ML20217M247

Pacific Power & Light Co (Pacifcorp) 1996 Annual Rept

ML20217M247
Person / Time
Site:	Trojan File:Portland General Electric icon.png
Issue date:	12/31/1996
From:	Buckman F PACIFICORP (FORMERLY PACIFIC POWER & LIGHT)
To:
Shared Package
ML20217M235	List: ML20217M238 ML20217M247 ML20217M255 VPN-056-97, Forwards 1996 Annual Repts of Portland General Corp,Eugene Water & Electric Board,Pacific Power & Light & Enron Corp. Enron Corp Represents Completed Merger of Portland General Electrics Parent Company,Portland General Corp
References
NUDOCS 9708220097
Download: ML20217M247 (66)

Text

A iniq h

l 1T10rC 3

p vy7,7,7

,,;7 m b

Y

$v t

=q s

e change

PACI FICORP'S VISIONc As we 00:< tOwarc t le future O

t le Uti itieS 1rlariet'3 ace, We See a Consistent trellC COWarC.

a wor C WiC e CConOnly t lat C enlanC S.OWer '3 rices, Jetter

(

r l Service ailC.

11, Ore C,OiCeS ron, energy JrOVic ers.7,e o tO ua t u s a no v i s Du S r ny 1S C.lang111g, Jul Our v1S10n renlalnS t le SalTle:

to JCCOllle One 05 t le eW C.Onlinant g50 Ja energy arOviC ers Of t:,e uture.T:le gOa Of r

t,is year's annua: re JOrt is tO arOviC e you Wit 3 a

C ear unC erstanC1ng 0: Our

vision, Our Strategy to JeCOme an inCUStry anC LeaC er. We'~

a_sO saare t3e arOgress we lave BlaC e tOWarC. aC,ieving t,at vision, SOnle O[ t ~le Caa engeS We lave 13,et a Ong t le

Way, anC a

eW WORDS OF WISDOM Jy WlkC3 We kve anC. WOrX U.tinlatey, C e[1Hing W3at it 3.

DleanS tO Our iDVCStOrS.

.i, a.'

's ea l"

S

.' /

g',',

,, -, ' ^' * * * -..

v' c

' '. s, e '[ ' v ' '. ' t '

,f-s.,

1

, =,.

.,, ' ' e,,

O',

't

, - i*

.'..i.';. '..,

..i.-

M J

', 4

. 8'['

. ' j i l. ', ' k *.. '

t, ?,". " M.

J[. ',

' k ;,[

', $f.

' e.,'., ' } g <.' ' " ' ' g',. j'

,1,,.,.

'r

(

a

' ' ' '['

'. (

' gJ,,..g y.t. ' j...p

,,[ d' M j+

f.

j

.,',,a

' (

' '[,*. i.

f' ' '$

%,. !,I.,

, i.,

.',e g

,f

,l

,.y..-}s

...,g,,,

4

. ' [ *, ' ',,;,. /l,

' ' ;,,, ',,, J I g,', '

,s k

.p, ',-

f[,, '

' i 1,,',

(*.

4 9 6 p ', - -,

i' i,..

3 6,,,

I 4

.p n.

t,,,, ', ' (,

p,-

-[,,*

, g.

1 J

I

'*./,,,,j','.,

,.,'h,, '. _., '

4 * [

'e 3

i '

.'l,=

5

.e i, ' e, 4

8 P

,0..,

s

~,

s 4

.4c,'-

,q,gg m...

',.. q-j',.

f',..

4. s,. *,

,i' I

. t>

+ - -

l? ;

. '.* '.f,M..

1. *. L :.

.S',

'l ".t e.

,...i..

, ((. p.'. E. ' [ '. 'l ", >,;;' -

• 't,J M.'...

,'t.

v.

,T '.. T.., ', ' [b. '.. s.. ' g, $ %...k'.,b # '

l' ' -.

":*' i ; ' ', J.'. '

(-

ys

.- 1

-', '., ' '.I'

'\\,

r e

I

'. '.. ' ', '. l,

. f 9 l,, -L I

..'y 4 '

[g. c '

Ql '

.v

~ '; '

t,,.}%

y,,

s

, \\ [ 1, f'.; %.. -

.,6.,

).

8*.-,

4

.c j;<

j...,',,,,_

f:,1 i

o

.d '..,,}. -.i

'a,

[,,,. -

......,,,.. -. 3 L

7

.n.,,

4 a

n,

{ -

,^5-.

'e,'..*..,,,.. --,

'a f-

- ?

4

- +..'.,

8' ; * =..

i

-.. < - 3 :

4.m -

..., - -,...y

,4

.;. s

..t-4-

~

(

,, i {' f,[ * " '

'.,,I

., i.

.**$4 i'.

,,.?

/

W ', -...: : '

'+

t. '

P i'.' s J r.

,,.s a

4 i

.y,

,. fJ ',.7, ',' A.h..

• p ' 'I (,.,.,,

K ' d.*

'.c (,4 ', ' ' j t'

i. [L g " ;-

'f

, i* +*,

..'4

,,, j '. h e, '". ' %, )g s

k,,. ',4, n.':,, $,, I, ; a'/; ; ~g

.Q -

. d ' ; *(, ' ' p' 3 -'. '.,.,1 [. b.., ' ',. '<

. g'

, r.

q*

r

. j '. - '

,1 i

,5

. t 'n>.,4.. c ',,,~ { ; - i s'

-',,..,..i..d

'N.'

,?.

se.^'. <

3 k,"

y a.

p lt,..,

' gi ji,..,. <.,,,, '

. y-.., ' Ge n

,'.'.4r 9.,,

J....

• g*.-

ie

..,..\\.3.,

y y,:

4-

,, +,,, -

i.l g

,t,,

,'44 r'

/..;,

M

.q- ' tl

)g - '.4

'; {,

,'.t-.:-(P.,, i

,y

i. ;

4,

i.g

'e 7, r* g..g.....f,'

. '..,[,4 -'.

.,,-... ;.,'ml p' '. ',

t.

i *

,h

. ' } ',,

'. - i

..' e ', f s ;. ' % J,.'p,.* e. o.,.,... ;

e '

_,.y g

c

.i j _

.'. j '.;,y,.',',',.,,,

• '.o a

s s

c

,s,..

.[

' j ' 3[

'.* *., N . '.,

%+.

.k ;'

.,,.', ' - _ f.k

(

S e;

J,

(,

, 5'

• ,(.l.'l' ja ^[ '.[, s ',. \\.,. i f 3

, } * '.p [ ' / [

.,[

• ;, 'i

? +8 's ' )

s' C

,'a4 I,.

..'e

'l, q -

,t.i L

.g

,r y 3.,,.l..

a.

..'.l.~

%, E'-

.[ f '.,,

r s,.' -

,,t, i

e c.

',, ' ! 8

• l'. /, ;"

• y'f.

I'

'y d,

..s N.

, !; N l('<

(

l',

h,, n. #4 '. o' 9 -!'

p ' O 62*..f

• ,I

.,,.,' jh,,..,y.'. ', f 0,.', " t 3

p li,

(

c 4

,i y'

9,'

',6

, 3l

,, e' i.

' 4d {.,, ' I 'g'.

[ ' **

s

., cg ;.p.-

7 g,. l,.

f T.,,. ni e'. e

-.~,.'I,,.:

i 4 (p.., ' '.

i l

• a.

( '.~.A

,,g

,3 s

....,. '.,.- 4" g.

s

,. x...,,.,-,,,,

..J 8

• j4i,'. < ',....

• d I.

j,.

5 e

w- - a..

., ;, ' 3,' j. '

.7 p..

.. } r,' *., -

.,a,,,

t.

t

..i i

,q

~

','.t','.

'g, t,, 6.,

a : $.. ; -

,y-' '.,,,.,t

,f.....-...,,

.l a

.c

.t,,,,

(

((

l' ; t'

.. t 2

i

'$ 4,

il.

9' *,,,,,

',d,'.4

,t

'f

'..' la,.

'e k't '

8

.'..p s

./'*,

,+,

.... 3 *,.,

..a*

.......' y

/- *,,. e i '.

e C( i 9 ii.

,j a

'i g

I s

.,.I, a

• g

' i 1

fi.,

,4 g'

$'e 8

s-

-. ' t' i.,*..s..

- 3.,,

,g*-

• .p',.

4,..,

,t 4,

,=*

'.. ' ' ',c,,.,,,,,

'g4 e

', ' y' ;' i

- co i '

3

,f'.-

, ] '.,,,'; '.,,,c, 7.-

c

,.... ' p,/ :

s e,.

7,

,'7.,,,,

,t,i'=,

c, e.

,'.s' - " ',

a'. i /. -'.*,,.,

a

• tl,,.,,.,-

, y-

,... $, e',

s 5,i g

., f ' / r.,.

e

,O

*,, ', e

^ '

f.,.

l

.,a' g,

1e-y.,

a ;',' '...-

[ '.

, i

., ',.f '.' i

,.,, ; ~.?,

',,b

'l ' I

• A 8.

,k,,l u,,;/ '

' N, '4, ;, d, '

'.f..,',' /'

+e-s I

, ' ',.,'.I*=

.,.'e 4

'_'('

7',,.'-

i 4,,

- 1 9

' t, ', ',[.

[ ~* '. a,, ', -

'*e 4

i

.w.-

'I !

i '.,

.'.e.f.., l.

, i,-,,.,,

,',y,.'.l,,'

[,,'-* [d I

-~,,

. : 4, Mi,., ' i,.,;

-,',.f,.

.', e :, -_ /-.. ~. -'

l e' j *,,', -,.

'I k, ge1-U

' ' ['

• ,. ' fi.

', j^s

, i j. '?,..,",

i

i

.p',

g

+

s

, !.,' o..

s g

.u*

, f., -.,;.

i.. q j ' '

83 '.'

t

', 'I <",, ' ]

0-

. I,'.

..,,,, 4

.,,. ei I,.,.,, l f,,

t,.

t D

y ' '," i',

....,..- 3

.,'a

...o- ;,,,,,,,, ;..... ;,.

3

,..,. 4:.,,. 7.-.

. ' f,

,t. f 1 f

.s c.

,, g"

.t.;*

(,; o,

,7...' K;

. r,.

i

.* *.,,..L ;,.,., ;

v,.

,... p,

-,3,,,..

.g,, g,-- e

, '. i, ' ',.

f. '

,..,.;,..g, '. ;..... w, '...,. 9,:,,- e..: s. +q, y,.,.,. *...

"];i ',.,,..j,.

.'-(,

,..g y 2 - e,3 y..

r,..

4 j,. ;.,; O i

i-,

i -.' ';

ig*

,}

g,'

gi 8

4

.a-

'.' l

? '., ' ' '.. ' .' ',. ',,; '*

.s

+

).

{'

,,'f

,c,,, i

,,,'5+i,.

+,, _.

' **9.,

'o,

)

jl,,

r

+

4

.J,',.

s.

,4

.,4

.;4 q

(

-(..f Y, 3

,, ji f..,.

i t

l, s,,

,\\,

pe e.,

g -' [

,, ?.

-3;.

a 1-

....#l(

.G ' ', s }',

,,/.. F

-'f,.sp>...,.,,... <

t'

.,., '..s

. i

• 'p',

't l *

..(*

.. - - [, :.,.,>**I, -g,..,.,.','?')

.p

(,

J

-...',i,,, '.;,,

.- ),, f,.

g,

..,C,' !.,....,, ',,...

..1

,/ V

.i*,,

.g...f,s,

' / 49, ' i 4 g -g { s.-,!

,b,;.

, 4 (7,. f.., -f,, J,,',;,

%;y ',., ' '...

.,.,.f.,g.,

,=

,g

-y..

.c.,.',.,.e

,,..j.-,. '

g:

e 1

p

,,O

, i.

, g, y, * ',., p,,

.r

.; i,...

,,,,, O 8

..',,,c, 3.-

,c

• h p

,. ',,,-.. '4l 4

., t

.,. '. p,, j g'

.',i

,.f

,a.

2,,,

','c

..b;

'l },,.. i Q. 'i '.. ' * ' I

, J, L L'., i...,.,

4,.'..

,p....,. '. '.. ' -, '. '., ',., '-

p.

N

,.4.,'..

.f

,'.,'.g

,c

's

-t

,s '

e, 1

. +., -.$.

..,%,, g

,,c.,.

.'M,:,",..,.-

p..

• ",g. -

.4,/ -

.'...i-

.'g,...

't e,

'd,

,t.

• = '

u I ', -.1' i, if,/i ~.. '-

. ',.. 1' ' '1Fi,',-'if'..,l'3.

,e4 i

-g.). ',,.* :,.

.'.t

=.qAsf ;* - n

,., '..g 4;

'J.

(*-

l j.,

1 <

i,...m'.

tJ

..'D ' '. i '; ".m..q,s ;; g. ';i 't. g au s ?. _ y.:. %, ;v.. y -'

...s ar ',. ; ' v *. :

4., c.'....'

g y y

',,'t h f y ' : *: < f.. : Q', [.

M.*

.8.. m.. i... 5,,,,Q4

., ll., ',., 4 w x

• $ <" x.. '.,,K

• 9

' % ", j ql,. y e ' ' ',, 'h,j ' n l,.

% p,. 'i g.

',;(. ('

> i

',,,,'t*

g

,A l' ',

4*

..*, 'e 1 ' ', L ' ;..,,, '. '.,.

. i ie

.)

e-,.

+s

'.t

.. e

..b E'i

..gg' s,/-

l

+, *

<a a

.i-

.e

+

,s

'.. * /, t q-

• ,, ',.. ', ~

i g - (e,.' '.

. i pf r

.e.

. '. ',, lg,

l. {. ", p ' '..

.t, }, '.., '.[*$

'l 3

,.,i,

P

'fm 1

e

'.4'

. ) j,, [, i. '.. ; '

s

?',

.,.,,.t'

',,.,, J [,,.. l.

J

\\

e., - ]..

g it.

+,-

c.

g

.,l

'e k ', f ',. ' ' 9 -) j ;; {.'

'..,l 0 ' -

f

)'

1

, ab 1 *I,. ['

,3 h,*,,,-

'.i l

4

,,\\

. y,,,'i,.

,,f V

', ; 3' d'

i,. -

[ '

• .,I Y Y.;l} ': $ 4.. s. ' $' i.',, f f ',,, s

.' W.

k' l ', '. e!

.N.

Gg -fq

,,[~,',,.'

i e-e,,

. ;'.,,, y, y y,..

..,s,

• {;..,,,. r' p ,,.

p. h, y '.., '[ g t

., ;', i

]..

,,4 i

,,f,'. j (',' '.

.'y.,\\

j[MA.

/. { ' C y,,

...,ce.n'

• ,.3'

$ ' [#,'

8

',t.,4..

',f..I s ',..'.I O, Yh ' I a '

g.k k'q l. '

• 4.,'.4

[,, i

i. *E D ',

[

'r' Ir

't e

' 'h. ;)

%. 4,m.\\,l*' ?',. G. ;';.a L'..; ' f.. '. J I

} g3 ^.'

,,,t

..-ll,.'..A

" % j, [, I'3 },1 ;E J l.'h. ;A, '

e.

s' *,:

j

3

.;. ;@4 Y.) O '.;%.,' E l).},.O

'O i

(. 4. 4

~

4

) ri * - -

c.! -

'6'

,r.

,'f

.k

>3

.t.

.t

. -)$

IN8 E.

1,q ('. \\l

.h..[. *([,,.

l, e

t,.i. k;,e',[b ;

b #'

.T e 4 O

'- J

' I / ',. ',... \\..*

'[

,,,h

. h

-i,

,e

,/f j

.'.,,g$.

M i,

."}-

C, a m ' h,, ' e' %,

f ',' 0,,:!-

• [

,,'. l.

.. g :.

$ 9 '.,

s E

. 'f]. f h,gt.'.M 9,

. i

,LJ '9 "

,, s ' y (*' '. j4 z.,

.j,. q k,.

r 4 '. j lN '.a,s I

6 d..

6 g

W WJ.' O.# e.,,,

e,(.Ji g'y "c, ', s # '

"i '. '..

o' 4,a,l "t,.

.. 3 a,,,f,,.,.,.

.. g ;3 c.,

,i ;,

jq< l>

n.3. t..,.

yc y q.c

,.,,y..O.w.c,,,,p. a y e. 3 0, i.:

.. 4..,

. w. t..,s -

e<

.o,.:

7

.,. g.

.,p.,3 my.-

.y

., c. s, t. _

y y,..w,.,, t

.g,

r r, T,..,...c...

3,

..;f.

... e., $e w

.m 9:.

1. ; g - u. y ',.. :(g s e 3p g.,,.. v.; i. o

.O.Sl. ;,

3

-s,

..f, e

.c &.

,y A

, W,.

• ].,

w,'

.., w.:..

/?

u,, ' #.

% ; y p:g? g;4 M)s.-e 4. % j b...,

+;b x

'4 f;Q:.; h......

• .g

)'Q '

, v -- l l

4.

3 p p '.,

sa y

y,.

.,,, 1 f.;

34:

s

. 4 y

Q

,($3 4,

k, y f. V.... "

.J n& ffy).e r:,Q ;3

~ Q.. Qml..y... Q. r % y ;;Lg. f. ::

-(+....gQ,_y,

[;q.

Pt v

g:qy g.M, s _,s&,< s%b e, *,f,.

e L y:8. :.Q G._ q :Q: Q Q,.V ;f_.:

Q c;

,}

y,H; a<g,; a.Ju %~ h

$ M,y. p S @ su n,.O.*.4af v..,a.if,,4m;;',.% yy.r. M,3 + ;g' v,. M.3 4

m y x

.n

. c.,..

7. -

..a

. s.u.

i,...,,. w

.~ p@.. t, t 's.m g (e,~

+ :,A.,. :.

u.

w c c :,s. e p e M 1 i wp A rv a

-q.

.t.,

v1 v.

c y&.

-L 5[U.?..f gh g.R.W.Wc M ;. ::j. f y.,i u(g p, y@q.v.Q f5.Q 4

V-

- f Q

9

q..g.&,t.. :!Q%G. s. \\.:? J,..m.... ? D;,.:Tt%. 3. if.&-

q Wy<

. g.N, p

W i? +q f.

, g t

Q

.'ddd[.. @4 ;#a,h,,'m' Q., w. Y h, h.Q..Q [ch, y.%y :v " : t w 3....o w e

3

.h.){.,.. jd[M $q.u... h.@W:. > = y;Q),. %w y.. r.d. 4..

v. f. g; y A.;o a.,; u e,,,

$J3 W...-

'y %se

. 2 c

v m

y.4. p..,.m y.;.

.g J \\

n,8 c

s

'hk)

N.

. g j,

.. s.Y.

%.s w,..., s.f,,.Q<

,,. 1.m D

,_mj yim.s.

a>

.w. c, g>. m -.. L : 9 fe.< ;v

.m. a.

a,... c,. Q 9, g T y.

9..., :.;~ y c.z, y. : y,y... w ;e..~.%~. ',:".y e

n m

% k. 3..3,.o.a. h.,..:.... v. 4p,, y;tI p; &,u< s

. e

_. m., a g a v,.,

3

.a, s,t i

1. . s.

• ?y

.. g. s

,0... Af e.. go. a 3

,4,.., c

.. L.....

v;.9x, a

lf. :}y., :g;}gf.c +.. f:. n.)y t,". -l'p :f,G....&.

, y ;. >

2

..n.

e, - &e r..ah; i. w

.v y

..: h

p. u s.

y,G g.l.'?n. y& lw.

Q '.l Q; f'.n..~.,

v, s'2.l s'. s j'.:f..ryfm.,:..e a.

.~;.m ms f( }y<3. A '.

.j

c..,,..,:.. o (,... '(~

,..,.. yg..

' ": s }

(.R:

,f 4_<~}.,f., w.a, A..

,,...p.

j j

',y m,.

. 3. c..~.

,.,,e, y,

+

...s g.. l 3 (.,..,j. 7

~~.m...

.8 m.'#',, g l [3.y. g. :....,v.. s.c

,.J..., :,7. f.,

,u,....,

._, s

, ~,..

.t t

s.,

, ~.., ;

,,, d,,c

,' $,( I ' ; '3 '.t.. -g [,> ;, f, 1..,;

c p, ;:ji, {, gp... ':, ' z,, ?..,

' p,.. h a+f - } '% %

a j.,'(m 5;

, 4

,[.', ;. :.*,,,. "/ g:','a. f.jt, ; 'Ap.;;..}., Y'L ;, <.,l, g, I

_ ', y.-

-[ e g,

%+#,l ',

.'3

,y 61 p.4y[m

. p. '

. ; n' '; ; ve. y:,;

a g,

. N. n.

.y s

e

d 4,

^, -..,. -

4 i s,8 e$l, -

,h ; y,. g'.

w 5.'.

, p.

i*

J '

y.,

,4

. /

, 'fi.

l,.',,

4

.,,,(

lg.

.p

, - i <

..t e,i y 3,*.

2*

.f s'-

., 9 i i+

e e

• '4-

.,' y

, i,,..,

>p

'g

• . [.8 g

- ;.,,8.

.y

,f,

,4 2,-' i,

/..

,',,a, 3 - e

.. i ;.* *,*,,.,'

.,i i

,+t

, c

/,. -

t '

..'(,

5..>

.f s 7

f,,f

.f.-

g-r f

s q-g c

g.

i.,,

'..,i

.I 4

t e

a,

[.,,.

,,,..,3

, lj i.

,y f;,

v,, '..,.- i., q., e.. f f

.s.

i.

't.

3. ', ' 7 a. i-,. y.

-y' ;.f.,, L,'

J' t

'.t e.. ;

.. - i,..

4.

3,.

c,

.'l,,

'f ', 8',,,'

.C. '

', \\

.s f'...-

,1 c

.f,,

/. c,. J. (,,

' '.. '.c2 s' Tl *.

~

e, s 4

3 n '

.g'

. ',.*'"'['

t.

,. s n.

i 4+

e

.r 4..'

h.

.-..~'7

,' ^, '., '

t

l '

4, g'.,

,,'. ' '.*l,'(.'

.[

. f... y

[

'[

• 's.

'.,*.,a c

f.

i I

t

• g..,

,4'..

H~

8e b

'3 a..-

/,,,,

~. -

i

({.

4 y

8 l

g

.e.

e6*' J,.~

1' 6l t

/,

0 g','

W. - '

. q.,

g g,

. ; I' =

. s.

4

, l 4

y t

c

[

k I

WO.i..* -ur V1510n 1

.e

[.

~

4.l f

's., '

s

=

g

i..,,,

t t

.., q ' ' _

g'

'a

(

l

,.e,,,,.,. ' ' '..

q,

~

g y_'.'~,;,

1. :.

4

+

4 l

F

~

' 'e;

[

t g

e' t

c'... _..

'... f -

's>,.

.*.s'

's,'

g.'

.e

}

+' -

,;4 g

g t's

~

e'

- A' a

e, ' ". f., ;.. ' : u e

.4.,,..

v.

p-l

e.,.

Q ..; ;

e '

[, #

-; g,,=

b

'g

.,'g... -.

i,

-. # ' -. ' -'.g l

,1

.s

,' ~

,.:.. s

.g*

'8*.

t,-,'1 %'.

l.

. g e

't'

[f '.

f=

1..[.

i,

.,,,....,, - f_ q.

l

' :: p ;;.. ; ^.. ;:s.

-.. Q..,.

.,,. ', '. i..

- -[ ; '. p L.

s

.: g. e..,. '

,a i

77,-

S.

,, ;, y*

s..,,,.;,... :.

., ),

.,2..

g.

.y l7,

' ),0 ;

% ;:,....'..; ) 3 }b :.N ;g b g. : } }t hTc'. v':'Jy

. Yn'N:,$ l:

e 7,

- d; l:, % 'y; '... y:..-.',\\. ' t

, c v;,, p:

y.,.. ' '. ::

y?.;. $ '.. ~ o,';;.;

c

. h. * :

.... 'y

% MM.

Q d.' W ! ', * :! 1

2: -

. {g y%.r 2 ; c W*c. ~L r d C ' W L Q i Q:

."r,2 (, y v; * :. k '. ;y i p.3., '.Q:..n. aY : y*v.; M Q y. Q h

• A s,?. '., %, ;y t w:_

kv. ^

y, b '

. g, i. '.:., x y u ;s;;

r o : _ :...~: a

'. m p :Nl?(...

..% ' 'J Q.

• J -

1 '.

, q?"W '

J. A. Y '

'y:

V.

L; Q f ;*y

'[

l' s -

y t Q.fy'.; y'.. :,. :%_,_,'G 'f ;;.,; ('; 7.s je n y,s a k: '.7.c W" T f wM Aw.Q

%: f,'!,.[ j,':

Q b :.j,y.L...~.

I ;<

,7 : ^. i;. -

m; j'M,%,.. t.% : '.i,j)::-}.{;q. %'g%ypyn.,

,s:. h., C. ]

.4.' ?. ' ' R:l ',

.bu :; L :...;. -.~

". : L:

g.ct h,a dpt. W.fg s.-

W_4

p ;

7.1...

J A c \\ q c:e c,;a M.& 9...

d

.: : M S. '

'L~:,p y,;.

~;

t'&.,+ Q..; k f:f. lw,f lh.,[y}..w. g v.p[f, lng[:y[wl:&3:;*h.u;;&Y

.;..~ r.,; m,M :

Mcw C

3-y p fiW 4

.c.

4 u.~..,. p (,,. y,J,Wk fQ,". s$.u. 4

,h.8fQ.'.QW

.'. f.]= c

a. ;,...;:. n.* 3. "

. m.u,

• v ;. w,. v-c s.

