreed to price. November I, iggi.

"**"**"I' "**** " " *** ** "'

Note 12. Jointly Owned Plant manlintertie gain issue, which the parties continue to At December 3i, iggs, por had the following invest- litigate. rot's position is that $29 million of the gain ments in jointly owned generating plants (thousands of should be allocated to customers. The i987 rate order dollars): ullocated $79 million of the gain to customers over a 27-lacihty Borudman Colstrip 3 & 4 (entioko year perid rot has fully reserved this amount, which is hoian being amortized over a 27-year period in accordance with location Rainier, Ibardman, Colstrip, Centralia, the i987 rate order. The unamortized gain, $7 6 million at Oregon Oregon Montana Washinson December 31,199i, is shown as "Regtdatory reserves" on Fuel Nuclear Coal Coal Cml the balance sheet. In the event that a final decision and Mmwatt CyuNiity i,so4 53o i,44o i,3 o subsequent ratemaking action supports ecE's position on pOE this issue, rot will recognize related income, as appro-

% Interest 67 5 65.o 2 o.o 25 priate.

plant In 199i, the Utility Reform Project (une) petitioned in Service $ 549,95o $3 51,246 $442,738 $8,88 3 the ruc to reconsider the order approving the settlement.

r $ 2 3 3,o35 $ i 3o,o 3 5 $ 12 5,4 6 2 $4,58 3 egm awe su%uen@ ped a law dad-ing the rue's authority to approve the settlement. As a The dollar amounts in the table almve represent rot's result, the ruc issued an order implementing the settle-share of each joindy owned plant. Euh participant in the ment. une has fded an appeal in Multnomah County above generating plants has provided its own financing. Circuit Court to overturn the rue's order implementing cor's share of the direct expenses of these plants is settlement.

included in the corresponding operating expenses on in addition, The Citi:en's Utility Ibard (cua) fded a lbrtlar;d General's consolidated income statement. complaint in 1991 in Marion County Circuit Court seek-ing to modify, vacate, set aside or reverse the euc's order implementing settlement. The Oregon Department of justice fled an answer to the cus's complaint denying that the euc's action was unlawful and has moved to consoli-date this case with the une case.

While the ultimate disposition of these matters may have an impact on the results of operations for a future reporting period, management believes, based on discus-sion of the underlying facts and circumstances with lega' counsel, these matters will not have a material adverse effect on the fmancial condition of Ibrtland General.

-j A

• - llarbara Etuchley, Corporuse Librarian. e lluckley heads Accessfor All, she Company group at the forefront of leading PbC toward compli.

once with the Amerkans With DluabHisies Act.

"ADA is an opportunityfor PGC to allow equal, not

-+ special, accean for people with disabilities!*

O Pmw Gmin (mmna a 5 men NOTIS TD flN AHOAL STATEQNTS Note 14. Lt go! Matten llolJmgs 6 led a complamt in Salt Lake County (Utah)

WN r COST $ H A RING- r(.c and three other invesnir, NM %n & @g Nom & Ede aW mas owned unhnes (ious) are involved in htigation sunound, individuals associated with Bonneville Paci6c with " mis-ing the Proper allocation of shared costs between representing the 6nancial condition" of Bonneville Washington Pubbc Power Supply System Units and 3 Paci6c. IlolJings' complaint alleges that it relied on anJ Umts 4 and 5. A court ruling issued in May i9S 9 fraudulent staten ents and ominia by De:oitte & Touche stateJ that BonJ Resolution No. 8 9 0, adopted by the and the individual defendants when acquiring a 46%

Surply System, controlleJ Jisbursement of proceeds from interest in anJ making loans to Ibnneville Paci6c starting bonds iwued for the construction of Unit 5, including the in September i990. HolJings is seeking approximately method for allocarmn of shared costs. It is the ious

. $2 28 million in damages.