.g

.,3 w-c

.,j 3

y ;.

g-

.c c.

l Financial Highlights manon,.,r a.aur,, cucci en aiare aniouni, iwr, io iw I'ercentage I!or ilic year 1996 199.$

Collipalikot.

Operating Results llevenues S

4,294 S

3,417 26%

Incoine from Operations 1,245 1,056 18 Net incoine 505 505*

!!arnings on Connnon Stock 475 466*

2 Data l'er Coininon Share Earnings S

1.62 S

1.64*

(1)%

Di'idends Paid 1.08 1.08 llook Value 13.66 12.78 7

Stock Price llange 22%-19n 21% -17 %

(3)**

Fiiiancial Position at Deceinber al Assets S 14,635 S 14,015 Capitalization 10,817 10,359 Capitj Structure Total Debt 58%

60 %

l> referred Securities of Trusts 2

Preferred Stock 3

5 Conunon Equity 37 35 Other Statistics lleturn on Average Conunon Equity 12.3%

13.2%

Market to llook %lue (Year End) 150%

165%

Cash Flows from Operations S

1,077 S

912 Conunon Shares (Average, Thousands) 292,424 284,272 Dividend Payout llatio 67 %

66%*

• inandn gain on the ute orAtasconi or$37 ioittion.or s.13 per share.

• llased on year-end price.

b b[':0 Our S ~1are lOlerS PacitiCorp experienced both achievement and challenge in 1996. Earnings per share from ongoing operations rose to S t.62 from $1.51 in 1995, a 7 percent increase.

Each of our major businesses met or exceeded our expectations for 1996, yet two issues challenged us throughout the year: continued investor uncertainty about the outcome of electric utility restructuring and concern about what part we will play in the " convergence" of the electric and gas industries. Partially due to these factors, total shareholder return in 1996 was only slightly over 2 percent. In the last t}) Tee years, total return averaged s percent. Our goal is to provide a competi-tive retarli oli your i1Westillellt. Eveii though we coittintie to otitperli>rni niost of our electric 11tility peers, We are 110t p} eased Wit ollr sllare priCC pertiorillallCe. T 11 E F U T U lt. E IS 11EllE. Chaiige continues to drive otir industry. In 1996, a large llulliher of domestic e}ectric niergers Were announced, ill additioll to several electric / gas Conihinations. More U.S. utilities entered foreign markets, and several states,111ost llotably California, took first steps toWard restructuring the electric industry. We want the transition to an open, competitive marketplace conipleted by 2001.We recogtlize that states need iniplenientation flexibility, btit we advocate federal legislation to ensure consistency. While the legislation enacted by the State of California provides the principle of customer choice, the transition costs included are high.The California law provides protectioli to high-cost utilities througli inclusioi) of a tratisition fee which allows those utilities to fully recover their " stranded costs" at tlie ex},ense of current customers.13eti>re retail competition can be fully unleashed, the issue of stranded costs needs to be settled. Our view is that nationwide, not all utilities should expect to recover all of their costs through customer charges. As direct f access legislation is developed in other states, we will work to ensure that it is titir l i to both customers and shareholders. s

No one can predict exactly how electric industry competition will unfold, but one message is clear: competition is here today, and will continue to inten-l sify.To prosper, utilities need the skills that enable them to meet all aspects of f customers' energy needs. In response to this need, the convergence of the gas and electric industries accelerated in 1996, and it's a trend that will continue. Paci6 Corp is uniquely positioned with both coal and electrk resources, but to be a null-service energy provider, we will eventually need to develop or acquire additional gas marketing experience. Our interest in gas, combined with recent e electric and gas merger announcements, created speculation that we will enter into a gas deal that will be detrimental to our shareholders.The acquisition of a large,ilitegrated natural gas company at a substantial premium and with sub-stantial earnings dilution is not the only way to gain gas market experience. We contiliue to explore opportunities, but we're not interested in transactions that don't enhance shareholder value. Despite these industry changes, one thing remains the same: our vision of what it takes to become a successful global energy provider. Last year we predicted that eventually a few global energy providers will dominate the world's energy market.This year's domestic and international expansion activities support that theory. Our strategy to become one of those players is to leverage our expertise in Riel procurement, power generation, power marketing and the transmission and distribution of electricity in markets where there are good opportunities to enhance value for both customers and shareholders. GROWING TIIE UUSINESS. As-a low-cost electricity }1rovider, we have a competitive advantage in this newly emerging market, but it's not enough.-In an increasingly global economy, we need the skills that enable us to meet our custoiners' total energy needs. The 1995 purchase of Powercor, our Australian electricity distribution and marketing company, provides us with a platform for international growth in a less 4 . -..-..,.-,,-.,-, -.,- ~ _,...-.. -. - -. ..--,,..-n..

regulated, highly competitive marketplace. The expertise gained by operating in this dynamic environment is helping us prepare for retail competition in the U.S. Our Australian business grew in 1996 with the acquisition of a 19.9 percent l interest in the coal-tired Hazelwood Power Station. Hazelwood adds power l generatioll to our Australian business, and allows us to utilize our Coal mining skills in a new, deregulated marketplace. Our strategy of building a successful, long-terin business in Australia is one that we will use to evaluate allinternational investment opportunities. Our strength in domestic markets is another important part of the energy equation. We are the leading bulk-power trader in the West, and we continue to grow PacifiCorp's wholesale power business had a record year, with volumes increasing 81 percent and revenues hitting S739 million.We are also increasing our share of the eastern U.S. market.While we continue to work toward a long-term agreement with 13ig Rivers Corporation, our interim marketing agree-ment with the company provides us with significant inroads into eastern power markets. We are actively pursuing more domestic transactions like 13ig Rivers, which we view as one example of how we can become a dominant player in the competitive electricity market of the future. 711rexcel in-a competitive retail energy marketplace, we continually need to improve the quality and value of our products and services.We took a significant step in this direction in January 1997 by forming en.able, a joint venture with KN Energy, a Colorado-based, integrated natural gas company. This venture provides utilities with a package of products and services that they can ofter to their customers, marketed under the Simple Choice brand. Providing quality and value are two priorities that also apply to PacifiCorp's telecommunications business. Pacific Telecom's market niche as a predominantly rural local exchange telephone provider makes an important contribution to PacifiCorp's profitability, with earnings growth of 13 percent in 1996. s

PTl currently has pending acquisitions in Alaska, Minnesota and Michigan, and is improving properties acquired in 1995 to provide consistent, quality service for ali customers. Success does not come without challenge, and PacifiCorp experienced both in 1996. We take pride in the achievements that strengthened our company's competitive position, and learned from the challenges that prevented us from fully meeting our goals. In an industry driven by change, our strategy for success remains clear: by capitalizing on our expertise and gaining new skills, we plan to becollie a dolllillallt global cilergy compally, in 1996 we took tangible steps in that direction, and as the energy aild telecoiiiiiitiiiicationis iiidtistries evolve, we will colitilit10 to set aggressive goals tliat eliable tis to grow our busilless, our eartlings alid tlle value of your invest 111ellt. ,La]Y fa Frederick W. Iluckman President and Chief Executive Ollicer Total Investment Return Total Investment Return m, nmee.vm compouna iue em-em PacifiCorp 2.2% PacifiCorp 8.0% S&P Electrics (o.3)% S&P 24 Utilities 4.3% S&P 500-22.8% S&P 500 19.un m

O. =.,4 .g., ,a s ,. a ,y,',s ...,i. i...'* ,..,,.,, f .4.... .g ,, v;, j.' ../,.,,,. f,. t 8,. ,.,.*..'g*,'.g*.,.<.,4.c.*. '. ' es , - /e i, - -J, e .~. b...,. t. p. a 'e' /..,... ' j, c. 7 .,e.', ..3,.. .r. 6 g.,., # ,.;e ie. y .,.ai,. .t). 'i .'g .$ ' ! ( g,4, p .,., I. f '.'u a, .\\- .M.. s '. ' s 4, -.,,.*4 'a .? ,4-* (, - a e. ...*4y .. c,,-, .(.'" ..4 a, ',i ,4. .s , f. g ', a'.. 4 i ,,.8 ,1O t i,"'., E' ..i p.*.g g {.- ,f.. a db ',,, t' ..'..,.,/ '1' -G 4. '... '..." -.,: S ,. y f.,.g ,1. t. .'l i'...,'. jf-., t.'.. y l.,., [,g e,,.,. c, 4. p**, ' f. g,' q'li 3.'

g. l 4,

t, * -,' '...,,..,,.;>,,,, ) ,,.c',..f ' ',, g. ', =, - ,.'g;3,....-

• 1,0.+'

? ..,',. s. ' ' ' ?...,. - f - ye ,l".,', .i,, ' '*'.4,,. ' ',. . -,.;. ' 't,., ;f,.: ** .n .'i. - 't.. g o e. T

i

', ; i,- ' a i i l.- N' I'..., ','49 ', i * .,; ; i 3 .s*l. * ;., h 6,j. . 3 e, g

• ,5 e, i

'e g;.f, 1 a i.,s* I 5 g,,,. i.,,', 4 b . (,".s,g t,.' ,t; qg.- i. t, .. 'J 4 !, ,..i i .... '.i., ' ..,.../,'-., ' ' , '" ', i +, K d, ' ' '. .,t .. ! l,.,.,s %,e ',. e.,- i,- Y. i, ",.4'. .,,s-e 1., . ( ,a

..i.

.s .g...i s- .g. .. '.t c.. ..,. -. ;V -.,.. k,,,, 3 . '* l.. l, ' ?&N - 1l*e , -( [f . ? .5 $ ', <$ 4, l I _ f. p*_ .l l' 'l, i., ; }. r i ^ 1' $'$lI,l7 f jf..)1.ll,$&' ' ?NlQ'h&&.If &'l [' ' /. '.&'[" c..?.l.N N A' '.,.yll f .. ' i. -l%' l ?, k ,44.,. ' or. 3' . ',,. t' 6 d,.*.,..,',..,..l' e: '..: fi,,.* b f ', 9"',.4,* .'A... ...)',',+.,4 1,.,,g., e'L, ;.s m , ';n .' ' ;. ' l) i,. = 3,'.e '. ;f _ * ..".9 l, ?_.., s ' s. l','.*7 ,ia1 t r .,3,.

. >. ; g;s s.

Q

• .. 3,<,; . ',,:

n..., ',' j l N. n, ,,, ' N r ; 4% f v,.c,,- A ,.'f < f i, '. ' .q y; *. j ~,...,, of, " s * ,2,,,_, ...,..,e,'

4..

l '. '.l. W ( .d, c..,'.i. t,g,- ,.j. .3 g

g. e. -..

A< .f4

• 1. '

c. a !. ..i., 'm ,g. .n ,,'s ,a, s e. . g '9 /# ,.--n 1s,, g ('?s' * ).,y? '.. ' :. ' ', . *.... ; *. -. 3 ,a,.{ ' '. $ ' 7j '. p. %. .., 3, >,.....? - ! [,., r ',a' d.. '. /. .','.',,[j. .[ j ,, h, Q. r.. l,e ,,',,d y-g* f's,. - j ' a, R.; L; '.::' h.

_ 4

.,. ~: :

• i,1 g j,

,, - y..., s, ,..,+.., - ~ 4 .-f. *."t ' : ~ ' .g,.. .. - -'V-. et..'... 4 p'.:...-,'s ..'J.. ' p,,.,,.'. v-a.. 4,, " *, 1 ',.,.1'..-j l< /. n,j. .O g., ,l J.g a. .., 'q. h. v. j n.* t. L? \\, ..,. ~ - p 'g ,3 g ,c - ....~,.,.,.., - ..t .,~/, v i.

r. ', r r,

s. l 4 q..,, ,, +.*

e. --.. ' '...

. '.,,...- +,'

• b

.m, -v: l ,'i. ., r i ', 5,. # ... ';. *4.* a. ..i.., 1 -.M, ' l. ", ( - -,,,i ',,' g.e 'r.,,- .'.J',*. '.,, C'. l '. N :*' .,.C a; 4 i f. l,.. " " j f.,', '., ,b. .((.,.) f g. '.g.'. ; [, ' ', y,'..,'; y,,, ; j;. 'j :.h,,,y i; I. f ; y,. ' '." "

l.,.' ', fi : 3 '.,.>., !.. &, '.

.. '. '.;;;;7 Q-, es....-<; i - ' '.. ",.,. '.*r' .,c, x u-e 3'

• i 4 ).

et. .jW - 1. '.'.ti ( .0 J. t,' . i i,1 *. .i..'..'..,.4 .,... a,ej w i i ).,, c ,',,f. s ,, J g[q.,, - ,. +. .,.c j,, ,t.,,.,.s.

.. e

. u -.,,.,g. , ~ e.; 1 ' 4. +' J. ,I ,i',- q.c..,.,. r. 3,',/. ,,,g ,, ',,, -., - ( j., -- { .P - 9J I* :, ,, ^. ,.D, I - .P

v.. '

,., :.,. F. j,l r ;,. '. ' s o l '. u .. i- - -,. ' - ', ' . ;, e' 4, r. 3..,--' '.. '4 ;; y . =,.1 J. t. . a:

c

. O', ; >. + 8 II'.. < ~.. b *e,, ',.*.?,'.' '.f. .' l J v e. ',, < ,. e.l Iv ; ' y a. 8 y ~ "'p. ',S .J,, 'f 4,(, 5 N,* =. *,_',,.s...*,,;.,,,.;...., ,g., h. ' '. ;,.,,.. y*..,.. s v-

J.

*J'.

(_ ;....-s{' ;. s... ' '. '. ",. -. g' 4. ,g,' /, 'h I I[. .:\\,. : '*,, ' b t e, ...,s . q j,,y v' ~~ '..., ~. e.. ,.a m.'.. o,,g,s. ."* i :, ..,. e e, 4 '. .. e '.[ 3 td,. ' . '. J

• • Y c' '.

A%. ., y' '..O... .. -,...n~.1 .:,....)',, ' -, ;.g. n n. .c .... f + -m' '..s,, -.',,..,=es.- i 4- ,e ....s '..,ti.,.; ? 3,,., 4',, 4., l, .,,,.. / i. c,... f. * *;., - (. : ..."- }. ; o e, t .. -.i..,. s

• " g, ' c.. g '...,.. a.',.,.i

,, {,,.,',,.; %, ; -',] l U

t. -.-',',,,,.

...... i... > )., J; 'J y l,* ' ' ;, i,,'., [i, . ~,...,,' g '3 y ,.7., .s. ,c,,f h .} j ';,' i* ' ' i,5 -..;+- .{'.1., } " ;, t,, (.,.,,,,../ ,, '., ;a, .,. -.j f.. ( f ;. j N. d.,,. ...A,. .' Q ?.

• i..,-._.','l.r,i, 4

t 2., ..a.... "..; f.. >. -, '., i t n. ',' : +. ; t-

1. i,.T..

.i. ~ '. ')'. .. '..,1,. y 7', ; ; 1 -. a,3... l f, J. .d...., '. 4..:. .i.. -l e-s c i, j..T. ,a $ ' :& ',,:' 'N. ; 4 h., *. '; k.,.. l:l* 'l L [ li, - ?.c .h,'.'.....$.. l* \\, ,.', ;...',{ ','. h,e? N ^:. l S - *SMe !:. if l Y'? ' 'l';'.{:$i1*..] ; '.' A.;. y ', r <, ;' Of. 4;,. 3 c. ,,,a on >,j. . f. . $ . 3 [3 ? 'f{. S,y 1, f.. - ',;j_, g' ' -[. .[ p;.).. ). '{ 9 ; .'g, _'J, ; 1, ',JJ, k, ' :,(,'., d ;, a,. il,,., ' e. ' ?.[ l,l., s'.fj.'[' c i.+ c / ' l N.' k;;l :

• l !;- l. ' ~ ' r:.,Y '.!, : ll l. '; (

.]. 5 '; d ':'{.,]' ' Y l'f' ;'. _ ? i {h '.';,; ' hE \\is..?.Q 'N ^ Y.'{' & .l,; 1 'l.. i.f '[ l:; .' l~'

j. ! "-

j ," :l, ' ;... i t'),;U..,.3,. j.'^ ; z Nl &.' .a :7.:c;.,,.ff.. s,. m' ',l. w_,f.', '., 'n, '.. Lp .. ' I. ..,, {'. '. \\l - ' C t ".1 l \\ - .L[4,. 3 p :; l.9 : a f ~ :... ~... - y n, s.s..:..:;.p? .v, . '.w.. : .m v.. v ,. L nN, "i - (,-

. +.. :

vi,.. n.*. .;. y..t.. L... y ..,

• M. ' g... -..

. -,:c'....; 4 c. 7,,. ~. + g e. m.,:: .. ;.! ;, t... c.,

• . p*;*/,},';t; 1llT. M %y,. a n:-

..,1. 5 ;,.., .. :, es p

+-

y t .e;.., /.,."i. . p :. 3 g ;;- 4,,sy, 4;. j.,,} ;M.9 y / 4..u ; i,J;? . 7,;;; -' fdf #'.'/.;;y,-, ', l.-l. hy {. y ; *y ' [i l i,. '- ,J,, 4

/ D,.K,'. f." y':,.,M.ll;;. ?};, s)

, p ','., y% #,i. i. ; ' - c. L ;,,,

w. ;. c,,

+ 4,. _'f:,v. ', :],.,.. .,q ? -. -n.-+, .,..;. :,. ' e. f ".... : R. c.. J :, c, ..:;n...: ,.,.-: p r.... ..o.g,,.'. n. '.. a :.o 's, 8 fa; %f ;:, ? ' *,,, y.

,,; 3

.u '.: c ]n* .i

. ;[ s

,,g.3_ :..:y.s ll, ' t....'.;

b _g*l,_ q,Y.

... li G ' _2:..., 4- ~) .?,7,,;- L L. f. U. :: e +

..., 4 ;y,

,t;;.: ; ; _ ;~...( _ .4~,.,,;.. . y g.. y,, 9.:) g% ". i,.-3...y ).< g M.. .e n

;._ '; y.,,,., _,

.p.. c-

4..,.. ; p,_, t,...,....,,,.....,.e.p:... c

,.. - c: :...,t.v.. s.: 9. g. ::.,,.. q, _,e.. c..y.. a,. 9.. .s n y .o;. 4,. ..~.t. ~. .u.... 1 , ', :j....,... [ - 3,. . w.:, s,, s, n.. - y,v e.. )... . n,% ~. fd - ..c, n.g:.;,,.+ (n'.

• • . a.c x.. c, ; n 'p, '.,-; v 3 m.'...

.3, 9 bl '. ', (,$, :.;)},.').4, wf'g,. ip4 -i. f 'g.~ 4' t. ? -., 3' ., 4- ...,a.:n" 1 e.,: ,* pf. - 9 u, N,.; g 3

.u : :. -

.....y> . L. - .,~1.. N, g (.:. a. :..e 4. ;< N, y.a ? ; 2:,. Q.'s,l,%;....l,y.9.%n' & '. f... v-r.; + 4t

. y m~

u . c..s 'h.e... - s . % l jf. T.<.s..,,e '.Q Q, ei.;l ) ' ' ',,,l,ll. a -, 4 ':f. f.Itl:[ ? g; ;;,a(g"l &.,... ..,...'- D Y '.., fs':: 'j;*,' - n,,. v. m.. ....:...,...a.,p 3 4.v. v. p.. s..,..,; ,.m... ;,,..,c u.,,,. ,c.. a,.. f s 3, f,.,. ..c... ..m,

c. ; -

.,. 3. s r o m _e_ _.____ _ _ -m _. %_m.; ?%w:m~.p.;+:. W_v..:,A M.m. _3:d,*w* w<_a w.mwup k M N_m g

n. w,. m :s:w ".m M.

.m. _Mr .m

m. W; e

g.,o +u... n. c.., n%.; :p w ; w m,.e s?1.' J..q w g : e n..... av. u a. y ;w n

m a.-s.4 m

. a. s. ua ..m s s m:...u. p, v A r'...,. +.c. Q;., O, e Wn h~:v;:y; y, e # ;c.,[,( a ?;n. 9y v >; ..m. m a... h..h...1-p,w,4';.Q:. y t .: p3.~ - 1 . o y ' y... ; R. q'. :..

c. w.. Vr..X, t N,.

W it O. m c.. w.y,, t +v. : r.. y t x a..~i; fe. M u f. . y, n a .. n .a. 3. a . y,., ,,c,4.t.. u : 2.. + y; k '..yhy;"e, v,s..n._,Wn.6 .c .x.. m : ; s ,c c . -i.,$. m, v v,,:,. n 4g:, ?+,t

a.b r <l "

.s ; %. '.,' ' r.%

41. ( ;..Qo- ,, n.:,:.p~.. ' D,.' yy". e. <,%'s;e.'.e.

g. c. 3. m'.

lKq.'. ;m/ :. * @2 tt .:,. Q. ;. s' . c c...eA. J. q y s m c e x.,.. w f c...e, 4.. p

s.,,3

.=1 .,cyc f.a;O :m-. u.. 8 t. a., '2.. a.;. - 3., w4 q%f.f.fp ;, e.

6.. t p.,,. 3

...a g.- - + x fl b .s ; h ;f. , f. %l;f,.. m)$, VJf.}: w % a ml.. _.;x :ffl ml1. jf.f l$. f W1:f.;h f.f. g;?;.' f_f :._' '. af:e. v., ; fo! . m ' e,.,.v.,m.... m. 4.'v;.M ; %y ?.t i.p&u... n h.,p,(,;.M

y. 4.. -.3.%. ;. n..r,. e m,.,.

. m< u... .;. s...,.,:cs .s .g e d:p % ':;i:. # % c.c.T # g yy G ;h;... e.g;I . ;w. : :e . ~.

y^

n. ;;., y

' 1.} ';[:.n Q.s . s' fl, ' : }* V

v. ;, y, q

(. 3 : '.,l,l 'R \\..') - QQ .C m 7. L. :> ;%) fl ;^ f f*. :s ;'s,fi.. Q.,;.,, * : %li

y,

" g,7 $4[ '5ffb0 {]EjjIhb k g4 P3y

1. RE Q@ F @ Imq"IllhNM $ii%>

7.7bf ', Tl g /d kf(M f$lNDJ@ g ~; $ p{ph ! C fl ( hhY Y Y h ~ n c. l t - s ^ n 9v p t pdq ( x ~ i n Q,,y i hbk[ Q. ,i '{t{;* ($ G s. p; 9 \\ 9 8 ^ ^ I

a

:

.,y; ^ $4d. N MA - Y2 -A b f%l bYbNhk N:$' 'SkN i w fl 3 MT; '.:. si h8 esg x y w,. +?- w 3-ty' Ie g g %@ e yp ': ,, w s b' i

Premier ,omaet t ve Position ii 5 PacifiCorp is positioned to succeed in the global energy industry. Through our extensive electricity distribution capabilities, we currently serve 1.4 million customers in the western U.S., and 547,000 in Australia.We are one of the lowest-cost electricity suppliers in the U.S.: our 199( average net retail price in the U.S. was 4.8 cents per kilowatt-hour.We have access to geograph-ically diverse energy sources that stretch froni Washiiigton to Arizona, and opeitte one of' the nation's largest open-access, high-voltage transiniwion systeins. Unlike most utilities, PacifiCorp owns and mines most of the coal it needs fi>r power genera-tion. As the nation's 12th largest coal producer, we produced 22.6 million tons of coal in 1996. Our coal-tired plants had average production costs of S13.87 per megawatt hour in 1996, more than 25 percent less than the national average. As a low-cost producer, we have an advantage in the highly competitive wholesale energy business, where we have the largest market share of any incestor-owned utility in the western U.S. To grow our business, we are leveraging our key strengths in both traditional and non-traditional markets.Through business ventures in Australia and the eastern United States, we are investing in assets and markets undergoing privatization and deregulation.This helps us prepare for the competition that will come to our regulated retail domestic marketplace. In many ways, we are operating as though retail customer choice exists today, and we are seeking a regulatory environment that fits the realities of a competitive marketplace. Australia's incentive-based regula-tion is an example of what we are working to obtain in the U.S. When we filed for rate increases in Oregon and Wyoming in 1995, we also proposed incentive-based regulation plans.We received a 4 percent rate increase in both states, but did not receive incentive-based regulation.We continue to work with Oregon's regulators to produce an ecceptable plan tiir a competitive marketplace. The transition from where the U.S. retail electric market is today to the industry's future is going to be challenging. lly preparing for that transition now, we are reducing the risks involved and incicasing our chances fi>r success in the competitive marketplace of the tiiture. s

P c 'WMM .q AMS'1l40 @&l $e W h h,/ j w% % g)y; fYU W W i ,, O y$,tla o a-q s e t e' s> w u th. - gl};W ' lp Ogg:W L jn Aff * "W"T ;i h/ i . 4

• y q+ xl w; &

f 1 s mw a

s. a 1

NY d e W

f..

~VM $M , y ql ' c 'y v

g y

?l&h[%$Ah9 ?.W. $y,L 7m MU & W,lf?flW f W ?? u ( L, 43. 1 W a Q yyy$&py&lk?& ff(W}Q;'DMkh, f./j&y}$fjf lQ gylQllj@_f k Q fWWWQ Wh:QQO: AN dff-0 '#U b Yf Y k. +ggggy

Qy gy $

mqQ;h 't 0\\ Ql' i q 3 xAmv %- em ,s x w en;c:su$ n, ,:v,n ~ne &a w.. M:M r dye T?- pq , &a w " ' w- + c1 + >o w;mn. + pm A*,i a m. edm%.+ -- y,wy, a -;n - + w> e - e a i ged , eg n :. - +z g ~ a n n n nj

• 9u wp

+ t =I w % ~%.@738 qq p d:gWhd3*%@ykhf%a*M6n v n V*~Q~M, t

• F+

~,m? @v e N gy i ggm m ;u, s w g g 4 7 A n g g &+ p N g g %/.; g Spy < / ej fy m wm ~ Wh va%a#;3 4 w. 3 r &:A sA. e1 w w % ' 4,, e,7 L n pay g ev + t k ,y.. J mW[:e % ':h. i!%w@; - m * $ w d yg 4 e @n m qev: a p;e n: um o"n + mA ,a $x-o,fl p.,s. x a x"' .a&g Aa u &wquD lL}g b et Q@-jp z-c '~ . j @'y y. p( 5 $ Q R; ~ &,;!1$. f W;y k c t% :.4fe(.f-8 r w-(T- +

fef

• fliV lWK t

?llw&q;M s&LD f, f$f]kQ?a % i yU 0 t o w.. mte v _ e s O ]' si j f, h a ,c n. G$ w' e?w$.,W Y & q[w ,p.. 6 vs + Q }n&eVVb ?f,$ g n f s? 6 {pllNk; &,. m w i W g y >;qr hm m: a' s ,. u+tggdy d r n ~ 3 y;. w* n emgyp4 g:4Q W+ y w, + O, 3p u nm x, gp ww 4 WJw ms0 _4 r%, %,omp As s - m,,. m_ s cpm w e y-mu,- ,4 m Jg;y;p,u L mv nlgy m? u&. w.ln, w eg Ay (,f y n u ,w 9 ygs ,m;:~U mm ~ mx n 4 w 3 cr 2 ma g y# r my mnp4 / p + cp&a e7 og g +4 s r pr ;, m s % % w e. w m -.- h,f k $e,$ w$ h h h $ h h $ h ? mh h h h h h h $ h y k k h, & a-w e am m fh w? @ & a %p m $ $s &w $ a $ m$ N Y $ dN NN W mamEW w uw wmeu menumsnwnemann f MMGMSME M-QhiW%n_#d&&G@ga2Rmyl} % M nQ M Wh y d , mag m m e mymynynpr m g ~ymugn%qlffQgy j@g; Q % ye ww.w.w n _wn-w&&a y$, y.wa$ w wwww$kR l; a w. n ~mgyewwlp(pN,M f y% p g h?Y, ylNQQ gg sQ fmq M; yykhL

• M!$4Mddh$$fSMN#fddAYMNMh%!diMME# YW hhQQ igQ d Atf MNhs kNNhkNM hNkhhhk h!kMkhhk@N@lN@QQ hk MMMSMNM Y n-J;+.n-

_a n e- ~- ~,y, w$ X % wl% &f&YEfl&:&n ~e ,jf w eamum m xp p&amawva j[fQYWRl )?+l &m! f@%llW{&n&&v, m$jj;RQ:}gwwwwan amw&w ag + I gg f w w w me y m m a&Q% y 6fC hh h. p _v Mn [du m wu. wp$m nw$ $m$w~f[$f T@uptw&w@Mk' n p:pm&www n,d a a n$ M wn d N Mij $ $ $ $ N N h $ $N $7 4 k N. A )n;T W@$MM hM ~ _%M,WW_TMN h ~ m 7 N ~' 9 ~ _ - _nw. ~ adMj A m c n@ M*+%, nMMM,EUY~VNM,,x ng,,i a, w n- -~ CQN gM /s@yMnTs$ Q@@p NM7W - m w,e w M Q W Qa wM W N y k,Q sy$w% m ;~ u csyn m mm m p.,My ;W n!. Qf+~ tQ",t 4

• , - a M.

J"

QL

.km w W &p 9 g 6 %e q Q . afp 4i% M f QQ y 1 %Q u a W f,@F#ym me &ML,%wQ$ W f. %a x [ h( qm s,Mg wM,' MMT-QlG H % R Q &a$ @N @Q P~ w @@fffQ@N y fQ&w mm[C w&wk'Qhb.W ;}< Q m',g" Ji@NRD@N@ n-n rW n%Y y hd*fKQR G g M $r? f w$yk Q % jg_ m gn eM u 2 ge p. 1 MA Q m Ql4 _ _+ y Q, &.. W +' W [,, % & M ? Y d f 0 g ? j & N & %, L_ a-_. o. O

but is created through innovation and always meeting challenge. ,Q/ ~

G163a1 Sales, Marketing anc. Energ racing i As the leading bulk-power trader in the West, PaciliCorp continues to experience double-digit growth in the wholesale part of the businen. Our ability to anticipate and respond to inarket changes has enabled us to strengthen our position. For exainple, as a result of variations in the western whok ule power market, we increased our fi>cus on the short-terin market. Our (juick response to changing market conditions resulted in a record year fi>r PacifiCorp's whole-sale power business, where volumes increased 81 percent and revenues hit a record S739 million. PacifiCorp anticipates another exceptional year in 1997 as we continue to develop our expertise, pursue new opportunities and develop the kinds of new products that meet the needs of our large Wholesale Custoinels. We contillued to silCce%fillly Coll 1pete ill tile short-alid lollg-terin contract Indikets by sign'.ig new agreements in 1996 that will provide new revenues of $227 million in 1997 and 1998. Our ability to provide uniclue products and services has resulted in new business with the City of lledding and the Western Area Power Administration in Caliti>rnia.We also signed power sales agreements with several public utilities, including Okanogan Public Utility District, Litah Municipal Power Agency,1 os Angeles I)eparunent of Water and Power, Plains lilectric Generation and Transmission Cooperative, Deseret Generation and Tra.,smission Cooperative, and a supplemental agreement with Clark Public Utilities. Margins are thinner in part< of our highly competitive wholesale power business, but our increased market share resulte ' con-tinued profit growth. NEW M A lt K E T S AND O l> l' O llT U N I T I E S. As one of the natioll's most innovative and successful power marketers, we are leveraging this expertise to enter new markets. In 1996 we signed a detinitive agreement with Kentuckybased llig llivers Electric Corporation to lease and operate their power plants and market the excess power in the eastern wholesale market.While we continue to work toward impl menting a long-term agreement through the llig Rivers' bankruptcy process, our interim marketing agreement with llig Rivers provides us m

~ l l - with a strategic base upon which we are building a wholesale power business in the Ilast,We are-actively trading in the eastern U.S. market and have expanded beyond liig Rivers to establish a significant position in the Pennsylvania /NewJersey/ Maryland macket.We continue to enter new markets, and our reach now extends from Mississippi to New Jersey.To add to our expansion - efTorts, we will open an energy trading floor in Cincinnati in Spiing 1997 to fbcus on the spot market and increase our sales and trading activities in other parts of the country. 13y using our eastern marketing activities as a starting point, we have capitalized on our power marketing expertise and obtained information about potential markets and customers. Developing innovative ways to access these new markets helps PacifiCorp lay the framework for success in a competitive retail uarket,= We are also beginning to develop a presence in new international markets in January 1997 PacifiCorp entered into-an agreement with a Philippines-based --industrial partner and an Australian partner for the development of a hydro-electric plant in the Philippines. Upon approval of the agreement, construction of the Luzon hydro project will begin in 1997, with operations beginning in 2000, PaciftCorp has targeted the Asia-Pacific as a potential growth area, and the - Philippines meets the broad criteria we use in selecting countries in which to do business. CUSTOMER FOCUS. Until recently, electric utilities relied on their core business skills of -operating power plants and distribution networks to succeed.To more fully prepare fbr wide-spread customer choice, utilities are now challenged to provide value-added retail products and services' to customers.To better serve current and future customers, build loyalty and generate 11ew revenue, we coilstalltly need to iluprove the quality of our products and services. In the last year we took two significant steps in (bat direction. 11

4 L 4 l 4 4 4 i i i i r 'Ib expand our portfblio of products and services, we thrmed a joint venture with KN linergy, - a Colorado-based integrated natural gas company. '1bgether, we launched en.able, a new sub-sidiary that is the first to ofkr other utilities a single package of teleconununications, energy, [ q entertainment, and home appliance products and services.These products and services will be q consolidated onto one bill, and served through one customer service number.The package is L marketed under the brand name Simple Choice,and provides any utility-from electric to water i to gas colnpanies-with tools that can enhance the value of what they provide to their customers. 13y mid-year 1997,1.5 million PaciGCorp and KN customers will be able to buy Simple Choice j products and services, judging from the interest shown by other utilities, many inore customers will have the benents of Simple Choice in the near future. l 'Ib enhance service lbr our franchise customers,in 1996 we opened a centralized customer service call center in Portland, Oregon.This center provides customers-with a w options and services 24 hours e day, seven days a week..Now all customer calls-from bilhng to outages-are handled in one place.We closed a large number of urban and rural customer service L locations in anticipation of opening the centralized customer service center, which allows us 1 to streamline our operations while providing increased convenience to our customers. A second - customer service center is scheduled to open in Salt Lake City this summer. These two actions are examples of products and services that will affect the industry in the sanie way that call-waiting and voice-messaging transformed the telei ammunications industry. i .We intend to lead the way in providing this added value to our currer.t customers and to other utilities' customers. 8 s Y -.,... _, _. -, -,,, _ -. -... ~. _, _

i. [,, - f, *" .',4.,[ ,, ', $ :, 0......'t4,,. i .s , h,. J<., -. e g,

• t.../,,..;...,.'.g l

, i e', i. L f

.. i.a,.,.

'a- *.*.

• f, i.'

, j..... ... i. a ,,e,**', 's .I! 4'. 1 J*.'s.. .,,....- m,...c,. ,.(.....,.p. y, (c..- c.. , p i,. 3,,.- o:. ..v + ,.s,....;.. {,.. -=. : 2 . g '. 5 a.,-. i psq r.>S s, .s 't.. '4"... 3, .. ', +. d.I i. 4.i. e "de ..,r,. rte ..,g, I .s?-

• $,g ',, - 4'I'-

..y ' '.*[,' .,,s'-. 4. .,= - 2.,,... s

• 4

,,1, w .yc., , w g.'..-, i..i.,.,.,,., a.. . ~- .,*..,.,,,. *.,'.p. . +,. .K, .'p..,,e.. .a f.. 4-. '. i. j..e,,..,- ;.;. ,f.., + f p ',*.. *,.~..,...l,.j; -,, ?y*'d, .,,.... -.,p ,,r' s f ,r ,. -** j- ,t. },., - A .p. 4. .J a. 3e, . a.

• f lt,

.4 ,'s y ,s , g; c. .. :.e u.'.. v '. s 7 y'.. ;.,. .o'.*

s. ',*

,.,,....'.,.*a- -i ,,.r.,,,.. ,....'f -. J,.,.- ,:4 c f re .i..i. ( ,,.,i. ,.i-. . c,. 3, g ..s.. v .,4 .i,...g,. .,... >. y *,c. .r e.'.- .? :.s.p t. -ii.,,g ,,4. '., -..', 4'*,-.'. -..-.g:.-.a'- r d ya.'.<:>*.. ?,.. J -i.:

g.

.'l.._'. ...y--,.- -.- '.-

. p..- *,..'.. ~-...,..-<',;..,'.,,,,

tw , i.... .,a. . ;t. c. n'*%. ;,,..,.. ,+.i..,,. gl; - ',4

• s,.,i..,V,*

1 a* A ..g...,. -,1 r S.'..L. e ' ~... .. y: -.] e. a n'

• l.'

..* y: ' .',s s i.

g..i,,.., -..

e.,. -Q;, u.

..v. -...c m s,_ :. '. .\\g;. r.',v, ...; ;;. e _

• ~

9 3@..e lv, ,, ',. k,.,...:...', '

.g

?, s. ,.,a f- .(

1. f'.,'4,3.j%..,.

fi. p,r '. c..i ' E g'*f r.. 7, ly-... ;, ;. ' ' i *., ' . -, _. ' ( y.;, l. t

• . S;'

.,..,,'....? ) (., t:- C< .;,.e la 3. t, ..','.t . p 1...

• t,.4 7..,...

-m.. .\\... ...2.:,. "..,' .,..;g'.',.,p.,',.... ,s $,s. j f.\\.. 2. '*. j s ' 5;d :. \\. s 4..

• z '

• n

- s: - ., d.r,i.*.*. '. -.. P. _ l,."'- : ' - ' Y,n / ~, ', . 'i s';.,- -.<.:. .- *.' f, c 3 j ( e: <.r . ? :.. ;,. :,. ,,.. ' ' ' '. ',..(,,,> s .'s.4. ( ;,i ' :'.,' ' (, '.' f,'.'. ~..,J. i '.c, i.,J/ C 'n e di.!;A, '.. n'-' y

• 4., : : :. \\ ;..c.

3..

.,s .t .s ' 'lr' u i; y ; i. Nj. ,~. ' i:. - '. ' b.'..f.;.: 3 a t . A *\\ h ;,...b y.:, l',: ~ : : .'.....y?_O.. ..,, ' -. -. s g Q* a ... ~. ...s < a 'c ,; -.,.a.. >N..',., &. g_,,y '- :r...,.- Q _y .'p5 - y; i . g ' s .}. , /,e n. c, ,,.....9.-_,...., y.. e. - . / ....,..u...-. .. c.. ~..,,. y F:.d... o..., z...,,, ..v.. a ! n, % f ; *'.,. 2.

1

., ~. ',i (-- .e..,.j, ..,.5s.,3 q t. ' (. f;..,,.,T l.,.s- ',..,,,., ' 'p t .s.. ! f,g. ? / '.}  ;.' 3.', .. c,t. ' .....t '.'.;' * ~ s, 1:..: - ; %.,'. - O.f{ 3. :., _., 6 i;.. :.. +'.s..',t.,. @* s.a'. ' g , ^ ,. j:$) y.,.,; ).J.,1,, ', $. :.-; y.,'

s. ;,s, i,

,,..,,,w,;....,.

w;

. h. 'q_.v...' j.. ['.' ' ' ] 6 ; !,,[ ~.5. f. <. *. :[,b'. '. ' ' ,, [o G..,. '<.: ;. ' : t,..

i../,.'f,b. :..-

i ,,.1. - t.,,.,. n, .'. 4 5. =.. ; ....:p i

r. -... -

.... 3 *d..s-.,. . c. \\* v. ..t - \\,l. s. .s. ..\\. ..,,....r_',. 9: n , (9 o, ,%.., -, - s c 3.... A,. c.. 1{;, 7

T

.y.-

3. -

s. t., ,.,s ...e .y , +. i,.. i.';h a.e g. . i j,.,,..y+3.,,,p . 4 ., ; ',i; -c e.% e +y' sf ...p's,',9, >g*- n ,i ;. ' '#@, e t .g f ' C. ).,. t. *;c J -Y','*-t',Y.,.- . i u

;-,; '

., \\. '.(;. *< * *

, g 'g :,. \\ ^ 4,:..Q*. -. ?, s. ..g,' s. U. % :-..... ..;..u,...w.'.,-..? c.,

• ;'., '.. *'.*,..p.;.'.",.....e,

?,...-s L h -(

q '.

\\; p 4 ..;.,.a 9 t, ; n'.... e.-

."o..,..-.;, _,,. '

J., r ., *;,

• s..; f.:. qc,t,Y,.. *.,,,.,. ; ',.., p

^ '., '.,,...,. '. s. .,t

• c o,

.%.g.....,7 .. ',. u. ', i p,. s,. %,.c,. i .......S.. 3, ..c.. d.. ^ a9 ... '. :1. u. s, ..s 'l e. ,,',-i.a,'*.*. ...4., ,.,. -y q' . - g -., i ,4-2' g* ip- -. '.l8pt a4 e..r 5 ;, ' %,.,. t g .,... s. g. t ,4 ...... ;[.. [. g..- g

1.,

.3 . -. i,... .s ,.~,../, j, e r;, -h.y[* [.. '/...-[;[. l .... '. I - ' k, ,he' ', A '.[ *, /:.' k..,. f M,. k'. M,;* l t c -i ,[!., ' j,.,. 3' b., f 3 ;, " '..'y?~y.., 'f.,;.:. E N -l',/, 2..L. L L, , o:: :. ..; y ;,z :v.... ' ' s. .,; - y) %.e,1.,,. :. c. ... 9:.. :....'. ' p,;,' '-., ',,.,.. > ( -,, h.~,x. k.,.; .; i. h.. ',: g ?* '.

.'. 4 y

• ^

,.M.'. Y l' '. '?,: * *. * ;..* 1',. l p. ,.'.',i!,....+.,.*:'.I

• ' -- * 'ii..

'V n ',. 4'E ,'s ,-a' '} \\' ?;

• ,i,.'.,.,'*ip.. ', '..... -y'

.,,i-,j,l.',," .I '. ;. -h ,ff,' ', .,..g.6.,n ug ; ga,., 3,., f{r,. e. ,' j ,,0. ' 'j,. 3,, .,;.;,,..A',-t,, .+ '.f.; - 't. M ,= s ,y,., ,,p ,f 4 's- 'p .>s e [,,..,(*) ' g" ' l ]! '

• j I, } '., ((jid.. :. ' <.?; i. "' ' f,' l?

',.,'.,f.w**.',, \\,',.+*.',,.'..'.3, ,....g.' . k, ,a.,. . _,,.....,... g. ). : e,, c,. j '.,.,].'.,,..,r j,. .i4 ,y,,:,.,,, [T E p,*,.,,,g,v. .,,.. -..,} a ;,S..... 9.,, ,,.,..e 5 5 '.,.,..'.,e..,v* .,, -.,..,;r,, e,,,., ..s.

• g'. -(

.g.., ..c.#,.,. +; l, ;- l i ,g .,...i ...,l*,,.,..r,,y,., ,4.,,. v. ..-. ~, 4. 7

+.

i..... , :..p + ...,., g .,.,.i,,, a,.- , i ..,.,,.a.g.~-.s .. ; ;,:4.,% ..,..t.c. v s..%, , c. *. y' ., l,_. 1. ; ,.a _,- .y r. s - i. N.**., ') ' 3 u.+s

.,..,

.',, ( U;f.._..f I'*?_.g, ',o. ' - **,;,

E', '. ';. 1,. *,. _, i, w.j, ;..., x..; ... % -,,,.3 c ' *... 9 .'s.,,'.. s.,.-.,f..-l,., 'a. t' b }' L ,_ g, ' ' '.. ., w.....; : w' s ', .:,c ,..,a g ..y ... _..,, :,.. - -,',e.... i6- ..1 ,.g.,.._ -,:,, q. * .? ;, r in

• 3 l.

., *: ;- i.

• v r,*.

~..: 7 j 1.t.,,-. eg.,l ;,. '. ' l s - 'f,e. ?. et... p, y 3 ..*j 3 w g .. f. g. ?,.. 4 -l -l',, c.,2. k. Y. . ; ; -J- . 6 .k.- ,s. 4. -..,..., -.,..'. c.. :..t, (. w +,. , ',q..q ;.......m,.i.,1 ' c.'. ;.;%...,. k' .'. g . + .. ; ei 6l.. c...,y'y, ..y,n

.'.,... '..,, ' 'fs, p. ' '

J, ,..j 4 J. .,1 ,,5, y,.,.,, , (.+ s g - w ,. ' + ++.

; '.

; f),..,y[.. *,.-

,n "s -,. i, j. :, s,.,

2. :.

.;'(.- . ';.  %&. .~gl..;

• '.,..w.

. 'i. y q,: ..o. ,t s.. . x. ' $ i,k, *,. 1 -.,.i st....,' s. z $.- ' '!, 4,.., /. 5 (. '. ' ? ( ' 1 y*;..'.g :4. *,. -, i

m. '.'-.-

"e s-' ' ";j,' .., ' ~ ',,,;i.,./Mf,. D. 4 s r 4,;r ,., ;~. ', - -.6.*. e..,.. .,..k,. '1 r, - .,,'....,.t.,g.. -, -,. 5, f. .,'. i ...;...'...4 .........n. ^ ' ss.a 's; i ...:r..-..>... ..e,.,.,t ......4.....3: '. j....,.,,.p a .f,.., (,.,. , /.y...., g i. ...,,..t <,.,, :, i.,- s, 3 y.. ..f ..,., ;,s , oc .... k.. s... 5.,' N... ,...,,. ~.

• .t.,,.,~.,.....,*

., c, .s.. .,y. .',,:,..'y. ,T,. ( r.. _ ;,,...,,.. a' ,e .L.s.. v,.., c.,. > ; J ? (... e :4..,.,, . _ ' ;,. f; ! '. ' Y li '. ;'k., - i. ,3 ,..,.. y._ $,........ . ;.. ; _.. ;.. _ q-- f- ' '5,. g. a .Q'. - 's. .. *1s.. % q ,., ' N,.. .s r 1.. ' '.'. $ v;.l.. y,.. .x. l :,. * ',,, ; _. ,,' ', 2 /d,'. e 1.i.' [. ' ,Q

e. '..

',ct. g '; -. W,' g ..;,...,..,7..,... s, . i,e.,p;. y * - (., i', ', ? '... ' '...: 4.,- _%,'y'......'.'i.,,.,m,a ' y ; t r s : 7::., g 1 y.-, ,, ' c A *( I, ' A' p ',... 5'.- ...1* AJ. f:, :' &.* j '., ' ' ' Q'. '.~;q.y..'(.-, h s' ...t l..,1 f e ,', ;'. '..s' f,s. ' l: ,_.;, -s,. ;- -... -,:..,.. .4 .s,- 1.- . s,

a. :

s.

t c.

, 5x 7- ,._ l ,z

., ; 2? '~.,J ;,. y +:. : Q'..o.

', f ',

....- 1 -. 3...,

.( s- ., c+ .'-*. g<.- 4.. h ~ ',c ; ' '. ',. ;.,./'* j, 'w ', ;h,. '., N, ; y Fl f,. ., y 't" ;~. -. '. -,, n....... : e

' f ;

..'-.- :,...,', j.; ;:, _., '., ' v ;' /

...h. f,.... 2;],4.,?;,',.. S;.,',: h,,\\!.,:.).,.l h L W,L..', :

e p. g 9,l, r j.e t V t,,.u(.' e '. ^ b ::::' (.'.',, p l.,, '

e. ' :

. l ?.. l. '. ! q _ *: .<..': %.. [ ',Q.':,i,eb f. '..',:',. '. 4,.? X, J _.. ;.. 5. ..sy N...... .. a ';. i 4" y i. ' F. a' -v.>,'-" t; ), '/T -.:,~,. 'I) p '.'.'.,,.:3.',,i.,3..i. .. -l. ..s ..g".... .f.,,.'. ',j, * ,c -.,f,.,,' ..+J.,..

g... Q,;. ;,. 7. '.', ^ i -',. :.

. " +,- y[' G' $.,,, 4 5, \\ i.,

• E.'

' ' l'6.'.' ;, ;;, ;,[. (t5 =^:

,r.'. . 3,:, - -}'.'.....,>4...,.,.E 1,. ; t ? ' ~_.'_ '.

• _,

'.:.. '.y ',y.), ' y lf.;E. 3:.1+ kg(. ' } e ,'-;lf' e. .,_(.,f [. ; R, p,.,;,[.;4,.{ '_I;;i..., f E' , c.' s 4 .},

) *c i -

1' . < * -,,.:. f.,

• %44:N.

e. - **

.... f, 7. .f.: , v,.c

,., g v.

r. ),.

,g,,, s. ,s ..,c: f.. y., p.'g.._,, f..., ;;,,,... e; 7 r.g.,.

_c n.

(,.r. M,, p.,-../,. .i.. ; ,s' m.J,. g.o,.4 e-cc i... c,.; :l.'s c.,. 3 .g ..;s,.,.,, .,,.,, A. s 1.,i .. s... 9.*... .*..,1pg c / - '- ..l-' .".;,.,..,f, et

4. :

.f c m.<. . s... t. g'. - ,,.3....',i .F. ;...., 3 - g l ;,h . g 4,; + s.7 '. :t .p...,72 i. .i.,, - , * -:-.. ;,. 8 -...t ,..... 3 -n :-,,;. . I ' g.,

• r'

._.4 j,,, C <, ;....,, * '[ ' f.,,., 4.. .,.,' '..,4,,%,..,,..,.,-...r-

• l'c.,.

.-f.,,, 3,,,.,-,?.3...., 4 . g o .3. v.f

.-,... ;,..,;,.,..,)..,..-

,.,.,p.,- ,,.. 3. c c [ ',.,..-. ..... i- , 's a , [, [* (. ' ' ."- ' ~ >...-., .g , *. ; -] %. ". ?..,. ". ;.i }, g j:.',,g.,.i....' . ', g ;' ' i i, l ;,"./".,, .1. , ' ; ;J ';- '.g 3. 3 . s. g.. '.......,.,.:.-

• c

.., p.

.. d.y. '.g r.,.. .,y ..,.,,v-l+.. '. ' .'g.,, . P, i... - *. - yt A, .4 .,,.,. i,*. {.,.- 4 "t

.,, ' y.., e. c,

s . j. 3 v. 4,,, 4.. ,' *4',f l. ' ' '.,' --. .l, 7.%. ;,#. W ' -'..k,' , g+ ' [{.,, A".$ ".,: (s,.,. ; T,.', S. v b4 $l.g', 4.- .'[g,- .k ' *-.... '.. - A,,. ', h 'f,'. , *',.i. . >i. L .7, -[.;. [. f, O,y ,g y (. ' 65 '. -' ', ( g s

- g

'. f. '.'. .I I,. *, ,S... ,b, ...r+*. .,p r, ,g e.* ....y.. / k2 *. ; '. b -...; h [. ' f ' ^js

[l...f.!j

i. ' '. '..

J,++;,' ., I.., ?,5 ' .,I., '5, '. ..., ' B Wn

d...m. %.7[.~.#q* ' c

• "S Q$.4.R.1 G.7 -Q:!(l?.h& i WDN,-

Q'.,,,,yAlt 'l4. M... -l" Q W:?,. ....c O' .\\ /. ?t.. 1 n .e , x f, .,1.-lq ' ~' n'- -Vs .,....t....,....., er ,,.0.. g.- c,_.'g.'., - k.,5 - f'.,.