contention that at the time the project commenced there orHER EAL MAUrRs-Portland General and certain was agreement among the parties as to the allocation of of in subsidiaries are party to various other claims, legal shared wsts and that this agreement and the Ibnd Resolu. actions and complaints arising in the ordinary course of rion are consistent such that the allocation under the business. These claims are not consideted material.

agreement n not prohilitcJ by the Ibnd Resolution. SUMM ARY-While the ultimate dispo3ition of these in October ivvo, the US Ihsuict Court, in grantmg a matters may have an impact on the results of operations for motion by Chemical Bank for an accounting of the cost of a future reporting period, management believes, based on facilities shared between Units 3 an,1 5, ruled that the discussion of the underlying facts and circumstances with oroper methodology for the allocation of shared costs legal counsel, these matters will not have a material ad-

"reqmred the application of principles akin to those verse effect on the fmancial condition of Porth nd General.

espoused by Chemical Bank." The Court stated that as a result, Unit 5 "apparently bore more than its fair and equitable share of construction costs." cor and the sous arpealed the juJge's order to the Ninth Circuit Court of Appeals.

On February 25,1992, the Court. of Appeals reversed the US District Court's decision on the method of alloca-tmn of shared costs. The Court of Appeals ruled that shared costs bctween Unin 3 and 5 should be allocate i in proportion to benents under the equitable methmi sur-ported by rot and the ious.

nos so vitt t rAcivic-Two senarate class action suits wcre 61ed in U.S Dntrict Court ofOregon on behalf of the public shareholJers anJ debenture holders of Bonneville Pacihe allegma violations of federal securities laws, negh-gent misrepresentation, and breach of common law 6Juciary duty by Portland General, lloldings, and certain individual defenJants af61iated with Portland General.

The amount of Jamages are not specifieJ.

. - - - _ . _ - - . -- Y[f Das z johnson, Senior f urnier, l

f[i.

1

}lt Lundacupc Sertices e Johnson fed team efforts to help cornmunity

% " 4g1% groups plant "the right trees in l h ghh the rbght places." "I'lanning 1JQ#

4, % '-p"~f 1,

1 4 &gp before

,iWk p'* m planting, overheati cspecially lines, un4fer reduces pruni uc 3 tosu und helps trees enhunce

• h' 1 the entironment und pratide D4h h '" "#

O-tmuse 6mm huoum a $aismen QUARTIRLY COMPARISONS -

- (Oohrs in Thovsonds) March 31 : June 30 . September 30 - December 31 -

PORTLAND GENERAL CORPORATION Quarterly Compeilson for 1991 and 1990 (Unaudited) 1991-

. Operating revenues - $233,i6: $ i99,97o $2o5,752- L $25i,o32 Net operating income 53,882- 26,881 -22,437L - 33,438 Net income (loss)1 3 i,654 - 5,117; (45,i92); (4i,446)

Common stock Average shares outstanding 4 6,i4 8,9:9 46,269,275 4 6,39o,7:4 _46,523,478' Eamings (loss) per average sh re' $.69 $.i $(,97) $(.87 )'

1990 Operating revenues $24o,259 - ~ $184,668 $188,oo2 $239,276:

Net operating income 58,26o , 24,o34 ' --37,47o 56,693 ,

Net income 2 3 6,537 2,337 31,9oo :29,i7 8-Common stock 46,123,6i8-

~

Average shares outstanding 46,i29,748 - 4 6,i3 6 ,53o -46,143,32o Earnings per average share' $.79 - $.os - $.69- $.63

'The third quarter of in9: mcludes a charge of $4s million resultmg from the write-off of Holdmas' egmry investment in ibnneville Pacific Corpora-tion The fourth quarter of ag9: includes a $25 milhon, net of tax, loss from independent power and a $29 milhon, net of tax, reserve ir.t iscontinued real estate operations. Portland General has decided to no longer pursue development in the inder ndent power and real estate businewts. See Note a',