.,i

,q f -.',:..g.. ..,,.s.,. -....,.,,g,.. ....4,..*'..- .i....,. p h ' t i..3...,, .,e ...1.,.,.p<g,..,.,,....,(- ...A. s .. -.4.,i5.. u .o ..-....t,.,.,....r,.. -. '.,, ..$t.,- f , t. 3.M...,A,... +,,;, ,. ag,....- . : p. ;s, ..t,..,,....,:,'.a, n .,.,I-J ',,,,s...a...,, ..'s.,.

• .e..

..c. q.?,

...,s,.,

~..'m..- ...r,. . -.., -. ' - - s-O.. .(.' 3'

; Q*, _ L) r,p'

... ;':. ;,.?_.", ' ;,

.y.

• , r.

4;..i:_., .q.,.;.~.." -., ^ n .... - 4 ;,,y$p, < ; n < ,*r'..: . +. e ". -.~. ';. 'y <:..Q :,'.;..*.:,_ . q... '..:: Q, r d.

f. ;;;- 1.% ; b. *,.,. o[ L, _. 5: ',. :.;l 1.;;y:g.;,.,._.' qlc.[.

,.f..,,,. 1.

• q l ':s
• i v -

i., ',n

l -

c;,' '.

g. :

q.,

W ;. '.^.. - . b',# 1 l

h.,_.,..y ;f..., ' ? l l" j ' }. ' ; p:'

4.K ',;y.;h,4 ;.4 ..r..,., 'v .v.

;...,,. y P * -

. Q *. _ _ ;, y [, n,,' y y. '~j y '_. p, A p,.; :\\,' i>..'.~,., .'....}*'_

• z 'f':. '.,,. ?,.

.v. ' :..,3- -V y -. :(a... ~. - .. s.. n... ,c;.s- + ...... n... s..... .w.. L.m... = ;.,. e..,. - n.., - ..,.., u.. e., ;:.'... ;. tu.,. y t n: ,x.....,....,..,..;m.,,.-.o....s. .; 4........ m.c. l,...) 4..*'. , :,1 Y#.'m,. 'f. '.. 1 -....,..: ..._.3.'..,r.,.. . r. :.- :. .a - s..s .s s .3..et a 1-. ,... -., -..-o.3* ..,s

• ...'. -,., :P,,:

e. j c ^.r,,i.... q.,,..,-c 5 f. ..o. ?. -; (t 2 .r ) $. 4,...-. . 4 ^ 'J. ... - ' d[, [, 2, $ 'L. '. ).'s.lx,. 9,&,'\\ ^ v -[. j p Q: g.,,.,'.. ?' ).. ' - 4. , i. ' '.[.g,**:g.? 'h Nj {3; y y[,.] p?.* *..',. I;j,i:- -. ','- ' %.? 1 *O*n c. 6...,.*<u g @'(i.<..Y.f ';,,J: 1 [", ' ;,. 6 .c. ? ' h;[".4; } [' . f, .., 2 'ha' ;'.. .s }."' ' y,'. s ntqf,_3..y3:s-N.. Ya.. k %:p:M;. L ?...;7:. '.,,, :,. ; ';q..y n N:.,W......yf..% v :.n.2n.Tl.,.m

t T..}.

.j; ;'.

. y f;; y ;.. (;::;+1.;. Q ' ':

3..

u., 4.w.; bn.. %.y;*,2g..y <, ~-(4..,% :h<,'N.. h..F...j. A... ..N. y's. m u. ' &.... .'..y - Wy ...V.i.v. . x 15 W,m.y <M. y.;. m..,&..u +:.'-\\': . q,. o.,; ~f'.y :q:',.s ;&;&, >.;'.:.C .'..c.R. %x y > ',; a-6 ; M Y.. ;;\\.. h.-; .... s,w..M., n.. s; 3 2..: f.,:A a. o b .o'. i;. .:.c. y,r g.,. ?... a,..s.4.m. am.

a s.q.A

'a u.,4 a

r..

~. ...c. ...p. 3.... .',.['.* ' r.s... c.u - ' ' '}' [.'.,b.'.i N, e'..[..;. t.. ...c ...f. - $ -.* 4 a ..t s. i - i -f Q',';Y!. hh: .'A.'.. W.y' ';. v 'tl-l '0.^h...,y f'1;f kl,.. s,g,.'...'..q..','*i.';o..., h M., 4 4 '

• I,,4 J

9 4 E.[. '4~r. *. *r6.,. >, '. y - h.,..if ' *e. ) )'; II h. f 3 d

1. y' ' N ' v, 4'.~y,.,..c....k p.&,..f,, ',

g '. [,"(n ' " y,: s ^ ,. g.." *:0'... g 'l

• Y v' e,y.

. t.Ig. p. '.' *4.., p,. -

c. eJ.'..N..

,i,..'.V'.g.; 4 .}- a ' i 31 .'v',._...#.f'.i..,. g# ' .= e.i

• gf,.....+
• f

' K..,g t s. +. c., :. .'4 ..s.'i .g ~ dl'q. + i r" ],4, a [.m.,c..*'....,. '-'-.p 7e S, ',,f { } = m '. i f ,.,s, "_7.- .j-s'.' q.a. ,. ff,*.$.f_: .fkl

• ~*

+ ., & @rr T.i. f. .g e gi, .*e t- ..g3... ". ag i .g s .,f .t..f f.f.~.'bf.,,?? w. h,. $,k,*. q? W. k+f i:lf:t A O Qh7., w...:'. 4 *h...>.,s,,., I, f'...k.;..~, . w..., ~. i. g..a.,... . o.. n.,..x n,) ... ~.... . ~. Us j ; t. 0" -..... ~. 'p g.1 ,n..g.., g h..,,' 1 s gl.4 ?, y

s...,. 4 fu -

,,'7 .~,*

w.. 7

,,,,m. .t y m,.. ;, e :=. m (. f}i.,..........g 's . ' A' _:';* l, bll&;;';. '.,f'= L..l, :f H,

• Ws '. '.i, ;,. lM Q { $ 'f *' .L, S, }{ (\\

t $ ? % $ $ }$)*0,'l.;.T $,$. $ ), $l. $ ?.K.' W # i':. ?;:<! $ N $$5l $ & : 5 Y ... W{ :;' f f i Jf '. :;'v-j$' d %['.&Of:,M.M,,sm%.&,.l.l: J .? *, ~ .&.5 \\ f QGM. h: wu m....,MM.n. y,p'4. i.>p... a.+M'..D.m.lv.: MQ>M.Q,%,M.WW%wp.4..oy%%. $W.m f. a,. 4..'y%n;n m.:y s, m %.n ; D5.WC.hl@9T&,;,%Qg';W#@W,dMl@:t:lQ.'y9.QQ&Y.*,

+.

g., ny.cz. a.c.w;An 4a:

.m. m.. -. g m,w. s M't.p, x,::v,, Q:%'My:n.ls.::: ;..M.:,,M &, l;,. s.m%f

• l. :::

a4 ..sfq% :.. n.c. 4 d%Q:y. %:c 34.%..G r:.

"..<? X;j::i:.k+': ltyQGW' :%y W:,

.8 g M n.f. hi .M..,.M%: .k c d? v. f:\\y n:s,Q $4 fy.N.. M,@&&ly}:w,g LQ ...n i: ' n ?- h.i.W t?A. -t ."&g.llN&.5.. y Qf W4- .Cl i db$ MQW gyg M.WN. .N:

p.pygpygygp;;gy;g '/"~. 1[ At *e i. sp g ni)%. {" i, e. v2,.. Lt i a w i -y y y ; (g 4 : .a ~ I 4 k lTV' ? pkg mgy5 rwbg n a w b i g a 4 ,, a 'khh,- }Y' y 3 j 3[e, J. {9 i s,n L u r#

s #,,2 g$ds)ey m,y gp IN% L edst h t 3,M $y$hk lyff 8

_ [ ra m w a a M a

Austra:ian Growta Australia represents significant opportunities for PacitiCorp. The Australian market enables us to gain experience in a competitive, less-regulated marketplace while creating value fi>r share-holders. Since PacifiCorp is actively promoting choice for U.S. electricity consumers, partici-pation in Australia's increasingly competitive marketplace provides the company with useful experience and knowledge. PacifiCorp established a fbundation fbr its Australian business in 1995 with the purchase of Powercor, an electric distribution and marketing company in the State of Victoria. The growth and financial results experienced in this first full year of operation exceeded our initial expectations. In one year, Powercar demonstrated the possibilities that exist in a competitive marketplace. In July 1996, Victoria customers using 750 or more megawatt hours per year became " contestable," meaning they could choose their supplier. Powercor quickly established itself as a leader in the contestable market.The execution of a well-organized and aggressively implemented marketing plan, combined with Powercor's consistent focus on identifying and meeting customer needs, created a formula for success: at the time of the acquisition, Powercor served 30 percent of Victoria's contestable customers.Today,it serves 46 percent. Powercor is poised for success in other areas as well: New South Wales, Australia's most populated and industrialized state, began a transition to a contestable market in October 1996. Powercor was the first company outside of New South Wales to receive a retail license to sell power in that market, which r presents 40 percent of the nation's electricity usage. In three months, Powercor gained 5 percei e of New South Wales' contestable customers, and continues to aggressively increase its market share. 14

i } i 7 i 3 1 l 1 i i i l Powercor is a clear leader in Australia's contestable market, and we intend to continue build- ! ing our business in this country. We are currently establishing a market presence in other Australian states in anticipation of these areas opening up to competition in 1997 and 1998. C L11S1t10n of a 19.9 percentinter 3 in the Hazelwood Power Station, also located in Victoria, represents a significant next step in PacifiCorp's strategy of becoming a dominant player in Australia's i energy marketplace. i l In 1996, a consortium that includes PacifiCorp; National Power PLC, the United Kingdom's l largest investor-owned thermal electricity generator: Destec Energy, Inc., a leading independent i power producer based in Houston, Texas; and the Commonwealth Bank Group of Australia i i ! acquired the 1,600-megawatt Hazelwood Power Station and an adjacent coal mine.The acquisi-tion was completed in September. The consortium, known as Hazehvand Power, purchased the coal-fired generation station and coal mine for approximately $1.9 bilhon (U.S.). As an owner of ( a distribution company in Victoria, we are limited to owning less than 20 percent of a generation l business in the state. l Among the partners, there are conside;able skills in managing and operating coal-fired plants ! and coal mines. National Power is overseeing Hazelwood plant opentions and PacifiCorp is l overseeing the operation of the adjacent coal mine. Since PacifiCorp is among the largest coal { producers in the U.S., we view this as an opportunity to leverage our mining skills in a new, ] deregulated marketplace. i l l tS l D

- Hazehvood is located in the coal-rich Latrobe Valley about 90 miles east of-Melbourne, Victoria.The plant is fueled by brown coal-a very low-cost fuel-from the adjacent mine.The-E mine contains 450 million tons of reserves, enough fuel for at least 40 years of plant operations. Participating in the power generation market in Australia allows us to better hedge our energy exposure in that country. Until now, we have-only owned a " poles and wires" distribution - business _(Powercor) where we buy all the power sold to customers. If the price of power increases, our profit margins are hurt. Now if energy prices rise in Australia, our ownership of generation acts as a natural hedge. -The expertise gained by operating in Australia's dynamic marketplace is helping us prepare for retail-competition in ' the -U.S. We have initiated an employee exchange program so that employees from both our U.S. and Australian operations can share their expertise with one another.

Since PacifiCorp is a recognized leader in the operation of coal mines, we sent two of our mining -

managers to Australia to assist with the operation of the Hazehvood coal mine. To strengthen our sales and marketing efforts in preparation for U.S. retail competition, two of the managers who led Powercor's success in Australia's contestable market have joined PacifiCorp in the U.S. PacifiCorp is exploring additional opportunities in countries with similar competitive envi- < ronments, and our presence in Australia allows us to explore these opportunities in depth. Thailand,l Malaysia, the Philippines, and Indonesia are four Asian-Pacific countries which appear to us to have the type of business, political and economic environment conducive to developing Ha significant business presence.We are actively seeking opportunities in these countries that will enhance our ability to grow and compete in the international energy marketplace. Australia is an integral part of our strategy to become a global energy provider, and in one year, we have made significant strides in that country.We continue to build on the success achieved in Australia's~ contestable market, and to seek opportunities that enable us to leverage our expertise and enhance shareholder return. a I

.. ~... q.. > ; ';;-

...

.W..

s.... r. t -

. ;... ; ** y. +

1~ ...s.:,,.... ;;.... k.....,T..4 ~ y :.,.,.,., p :,. :.. .-.......-( . a.,.... ., e. ;,...

.,..~ ~ --.. s o.

...,s. m 3 r .. x :".. -,- u c y:.. l.5",,,~f. ,, r,. uls ' s.,','.i..'..,.. _D*),....' ' ^ .a:.

+ c

.y c g ' < ] '.,., +, '? [ -... c. O. 9;, :. A. m.,; 's ;! :- :a.'.. .,'y. '. i ' Q '. '. R,d., ;.:,, ,'_?..;H. '. ;' . n '., s....,x,, ,,.\\- .,s, .1 \\.' {. '.c'.,..*(' J'.. ' s. s ...-('...:, "'

u 1

u: .a ...,.1..,...,t.w.. c,,,. f ', ' :: -. g: ; < b :,y.Q. '.,,p-..,. ',}, !.,- ;.,Ql,,..., n f . 7 'y .,1

h. w, (-.) q',c' j

- y g ;] J..f '...,,i - ' f..;. '. " c ' v j '., ;3, t.3 a 1 e 3 s. ',. ' ' **y ', f, : j ' i,,.. ; L.y; u L l,; c d. c e, ' ,

• 1;i'~.,o,.'

y l f,, y.','. Q :. :l '.'. :;.:....... .: L. .v...,.. ..a 1. ......ga....,......., t .g,,,.,.s,s. t., .7 .:)....., ; ,..i.. (. q,.. \\,.a )........ y.;.. ....m.... .....,,...s t.,., s.;..,.., <: -: ;.,.. ' ..:...y'. .., ;., n ;. s... : ; ..%.3..o...... v. . s. . s. .. g .r...g..,......,... .s. .,3.....,.,.g ... p i... ,.- 2,...... ......e.. ,............ z..... s..- c. ,. y:...a. ..J... .8 , + .c ,.e >..,.,, -.,..... y.....,, - . +. ...j e- .;...j e. ,..g l. t f. t .'....q s.; s-4 3* - u..-...

• .m

..*e ......a... .. a. e. ; %... i..4 ; ;.,..........,. m. + .3 3. 4s*...,.,,. '. 7-4* s...u,...'.'..,". ', .'*i.,, f.; t i

g. *.. -

s e j 9... 4, y ...a- ,.- 3.,,. ;7 s ...:.,..,.....y.,- t-.... - . 4,j '. ...,...s. .{;-["a'... p. s '..4.-.. 4 g -},.,. .,[ '.,[ I..,. ,. -. ' 'i ,.s.3 -. ', ; }, - ' ' ]. ;, - ,' {'; ,' ;,,. o. ..yi g....,. -,...,. - :.* 3 - /' - ^ s '."<:

/.,.

e ,l.

• ?,.. '.. '.,, '.,, 9. _ - ' -
• _*J.'..

.,,....4 .c.. ',. ' ' '. b p.

n. ',,. % ;,. '.. -

+, 7.:

..., -. ',.' -r:,7./.,fy:..; q [ s., ~,.....

• 'o-e,

'...'.'.n, g. .; -..+e -..., [. ;, - (. a. .-s.,H.- , p. p., f;. *,.,..'.. ' ll f. '. e ' h.;',.'s,..'".m'-- ...s

..,,,. [,'

n.'.i .?..'.

a.,,

..% ,. R ! ' >.l O ~ '. '.,. j': l l E,\\g. ;t ' '. b. ' . 'Y l ) 1..'. . t * '.. g-e...',, .- s c "?.*- n ,.l s '.q L.. au '..:. *...,.- q-. * .. p ' ', - '".'..'-i. '1 ..:.... -;

• f :. ~ ',. '.n '< '

.,..M.'".,.,.. ' ",. '

• . !} " J'.

'.y,. 'o v 's -y

,.l.,

y.:.,..n g,.,,,g i. ',.T;' f, ; ', ;. '., ' '...... 0..

p.','.

.>,.'1...,.'i'. t,,*. sj ...... a , ' ',..... :. /e .. ' lt ? ' \\.?l {:.. . i. ,f. ;,.. e,. y.. ',;*., /, ' f,,' ',,,. ,..[, s.. ..;.,.s., - ;;.. 'g..,... 3 ~., ,g . f ,,.,.,, i.. j ,,.,, -,., y f. .. a p,. p ;..,..! .t f* - -

g,. ;.,.,. ; * ;,._,,, ' _ ;...l ;- { l;.,..

..e.y..,.,

,...',K

.f,, ,r.3 . 5 c, 77..-,,. s.,, e t r..,,., .9..,.'. '.,. .eL.7.,..'.q..:.+.,,., g , Y [f. ;N. ...,....',..,t[*8 .y.[ .[ ,e., ;. n, r :[. ;. R ; - ' ' ' *. ' {'- ' *. } ,'r. 3 3 _. ' a: - ,a i l', L ' :,,, t: '..y;,  ;*.' } '.,.. _ _ ....,_ j - y .,_,'_y,.

_'; '.;_ t. _

_3 p s, I '...e'?'.,- ...s.. . ~.. s- '*?* t ,i ..4 .c., '..,',.} 'W

• l.*

.y '..l,,...;- c (' T..'. '...'s:.'. ;,..?,' f' '.. ~. c. &., '.< * - _ ;.;... b 'f. j, s. '.'a

e. y

. bL,C..,,. f ~ -.n..'..'.'.a L... .*^ '. dnL'.. ~ ' _

• -..i ' ',

-l '. ~.s . *,.<.. 1. * ".. .s... ' l " : ,4 '.t .. s ', '. ' * ', 'l, ', [, e - y si e

• w.

i. - l; \\

,.}2 .. ', u, ': s ~+...~ : * : ' W ?.j '._l. E' [ \\,' '..'..U'..',..;',,s$...'. '... ' 3 [ .'.,', 'I.' J: *. l ' '.,...,. l,'. :'; ;, ',sy.'~';

..-)

. % ~-",'j*..i'- ..r $YI }.;e'.h.D.) T '..[... v,. [ d, ', '.b. l ' , Y, I..' '. *.....:...:,,,,.:. a._. c.', ,s' }., "h*j '..; g

r...... -

. ~.,, +,-.. ...._,..:,....,.'.!.;..af: ' ' '.. >L,' ',; a.. : .. ;. l,7,.... > : l... y.... ....t..,;.,.' ...e:-.: ~ , :.;,. : ',,.. s. .*r t, .s '.t-....~....,,;,.,: u....r n,....',.. ...i* i..-. s...V., ...e'. ,..... 3 ,+e.. g.. -:8 ,..1 i y . s*.'...- ... + g. ...." v- ',rc . A i. ;. * ; '.4 e 'a'%I.,? y.4..'?.. 9 ?'

• A %"P.. - ; ;'a ; ':,. *>

n.'..- ,c. c, %',, ' i,i " ;. ..,'d,,,'3.'.'.' ' h..... - +. 4,-' ".. '.. ...?,,.. i' -..l'.7 jg ..s. ..c.,s.....,.-..... - ;..- : ...i,:. <, ; ..... n. ......s,,.. 4 . :.., _ s Y. .,....p,. .y >..c. .,..,...;,"- 3y. .,p, ;..,....;,....,. 3 [.,; e,.,. H.,. ..,o.,-, - :.. ?..u*. , y;. _:,,,-. ; : ., ;. ;.,, ;,3 -,_,. ..m, 1,. ..y. ,._.s -l -..:.-. - -......,...n.- L: ... e..,.,.; ., ;.s ..c..v..,. , y....a,,..,,..,...a..,,. -. <. uw .. - =,...,.,,. ,.v. 1. c, .,s,, . v. : .~

..'.'y**'

t.. m :... s ..(

• ..: a.'

3.... - ; R.. ....t ..... c.... .,.r- ' g.., s.- m ' - ' %. %. _ q..i. .. ' ', '..,. ::,..' ? s.... *. :..5:...y ;;, '1 e,

. q. f...., ;.,..

? .,V.. .,'.,n- "' ::?... :- -.... _..,; - * .,~.y.,,.', ...... - - - 1 ., p.

'r.... a_

u,.. ( :.,. _ g,, n.., ,y,,_;_-,. ,e. .~ . s..; ..s p.~- td .... : m ,1g. 1-L. .?;...'.,.,';.:..<....,,; >s.

.L.; m':.;3}.v. m

...;[e: .6_ -;., _ ;;, '.,,.: s- ,7;.';'. s u_ v .. N :. .~,, - : ~

.e

+.., - "i s., c, e . ; j. i. -?.., +.... < '1

,,.. ~..

.3

- -.....y

-J .,..'.7.; .( -f.,p ; o,,,. *. :.,. .s..,. '...,t..., -., ;..~,5,,. .,,e i t, j;, 7,.*',1. .i,..,.'...,.,,e',...'+'...-4.'.v. +'

• 4* ;,,,...,,

,.,.,.,a g:

v..- ,,,.,,,

'L.'..,. .,. *.p.,,.',y,.',',-** s...,4,,1.,,;'.. ,,..?- g.4 s. ..'..','.'.,)-- 3 '.3..,c, .a. l ..,.',.g ,y .i '. N ..,'.,..(? .,.1 g :,. y. g y,.... ...e,..'/. ;. ',. s-a .,6 ,... W .'a .'.. - O r. .6 /,,...,.7',. c. y,1.'..,*.". ,.f,. ? . s, N.'. ?- J' c.,.. -,* ;';,,. * - (,, ?,, 4 ,.. -.. - ;o. .,...'.c,

d e,.--

,,1 y ;. _ ['. ... i.y'., a'<> y -j .,<... t ' y.A. ',i.. 1,' gg. _ ,7 .,,l. ..... p... ',,. ',.s ~..t* [

i.,,. c.. a....4

. :. v", .,.q...,ci.".... .., :. ;3, j3...,..'. - ', I,% *{; %,,* J ';e,...* i.*T., ..-l,. b. f ...,. jy, s. \\- ,,' ;O,..;. ;. ,.,z'.'..'f. c. '. ' - ...; ; %;j : '. ;_ 3:. ;_ ,('.__ ; -.l..' ,',? - :;., z l *'3 :..... _..'l'- .c. ;.;_..

_ y -

- I ' ',E'.:,. ( f. V'.. ~ {: :.;, . ; l... 'A.* .~~..:. V' ~-? .',4... q '. ',.?; '

(

.j., i : j;,.; * ;y, ',. -

- l. _.

?. l_.- L:Y.' ,,.. (: _)

• -ey

.,.,.,_,,(. ,4 , :..+ y?, .,1c T.b..g.., p :...j f.. '. ;'.,,, ;..,y.,, ,e '.y,,... - ;- ;.,.. [ ,s, .;,,,,.',.s - '_.':. f..,f *j;r_.. ? ? .l- ,. A ;,, ',c '.>'., g. _s._, f,  ; p. -Q ' [,.'._ ',.."- '. I.. J. y;_ . t v,.f..,...s."l',.",,,,. , - l '.' e :. ;., :y. l l.. _. y <,c...j,',~... ., a......f. f' ' :., : f,,.,t ?,- '. c,s. g; ":,..,. { ~ 19 [.,. a n + .,:.) _,. f p,. ... t3 7, v.

9.,.

.,-.:..,. x.,. 1, ... a,. ,, +.. .. ~;.;r..., y. t... ~. r 3... 9.;,. ;p.5.... g. g - -.,. ,8 -: r .;7. 5;... ,, /. , ;.3 s .t -..,:,E... .a, i.m...,.,..,,.,,.-.:., p ,g .,,:.. - l :., _. ,,. t ..,.r. .~..,r.. -. ;.,+,.,. : a,, ;-~ as.:. ;,,, s; * ..;..l.,n,.. n. .,4 '. ,,.w

• ..;.'.,',,,q-... y,; M t.,- ; g.' ;'..s.L.',

,,n', ,,.,.,16..... : m....,... - :..,u;... ; s 1,.,,..*..,.- .,s. c,. -.. s, .. e ,.. ",.,,....,f.b.,..,e,.. (.. ,.,.f.r . ?,

e.. -, --

r y.,',.. g... b. t....,......,':.,:: *:....;. -{.,.z ,, j. 5.... '.~c ;,, f, ,. 3 e.

• s.,.,.-.,,. ?.:.

.2 f. ,,,,,s 3 ,.../.,y,..- A..Vdi,',l s, -),..,s y. - < g i.. , N A. .i,.., S. -. ss .e,,..., + ....,.....e,'. a- ,,,t.. ,,i..c,....,.;., ; .i. f. s, 4,. y... .. *.;., - ;% ~.. -.', 9, .2..... c ,,,1 4 s.. ,.,z 3- ... :,' Q,.. Y., ,n .~ (,.,..,.~.;.*',- c 4 g . - :y { (: _ a. b. - i, p.: e,..

c..,, M. : :,.,. :. ' y. <.c

!! u ~.

4.. j. %, cy... i....,2. e.:.. 'c.

'.,Y ,.y

• ?g.

a ..e.., . W m,. .r,... _ y. n...,,,.. m9...., <... + f n. e,.3.

4. n., q.,,9. s.+ e

.n. y. _.,,.. g......., n..,g..y..~. /e s.. ': i v .&w ',w;. W., g-w3 y;. =Q[,,~.; 3,... p _. '.: '... ; ' ?g f......y,c... ". - '% .c . G-,_. :..wi

G.k % \\ d,%Q J.