Real Estate - Discontinued Operations, and Note 3, las From independent Power, in the Notes to the Financial Statements for further detadsc

'In the third quarter of i99o, $ t6 mdlion was restored to income for settlement of certain rate matters: See Note i 3, Rate Matters, in the Notes to the :

Financial Statements for further detads.-

!As a result of dducive effecu of shares issued durmg the period, quarterly earnings per share cannot be added to ernve at annual earnmgs per share number, d Market for the Registrant's Common Equity and Related Stockholder Matters Nrtland General's common stock is publicly held and traded on the New York and Pacific Stock Exchanges,The -

table below reflects the dividends on Nrtland General's common stock and the stock price ranges as reported by The E!! Street Joumal for i991 and 199o.

1991 1990 t Quarter 1st 2nd 3rd ' 4th - 1st 2nd. 3rd 4th High ' x8% i8% 17% 57% - 22% i8% : 17%- i8% _

- Low i6% 27%- 56 % 12 % 16 % s 25%. .i4%, ' iS% -

Closing price x8% 17%- 17 15% 37 17% 15-- 18 -

Cash dividends declared (cents)-- 3o -- 3o 3o 3o 3o 3o 3o- "3o At its February i992 meeting, Portland General's Board of Directors declared a quarterly common stock dividend .

of $.3o per share.

- The approximate number of shareholders of record as of December 3i, i99 was 55,899 Preferred Stock of Subsidiary The $2.6o Series of preferred stock for ece 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 The Wall StreetJournal) for the respective periods.

Four of the remaining preferred series are traded infrequently over the counter and disclosure of quarterly price ranges --

is not meaningful.

1991 1990 Quarter 1st hd 3rd 4rh 1st 2nd 3rd 4th

$2.60 High 29% - 29 % 29 % 3o% 28 27% ' 27% 28% -

Low 26% 28 -27% 25 % 25 % 26 % 25% - 25%

Quartedy cash dividends were paid on each class of ecs's preferred stock at its stated rate during ig9: and 199o,

O haum Gisant (otronmou a Sment:6

$fLICTED FINANCIAL DATA AND stall 5fl(5 -

B91 N90 M89 W88 W87 W81 PORTLAND GtNERAL CORPORATION Fino-cial Comparisons Key Results (Thousands)

Operating Revenues $889,935 $852,ios $796,91o $75 6,3 84 - $767,244 $594,789 Ner Operating income $ t36,638 $i7 6,457 $i6i,877 $igi,7 i, $i75,9o5 $i84,479 Income (Loss) From Continuing Operations $(2o,698 )' $99,952 2 $(9,90o)2 $io4,568 $9 ,973 $98,968 Discontinued Operations' $(29,169) - $(i 7,o33) $(7,259) $(i3,986) -

Extraordinary / Cumulative Effect Items * - - - -

$35,044 -

Net income (Loss) $(49,967 ) $99,952 - $(26,933) $97,309 . $ 1 i 3,o31 .$9 ,98 68 Earnings (Loss) per Average Common Share :_

Continuing Operations $(.43) $2.17 $(.2i) $2.27 $i.99 $2 54 Discontinued Operations (.63) -

(.37) (.r6) (.3o) -

Extraordinary / Cumulative Effect items 76 Earnings (Loss) Per Share $(i.o6) $2.17 $(.5) 8 $2. i $2 45 $2 54 Dividends Declared Per Share $r.2o Si.2o $i.96 $ i .96 $r.96 $ t.7 Total Assets $2,617,3 : n $2,63 i,57: $2,58o,o36 $2,518,717 $ 2,62 i ,693 $2,293,243 Stodholders' Equity and Long-Term Debt (December 31)

Common Stock Equity (Thousands) $679,3o9 $77i,4:5 $76i,976 $878,894 $869,948 $7o3,990 Book Value Per Share $ r 5 25' $17 49' $i6 52 $19 06 $i8.86 $17 63 Dividends Paid Per Share $i.2o $i.39 $196. $ r.96 $1.86 $17o Average Shares Outstanding 46,333,o96 4 6,133,3o3 4 6,ii2,255 46,io3,648 46,8o4,5o6 39,o24,435 Preferred Stock of Subsidiary (Thousands) $ 150,104 $15r,9o4 $iS3,7o4 ' $155,5o4 $io9, to4 $i4 6,993 ,

Dividend Requirement $i a,9:3 $i3,o73 $ t 3,232 $iao35' $ i 7,902 $13,373 Embedded Cost 85% 85% 85% 85% 87% 9.o%

Long-Term Debt (Thousands) $926,9o2 $763,338 $816,75: $849,292 $892,316-- l $1,o99,2o8 Interest $76,792 $77049 $79,42 r $8o,737 $90,197 $124,365 -

Embedded Cost 83% 8.2% 87% 85% 8.8% u- @

Eniployeo Data Number of Employees (December 3i) 3,256 . 3,475 3,291 3,147 3,1o7 . 3,244 Operating l'ayroll (Thousands) $io9,479 $io2,436 $93,o63 $87,623 '$8 5,321 $57,8o9 L Construction and Other Payroll (Thousands) $ 52,9o5 $46,354 $42,2 :5 $34,424 $33,o63 $33,r34

' Includes a hws of $n r-dhon from independent power. See Note 3. l.oss From Irdependent Power. in the Notes to Financial Statements.

2 includes regulatory has reserves of $89 milhon for certam rate inues in in89 and a gam of $io milhon for settlement of certain of thew issues in to9o.

See Note u. Rate Matters, m the Notes to Financial Statements.

'Purtland General Jacontinued its real estate operations. Current and reior yeari amoimrs are not reflected m operating revenues and ner operatmg incame. -

' Represents an adiustment resulting from a change in accounting rnacirle. See Note i, Summary of Sigmficant Accounting Pol cies und Note i,, ve3 Settlement Enhange Agreement. in the Notes to the Emancial Statements.

'Euludes contra-equity -Uneamed Comrensation. See Statement uf Capitatuation.

. = - - . ,. ..

5 D .. I

-- Pottuo 6mus Conn >utica a Snsemis SilfGED flNANCIAL DATA AND $TAfl5 TICS '

- 1991 1990 L 1989 1988- 1981 1  : 19 81 -

PGE Ettanic OPERAil0N!

Sales and (vstomers Kilowatt-llours Sold (Millions) -

'6,548' - 6,i39

' Residential 6,3 : n _ 5,924 5,553 ~ 5,346 Commercial ~ 5i598 -5,394 ,5 141 '4,865 1 4,672- 3,844'  ;

industrial -3,6:2' 3,62 3 - 3,508 - ~ 3,326 l3,i7s - 3,695 Publicitreet lighting ro:- 94 93 :95' 95' 107, Billed to Customers -15,86o - ' 5,43: 14,9o n ._ _ i4,2 o ' '13,498 2 995'.

Unbilled (145) 133 ~4 34' 42 - w/A Retail iS,7 : 5 . - 15,56 4- (4,9os i4,244 33,54o . 2,995 Wholesale 3,939 4,273-- 2,98'8 2,935 2,952- 2,3:2' ,->

Total i9,654 ~ i9,837 i 7,893- i7, i 79 16,492' 15,3o7 Operating Revenues (Thousands) - . .