,:.g

l*\\ ?. ~,&,. g s c;

q i. s. ;,:,my"M.$.

4...,. f.:G: y h'3.._ g..h,

.y.,..2%.9.Q.. v: .m.\\'M a:

t. 3: g. yv:5<.",;f. y..Y ;;.y[o' h.Y. ';

.o.; .c i.C l .... l,;: .? ..t f ;

S_ y,. %. :,%,...c...; 3..

.2.. g;;: rym -? vQ;9, G:f':.'. f.g%s ;c. l:.d : :' E.. : ';s. :! n.:$s' }. ;-

• l.;].%

5

q Q.x i

.lhpg..a.:M.,.. . ' v: x ;.; m @;. W.,.g.:.y]..y g &.;7 c.:. 4.,. ;. gq yy. wu;Q:. Q, q - s ::

n..

y:. j(.;' y..?!p p.f;. f. _ . v.e.. m;'?;. i p ';..n ' @ p*. p.o 2.. .:: :.. e.# .. '. A ) n. : .... i.5. : .% lc t ds ;; .;' qr a = ;;-:[., .:lQg .f.h..F Q =;g..fqM,'M g g; &,l. ?' q;..y4 /;::._:.?: g.f Q Q'L.f

.n qw..N

q:,g,.&: s.4.g.9. % :ygr% a.;vg. :n;:.w" :g,:yp-- m.%s.w q

i s ... p,.D.. :.'>h. m':.Qn..m. m.f;?;g 9. < ;,%> r. W: A c., ./(e.a - :,.. ; 4;gT..@v.:.:g?:

f...y:1.,.y. '.M:u qQ:.y[.':%::Qv.f,,f..,,W 2 %....;;g T m.

c nn m: .a s

.. a 1 1y:

W. M D;+,D %:y;J.V.a.) b (?p g...giv.L..Q. .:.:) ll;. : 9. M u. v.n g,,. w :. a. u . :QQ M WQ c \\, yfd.RWif; ).\\ ', q l;.:.y?.y.V '., *;. 4 v.m . W ;w.~.. m;p.: r ^ . J. ".L. f.l hh;.:c';. ~::n Q h !Y hk. h &.m n k. e,hh a 1.3 n .h.a. n.. .a. pp% 3 4 r.w ~.m+bf?. %v.. e c.m.. m .Ch).M.%.N%&.;MQw. M '.im; :px&.m, ::m..m%.MM_6?:y. u ..y : g, ~.- :n:s. n., vh o,n:. a.nt o m.w.c :.n...~... w:4.gw.mQ.g u e c ; a 1. :

p..w,. o.. p w

7. v.r

. 9. M,sy N.

g,$,e !D l b e@.cg_ap;1g.3 h$Sk i$ j ! um rg gg u. c., r.' E

1. ;e e.

4, . ~ bh ?g$ i - gr, g ei; e e w ( y 3 i$. k ll f ' i .t a ai fy ~ tb ' 9,. \\ eg j 7 g jt. y ,1 se h _', n; k . h '^ g, j.( . A il g g ih,hbhM(gg. pb?Y $..o$e}>t/ft)$g4,;e-lg :u a $ 9 64 Ar + 3 =_ c k 4 g m wr t ; v g z f' f ?\\

l g

A wa mg 3-m $ % ~ f $ u L ; a,R 4 l pa p p e m,h ?,h $ $hgg,y,g k 5 wy ug p i # g

Te_ecommunications O C Steady growth continues at Pacific Telecom, PacitiCorp's teleconununications subsidiary. PTI's primary focus is to provide high-quality local telephone services to rural and suburban markets in the West and Midwest. 'li> day, more people are finding rural areas attractive places to live. However, the higher cost of providing telephone service to these areas is unappealing to many teleconununications providers, For PTI, these areas represent opportunines for busines,. rowth. Through the Teleconununications Act of 1996, all U.S. customers will eventually have the same access to basic telephone services or" universal service" regardless of where they live. Since PTI is a rural service provider, the Teleconununications Act entitles us to receive universal service support in some areas, which otTsets the cost of providing basic products and services in rural locations. PTI's fbcus on rural and suburban markets has produced notable results. In 1996 our internal access lines grew 5.5 percent to approximately 560,000 lines, a growth rate twice the national average.While this growth can be attributed partly to population increases in our service territories, PTI's customers are also demanding multiple lines to meet their growing telephone and computer needs. Customers also want the kinds of advanced telecommunications products that are typically available in urban areas of the country. PTI's primary objective is to ensure the delivery of universal service to rural customers, but when possible, we are also conunitted to making the necessary investments that enable us to meet our customers' advanced conununication needs. lb

Growth through acquisitions is also an important part of Pacific Telecom's strategy. One of the most significant opportunities in 1996 was our successful bid for the Fairbanks Municipal Utility System. Under the terms of the agreement, PTl will acquire 32,000 telephone access lines and 6,800 cellular customers. PTl also has pending acquisitions in Minnesota and Michigan, which will add another 38,000 access lines. Subject to receipt of regulatory approval, these acquisitions are expected to close in mid-1997. Providing quality customer service is crucial to the success of PTI's strategy. PTl actively seeks to otTeradditional products and services in areas that demonstrate significant customer demand and a favorable investment return.We have worked hard to invest the resources necessary to improve service levels of properties we have acquired.We aho provide additional product otTerings within our service territories, including Internet access and Caller ID. PTI's goal is to provide 85 percent of our customers with access to Caller ID by the end of 1997.We currently provide Internet access services to more than 5,600 customers in Alaska, and plan to expand this service to selected markets where demand exists. Other product initiatives include the sale of direct broad-cast satellite services in the Midwest and an Internet-based conference calling product. While PacifiCorp is not the only electric utility to own a teleconununications subsidiary, the combination is somewhat unique.When PTl became a wholly owned subsidiary of PacifiCorp in 1995, we began to explore possible synergies between the two companies that would improve both earnings and customer service.To date, we have not yet fbund any significant opportunities. In the meantime,we continue to fbcus on PTI's core strategy, which continues to make an impor-tant contribution to PacifiCorp's earnings.With its strong capital structure, PTl is well-positioned to pursue acquisitions that fit the company's expansion strategy and enhance shareholder value. i.,

Leacing the Wa There is no single way to achieve success in today's competitive world.The only certainty is that companies who do not seize existing opportunities will be left behind. PacitiCorp is among those leading the way toward a competitive global marketplace, and is moving quickly to establish itself as a national and international company. Our vision is aggressive and bold.We have made significant progress through our Australian acquisitions, expansion into the eastern United States and our joint venture with KN Energy. We conticue to search for opportunities that enable us to meet our customers' total energy needs, but we have not forgotten about the basics that are the ibundation of our success. Although we are one of the lowest-cost electricity providers in the U.S., we do not assume that we will remain so.We constantly test ourselves against the market and search for ways to improve etliciency and cut costs to ensure that we remain a low-cost provider. We also remain focused on improving customer service through new technology, products and services. Competition has brought about many changes to the electric utility industry, and no one can predict the fmal outcome. However, by acting today, we are preparing tbr the tremendous opportunity that exists for us. our customers and our shareholders.13y strategically using our core business strengths to expand into new :o..rkets domestically and internationally, and adding new skills, we will achieve our vision of becoming a dominant player in the global energy industry. m

S+% <wMh6,%q~#Mh?W-n,yys% B MS~nn~MMM$a$dfRMm%r w&gg ?m%Q Mu"Mh%ndSRn a Qq qt %q e yt wm .ag mm gr munog;# mq s yfM ps $p Ma k k h; Mh (; dewn %sg:hkkNk!;pl$k$khY Sftf$bbkfkkbhi?bb?4m%ydam ~ pmwunummmeg w u;mpM&imMw h hikkhh_n$h0! khee$hrw&_kYualh_hk,Ihh_tb6 h $ w _k h b h h h? _h W k ?k h _o s n ~kW$a _k $b _Nkk k k h b h h Va nnn aa -n an n swa m$aamae a w a$ssm a$$s$ R RM348pSM8W kBM $De uunana sunswan nanna,mmymem ~qq jy qw9pa,y upwwpen n a MBEkNNMEM.kkb R MWa$s$nM$ M kb1h b e % x @ w@y n e u w w s m w'p % w t %;[ w'v % :'. w %yd%

• m*T w%a

% 1%w, w tx wk[L W w nNu1 Q W??ot m w@ .. JsE,sN,yr+ffGMRQgg

• fy RlW ngg 4

Q$l9W W Al: Jtyspf4 2 g M.x M A M,D W

• g & &y : y;WD.MMym 3

r ? %c hpp %J 3Ngn Upfedep$ ids;&i

• >A&f @E %yn n+[fp?;$ &Jef %%T vh. %

DN +m t h %y@i b f,;i, i. c U MW )aM g A$ h M Mw % i Mendj D &M.S $ r& ?d N hN $- asu ". W w-n wt p m n _r, hhhh khhkh hlq;f.s n-v n en.g-e Ngu 3:hhfh N,pty[EhhNh Y e 3 s; fe % ijQT(& k h h h$lWlf5 i: p o-P g ya c ' MV - 5 %* hfM3&lgn t, es' s pNmuy e s t l hl$bb khfh$h;b? %kk 3$h hI hk[-[k=- h k6 - kf. - -N kg s, c

Success is not the result of spontaneous combustion; you must set yourself on fire. ._ a=_

Financial Performance Earlier in this report, we expressed our disappointment with our stock price performance, and discussed some of the possible reasons R3r the perRormance. Rather than becoming distracted with issues not completely in our control, we are fi>cusing on the fundamental building blocks oflong-term share price growth. GROWTH is of paranlount iluportance to any colupany's share price STRONG E ARNINGS perti>rmance. Last year our earnings from ongoing operations grew 7 percent, the strongest growth in several years. Going forward, we know we need to meet or beat this perfi>rmance to generate superior returns for shareholders. And while we know our earnings growth rate will fluctuate some from one year to the next, by constantly looking ti3r new sources of value-enhancing revenues and keeping a tight rein on costs, we are confident we can generate the kind oflong-term growth investors demand. COMPETITIVE ENERGY M ARKETs here and abroad provide treniendous opportunities for investments with superior growth potential. To take advantage of these opportunities, we must retain a sufficient amount of our earnings and carefully scrutinize each investment. The days of " guaranteed" returns for utilities and their shareholders are gone, replaced by greater opportunity fi>r superior returns for those who are ready. Onr invesunent strategy at PacifiCorp is built on these realities. PRU D ENT INV ESTM ENT O F C A PITAL R ESOU RCES is what helps PacifiCorp maintain its financial strength and llexibility.While we have leveraged our balance sheet to take advantage of more than S2 billion in domestic and foreign investment opportunities over the last two years,we have maintained our"A" credit rating from our rating agencies.We know,however,that there will be additional earnings growth opportunities that will only be attainable by continuing to improve our cash flow and reducing our debt levels. The formula sounds simple,but it takes hard work.We will stay R>cused on strong earnings growth, prudent investment of capital,and financial flexibility as the keys to better stock price perR3rmance. es, ,,i1 m me n ,m 4 sesi m, e..,.,

Debt / Total Capitalization Percent '96 '95 '94 PacifiCorp Actual 58 60 52 S&P Electric Index N/A 54 49 S&P 500 Index N/A 41,5 44 Dividend Payout Ratio Percent 96 93 w PacifiCorp Actual 67 66* 72 PacifiCorp T get Range 60-65 60-65 S&P Electric Index N/A 76 82 S&P 500 Index N/A 41.5 44

• Includes gain on the sale of Alascom of $37 million, or 5.13 per share.

Capital Spending" Milliom of dolla '9 / '98 '97 PacifiCorp Plan 715 715 705 96 95 94 PacifiCorp Actual 651 579 789

• • Excludes acquisitions Stock Price Performance Percent 96 93 94 PacifiCorp

-3.0 16.6 -5.8 S&P Electric -Index -6.0 23.1 -18.9 S&P 500-Index 20.3 34.1 -i.5 N/A-Not Available rs< ire,o., u ..sst si a,,m

.- - ~ - _ --- - - _ =- - -.- -. - - -. -.- - - - - - _ ~ _ ~ _ - - M AN AUlMt N r's ntsc UshloN ANo AN At t sis - E A lt N.I N G S ' O V E R V l E W f ank.m a aott.. ,ri rer *her s'*'i+=< ion i 9'4 i "5 t4r4 i Earning contribution on conunon stock - Domestic Electric Operatiom. 3 41.5 276.4 5 339.8 - = Aucahan Electric Operatiom 30.1 .7 ' Teleconanunicatiam 74,7 103.0-70.5 Other Operatium 28.H 86.2 1H 0 475.1 4M3_ 428.3 Earnitip per connnon share 1.62 5 1.64 1.51-PacifiCorp and its subsidiatin (the " Company") increawd earning on .Amtralian Electric Operations contributed earninp of $30 milhon, conunon uock i1% or 5.11 per share, compared to 1995,after deduct-before allocation of corporate interest costt in July 1996, cmtomers in ing from 1995 rnuhs a gain of $37 milhon (5.13 per share) relating to the State of Victoria who uw 750 or more megawatt hours per year - the ute of the Company \\ Alaskan long-distance operationt Each of became "contesta' ale," meaning they could choose 'their supphet. the Companyi nujor bminewn contributed to the earninp increaw: Powercor, the Company's nurketing and distributing entity in - Domestic Electric Operatiom Amtralian Electric Operatiom and 4tralia, has estabbshed itwlf as a leader in the contntable market. Telecommunicationt The Company achieved ihne posit ve rnuin and currently servn 46% of Victorin contntable cmtomert New ..while continuing to prepare melf to become a dominant player in an South Waln' contestable market opened in October 1996, Powercur increasingly global energy marketplace. Domestically, this preparation was the fint company outside the state to receive a retaillicense to wll included fmding new ways. to manage cosn, improve customer service power in that market, and currently serves 5% of New South Wales' and expand the Company's presence in eastern US markett Powercor contntable customen,The Company expanded its Austrahan btmness - Australia Ltd. ("Powercor"), the Companyi first major internatmnal in 1996 with the acquisition of a 19.9% interest in the flarelwood ' endeavor, exceeded expectatiom during its tirst fidl year of operations Power Partnenhip ("ilareiwood"), Hare! wood's 1,6no ' megawatt as a 1 acitiCorp company.The Company's teleconunanicatiom busi. ("MW") coal-fired generating station and coal mine providn the ness continues to focm on in successful strategy of gmwth through Company with an opportunity to employ in mining skilk ir. > new. e acquisitium of rural telephone exchange operationt deregulated nurketplace. Domenic Electric Operatiom' contribution to earninp on common Telecommunicatiom continued its steady gmwth in the tmal and stock increawd $33 milhon, or 11% after addmg back to 1995 carn-suburban telecommunications nurket, increasing in contribution to ' inp $32 nullion resulting from a tax settlement-with the Internal earninp by $2 milnon, after deducting fmm 1995 results a gain of llevenue Service (the " tax setdement") for the yean 19M3-1988.This $37 million relating to the ute of Alascom, Inc. ("Alascom") and tax setdement was otFset in Other Operatiom' discussed below.The - adjusting for minority interest.This improvement was the direct result - higher earning were a result of several facion: an lnereawd focm on of local exchange operatiom acquired in 1995, taken togethn with . the wholnale powrr marketplace, where the Company neabhshed growth in existing operationtTelecommunicatiom expecu this growth . inelf as a leadmg bulk power trader in the West; price increases in - to continue due to customer access line growth within existing wrvice Oregon and Wyoming; and increawd demand for electricity from all-areas and acquisitiom outside of those areat i cmtomer sepnentt Purchawd power played a more pmminent role as Other Operations' carning contributiom totaled $29 million in increased demand in the wholeute and retail marken drove the need 1996 compared to $54 million in 1995, after deductmg from 1995 . to acquire power from external murret _ . rnuhs the $32 million tax settlement referred to above. The - 1996 resula were impacted by internt expense awociated with the invounent in Powercor and cost awociated with new. unregulated energy bminenet ? k k () khl k lI k k 5 @ N fl ANNU4L R f P ts k I ~

DOMESTIC ~ I: 1. 0 C T R I C O P O IL A T I O N S RrVtNUL% i N1 k O Y 'i AI L $

MJbim d A,1% "

Prm iws- ~ m4 - nth,% m n 3,5 p.% m4 i llesidential 5 i 785.6 $ -- 721.9 $ - 72419 llesidential 12,819 12.030 12,127

Wholnale' 738.8 520.0

532.7 Wholesale 29,665 16,376 15,625

~ Industrial 705.0 697l6 726.3 Indmtrial ~20.332 19.748 20,306 l [ Commercial: (22.4 575.9 579.4 Commercial 11,497 10,797 10,645 Other 1090 1m7 93.5 Other 640 592 623 - $ 2.%O 8 $ 2,616.1 $ 2,647.H 74.9;3 59.543 59,326 i R t v r Nur s-Indmtrial revenues grew at a slower pace thsn residential and Domntic Electric Operations' revenon rme 13% during 1996, driven ninunercial rnrnun durmg 1996, increasing 1%. llevenoes from . primarily by an 81% increase in kilowatt boun ("LWh") sold in the irrigation cmtomen increawd $7 milhon due to drier weather wholnale market. compared to 1995. While sales to oil and gas cmtomert dechned Wholesale rnrnon increawd to a record $739 million in 19% $10 nulhon due to pernunent well dosurn, volumes increasni overall ptimarily due to an increased focm in this 3rry competitive market. as a rnult of higher volumn sold to new nonagricultural cmtomers at Dnpite the 81% increaw in u holnale LWh sokt. the Company saw competitive prices. only a 42% increase in' revenun due to the impact of competition on in 1995, revenun declined in all areas except conunertial and other market _ pricet Average rnrnne per kWh dechned from 5.0318 to ules when compared to 1994. In general, retail revenues decrea ed due $.0249 as a rnuh. to the $15 nullion etTect of the December 1994 sale of the sandpoint. - l(nidential and conuncreial.rvenon grew a combined 8% in 1996 Idaho dntnbution facilities.md warmer wmter weather, Hownrr,both I as a rnuh of both increawd prica and vohnnes. Price increaws of rnidential and commercial revenun increawd due to a 2% increaw in appmximately 4% were approved in both the Oregon and W3uming the number of cmtomen, Industrial uuge declined $29 milhon pri. cmtomer jurishetions in July 1996. Thne price increases should marily due to a $21 million decreaw in sales to oil and gas customen contribute approsimately $37 million of additional revenue annually. in Wyoming as a rnult of permanent wrli clomres and a $15 million In, the last half of 1996. these increases contributed an additional decreaw in sales to irrigation cmtomers due to incre.ned rainfall and $16 niillion of revenue. Weather conditiom that increased energy mild temperatures in 1995. - requirements,2% rnidential and 3% conunercial customer growth and Wholesale revenues dechned $13 million while LWh volume increased cmtomer mage led to an. additional 1.5 billion LWh of increased 5% A $22 million increase in revenue fmm new long-term rnidential and commercial energy ules and contributed $36 million. contracts partially otTset decreases in spot market and short-term con- - $29 million and $21 milhon of rnroue, respectively. tract prices totahng $34 milhon. On February 12,1997i the Diviuon of Public Unhties and Committee of Consumer Service in Utah fded a joint petition with NUMBER OF RLMM CU$TOMER5 - the Utah Public Service Conunisuon (the "PSC") requnting i hmm.a.i m,-mi i+ n imes m4 - the Conuninion to commence proceedings to ntablish new rato for Itnidential 1,194 1,176 1,155 Utah customers. T he petitionen requested an immediate hearmg on a C -M 167 162 159 $12 milhon mterim rate reduction and a subsequent general rate caw, ,g g g 39 which the petitionen. allege could resuh in rain being reduced as g 4_ 3_ 4 much ai$54 million, On March 4,1997 the Utah 1.cgidature passed 1,385 .1,361 1,337 a bill which creatn a legislauve task !bree to study stranded cost issues and the timing ofcmtomer choice.The bill freezes rato atJanuary 31, O P E R A11N G EXPFNSE$ 1997 inch until 60 days following the concimion of the 1998 legis- - Many of the C,ompany,s etTorts to control operating cmts proved -- -lau.ve general wwion.The PSC n. precluded from holdmg any hearines - .on rate changes during the freeze period.The Company has conunit-etTertive in 1996, keeping the growth in fuel, operatiom and mainte-nance and other cosn well below the growth in revenuet However, ted to reduce prices to Utah cmtomen by $12 million annually on appnwinutely May 1,1997. purchased power costs increased $231 milhon since the C.ompany met ggg g g, g additional power in the market. Additional power was aho purchased from the 11ermiston Plant which began operation in July 1996 (see investing Activities), r4 u v i c o n e 3 im A e, ~ u s t nicont

U Ph n ATING.F X P r N $ f % gmm ed sJlm 2 1+m 1Ws tw4 Fuel' 443.0 431.6 5 483 0 Putthawd power 586.9 356.4 356.7 - Other operatiom and maintenance-445.0 442.4 437.7 - Depreciation and amortization 343.4 320.4 301.6 Other 272.7 '264.4 249.5 5 2.091.0 $ 1.H15.2 $ 1,828 5 Operating Expemes as a Percent of Revenue 71% 69% (E ll-l P U R C D A % f. D'. P O W t k OTnER INCO M r A N D E X P E N 51 Interest eXpenw declined $8 tuilhon, or 2%, to $304 milhon in 1996 Rhim r4 MWh th IM 1W l'.xcludmg $28 milhon of interest cost a%ocuted with the tan $ctlle- - Short-terin or spot matket 16.9 5.0 3.3 ment m 1995, interest expeme increawd $20 nulhon, or 74%., due to Long-term contracts 8.5 6.0 5.9 W debt leveh during 1996.The settlement had no effect on con-sohdated net income, ahhough it had the etrect of reducing 1)omestic Short-term tirm and spot market purchases.m 1996 were more Electrv Operau.om earnings by $32 million and increning Other than three times the 1995 level. These purchases averaged $13 per Operatiom' eJrnings by $32 million in 1995. Other expetwes mereced megawzt hour ("MWh") in 1996 compared to $10 per MWh in $1H nullion m 1996 a a result of lower levek of capitahred intere t, 1995,increawd volumes purchmed under new long-term tirm powrr reduced auct sale gains and increbed pmduct and businew develop-contratts, net of expiring contracts, added $29 mdhon to purchawd ment expeme, . power costs in 1996. ~ As a result of these additional costs and other facton, net power costs CO M PE TITIO N AND it E G U L A T I O N (the net cost to serve the C,ompany,a retail cmtomers on a MWh bais, 1)omotie lilectric Operanom continun to operate as a regulated mmuted as the som of thel, purchased power and wheelmg expense, monopoly within in seven-sute franchise service territorin, with tel-less wholoale power and wheeling rnenun) were $7.20 per MWh anvely low cost and etT:cient power muren.C,ompetinon in these area - m 1996 compared to $6.83 per MWh in 1993, a 5% increase. u_ven vanes m to*m and intemity, but is expected to increne over time, prm-the Company,s comnu.tment to take all of the output of the Herm.iston cipally as a re uh of m. dastry deregulation and consequent increan m. Plant, net power cost n expected to increde in 1997 '1.he Company adverthing and marketing by ahernative energy suppliert large indm-continually evaluates the cmt of ahernative sources of power and. tnal cusmmen are acnvely seeking choice of supphers, and have attempts to minimize its cost to meet the demands of comumers optiom to budd their own generation or cogeneration,or to me aher-by balancing its utilization of hydm and thermal generation _ with native energy muren, such as natural gas. Other comumen ako, in pun-haed power, many caws, have the option to swach energy souten tot heating and - Depreciation 'and amortization-expeme increased 7%. 1996 m air condinoning, and to comider alternattyes such M municipalitation. primarily due to a $410 milhon increce in average depreciable plant, The U.S. power indmtry n undergoing a dramatic tramfWmation, meluded the Henn4 on Plant and a new customer service system Thn. t vu deregulation and restructuring, that wdl substannally increaw

which were placed in service in 1996 and added $6 nulhon of.depre-compeution.11evelopments m tlm transformation have been largely-E ciation during the year.

dependent on state legislative and regulatory initiativn and-vary in 1995.the C,ompany's fuel cost decreased 11%, compared to 1994 comiderably from state to state. Industry rntructuring bilk range from - primarily due to the me of lowrr cost hydroelectric power genera-those which require cudy of direct retail access to those which woukt tion and lower cost purcheed power..~I.otal purchued power rnuk in implementation of direct access for retail emtomers. cmts remained flat, as higher firm contract volumes were otTwt by a - The Company expects any legn. iation pased to specifically pmvide a $27 million decreme roulting f. rom lower spor market prices. reasonable opportunity to reemer costs which have been placed at risk due to the introduction of competition. Legidation has been enacted in Cahfornia, AlllH90, which requirn direct access for a portion of-the state's retail customers by January 1,1998: Cahtbrnia provido approxinutely 3% of the Company's retail revenues. , 5 c i e t e-o a e 3 % assoit aeron1

Competition.has already tramformed the electric utdity industry Tranuniwson Awociation. The Company has an internt of apprmi- ' at the wholnale. level. In 1996i the Federal Energy Regulatory mately 2tr4 in the Station. A settlement confereme has beer. scheduled Commiwion ("FERC") ordered all investo owned utihtin to allow for March 1997, ~ others acccu to their tramminion systems for wholesale power sales. As Actions under the Endang red Species Act with respect to certain a rnuit ofincreased competition and excen capacity, wholnale prices sahnon and other endangered or threatened species could resuh in have dropped significantly over the p.ot two yeart rntrictium on the Federal hydropower system and atreet regional power To meet thne competitive challengn,Domntic Electric Operatiom supphn and tmttThne actions could aho result in further restrictions y participating in rntructuring pmceun that will determine the shape on timber hanrsting and advenely atfeet electricity sales to Domntic of future markets, anlis pursumg strategies that capitahie on its cone Electric Operatiom'cmtomers in the wuod products industry. . petitive pmition, includmg the development and delivery of innova-Domntic Electric Operatiom is currently in the pmcess of relicenw tive products and serviret Domntic Electric Operatiom continues - mg (ertain ofits hydmelectric projects under the Federal Power Act Ldevelop its competitive strategy as legislation, regulation and nwks and wdl be seeking licemn for other projects in the future. The .opportunitin nulve. The Company is advocating federal legulatiot hcemn of 12 of Domntic Electric Operatiom* hydroelectric pmjects I that wvuhl rnluire states to give all comumers choice in their energy expire withm the next 10 years.Thne pmjects repesent 664 MW, or pmvider byJanuary 1,2001.The Company believes that federal legio 62%,of Domntic Electric Operation / hydroelectric generating capac-lation is necessary to addren barriers to entry and inues ofjurisdiction, ity,or H% of total generaung capacity. In the new licemes, the FERC . to preserve d e proper role for the states in implementing cmtomer h expected to impose conditiom designed to address the impact of the 3 choice and to bring benefits to comumers as quicUy as pouihte, projects on fnh.md other envimnmental concerm. Domntic Electric Operatiom h unable to predict the impact ofimpmition ofsuch con, ditiom, but capital expenditurn and operating costs are expected to . E NVIKO N M E N1 A L 1ssUf5 The Comp,my's generating plants burn' low-sulfur coalf Major increase in future periods and certain pmjects may not be econom' al comtruction expenditnrn have already been made at many plants to to operate. reduce sulfur dimide ("SO,") eminiom, but addnional expenditures Several Supertbnd sites have been identified where Domnne -are expected to be required at the Centraba Plant in Washington Electri: Operatiom has been or may be designated as a potentially . in _which the Company has a 47.5% ownership internt. Studies are respomible party in such casn, Domestic Electne Operations reviews underway to evaluate the ' Centraha Plant and determine a cost-the circumstanen and. where possible, negotiates with other poten- . effective manner of bringing emiwiom into comphance w:ith tially responsible partin to provide funds for clean-up and,if necessary, . timitatiom. ordered by the environmental authoritin in the state of. monitoring ac;ivuies. In addaion, imurance roource are reviewed Washington. It may not be ponible to reach an economically viable and imetigatedL solution. The Company has aho been engaged in dncuuiom with All of the Company's mining operations are subject to reclamaticn ' the environmental. authorities in.Wyonung with rnpect to alleged and closure requirements.The Company momtors these requiremenn - violatiom'of the opacity and 50, standank ar 'icable to the Jim and periodically revi n its cost ntiinatn to meet exnting legal and liridger Plant. Resolution of thne alleged violatit not expected to regtdatory requirements of the variousjurisdictiom in which it oper-require significant additional capital expendnutes ates. Comphance with these requirements could roult in higher 'in addnion, the Company and the otherjoim vners of the Craig expenditures for both capital improvements and operating custo 5 Generating Station (" Station") in Colorado are arties to a lawsuit future cmts awoetated with the dnpmition of thne matters brought by the Sierra CLb alleging violatiom e ie Federal Clean Air - are not expected to be material m the Company's comolidated fman. Act at the Station, which is operated by the1 state Generation and cial statements e 4 t i t n e o tt P _ 27 tvs* iksU4 L' Rtronr

o LA U S T R A l;l A N.E ILF C T it l C O p r it A T I O N S. I + u-e, aa., n, n u.-. ~,eu c,,m i llnidential ; 239,4 ' $ 2,60N 9.2 ~ Industrial 179.3 3,282 5.5 Commercial - '165.5 1,926 8.6 ' Other 74.6 494 i 5 6M $ ' H,310 5 1 j FOW RCOh The operatiom of the Coinpanyi tirst uguificant internanonal venture, Pmvercori operaung expemn aggregated $531 mil! ion in 1996, 1 Powercor, enceded managementi expectanom for 1996, its tint ndl with purchased power wsts of $305 million representing 57% of oper-year ufoperations as a PacifiCorp company. Powercor contnbuted earn-ating expemes. See Note 16 to the Comohdated Financial StatementC { ~ inp of $33 million, benne alhwation of wrporate internt cmtt Powercori operating expemes totaled M1% ofin rnynne compared to Allocation ofinternt expeme on U1 bornminp auociated with the Domntic Electne Operatiom where operatmg expemes totaled 71% December 1995 actlukition of Powercor would have reduced ' ofin revenue in 1996. As Pourtcori operatiom do not include power Powercori carnings contribution by approximately $28 milhon in 19% generation, this relatiomhip is comistent wnh managementi expecta-hm ercor, bued in Melbourne, Amtraha, was acquired in December tiom and b expected to continne into the near future. 1995 after the Victorian staie govermuent decided to dhaggregate Although Powercor was nicccuful in 1996, its abihty to continue

and sell parts of the starbowned electricity industry. Accordingly, the to meet or exceed the Company's expectations h not without rhks.

State Electricity Conuniwinn separated the eternicity indmtry into Powercor buys all of the electricity it selk and can, therefore, be - three components generation, tranunission and datrilmtion. Five unpacted by fluctuating energy prices /fo minimize thn rhk, Powercor companin were-fonned to manage the network of poles and wire has ntabbshed a risk management system to manage in pool price that deliver power to emtomen. Powercor is one of thme expeme. L:e Notn 1,7 and 8 to the Comohdated Financial State-tempanin,^respomible ihr the largest network system and geo-mentt The Companyi investment in lluchvood h strategically graphical area in tiie state. important became, among other things,it providn a nrural hedge to 4 in addition to being a dntributor, Pourrcor is also a retader of elec-a portion ofINwvercor's exposure to fluctuating energy pricet tricity with about 547,M cmtomen-the majonty of which are hicated in its network area. Under Vicmrian state government retbrms, u Aztt woon Powercor is able to sell electricity to large cmtomen outside in As dhemsed under invnting Activines,the Company acquired a 19% network area: On July L 1996, appnnimately 2#10 cmtomen ming internt (the maximum allowable under current law) in Ilueluvod in - 750 or mme MWh per year of power became " contestable," meaning September 1996 with a comortium including subsidiaries of National they could choose their electricity provider. Powercor has emerged as Power Corporanon Pl.C, Destec Energy and Commonwealth llank N the leider in the new inarket, not only obtaining new customen but Group of Amtraha.The coal-tired generating station and the awoci-aho retaining most ofin existing cmtomer base. Powercor now holds ated coal mine are located in-the coal-rich t.atrobe %!!ey, about g the largest share of cmtomen in thh market. New cmtomers include ou miles e.ot of Melbourne, Austraha, where several other large, coal-two of-Amtraliai larger banks, Australiai second-largnt retailer and fired power statiom are locatet' The plant is fueled by brown coal from severallarge industrialt ' the mine that contaim approxi.mately 450 milhon tom of reserves,- enough fuel to operate the station (br at least 40 yearo r o w t igc o a o e r n A r i N a atsutTs Among the partnen in if arelwood there are comiderable skilk in Powercor achieved total revenun of $659 milhon in 19% iligher than managing and operanng coabtired plants. National Pmver, which owm expected revenues were achieved primarily through retaining custo-519W of ilnehvood, ovenees plant operatiom and the Company men in it network area and through obcaming additional contntaNe ovences the operanon of the adjacent coal imne. Smce the Company cutomen Thne additional cmtomen provided $40 nulhon of revenue b one of the large t coal producen m the UA, management beheves in 1996 and are expected to add approximately $130 million to rev-will be significant opportunities to share best practices between p enues in 1997,albot at lower margim than the noncontestable market. - m mining operationt As of December 31,1996 Powercor held about 46% of the State of .Wctoria's contestable market and 5% of the market m neighboring ' New South i%1m -cat t,<uar 3 im as,,uat ateoer -m .. ~ -

y i 5~ I. i e d H A Zi t WO(s tn ' O P i R A T IN G KE ULTh liareluuod sells its power through a statewide generanon pool and Powercor, hLe each of the other four Dlh in the State of Victoria, enters into hedging artatigements with Au trahan dntnbution com- . has been granted an exchnive liceme to sell electricity to franchne panies. mch at Powercor. Energy ptices vary with weather, economic customen whme facihties are in in distribution area and a non-gnnvth and other facton atrect;ng the supply of and denund for excimhr state-wide hceme to sell to contntable cmminen All custo-power, Powcr prices are lownt during Amtratin sminner months (the men with loads in excns of 750 MWh per year are now contntable fourth and tint calendar quarten). and other cmtomen wdl become contestable over the next four yean L Since its. acquiWion in' September 19% the Companyi share of - depending on their energy denund level, with substantially all renden-Ilarelwood's net km totaled $3 milhon, includmg approxinutely tial customen renuining franchise cmtomen until 2001. If a Powercor $2 milhon of interest.mociated with the tramaction. As demand is cmtomer chooses a ditrerent retailer, Powercor will contmne to receive lowest during Amtralin summer months (the winter months in the network revenue associated with the cmtomer. I US), the Conipany does not expect to see its share ofloues accumu-Repubtion of theVictorian electricity industry n the respomibdity late at the rate they did unce its acquhition in Septeinber 19% of the Otlice of the Regubtor General (the "ORG"), an independent. Moreover, the Company expects to see liarelwood's operating results regubtory body 'Ihe structure of prices with the Victorian electricity improve as-the Company's expertise leads to more etTicient mining industry redern the estabikhment of maximum uniform taritTs that operations and as the pown plant becomes a more etlicient generator. apply to noncontestable customen and some contntable cmtomen. Nonetheless, as these changes will take time, the Company expects . Under applicable regubtions, Powercor is reqmred to supply 'llazelwuod to be dighdy dilutive to 1997 carningt electricity to noncontestable cmtomen at prico that are no greater than the prices speciGed under the apphcable tarifftThe prices speci-co urt T s Tion fied ;n the tantTs are all mclusive prices, mclushng grid charges and Powercor h the largest of the five dktnbution bmmoses ("Dlh") energy cosa. In general, annual movements in the tantu for noncon-L fornied w: hen the Victorian state government decided to privatiie, and - testable cmtomers are based on the Consunier Price Index, a measure ewntually deregtdate,its electricity industry. As the Vittorian market of price iatlation. becomes more open to competition and cmtomen can increasingly Network tantTs include recovery of dntribution me of system costs, choose their energy mpplier, Powercor and the other Dlh will con-use of transmisuon 3ystem fee and connection charget Network tinue to-maintain a monopoly on their individual netwurk areatThese taritR are intended to cover the cost of providmg. operating or businnses derive much of their revenue from the network fee that is maintaining the diuribution network, except to the extent relevant ' paid for the me of the dhtribution system. costs are recoveraNe through connection charges or other excluded As - mentioned labove, Hazelwood operates in an.. area where services, and the charges levied for connection to and me of the trans- . sewral large, coaldired generating facihties are located. It will con-mhuon systemt tinue _to compete-agaimt these pbuts, as well as ochen outside the The 6rst major review of the regulatory arrangements and respective geographic area. trammission and distnbution netuurk charges will be carn-d out by - the ORG, with any changn to apply fromjanuary 1.2001. Any subse-a e d u t rr i o N quent price control arrangements are reymred to apply thr not Ins than Except Ihr power generation and certam contestable accounts, the hve yean. LAustrahan power industry continues to be a regubted businew, albeit a The Company docs not expect regulanon to advenely impact its structure that h rapidly changing toward cmtomer choice. existing operanom in Austraha. entiricone si ,m rsseat nieoni

~ - ~_- - - - - - - _. ~. - - -. - ~ ~. -.. - _. - -.. - - - - - - - .T E L 0 C O M M U N I C A T I O N S - _RtVRNut5 tXPtNus )' Mdin d 4&W In i+M iwa Mm.m of 4&n le in m c _ Network acens service $ 259.1-$ 223.7 $ 168.5 - Operatiom 81.5 5 7d $ 66;7. 11.ocal network service 140.9 120.5 - 96M' Maintenance 91.2 - 86:0 - 74.4

Cellular 44.0 33.9 23.6 Other operations expeme 83.2 68,2 61.7 Other

_ 77.1 - 68N 64.0 Depreciation and amoruration 106.5 86,2 66.2 . Alascom 193.1 343.5 Alascom _ l156.2 = 262,8 521.1 $ 640.1 $ 6%5 $ : 362.4 $ 474A $ 531 8 a i }; 9 O OY r RVIE W O PI R AllN G r x PE N%f s _ Pacific Telecom, Inc. ("PTl") contributed earninp of $75 milhon in PTfs expeuses decreawd 24% from $475 milhon in 1995 to $362 mil-p 19% c$nnpared to earmnp of $103 milhon in 1995.The results ihr lion in 1996. As wah n *nues, the decrease resuhed primarily frmn .1995 included a gain of $37 milhon relating to the ule ofAlascom. In the ule of Alascom, which incurred $156 million of expemes prior addition,the Company acquired the 13% publicly held minority inter-to its ute in 1995.Thh decrene was othet by additional expemn of ji - est in PTl in September 1995. After adjusting for the Alascom gain $24 milhon stemming fmm operating the LEC propertin acquired u - i and normalizing (br the minorny interest acquired, PTI's_ earnings 1995 for a full year in 1996 and aho by 4Jditional expemes needed to contributiom in 1995 would have been $73 million. See Note 14 to support the internal accns bne and cellular growth. , the Comohdated Financial Statement. Earnings from local exchange - Exchiding the $107 milhon impxt of the Alastom sale, operating. ] i ol eratiom ("LEC") acquired in 1995, internal customer accen hne expemes increawd approximately $50 milhon in 1995 compared to growth of 5%, growth in cellular operations and cable capacity sales 1994 due.to acquhitions and internal growth, Costs awociated with othet the $19 milhon earninp contribunon awociated with Alascom operations acquired in 1995 (operating cmts nuintenance and depre-i- operatiom included in the 1995 resuhs of $73 milhon, cianon) generated additional expemes of approxinutely $38 million in l 1995. At the same time, cellular growth and other internal growth increased operating expeme by approNimately $12 millione -KLVLNUEs Revenues decreased 19% from $640 mdhon in 1995 to $521 million iii 1996.The -decrease was the resuk of the ule of Alascom, which C O M P L T 11 IO N Laccounted for $193 milhon of rnrnue in 1995 prior to its sale, other On February 8, 1996, President Clinton signed into law the L

by revenue growth from LEC awets acquired, LEC accen lines,cellu-Telecommunicatiom Act of 1996 (the"1996 Act").The 1996 Act has a

• l lar operations and cable capacity sales. Local network service and net-general gml of promoting the development of competit ve service in-work accns service rnenues increased $20 million and $35 million, all telecommunicatiom markets over _ time, including local exchange anpectively,in 1996 primarily as a resuk of LEC awets acquired,which services. The inues addreued by the 1996 Act are those atrecting l

. contributed revenon of110 milhon, and a 5% increaw in the number - removal of barriers to enny thr variom geographic and wrvices mar-of cmtomer accew hnes. Cellular rnenues increased $10 million in kets univenal service standanh and mechanisms chgibihty (br 1996 primarily as a result of a 37% increaw in the number of cellular and access to univerul service support tbndmg, interconnection - customert PTl expero local _ netwmk service revenues to increase in and unbundimg of teleconnuunicatiom networks, large carner entry 1997 as a result of continued internal growth and pending acqukitiom into intentate interexchange communications markets and _ infra-J(see Planned Expamimn.' structure sharing. Revenues in-1995 were below 1994 leveh primardy due to a The 1996 Act, which applies generally to PTI, ako contaim provi-l $150 million decrease in rnynue awociated with the operatiom of siom with specific iniportance m PTit operatiom. Definitional I Alascom prior to its ule.This decrea e was othet by $63 million of provisiom of the 1996 Act clawify PTl as a " rural telephone company" growth from acquisitiom, $10 milhon of growth from an increase in for certain purpmes of the 1996 Act,-Various of the ~ inter-cellular cmtomen and $21 milhon from increases m interiul acceu connecuan and. unbundhng requirements applicable generally to. ~ ~ j hnes, enhanced services, revned 'LEC revenue e timates mereawd incumbent I.hCs are subject to exemption provisiom available to rural Universal Service Fund ("USF") suppmt, and other 6ctors, telephone companies or to waiver provniom ihr LECs with less ' than 2% of the total nanonwide accns lines-which quahtication PTI l aho meett. s-4 I4% l Eh( (I N @ ! 944 '.4 NN L: 4 1 R 1 P ti R I

TELECOMMUNICATlONS OTHLit O P E ll A T I O N S - C t) 5 T O M t R : A r C I s % TINES t A A NINO$ C O N T A l is U T I O N Tbwd at wmf two.*J Pro 1w. Ws tW4- %hm, d dJm t w, Iws 1W4 i _; Lines; 660 - 559 .530 418 PFS 34.1 $. 30A $ 3.0 PGC 7.H 5.6 H.5 Tax settlement 32.2 Holdinp and other (13.1) 18.0 6.5 28.8 $ 86.2 $ 18 0 UTHER O Pi k Allo N s ' The 1996 Act authorized the estabbshment of a universal service Other Operations includes two main ousinnses and several start-up-

fond to provide support for chgible teleconununicatiom carrien, for phase energy venturu as well as the activities of Paci6 Corp Holdinp, which designation PTl believo it will quahfy in the future, PTI's man--

Inc. ("Holdinp"). PacifiCorp Financial Services ("PFS") has tax- . agement believn thne and other provhiom will prove comistent with advantaged investments in a6'ordable homing and leasing operations PTli current and planned operations. PTl recognized USF rntnun of that comist principally of aircraft leases. Paci6c Generation Company $55 million in 1996 and anticipates recognition'of approximately that ("PGC") has ownenhip interesn in numerom independent power amount in 1997-producnon and cogeneration businesset Holdinp also has ownenhip With respect to a number of matters, the 1996 Act permin or internts in several start-up-phase energy ventures. . requires further 'proceedinp by the Federal Communicatiom Conuniuion (the "FCC") or state repd.itory commissions, or both, n t. s u t T s o r o e r R 4 T i o N s Following the etrective date of the 1996 Act, the fCC initiated more . The earning contribution from Other Operatiom decreased from than one hundred separate dmken to addros uriom aspero of the 1995 to 1996 primarily as a result of the 1995 tax settlement which 1996 Act's implementation. A Federal-State joint lloard was aho con-had the etreet of reducing Domestic Electric Operations earnings by vened o examine and to make recommendations concerning iuues $32 milhon and increasing Other Operatiom' earning by $32 milhon pertaining to future universal service de6nitiom and the estabhshment in 1995. of mechannms for support timdmg. Independendy, a number of state The earninp of PFS and PGC increased in 1996,but were otTset by repdatory coninmsions overseeing PTl's LECs commenced proceed. Holdinp and other expense increases. inp relanng to both the IW6 Act and speci6c state statutory initiatives The $31 million decrease in earning of Holdinp and other in 1996 and requirements. PTl has actnvly parucipated in all major proceed-was attributable to approximately $14 million of increased internt ing that a e hkely to have an impact upon in hirure operatiom and - expeme, as well as expemes incurred by several start-up-phase invest-nnancial performance Additionally, PTI has helped to organize or has ments in which investmenn in penannel and other resources are bemg. participated.or both,in indmtry organizatiom in an etTott to commu-made, otlict by the tax benefits thereof.The increased interest expense nicate its views eflictively on _thne various suuet was attributable in part to Hoklinp' mvestment in Powercor. PTl bblinrs that the 1996 Act, and the regulatory proceedmp Other Operatiom' earninp contribution increased from $18 million l deriving therefrom, connnue to prove consistent with in long-term in 1994 to $86 million in 1995 as a rnuh of the impact of the $32 mi'.- strategic plan. II.ned in part upon the rural nature of PTI's operatiom hon tax settlement in 1995 and approximately $19 milhon ofimpair-and the recognition currently bemg accorded to rural serving require-ment charges taken by PFS in 1994, as well as certain other facton. ments in the 1996 Act and derivative regulatory proceedinp the Company does not believe that the 1996 Act and m associated regula-tory interpretations will have a material adverse impact on the . Conypany's comolidated fmancial statemenn.- rA( t r i t-onr 31 191A A Pe NU& 4~ R E POh I

L I Q U l_D I T Y AND C A P I.T.A L R E S O U R C il s C Allt FLOW 5 MaluEm JMM tM Iw$ nu Operatmg actwities - l Domestic Electric Operatiom 718 -709 747 Australian Electric Operations 95 10 - Telecoimnunications - '197-152 141 Other Operatiom 67 50 74 Cash provided by sperating activities - 1,077-912 962 investing activities --- ' (903) (2,333) (340) Imanang activities (178) 1,420 (630) Change in cash during the year ' (4) (1 -(8) Cash dividends paid: 5 346 1 346-5 345 = OPERATING ACTiVIT1E% Operating cash flows increased by $165 milhon fmm 1995 to 1996 The Company takes all of the energy produced by the Hermhton despite net income remaining flat, powercor's operations contributed Plant under a long-term contract, Such ronunitment is espected to --

595 million of operting cash tiow in its first full year, while increased reduce income from operatiom in 1997 by approximately $15 milhon operating income in 6ther businenes provided $70 million ofincreased as compared to 1996.-

cash flow. Increases in accounts receivable at Domestic Electric Construction spendmg for production, trammission, distribution Operatiom were only partially ofTset by increases in accounts payable. and other purposes at Domestic Electric Operatiom remained rela-These crianges were due to increawd wholesale and retail activity and tively constant, decreaung from 5455 million in 1995 to $442 million - hanges in retail billing pmcewes. in.1996. c Powercor's comtruction expenditures totaled $80 million in 1996. INVf hTINO ACT 4 V1 rir s Capital expenditures for PTl dechned $371 million from 1996 to - While investing activities in 1995 were donunated by the 51.6 bil. 1995 as spendmg returned to recurring leveh.comidering 1995 expen-lion purchase of Powercor, no single tramattion had such a pervasive ditures included $376 million for LEC awets acquired. Construction influence on 1996. itather, imysting activities in 1996 themed on spending remained constant at $122 million, continued capital spending to imprave and expand existing opera-Capital expemhtures in Other Operations declined by $119 'million tiom and a cbuple of smaller but strategically important imystments-primarily due to the Company's 1995 purcluse of the minority meer- -114zelwood and the Hermiston Plant. est in PTI tbr 5131 million. During 1996, the Company continued - The Company expanded its presence in Australia when it invested to imrst in new, energy-related ventures and will continue to do so approxinutely $157 million, including an : associated $12 milhon during 1997. advance, for a 19.9% ' ownership interest in ilazehvood which,in turn, ~ The Company believes that its existing and available capital resources ' purchased a 1,600 megavatt, coal-fired generating station and associ-are sutTicient to meet working capital, dwidend and construction needs ated coal mine in Victoria, Austraba for approximately $1.9 billion. in 1997. ~ ~ The consorthnu financed the acquisition of the Ilazelwood plant and - mine with approximately $858 million in equity contributions from the partners and 51 billion of nonrecourse borrowings at the partner- . ship level I lokhngs (manced its investment with long-term borrowings iMhe U.S. under a five-year credit facility. On July 30,1996, Domestic Electric Operatiom paid $154 million . for a SE ownership interest in the Ilermi ton Plant located near t iermiston,. Oregon. This 474 MW natural gas cogeneration i plant begari commercial operation on July 1,.1996,The payment was initially funded with short-term debt.- = - - . PAL i5ICORP M t446 'A N NUA4 Il 5PUR r

-L IQ UIDiTY L A N D C.A P I T A L. R E S O U R C E S C APIT A L %P E N DINO s %11ium of Mim Iomed iW lym -Iws-m4 Comtruction Domestic Electric Operations'. $.-480 442 455 -638-Australi.n Electric Operatiom' 75 80 - 2 Teleconununications 140 122-122-148 Other Operatiom 10 7 3 705 651 579 789 _ Acquisitions and investments Domestic Electric Operatiom 154 Amtralian Electric Operations 145 1,5H9 Telecommunicatiom 230 5 376 5 Other Operatiom 75 49 175 10 305 353 2,140 15 $ 1,010 $ 1.004 $ 2.719 5 M4 ^ .u -a - PLANNED E K P A N 19 0 N The-Company continuously explores opportunities for growth m PTI has signed defmitive agreements with US WEST Communi-unregulated energy and telecommunicatiom markets. In addition catiom, lac, to purchase local exchange telephone properties in to the idenufied expansion opportunities highlighted below, the Minnesota with 27,100 access lines and with GTE North Incorporated Company will aho seek to increase its presence throughout the wodd. to purchase properties in Michigan with 11.300 access hnes. PTl has llecauw the Company believes that the U.S. will move from the aho signed a defmitive agreement with the City of Fairbanks to acquire existing regulated marketplace to a market driven by cmtomer choice, its telephone and cellular operations that have 32,000 access lines and it will focus on expansion of its unregulated bmincues and other. 6,800 cellular customers. PTl anticipates that the three acquisitiom,if energy-related busincues such as natural gas.The Company believes approved by regulaton, will require $248 million in cash, net of that the experience gained by focusing on the unregulated marketplace approximately $20 milhon of cash to be acquired in the acquisitions. will facihtate the convenion to a market dmen by customer choice. PTl expects to fund these acquisitiom through the inuance of exter-Iloidmgs and Hig Riven Electric Corporation ("Ilig Riven"), a ~ nal debt and internally generated funds. All three acquisitions are ~ generanon and tramminion cooperative based in Hendenon, expected to clme in 1997. Kentucky, signed an agreement during 1996'providing for a subsidiary of Hokimgs to operate and manage liig Riven' power plants under a iN r t A riON - year operating agreement for annual payments of apprmimately Due to the capital-intemive nature of the Company's core bminesses, $30 million.13ig Riven fded for bankruptcy in September 1996, in intlation may have a significant impact on replacement of property, February 1997,the bankn.ptcyjudge opened the Big Riven facilities acquisition and development activities and final mine reclamation to auction, Holding asked the U.S District Court to takejurisdiction costs.To date, management does not believe that intiation has had a over the Big Riven reorganization away from the U.S. Dankruptcy significant impact on any of the Company's other busineues - Court, in addition, llolding fded a motion in bankruptcy court . requesting'that the bankruptcy judge remove himself and the bank- - l ruptcy examiner from the case and impose sanctiom on the examiner. - The examiner responded and requested that sanctions be impmed on l the Company and its cosmiel On March 18,1997, the district court ~ fdeclined to take jurisdiction of the bankruptcy case, ruling that the