Resi&ntial $3:4,24- $29i,797 . $293,722 L --$286,o34 $267,88 5' $2:s,463:

Comrnercial 283,39o -_269 ,887 261,345 253 97o 259,524 L 49,507 z Industrial ~ r35,63 : 133,78o i33,33: 127,948 328,i98-- 116,295i Public otreet lighting .io,679 io,2o7 no,2o7 - n o,2 49 - 1o,343 - 17,888 Billed.to Customers 743,824-  : 7o5,67 : 68,6o5 9 6 78,2on : 665,943 496 ,53~ -

Accrued and Unbilled 4,448 ir,7:6 - (i 6,og8) . (18,9:9) -25,718 . w/A-Retail 74 8,272 7:7,387 682,5o7; 659,282 - [69 ,66: 49 6,153 Wholesale ' .i3 ,6o5 *28,272 92,323 : 8 3,2o6_: 66,36o 98,636 --

Other 5,'76o 6,o61 9,253 ~ -5 356 f 4,9o6L N/A ~

j Total $885,637 $844,72o $78 4,o83 . - $747,844 ' $762,927 ~ $594,789._ '

Average Price Per Kilowatt-llour, retail customers 47g6 4.6 t 4 58 f- _4 63C 75. I if 3:8Ac --

Customers (At Year End) . _ _

Residential 526,699 5:2,9:3 - 496,165 - 4 84,293 47 68 ,4 1 '443,4:4 Commercial; 72,o7 ' 7o,266 68,82: 1 67,o43 66,82: 56,698 .

'ndi.strial 186 93- 196 93 191- _197 ,

Itblic street lighting 664 637 6o 3 625 = 624 : -i,3972

--Wholesale si 14 12! 8 8 4 Total 599,631' '584,o23 565,824~ 552,i62 544,i25 Soi,7:o '

Residential Service ( Average per Customer) _ _

Annual Use (kilowatt hours) 82,582 i2,496 is,5_68-_ . _ ra,343- [ir,751 - 2.188 Annual Revenue . $6o3 55 $577 72 - $599 38 *$595 96 . $566.88 . '$48 3.82 -

Price per Kilowatt Hour 4 8og 4 62f ' 4,77f - 4.83# 4 828 3 97f Power Supply _

Kilowatt-llours Output (Millions)

Generated (net)-ilydro 2,i34 2,i98 2,26o 2,2 i o 4

2,o86 - 2,2o5 Generated (net)-Thermal 6,332 '7,84 7 - 7,7:9 6,64 7 4,330 5,888-

~ Purchased-Primarily Hydro- 2,36: io,945 9,ogo : 9,373 11,259 8,1961 2o,827 2t,oi7 i9,o69 i8,257- _i 7,68 : . Ji6,289 -

Losses and Company Use 1,i73 r ,i 8o e,r76 i,o7 8  : i, 89 -982

-Total 19,654 -19,837 17,893 17,i79 16,492 -- 5,307 :

System Peak' Load Winter .

(Timusand3 of Kilowatts) 3,136 3,68 9 35i9 2,893 2,8o9 ' 2,687

' Utility Plant Gross Additions (Thousands) . $ i39,522 $ io9, i 16 $ r 2 8,o35 $85,634 $75,922 ' $294,65 :

Gross Plant (Thousands) $3,oi8, i99 - $2,89 ,i7: $2,789,873 $2,677,236 $2,6o7,7o8 $ 2,4:3,6oo y.p.- .+.Wy 9-y..g9.=,_ -.- y - . , + ,

. --- %e- pw

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a 39

.Postung Gssitat (otronhos 's $on*Atdi-Omats AND DIRfacts t

. i '.

' - bfficen PORTLAND GENERAL CORPORATION , PORTLAND GEN E RAL ELECTRIC .- .;

, Ken L/ Harrison E. Kay Stepp" '

President .

Chairnum of the Board and Chief Exectaire ofBcer*-

Richard G. Reiten Alvin Alexanderscm _ .

pre 3ihnt= t Vee President, Rates and Regulatory Affairs -

Lednard A. Girard Clark A. Anderson Senior Vice Presidens General Counsel and Secretary

• Vice President, Management Action Program ,

Joseph M. Hirko David K. Carboneau ' +

Vice President; Finance; Chief Financial Offca; Chief Vsu President, Administration-Accounting Officer and Treasurer * . James E; Crossi Vice President and Ciief t Nuclear Officer : - ,

Charles L Heinrich-Senior Vsce President - . Richard E. Dyer' .