' bankruptcy judge must fmt decide the disqualitication and removal

motion.On March 19,1997, the bankruptcy court accepted a bid from

LG&E Energy Corp, for flig Rivers' facilities The outcome of these proceedinp is uncertain, 4

s + 4 4. r i , & c i r i no a t n %.anuuri noar . ~. . -, _ _ _ _ _ ~., _., _ _, _ _. __

LIQ UIDITY A N D 'C A PIT A L R ES O U RC E S EC A PIT At $1 ATlON -- %%. ordonew me, m, im l Long-term debt $ 5,148 47 % $ 4,792 46% - Conunon equity 4.032 37 3,633 35

Short-term debt 937 9

1,227 12

Preferred stock 314-3 531 5

Preferred securities ofTrust 210 2 Quarterly income debt securities 176 2 176 2 _ Total capitali7ation $ 10.817 Imf% $ - 10,359 totr%_ F QUIT Y T R ANS ACTION s .The' Company manages its capitalization and liquidity position in a The Company inued 8.8 milhon shares of common stock to the pub-comolidated manner through pohcies established by senior manage-he in March and April 1996 for net proceeds of $178 million, after - ment. These policies have resulted from a review of historical and - deducting otTermg costi of $6 milhon.The proceeds of such ofTerinp projected practices for bmincues and industries that have firiancial were used to repay short-term debt. and operating characteristics similar to PacifiCorp and its principal During the year, the Company aho issued 2.1 million shares ofits busince operations. common stock under the dividend reimestment and stock purchase The Companyi policies attempt to balance the interests ofits share-plan (the " Plan"), raising $43 million Due to the pubhc sales of shares holders.ratepayers and creditort in addition, given the changes tha, are in March ana April 1996 and issuances under the Plaa, the average occurring within the industry and market segments in which the number ofcommon shares outstanding increased 3%, from 284 million Company operates, thne pohcin must remain sufliciently flexible to shares during 1995 to 292 million shares during 1996. allow the Company to respond to these dnvlopments. In June 1996, a wholly owned subsidiary trust (the " Trust") issued, - On a comohdated basis, the Company attempts to maintain total in a public otTering 8.7 million of its 8%% Cumulat ve Quarterly - i debt at 48% to 54% of capitalization. liowever, as a result of the Income Preferred Securities, Series A,1br net proceeds of $210 million, $1.6 billion acquisition of Powercor in December 1995, debt com,- after deducting inuance costs of approxinutely $7 milhon.The sole prised 60% of total capitahration at December 31, 1995. Through auet of the Trust is $224 milhon of Series C Jcnior Subordmated the common stock otTerings described below, and strong earninp, Deferred Interest Debentures issu-d by the Company to the Trust. See Leommon equity increased $399 million. As a result,the debt to capital. Note 5 to the Consolidated Financial Statements. iration ratio improved to 58% at December 31,1996. In July and August 1996, the Company redeemed preferred stock - The Conipany continually evaluatet the advantages of common - with an aggregate carrying value ofs214 million ihr $222 milhon.The Estock inuances in the context ofits current capital structure, financing present value of the cost savinp as a result of the redemption more needs and market price. Depending on this evaluauon, the Company than jmufted the $8 million premiuni over carrying value. may otter additional shares of common stock to the public in 1997. As described below, the Company aho completed a preferred siock DfHT rRANsACTIONs - refimding d_uring 1996 that significantly lowered the after-tax cost of in January 1996, the Company issued $200 milhon of secured the preferred stock component ofits capitahration.- medium-term notes in the form of First Mortgage and CollateralTrust llonds with interest rates of 6.1% and 6.7% and maturities from 2006 to 2026. Net proceed 3 of $198 milhon were used to repay short-term

debt that had been clauified is long-term debt at December 31,1995.

In September 1996, the. Company established a. $500 million Secured Medium-Term Note Program and a $250 million Unsecured : Medmm-Term Note Program. No iuuances occurred under either program during 1996. In April 1996,llokhngs inued $150 million of 6.75% senior notes due 2001 and $100 million of 7.2% senior notes due 2m)6 for net proceeds of $247 million.The proceeds were used to repay short-term debt incurred in the Powercor acquisition. PAC 1f600RP 34 - 54w4 A NNU4i REPOR r

ILIQ UIDIT Y-A N D C A i> I T A L ' It E S O U R C E S ~ RTVOLVING C R E D I'i AURLtMLNT$ ' V A ll l A n t t R A T r ! ! A u l t ! 'l l t h . MJim of AJim'se,inmed 1m g!lmes n( A.bn Im tws Domestic Electric Operations -- - 7m Domntic tilectric Operatiom $ 1#90 $ 1,240 ^ Austrdian Electric Operations '1,250 Australian Electric Operations 511 896 eTeleconununications-300 Telecomniunications 43 165 11oldmp and other 5m ilolding and other 202 - 542 5 ~ 2.750 5 1.846 $ 2.843 Percentage of total capitahration 17 % 27% .~AV All A D L E C R E DIT F ACILITIE S RlbK MANAOIM1NT At December 31,'1996, PacifiCorp had $700 million of committed The rhk management procns estahshed by the Company is designed -i Jbank revolving credit agreements. Regulatory authorities innited to measure both quantitative and qualitative risks in its businnses. A . PacifiCorp to $1 bilhon ofshort-term debt,of which $675 million was senior risk management conunittee has been established to review ~ outstandmg at December 31,1996 At December 31,1996, mbsids the e risks on a regular basis.The principal quantitative risks that are arin of PacifiCorp had $2.1 billion of committed bank revohing measured are the risks and mlatility of cash flows for the Company's credit agreements.The Company had $1.2 billion tf short-term debt energf tradmg activities. Similar procoses for interest rate risk and . clauified as long-term debt at DecemLa 31,1996,as it had the intent foreign currency exchange risk will be establi hed in 1997, and ability to support short-term borrowings through the variom As part of the Company's overall approach to thk management,the - revolving credit facilities on a long-term basis. See Notes 3 and 4 to Company utihres derivative instrumenttThe me of such imtruments -the Comohdated Financial Statements for additional information. h governed by a policy that was established in 1994 and is reviewed on a regular basis by senior management. ttM(1ATION$. The Cornpatiy uses interest rate swap agreements couars, futures and - In addition to the Company's capital structure policies,its debt capac-forwards to manage in exposure to internt rate fluctuations and to

icy is aho governed by in credit agreements. Based on the Company's inciease the predictabihty ofin cash flows by etTectively convertmg its current capital structure, management behevo PacifiCorp and in variable rate debt to fixed rate debt. At December 31. -1996, the subsidiatin could have borrowed u additional $3.4 hillion of debt at Company had entered into dern atives with notional principal amounts December 31,1996. PacifiCorp's principal debt limitation is a 60%

totaling $958 milhon to manage its internt rate exposure. debt to capitahzation tnt contained in in principal credit agreements. The Company uses foreign currency exchange agreements to reduce I Considering such limitation, an additional $1.7 billion of debt wu a portion ofits exposure to fluctuations in the Australian dollar stem-available to. Pacificerp at December 31, 1996. Iloldinp' adjusted - ming from its net invntments in Powercor and to hedge obliga- - comohdated debt is hmited to 70% of its comolidated capitahza-tiom denominated in foreign currencies. At December 31,1996, the tion. Under this test,an adthrional $1.7 bilhon of debt wu available at notional amount of such contracts totaled $341 million. December 31,1996 The Company uses electricity futurn and similar instruments L Under the Company's principal credit agreement,it is an event of to hedge in emt of electricity and has recently started to actively trade [ default if any penon or group acquires 35% or more of the Company's electricity and electricity-related fmancial produen? The trading common sharet or if, during any period of 14 comecutive months, of electricity-related fmancial products is currently done in a hmited individuah who were directors of the Company on the first day of such number of markets, and the Company plans to continue to develop - [ period (and any' new directon whose election or nomination was its commodity trading experthe and expand in activities as these approved by such indwiduah and directors) cease to comtitute a major-markets develop, ity of the lloard of Diretors, See Notes 1,7 and M to the Comolidated Financial Statements for-additional informanon about the Company's me of derhatives. l partt: tome 33 ,,56 ANN u4 t-aeeoki

Ifl Q U I D I T Y - A N D ' C d P I T A l. 'P, E S O U llc E S i -CASH f t OW bOMMARY rN - Min.neu 6OlmO the w.r - 1+N ien - 1+m tw4-E Net Cash Flow from Operating Activities-Domestic Electric Operatiom - -718 700 747 Amtralian Electric Operatiom.- 95 10 Telecommunications 197 152 141 Other Operatium 67 50 74 Total 1,077 912 962 E m. Davidends Paid 346 346-- 345 Net $ Wh900 $ 825-875 -$ 775-825 731 566 5 617 Construction Domestic Electric Operatiom 525 500 480 442 455 638 Amtralian Electric Operations 60 60 75 80 2 - Teleconununicatioru 120 145 140 122 122 148 " Other Operatiom to 10 10 7 3 > Total 715 715 705 -651 579 789 -. Acquisitions and Investments Domestic Electric Operations 45 154 Austrahan Electric Operations '145 1,589 Telecommuaications 270 200 230 5 376 -5 Other Operations 50 50 75 49 175 -10 Total 365 250 305 353 2,140 -15 Total Capital Spending - 1,080 965 1,010 1,004 2,719 804-- Maturities of Long-Term Debt Domestic Electric Operatiom 299 197 209 182 .51 76-Amtralian Electric Operatjom 42 Telecommunicatiom 48 29 16 - 56 15 17-Other Operatiom 6 15 11 19 - 29 61 Total 353 241 5 236 299 95 154 Other Refmancings 42 191 295 'F O itW A 11 D - L 0 0 K I N G -S T A T E M E N T S lThe information in the tables and text in this document include The following factors are among the factors that could cause actual certain forward-looking statements that involve a number of risks and results to difier materially from the forward-looking statements: utility uncertainties that may intluence the fmancial performance and-commission practices; regional economic conditions; weather varia-earnings of the Compaay-and its subsidiaries, When used in thu tiom atTecting cmtomer uuge: competition in bulk power markets and " Management's Discussion and Ar,alysis of Financial Condition and _ hydroelectric production;' wholesale power marketing resuks; environ-llesults of Operations," the words " estimates"," expects"," anticipates", mental, regulatwy and tax legilation, including indmtty restructure " forecasts","plam"," intends" and variatiom of such words and similar and deregulation initiatives; technological developments in the elec-expreniom are intended to identify forward-looking statements that tricity and telecommunicatiom industries; and the cost of debt and imulve risks and tmeertainties.There can be no assurance the resuhs equity capital. Any fimvard-looking statements iuued by the Company

predicted will be realized. Actual results will vary from those repre-shouki be considered in light of these factors.

Sented by the forecasts, and those va it 3m may be material. t eaci,iroar y, m. 4suuat n. ,oni

11 L P O R T o f-MANAGLMENT I N !)I P E N I) E N T A U I)l T O R 5 ' R I P O RT The management of PacdiCorp is respamible thr preparing the 1o int uo Ax o or oikic1oas a s o s < k i n o t o a it s accompanymg consolidated financui statements and ihr their mtegray ot e w irte o ae: and objectnuy. The statemena were prepared m accordance wnh We have audited the accompanymg consohdated balance sheets of generally accepted accountmg primiplet The financui statements PacitiCorp and subsidiaries as of December 31,19% and 1995,and the inchide amounts that are based on managementi bnt ntimatn and related statements of consohdated mcome and retained carmngs and of judgments Management aho prepared the other mformanon in the comohdated cash tiows thr each of the three yean in the period ended annnal report and is rnpomible for in accuracy and consistency wnh December 31,1996.These comohdated financul sutements are the the financul statemenit respomibihty of the Company's management. Our respomibthry is to The Companyi tinancul statements were audned by Deloate & exprns an opimon on thne financul statements based on our auditt lbuche Li P, independent pubhc accountantt Management made We conducted our audm in accordance with generally accepted available to Deloate & lbuche ! LP all the Company's financial audaing sundards Those standards require that we plan and pertbrm

reconb and related data, as well as the nunutn of shareholden' and the auda to obtain renonable assurance about w hether the financial directon' meetings.

sutemenu are free of material misstatement. An auda includn exam-Management of he Company ntabhshed and nuintaim an internal ining, on a test baw.nidence supporting the amounn and dnclosures t control structure that provides reawnable assurance as to the integnty m the financul statementt An auda ahn includes awessing the account-

and rehabihty of the financul statemenn, the protecnon of awen fmm ing pnnciples med and significant estunates made by management, unauthorized me or dnposition and the prevention and detection of well as evaluatmg the overall tinancul sutement prnentation.

as fraudulent thuncul reporong. The Company numtaim an internal We beheve that our audas provide a reasonable basis for out opinion.

audaing pmgram that mdependently awewes the eiTecovenew of the In our opimon, such thuncul statements prnent fairly,in all mater-

', internal control structure and reconnnends possible improvemenn. ia! ropects, the consohdated financial posinon of PacifiCorp and Deloitte A 11mche LLP aho considered the imertul control suucture subsidunn at December 31,19% and 1995, and the rnults of their in connection wah their auda. Management comiden the internal operanons and their cash tiows for each of three years in the period audnon' and Deloitte A lbuche I LP's recoi*unendations concerning ended December 31, 1996, in conformuy wuh generally accepted the Companyi mternal control structure and takes cost-etli ctive accounting principles, actiom to respond appropriately to these recommendationt T he Companyi " Guide to ilusmess Conduct" is dneributed te, employees throughout the Company to provide a basu ihr ethical Q f g4y standards and conduct. The guide addrenes, among other things, potential conflicts of internts and compliance with laws, includmg Deloitte & 1buche LLP thme relating to financial dnclomre and the confidentiahty of propri~ P dOp cury intbrnution. January 31,1997 (March 11,1997 as to Note 15) The Auda Conunittee of the lloard of Directon is comprised solely ofoutside directors,It meets at lent quarterly wah nutugement, Deloitte & Ibuche LLP, internal and ton and coumel to review the wmk of each and emure the Comnuttee\\ respomibihties are being properly dncharged. Deloate & 1buche I LP and internal audnors hae free access to the Comnuttee, uithout management present, to dncuss

their audit work and their evahunons of the adequacy of the intertul control structure and the quahty of fmancial reportmg.

/ d T' d A 4 Richard T, O'llrien Senior ila President and Chi <fInumial Ofiar F4 eI F I( (5 A P M iS * * - % N N U % L Rl Ps'* I

S T A T F M I; N T h Of C O N S O t. l l) A l l: D I N C O M I: A N I) R I.1 A I N I. D I. A R N I N G S uain...e 4.aan cu er p.,.e ,ou.una = e. os n., io, oa on4 Revenuts $ 4,293 H $ _3,416 9 $ 3,49N O Expeines Opriations 1,7H2.4 1,239.4 1,391.8 Maintenance 30H 5 - JH10 292.3 Adrnutistrative and pneral 3nH.5 254 9 244.fi lieptc<tation and ainoturation 530.4 445 6 424.3 Tases, other than itwoine taxes 11H.9 12n 1 122.7 'Iotal _3.u4 8.7 2.361.0 2,475.7 ind from Operanom 1.24% i 1,055 4 1.022.3 2 interest Expeme and Otlier interest espeme 465.7 37H 7 334.5 lotetest opitahred (11.9) (15.1) (14 3) Minor sty iniciest and other 2.5 ($13) -(15 5) 1otal 456.3 312.1 3n4.5 incorne befote intotne taxes 78H.H 743.8 717H inconn taxes 2H3 9 23M N 249.8 Net Itu ome 504.9 505.0 4(A0 lb ed Larninp, January 1 632,4 474,3 351.3 Casn dmdendi dec tated l' referred stos L (29.1) (3H4) (39.6) Corntnon stock per share of $1FH (317.9) (.306.6) (105.4) Preferred stock setiscil (7.5) (1.9) Reta'ned Larninp, December 31 782.H 632 4 5 474.3 Larning on Cominon Stock (Net income less preferred dividend rettunetnent) 475.1 466.3 428.3 Average nundiet of c onnnon sharea outstanding (I'liotnands) 292,424 284,272 2H2,912 Larning per Common Share 1.62 1.64 1.51 Ne.umy..mmy i x ei. ro ha4=a rm.m I wittur .) Pat seirone Mi s*=6 aunoai aeconi

STATTMENTS O l' C O N S O l l t) A l l;ll C A h*1 ILOWS wsva 4 as.a m aa w.a sn, rm m - Cash I knvs front Operating Actoines Net income .504.9 $o5m 46Hm A@usunents to re ancde net inconic to net cadi prowled by operating u tivitin 1)cpteriation and amorttration $52.0 466.2 472.5 I)cierred incoine tan and invntinent ta t redits-net 48.4 62.5 (7,5) Minority internt and other (33.3) (2M.) 23 6 Accounti tercivable and prepayments (171.21 (71.5) 54 Materiah, supphn, fuel stod and inventory 31.9 (8 6) 11.H Accounts payable and an rued habihtin 144I (110) (11,7) Net Cadi Prusided by Operating Activitin 1.077.3 9120 962.1 Cash Ilows frord Investitig Attivities Constrmtion (650.8) ($7H.6) (7MM.7) Operatitig totilpatiin and auets acquired (199.4) (2,002.1) (5<9) Inyntmenn in and advances to aflibated companin-net (153.5) (13H.4) (9.5) Proceeds from saln of aucts 55 1 377.0 3H1,6 Ptuccedi from salo of fmance aucts and principal payments - 55.H 36.6 109.1 Other (105) (27.4) (26.7) Net Cash Used in invnting Acuritin (903.3L (2.332.9) (340 1) Cadi ilows from Financing Activitin Changes its short-term debt (319.6) 5H1.5 (98.7) Proceeds from long-terin debt 669.4 1,530.8 246 6 Proceeds front juuance of tomanon stod 221.3 .4 57.2 Proceeds from inuance of preferred securities of 1 rust holdmg solely PacifiCorp debenturn 209.6 lhvidends paid (.s 46.4) (346.5) (344.8) llepayments oflong-term debt (341.1) (285.8) (44H.5) lledemptions of capital stock (221.6) (2.6) Other (50.0) (SH.0) (41.7) Net Cash Provided by (Used in) Itinancing Activities (178 4) 1,419.8 (629.9) - 1)ect-ase in Cash and Cash Equivalenn (4.4) (1.1) (7.9) ' Cash and Cad, Equivalents at lleginning of Year 22.2 23.3 31.2 Cash and Cadt Eqtiivalents at End of Year 5 17.H 22 2 23 3 Supplemental Ibcimure of Cash flow Information Cash paid during the year for Interni (net of amount capitahred) 505.7 407.7 399 4 Income taxo 207.9 1H5.5 225.6 Noncash fmancing actnitin 8.55% junior subordmated debentures exchanged for 2,233,037 shares of $1.98 No Par Serial Preferred Stod 55.9 (%rf a.Tomgwrtying NWes to Omns4klatM haamul hiatreirpts) P A f 1 1 1 (' p R P.' yk 49e* 4%NOA1 R 4Pok1 .-n., w -.-nc ,.. ~. ~ - - - - -.. n,.n..- -+

.m _.. _. - m _.m. m-.. r ) L l) N $ O 1. l li A 'l l 1) ll A L A N C l. S il l; f: TS I L f Ahli15 j an ..t 4,,im, %,.,i., u m. is 4 Cutlent Aurtt l Cash and (ash eqmvalenti 17.8 22.2 Anounti receivable leu allowance for doubtful accounto 1996/$8 6 and 1995/57.4 71 H.6 545.0 i a Materiah, sult ics and fuel stoc k at astrage cost 188.7 212.1 l l Inventory $5.2 62.8 I Other 78 2 7tti lotal Cursent Aucts 1,0$H.5 912.2 Property, Plant and i:quipment 1)emotic Llectric Optauons Production 4,659.2 4,420.0 } Traniininion 2,069.2 2,042.5 I)iuribution 3.029.7 2,H29.9 Other 1,647.9 1,655.7 Conutuction wott in progrew 252.8 310.0 lotal 1)omruic 1:lectric Operatiotn 11,698.8 11,25H 1 - i Auuralian illecuic Operatioin 1.361.9 1,302 H Teletonunusucatium 1,670.0 1,606.9 + Otliet Operatioin 6H.H 65.0 j -Arturnulated depicciation and arnottiration (4,5H3.8) (4.280.5) lbtal Property, Plant and I'.quipment-Net 10,215.7 9,952.3 t I [ Other Aucts invntments in and athances to affihated companin 35H.9 187.9 Intangible aucts-nrt 870.5 743.2 llegulatory aucti-net 1,017,4 1,060.3 l linance note receivable 214.6 217.5 Iinance auets--net 425.6 453.7 t I 1(cal etate invntinents 217.0 - 179.8 1)cferred c hargn and other 256.3 30H,3 - Total Other.Aucts - 3.39 t3 3 150.7 l Total Anets 5 14.634.5 5 14.015 2 i p ? l s See a.wmpnnng f*m ts Conwtat ned f own wl %tememu pac: tttone . 40 teos auN UA t niPoat ,,vn, r a nm--.,..,.-,, ..,n ...-.,a,,,._.,,,,, ,,,..-,--,.,-w.~,.,-+,..,..,,,.w.. m.,, ..,-_..--..nr,--,_e,,,n.---.--,..a

t l A u t t 111 t s A N n 5 0 A n t u o t o s u s ' t-q u i t y hhilu a. or A* tim henao As

Iwe, tws Cur retil l.iJbihtlet Long-term debt currently maturing i

235.6 5 206.1 Notes payable and commerdal guper 701.5 1,021.1 At counts payable 469.7 345.3 1 hen, interest and dividendt payable - 303.5 256.4 Cmtomer tiermits and other 152ti 1760 Total Current 1labilitici 1,862.9 2Jn4.9 Drferrrd Credits invoine taxes 1,953 1 1,910.1 lovestment tax credits 148.4 159.2 Other 75H.9 786.2 lotal Defitred Credits 2,HML4 2,H35.5 Minority Internt 31.9 23.0 t ong4rtm Debt 5,323.H 4,968.2 Guaranteed Preferred llenefinal intereus in Company'sjunior subordmated Debentures 209.7 Preferred Stoci Subject to Mandatory lledemption 178.0 219.0 Preferred stock 135.5 311.5 Common Equiry Common shareholders' capital shares authorized 750,0;MUNxt shares outstanding: 1996/295,139,753 and 1995/2H4,276,709 3,236.H 3,012.9 Iletained earninp 7H2.H 632.4 Cumulative currency tramlation adjustment 12,7 Guarantees of Employee Stock Owne ship l'lan borrowinp (12.2) Tiital Conunon Equity 4,032.3 3.633.1 Commitments and Contingencien (See Notes 9 ar d 10) Totsl liabihties and Shareholders' Eqtury 5 14.634.5 5 14.0!5.2 on mennym, Ne w co.a.aea nn.im ut swn..ac -tA4 t)( 04r -41 tess ANNUAt a f y o st i

k k h m mb d iin tua,o.il 194 l'on nJ ihe e l l l$n tn e jantlary 1, 199f4 tbr Company adoptrd M Ah j2) An _ ons o, is b,,umne em,nri nnunns amu,, i emt.