Dan E KielNock7 - Vice President ( Marketing and Neer Supply Plamiing ;

Vice President, Human Resources

• Peggy Fowler :

N 4

• Portland General Corpi and rcs Fred LamoureauxL Vice President; Utility Services .

POWERLINK John R; Zanot

President Board of Dirnton Gwyneth GamNe Booth  : Randolph L. Miller ! . _ _ , .. .

Television pro lucer/reporteri community activisti inedia President, Milcor, Inc. dba The Moore Co.,' hirtland, OR ;

consultant'and bmf Chainnan of Neighborhood ihrenership (Offide Products Distribution)l Director since 19S7,- ,

Fund of Oregon Community Foundation, Oregon Public - Richard G; Reiten .

Broadcasting, Ibrtland, OR. Director since 19 8 st. ~ President, hrtland General Corp. Director since 199o (also Peter J. Brix; . . . .

from 198 y1987).

Chairman and Chief Executive Ofpccr, Brix Maritime Co., Robert W. Roi ihnkmd, OR (Maritime Transinrtation)i Director of Idaho l Retired President auf Chief Executive Officer, Jantzen, Inc.,

Forest Industries and a Tnotee of Willamette Uniwrsity.  :: htland, OR (Sportswear and swimwear), Direhtbr since - a

~ '

?

~ ~

Director since 198 3t, ,3 ppt, _

Edward L Clark Jr. .

Bruce G; Willison '

lhnner, Clark, Liulauer, McClinton, Fetherston G-Chainnan, President and Chief Executive Officer, First Edmomb, Salem, OR (Arunneys). Director since spS6t. c Interstate Bank of Califdrnia, Los Angeles, CA Director.

,ohn W. Creighton Jr. _ since t9S9 President, Chief Executive Officer and Directoi; . ,i,,,,,, ,,, ,,,,,3 ,, ,3, p,,3 ,, p,,,,,,3 g,,,,,; ti,,,ric company.

Weyerhaeuser Co., 7acoma, WA (Forest Products). Director since 1990. William W. Gallagher 1931 1991 = . - I

, A,en L Harrison ' lbreland General Corp; lost a good friend and a mluable y Chainnan and Chief Executive Officer; Ihnland General

_ Director in 1991 with the death of William W" Bill".

Corp ami PcE. Director since.19S 7 Gallagher. An investment banker, Mr Gallaghdr was a hiihly i F

~

Dr. Jerry E. Hudson .

regarded member of Ntlamf's business and citic : ~

President, Willamette University, Salem lOR. Director since

" communities He formed Gallagher Capital Corp. in [s973, 198 4t, tuning it into a leader ln institutional trading. Mt Gallagher;

- C. C:dvec Knudsen , joined Ntland General as a Director in 1986 and quickly -

- Director ami Retired Chairman and Chief Executive Officer,- became a respected advisor and strong shareholder adwcate.

MacMilkm Bloedet Limited. Vancouver; BC, Canada He will be gready missed.

(Integrated Forest Pmducts). Dsrector since ugS6 Warren E. McCain Director and Chamnan of the Executive Committee, Retired Chainnan of the Board ami Chief Executive Officer, Albertson's,- Inc.- Boise, Idaho (Retail Food and Drugs 1

' Dsrector since 1989:

J

~ e. e5 '--- 2.,c m v. ,y c w , ',y.c du., .,.e,',9 , , ,r uv w '=r *ba e- *e- vr e- -.e t 1 t Nr"---'*'*er-***W-F " z **-i *--4 w- M fev-'e**h.-t--W f r

O rm e io a m m .isa a n 5HARIHotota INFORMATION Shareholder Services 5tock Exchange Listings Inquiries involving dividends, stock certificates, address Common Stock of Portland General is listed on the New changes, stock transfer and other administrative matters York and Pacific Stock Exchanges and is quoted in the daily should be directed to our Transfer Agent, First Chicago stock tables of The %!! Street Joumal under the notation Trust Company of New York (tet). To expedite your PortinJGen. hiost other newspapers use the notation inquiry at rcT, have your account number and social PortGC.

security number readdy available. Also mention that you rot $2.6o Series Cumulative Preferred Stock is publicly are a shareholder of Portland General Corp., or roe. The traded and listed on the New York Stock Exchange. The mailing address and phone number is: Wali Street Journal lists this stock under the notation First Chicago Trust Company of New York PortlndGen pf, while most other newspapers use the SHARrHOLDER RELATIONS DEPARTMENT notation PorG pf.

PO Box 398 Dividend Payment Dates Church Street Station The Boad of Directors has historically declared quar.

New York, New York icoo8-39 81 terly common and preferred stock dividends peaNe on the (2:2)79 622 4 fifteenth of the months of January, April, July and -

Dividend Reinvestment Plan October.

Portland General common shareholders of record are Investor Publications eligible to participate in the Dividend Reinvestment Plan Copies of Ibrtland General shareholder reports and the (Plan). This is a convenient way for shareholders to Portland General Fact Book may be obtained by written increase their investment in Portland General Corpora- request to the Shareholder Services Department at the tion. New common shareholders of record (not " street Mlowing address:

name" holders) automatically receive Plan information Portland General Corp.

when they become shareholders.

or Portland General Electric Co.

Existing shareholders can open a dividend reinvestment Shareholfer Sersices Department account with either dividends from existing shares or with One World Trade Center an initial cash contribution accompanied by a Plan 2i S.W. Salmon St. '

authori:ation form' Portland, Oregon 97204 Under the Plan, quarterly cash dividends plus optional Phone: (503) 464 8599 cash payments may be applied toward the purchase of additional shares of common stock. Optional cash pay-b"" M ments can be a minimum of $25.m up to a maximum of Ibrtland General's and rGE'5 annual report to the Sec-

$6,oco.co per quarter, urities and Exchange Commission (Form io-K) is available All, or any portion of the reinvested shares can be sold upon written request to Shaieholder Services, at the above through the Plan upon termination of participation. address. _

Portland General pays the administrative costs of the Plan, Executive Offices but participants pay a discounted brokerage commission as Portland General Corp, or part of the cost of common stock purchased or sold in open Portland General Electric Co.

market transactions. One World Trade Center Shareholders wanting more detailed information may 21 S.W. Salmon St.

receive a copy of the Plan Prospectus and an Authori:ation Portland, Oregon 97204 form. The Prospectus conti.ns information regarding Phone: (So3) 464-882o enrollment, optional cash payments, withdrawals, and Notice of Annual Meeting terminations. Please contact the Plan Agent listed below: The igg 2 annual meeting of Portland General Corp.

First Chicago Trust Company of New York common shareholders will be:

LtVIDEND REINVESTMENT PLAN Tuesday, April 28,1992 0 a 35c6 Church Street Station rot's Western Region Center New York, New York icoo8 35o6 14655 S.W. Old Scholls Ferry Road (212) 79i 6422 Beaverton, Oregon 97x7 Common shareholders of record at the close of business on hiarch n, 992 will be entitled to vote. All common shareholders are welcome to attend.

rwne b,,th we.

thontrapher C, Bme Ferner n eireits Baerm RvJwh himet. Rano ovyhic Communu mom T,pegvarhr 1:vw T5patephers pdnd M rQcid Mer.

POE HMi- Wntet and Proe<t Mene~ Wheel revhr- Th pqe eed 6 e ihn senat Capaw Trudy Hemann o.nrum a tem 10 percent Fmamt Ses em Punted oenmL pecon umer ewe and a mems.m Amnnmr 6 Fmue dqartmem+ of $0 perm ere umd mmemis-

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