SUMMARY

oI sl G N II I C A N ~l livni Aarts to Ik 1)nposal Of."'I hn Statrment requun that long-A C C () U N I I N G P O 1 1 C l 1, % ined aurts ami cntam hlrntdiable mtangib!n to be hehl atul med by an enmy be iMewn! for unpainnent w hentta cu-nu or dungn ni i<4sas o# r k s s t N i A iios t ut tunmocn nida,ue Aat the t an > ng ainuunt of an and inay not bc I he wmolatated litusn ul statemenn of PanfiCorp (the "Ciunpany") truntrablef t he Frunrany evaluatni all m auen bent upon si As 12] mtlude its nargraird domotic datnc unh:3 optratmg dindom of. and u nlim die wotru of A for m tegulated opnatu.ni and Panhc Power and Utah Power arul its w holly ownni and mannity '"'"I" 'I"' '"' '"'"' "I dd""'"'""" " "" '"'itni ed Srr Not e 2. owned sulwidunn. M got subsuharin, all of w hich are windly oA nrd are, PacihCorp f lohlmgs, Inc. ("Iloidmgs"), w hidi hohh all of the 4 Asn ANo cAsn t uviv At s N i s L,Hnpanyt nontntegrated rlntric utility Anyt%tulent% int lthh ug f or the purposn of. hne tiiuncol itatement% the Company mmiders t foWCrcot Aintralla 1.ifinttd (,,PilWOrcor ), all ktntrabJn dntrkny all hquid invntmeno w nh origmal maturitin of_three umnda or ins datnbutor punhned 1)erembet 12, 199x. Pat ih.r. Idem m, ha. to be (eh equnalentt f U.Il"), a teln oillithltih alitun optration (l.otinerly do ow nrd, w*e Note 14h amt PeutiCorp i mam ul %nvit n, Inc. a finam ial servu n i ti k t i t N t URhiNLY I R A N 41 A I t il N btnineM, *logetha dine bmineurn are refetred to hrtritt a the I manual sutements for forngn subudi.uin are tramlated into United L,ompanin. Sigmticam mienompany tramactmm and balancn hne period cu bange rain a to aucti atal habiht n Stain dollan at rod of. been chminated. and weighttd.nnage rulunge rain a to revenun and expemn.T he ime tment m and advancn to athhated wmpamn reprnent mvnt-inohmg ru hanpc gaim or loun are an unndated m the "nunulatne ments in uncomohdated athhated wmpaiun (attied on the cymtv ninemy tramlanon adnntment, anount, a (omponent of ronunon batts whhh approximato the Company,s n}uiry in then undcripng eqmty All ngtntit ant gann and loan innhmg hom foreign currency net book ulue. tuns.n oom ate mduded m income. use os e siiu ri t s ele o PI n i t, PtANT ANU i ty U l e M t N 1 .I.he prrparJootl of Illurk ul statrintnn ill ninforimly with pt netally Pmperth plant and equipment are stated at origuul uwt of umnat ted a(ccpted accounting ponciplC5 fCquirn nunagrine!H to filake ntlin.Hn snutvs ani or an mat , nunm (apnahnd donng comnut. and anumptiom that atint the irported amounn of awets and habihon 1 non an unt urgn for Ungmening, supnu on and duidar ovn. and dmlosme of(ontingrnt awen and habihon at the date of the finan-lic orna e uwt o (Trn e unhty propenin terned,indudmg dal statementt Actual rnulu wuhi ddTer tiom thme ntimatn. the cmt of removal, leu ulvage, n t heged to,u cumulated deprn uuon. a t ou t ins DiekI( I A t itsN A N il A M t)R i l/ A T io N Accounting for the domnuc utdity binmoun confortin with ge Irr-At Dn ember 31,19% the average deprecicble hie of property, plant ally accepted anountmg prinnpin e apphni to regulatnl pubbe util-l Domntic l_ ectnc Optratuun-and squipment by category wn: itin and,n piewnbed by a tennn and the wn,miwiom of the vanom Production, 41 vean;'Itamnmuon, 42 yean; Dntnbunon, 30 years; lot atloth in withil the Ott!Ity bmittrnn operate, llle CompallY ~ ()ther,1H ytan: Amualun IJn tric Opnatmm, 21 ytan, and ide-preparn in financial sutemam a they rdate to liomnoc Ilectnc cononona anom, lei 3can. Opnatium and.Idnonunumcatmm m an ordarue wah htatement of. Deprn ution and amortuanon is generally wmputni by the i tilath tal At(oulitittp bundards (',\\I Ah,,).,1. " At coutiting for dlO i straight-hne method mer the ntunated crononuc meful hvn of the L.il.n a of L.ertam fypn of Regulau. on,, See Note 2. related awets after giung effect to reqmrement as pincubnl by the Company \\ vafiotn trgulatory Jurudutiotn Provniofw for deprecia-tion (CMituling aluottilation of taplu!IcJsn) W dir doluntic Clfttrki, 1 Amtraban dectric, and teltwoununa anom bminewn were 3m, 3h and 3.4% of arage depiniable auen in 19% 19% and 1994, respectivdy. taritis ose 42 i. .y Av4 t i, t eoat

MINI R r t i AM AllON ann l'tohUKi t041t IN1FHIv1 0 4 41 t A t 1/ 4 o l}te Collipally riperbri Lttrrrnt Illific rnlainalloll testi and atetun Cost % of dCbt aff tCable to dollit%tif utdlty piopritin ale t apitallrrd I bit OStkillatnI flltal litille tr(!altnatioll alid (loMile cmtk mllig IIIe inutb duriflg colhlrmtion. Crnflal!y,Nie (UnipoMic capitallf atht!) rain Wrry of production method, 5.7% for 1996,k2% for 1995 aial 4,7% for 1994. A N V I N 1 o n ir VAtOAllON I N t'O M i 1Axit ImVrltoriet ate generally valued at the lower of average (ost of muktt, 'I he Company mn the lubthty method of aWountmg for defrunl imome taxn. I rierred tax habihtin and awets artlnt the expnted INfANoIutt Assi1s fitture tax toinn}ueturl, b.ned on enacted tax law, of toturetary thf-Intangible aucts cornht of: bcome and other mtangible nat$ relatmg to irrenn% between the tax basn of aurte and habihnn and their finan. Amtralian 1lectuc Operatmm ($464 nothon and $32 nulhon,inper-(ial reportmg amounit tivdy in 1996 and $312 nulhon and $30 nulhon, rnpnincly, m 1995); Imntment tax unhts for regulated operatium in the Urnted Stain franchiso orlocal enhange atul crllular tompamn ($397 nuthon in are deferred and amortired to imome over the average niinuted 1996 and $39H mdhon in 1995);and esceo ~w over net aoen of buu, hrn of the propertin All othrt invonnent tax unim ate in ogmini neun acquired ($43 smlhon m 1996 a. ' W., S w onts are oflict when utihred by accumulatn! smortiration ($62 inillur + % v1 $40 nulhon m Provnion h made for Uiinonne taxn on the undatributed rarn-1995). Intangible auen are generally being auore ; over 40 yeart ings of the Company's internanonal buunnsn. IINANCE Ahtl1 h a t: Y 1 N U l R i L Oo hlllO N I'1 Hance awett (otBbt of finantC rectlVahleb lnrringrd Ir.nn ath! The Compally au rut % t%tiinated tir1 billed rnellum foi urf tfie 60t%Icn operating leasn and are not sigmticant to the Company in ternis of providal after ryde bilhng to inonth end. revenue, net income or anettT he Company's leasing operatiom nin. Pil partnlpain with other telephone unnpanin in auru revenue sht principally ofleveragni airrtati leasn Imntmenti m finance aucti pooh for certam interstate and intrastate reve9un, whi(h are ininally are net of allowancn for (rnht lown arul accumulated unpairmeni rnordni basnl on nomatn, thargo of $63 nulhon and $71 imlhon at Dnember 31,1996 and 1995, rnputively. eaie aarnstorA n rinio Attiounu paid m exrca of the net rattying value of preferred irmk n i a i y A : i y ra reined are amortired in anordame with regulatory ordert Gams and lossn on hedgn of existing awets and liabihtin are imludal in the carrying amounts of thme aucu or liabihtin and are recogmint .n r ri A s u ic A ion in income as part of thme cari>ing amounu. Gams and hwsn related Certain amonnts from prior yean have been reclawified to contbnu tu liedgr4 of allticip.tted trall%ndioin afh! Iittil ('ollllllitilltrlts att* %Illi die 1996 nWdiod oIptnellt.Inon.llH4e rn t.1%ilicatiotM 11ad flo deferrni on the balance sheet and recognired m income when the ellect on prevmmly reported consohdated not income tratnaction occun tALete_t of r -O

• • • 6 A N N U.A t uatoai

L ~ o ': e 2 1 ~o:e 3 ACCOUNIING i t) K 'l ll i % )l t ) R 'l - 1 I il M () ! 11 1 A N il 1 I i i C 'l s. (if RIGUIA1It>N li t) R R t) W I N G ARRANUIMtNI% Regulated utthon base hatothally apphed the pnn Norn of $1 A% 71 ~1 br Cornpamn' dni.i-tenu de bt aiul bor row mg anangernrna weir uhuh is bawJ oa the premiw that ugulaton wdl wt rain that dhm ,o f ollow t for the in ovoy of a unhtyi wsn,nn hulmg uut of urnal An otmtmg i u non u 1 -, or -.. uth!Or bl Ab 71 O eqfropt ulf,o long JC lain ale ntJbbsbnl by or Wb-

b..o.

bem e in i nin~ j001 to #ppfin al by lihlfftndt lit, thif d-patty lopulatoth latn att Wim os dothn nant it m f Nm m.tmc H er ' deugoni to en over the spnifu enirspinri ont-of wrut e. and m

19m, new of driiutut for wts 4 c,il n reasofiable to auuine llut rato ate Rt p.n diCorp

$ 549J 56% $ 4214 54"s at Inth that wdiin over onts atal on be (ollrunt hom 4 mtomen in suhtdunn 1521 56 287.2 56 applymg Sl As 71, the Company inmt gne wmuleration to (hangn in the leul of denund or onopetition dormg the cmt an overy Un,, period in at t Oldam e w ndl hl Ah 71, (be ('ompany\\ doitteth utihty panhCor p $ 479.9 5.9% $ 407.2 5.WL opCtattoln 4 apilahte t of tain Ohl% f rgulJtotV JuCH,in +4 tordant e wIth bulnhliaf in b41.2 6.1 l N(I O 62 tegulatory authority whettby tho e rma u dl be expemed and in ov. vied m future perioih. Regulator. wt at l>n ember 31,19nn 1994 and 1995 nu hninl the fidlow mp'. panhCor p $ 433 0 60% $ 372 N 4,5% wmn, ia aan n.mac o ne m bl Ritklalln )l,7 7b N5 b 4.b !)cier red tauw-net $ 670 6 $ 6H7,1 - t omrmot u an. tmI>.0, uw n,oim on p mun! m mn om.undmg a ow oid vi Ow l l )$ l.clrrd priNon (tnh lil2.9 1 l 6.8

• l9 n41 h u>e whh hih p mi y J mom.n oummamy on,rw a h a,.u w ow.a ngoni n n m, u on-eomt 8 om en, 6.h ennant lIrnund side tnouh r 4 osh IIN N l 10 O wmunt out*mamp tat sht pima U:unuunint not low on ruopnted debt 6H.4

?! N ) Umn m0:Od'Ito,un platit athl trgulatof y kt IIn ClHbel' 31,1996,Iadfifof f OulnnCrt ul pJpor allt! bank bne i study u na 26.N 28.4 borrowmp were wppmtni by revolung ordit agreemenn totahng Wrium other tmn 29 9 46 2 5700 unthon. At 1)n rinber 31,1996,sulnidurin had comnutted bank l 'lotal 5 1.017.4 5 1.onn 3 revolung unht agreement torahng $21 lulhon. 'l he Compamn have the mient and aluhts to wpport short-term if the Comp.my, at mme point m the futme,dettinunn that all or a bonowmps through variom rnolvmg rnht apermenn on a long-pornon of the domntic unhty opcianom no longer meet the oiteru terin ban At linember 31,1996, PautiCorp lud $123 nulhon and hit wnununt apphration of si As 71,the Company would be inpurnt sukubatin had $1 l bilhon of shor term debt clawilied as long term. to adopt the provniom of 51 A% 101, "Krgulated I nictpt on-Comohdated aunnunnent fen une appmunutely $2 nulhon in 1996 Anounung for the 1)nwnnnuation of Apphotion ofI A5115 atement and 19% and $3 nulhon in 1994. No.71." Adoptmn of St Ah 101 wonhl rnpuie the Company to w nte off the repdaiory aura and halohon iciatmg to thow operanom not mcrtmg Si AS 71 tequiremenn. Tk unhty industry will aho be miracted by the appluatmn ot St AS 121 n a inuit of deiepulanon.This awounnng statement rnpmn the recopunon of unp.orment on lonwhtnl auen u hen bool valun ( Oxt Crd Okpn ted ititu!C t.nh flows IntCgral paf'is oIIullite t.nh flow l ntmutn inchule ntonated future pucn to be received. the expntnl l future ush wst of operanom, uln and load grow th ihrerasa and the iuture of any legalante cmt rennery methannim. Rntructurmg bdh ate bemg onnidered in all stain in which the Company proudn retad wtvu e. The Company expect any legnianon paned to provide an cpportumty to recover msn w ha h hase been J placed at risk. fA e Ii iE in k F a4 ovt A N h V 4 1 k l F I/ p t

0:e L 1 O N G 'I 1 R M 111. It 'l 'Ihe Companyi long-term dcbt wh as folhmt num,4aa..% %..y u o,, oa PanfiCor p i Hsl Illof fgage Jfid (ollatetal !!Lht botidt Maturmg 1997 duough 2ml/5 h9.5N' 94tts $ 1,112.1 Maturing 2002 tiuough 2m6n 1%9"e taito 519 H Maturmg 2007 thnmgh 2011/6 w9 2N 235H 237.5 Maturing 2012 through 20lf./7.3%H HN 172.9 175 6 Matming 2017 through 2021/H 4bH.5"o 38.1 3H 4 Matuting 2022 through 202Mit7%H.6% 441.5 341 A Guaranty of pollounn ioutrol tevenue bonds 5 (&5.7% duc 2021 through 2023' 71.2 71.2 Variable rate due 2013 through 2024" 21tt s 216.5 Wriable rate due 2005 tloough 2030 - 450.7 4 5til. 1 unds hdd by trmten (12.1) (12.4) H.4b H.6% Jutuor subordmated Obcnturn due 2025 through 203% 175.8 175.H Cominett ial paper = 123.4 200.0 Other 2H 1 31 3 'lotal 3,489 4 3,563.0 l eu cuttent maturion 203 H 176.H Total 3,2 M ;.6 3.3H7.1_. 2k ll,H% hnt mertgage notn and bonds maturing throuyh 2028 139.3 143 2 6 H"tr-lo.2% Notn due through 2020 291.2 59.H Amtrahan bank bdl borrowmgW 922.3 H96 2 Conuncroal paper and wnunined bank kner" 1 H5.0 7511 Wriable rate noin due through 2007 = 35 H 42 o 6 6%9.45. Medmm-term noin due through 2008 323 5 223.5 4 5%-11% Nonrecourse debt due through 2031 170.8 155.9 Other 2.1 14 M 'lbt al 2.070 o 1.61 U. 4 I ew current maturitin 31.H 29 7 'lbtal 2,038.2 1.5 N 1.1

• Intal 5 5.321 H

$ 4.46K 2 - tm n,x p mam.n a m t.ona,

a. m nw ou mom unaa.n e.ea" A m "a%

Thejunior mbotdmated debenturn are unsentred obbganons of the w ven kun A oanou v swap onv< nca the nwa var n n hakhn to a A.noty om U S o bt h4lidity Wwa im uomomb 1 nu lit [hs o entaru rar % % 4: I bonbre it,1% {pmpany agyd are gubonhnaged go the Co.ppany\\ tint mottgage + wmca s eka a oni mongy.oa uswu nw twa run aw ai ist une mienu ota, r . uu.unty de el n.kmption pun mom e die.cs utnl pWlui.on tonma newmw hma-hom}q po}lution (ontfol reVelme bonds, conimercial paper, bank debt. 1 nunu ion w.o, wa.m uneo.,em ennuni, o.:. nauu u a,,,a non imawir j hernm my ten pinne em ut othee shon 40m uviket rm capiga} }c pe ob]gganons and any [uture Wnior indebtedneu. aim m ow,inuur waon o.uwontwa n.n wtrum,aun n., um v a m m regmen the 4: iwi W of se boenminp meu be brJ Nonrn ourse long-term noin are secured by ampnment of Arr,,nmma, p m,umn u taga o %nau,u. kut umne u<unom m mineu v4rn ~ a w mu,, oir ommna io, pg} aged linanCe rC(ch' ables, aMet Wiulity internb and C.hh doW% an av. var h4 e.14 4 yr en Iom u.< ( ~nn.e hm o,<.daa, m mn.,n Aon tam hu w mr.na uim m.*u beme seraun.ca on a kmg teem Na enmgh wuA mg tmei on uvaa ana tharue. t#ca upm rnan-operanng leaset 1he nottholden have no addition.d rerourW to yumm wm hm.Ls.o+a o : su...n a shrn em aan tm, iam aru the Contpaniet Approsunately $7 bdhon of the awets of the Compank secure The annual maturitin of long. term debt and redeemable long-term debt and capital lease obhganons. hnt mortgage and preferred stotk outstanding aic $236 milhon. $241 nulhon, $353 wilateral trmt bonds of the Company inay be issued in amounts lim-nulhon. $1.1 bilhon and $622 mi' hon in 1997 through ited by I)omestic Electric Operanom' property, earmngs and other 2001, te gettively provisions of the mortgage indenture. t' A U 1 i I( ok p U $ w. e-A N N y41 3 g yqe t t I

At I)n t mber 31,1996,there were 28,90;,056 authonted but unmued Q' sharn of umunon stotk rnened fot touain e vinirt the !)nidend Reimniment and Sto(L Port base Plan arnt the limployer Satmps atui GUARAN1l'lD P R I-1 1. R R I 1) Scot L Ow nerslap Plam an ! 1;u uln to the pubhc !=hgible emphiyen 11 i N I I I C 1 A 1 1 N T 1 R I. $ I S IN C O M P A N Y 's under the emplovre plam may dirn t thru pretas etnove 6 ontribu. JUNl0R S U li () R D 1 N A 1 L D D 1.11 i N I U R I \\ tiom into the puu base of the Company's tonunon stoil.'Ihe On June 11,1996, l'antiforp Capital 1, a w holl) (mord subuduty Company ma es nuklung t onuibunon% njual to a parentap of trust of the Compan) (the "Irmt"), murd, m a pubhc ollermg, nnplo>w conuibuhons, duc h are inscurJ in the Coinpand corn-H,r,80,000 of in N'n Company Obhgated Mandatonly Redrenuble "'"" ""' L I "'ployn contnbuonns chgiWe for inadung t onu dio-Prefo red \\crunnet (the "Pn fi9 red het unues"), scptnenong preli t red """""I"""'d'""""I'""'P""""""' und Vhled b' nefR ul intranh til the a%t ts of the 'lltht, with J iklundas tion pretirnne of $25 pet Preferrni Sct urny. The tole am ts of the d'" ""I 0" E " # ' '"h " ' '" " "' * "'" "' ""

• P"" i"V"I"""'Y

'Ir mt are $224 nulhon, m aggagate prun ipal anmunt, of the I"I""I'"""' 'U P"*""d ""' k " "'oded to uated value or a (profied Companyi 8%Junmr Subontuuted 1)efitrable Internt 1)thenturn, pu crena <unount per ure plus acuant dindends. Serin C, duc June 30,2036 and ustam nghts under a related yuaran-1 P R L l'1 R R I D $10CK O Ul %1 A N DIN G j tre by the (.-ompany. T.he ( ompanys guarantee of the Preferred Set unon, cumulered together suth the other obhgatiom of the $"',d d """ *"" """'" l n,s w,,, r,,, y,s ^ " " " ' " ' Company w-oh re pet t to Preferred Secunties, t omututn a full and unconditional guarantre by the Company of the Tnnti obbganom subject to Mandatory Redemption with inpn t to the Preferred Secuntin. No P,n $cual Preferred, (5100 stated value) 16Juio Murn Authorued l O'I 57i2 3" 5 3" 44" 5 44 0 7.70 1 p >0 100 0 1,000 100 0 C O M M () N AND PRIILRRLD S10CK 7.4x 750 75 o 750 75 0 """c" lutal 5 17M o 5 2190 %m vmm o.n i n u,n iu-t 6,uca Not Suliert to Mandatory Redempuun t n...m.t.,wm wk.. n ne a-r,,, wa wa (w No Par Senal Preferred At jvnury 1,1994 2M1,021 10,532 52,9534 ($25 uated value) $1.16 193 48 193 $ 4,H Sales through thudend 1.18 42o 1o 5 42o 10.5 Remvnuntnt and 1.2x 381 9.5 381 9.5 StotL Pun h.oe Plan 2,194 3R0 1.76 394 9.8 Saln through 1 mployen' l.98 502 12.6 hiotk Plam 1,036 19.2 233 g,66 16.7 At Dnember 31,1994 284,251 10,532 3.010 6 1,98, Senn 1992 2,767 69.1 2,767 69.1 Auction Rate (SlixUm Sain through 1:mploien' succd value) I ltno Stot L Plam 26 .4 Senal Preferrni $100 5tatedValue l'er Jumor subonhnated share,3,500 Shares Authoriicd debentures en hanged

4. 52%,

2 .2 2 .2 for preferred stock (2233) 1.9 4.56 85 8.5 85 8.5 At December 31,1995 284,277 8,299 3,012.9 4.72 70 7.n 70 7.0 5.00 42 4.2 42 4.2 Sales to pubhc 8,790 177.H SAo 66 6.6 66 6.6 Sales through thvidend 6 00 6 .6 6 .6 Reimystment and 7.00 18 1.8 18 1.8 5 toil Purchase Plan 2,073 43 2 7 96 135 13.5 Redemptiom and repurchases (2,342) 2.9 8.92 69 6.9 At December 31,1996 295,140 5357 5 3.236.8 9.os 165 16.5 5% Prrterred, $1016 Stated ~ Value,127 Shares Authoriecd and Ountandmg 127 12 7 127 12.7 'Iotal 5 1315 5 311.5 es, i,,ione a ss i 4 1 mitos >

- - ~.. - - - -. _ - i l 1 Marniatory inteinpuon :nimren.cnts at stated value plus aurued 1 he Company mn n>ternt rate nups udlan, futurn and forwanh dmdends on No Par Serial Prefrrred Stoil are as fidhmr begnamig to adjmt the characteratus of iti lut. day portfiiho from vanable to j a m 1997,15,IN N) durn of the $7,12 senn are trdeunable armually, the fixed mternt rates allowmg the Company to ntabbsh a mix of fixed $7,70 series is redernuble in m entnet) on Agust 15, 2ml; and or variable minnt rain on its ountainhng debt. AdJitmnally, under 37So sharn of the $7.4N senn arr redernuble on ca(hJune 15 from tenm of the vandde rate Austraban bank bdl iminm mp, Amtrahan 2m2 through 20n6, unh all durn outst.unhng on June 15, 2nn7 I ininc Operanom a requned to obtam a fixed mternt rate, da linan-tedeemable on that date. If the Company k m defauh m its obhganon oal druvanvn,on at least SIN of the prunipal outstandmg. to nuke any future redempnom on the $7.12 senn or the $7.48 senet Under the varium swap agreements the Company agren with other it nuy not pay cash dwidernh on comon n stot L. paron to cu banp.at speat'ied meervah the darerun c between tised. rate and floanng-rate unernt amouno cah ulated by reference to an agrent notmnal pnnapal anmunt. 't he tidlowing table indicatn the ~ ] Q ~[ weighted-average internt ratn of the swart Average vanable ratn are bawd on ratn imphed m the yichl curve at I)n ember 31; thne nuy I l1NANC1AL 1 N 51 R U M L N 1 % thange ugmficantly, affet(mg future cash thmt Swap contr.nu are A N 1) RI%K MANAGLMLN1 pritnipally betacui one aml fifteen years in duratmn The Company seeks to reduce net mcome and tash flow espmure to changmg interest and surrency cu bange rain and conmmdity Pay-fixed swaps pine rnks through the me of denvatne financial mitrumentt The Average pay rate

7. 7%,

7.7% Companyi painopation in dernauve tramacnom involvo instrumenn Average rnene rate 56 4.4 that have a close (orrelation w ah in portiiiho of habihttet thereby $ managing us rnk.1)erivativn have becn dnigned fi>r hedging pur-Intant rate futurn and forward umtracts are gennally med by pmn and are not held or bsued tbr spnulatwe purposn. Aintraban Llecute Operanom to nungate varuble mternt rate expo-l Nor tout *uorsis *no < u na r i uomi or ot ao u rvr - sure on Amtrahan bank bdl borrowmp and are mually settled m wh. 3 The notional amounn of derwarnrs sumnurued bclow do not represent The futurn and fierwards are accounted tiir as hedges of the Amtrahan amounts en hawed and, theretine, are not a meeure of the evosure of bank bdl borrow mp. Addmonally. Amtralun Llearie Operanom I the Company through m me ofderwauvn.The amnunn exchanged are punhases internt rate collar agreementtThe collar agreementi enude calculated on the bam of the notional amount and other ternn of the the Company to receive from the counterparon the amounts,if any, derivauves w huh relate to minest rates,cu bange ratn or other indeset by w hn h the Austrahan bank bdl borrowmp mtont payments en ced 'I he Company is expmed to ordit-related town m the nent of non-K75%, and the Company woull pay the counterpartin if internt performarne by counterparon to finanual imtruments but a don not payments fall bdow 6.5%-6h expect any counterparon to fail to meet thnr obhgatmm gwen that i o u i n. ~ i u u m. t x iu u s m.r ut u - At 1)ccember 31,1996, high credu rannpfl he Companyi creda pohcy prmidn that counter-the Company behl a threign currency exchange agreement, which j partin utnfy nunimum oeda ratingt fhe neda exposure of internt providn tiir the exchange of $50 unlhon for 7.4 bdhon yen i rate, foragn eu hange and finward contracts n repinented by the fair to mcrt a 1997 yen-denommated obhganon of an equivalent amount. value of tontraco w ah a poutive fair value at the reponing date. In.uhhoon, at 1)ecember 31.19% llolJmp held three combinni 4 isi s niu vui un u o u.iuis:- 't he Company enters into miernt rate and cunency sw aps that ternunate m 2002,with an aggre-Varkous tv{n of knIernI rate lonIrak u kn nunaging M knternI rate r. Kale nonoru alnount of 5291 nulhon to hedge a pornon of the eno-as imhcated m the tidlowmg table: une to tio tuatiom m the Austraban dollar relaung to m imrstment % mn.aAm,- m Powercor. Mabom ca dalim Dn emlwt 31 N+ 1M l he Intern! rate portioin of the thae eva}w which aho were Internt rate swaps $ 8464 5 219.9 deugnated as a hedge of Ilohhnp' invntment m Powercor, were internt rate collars purchased 52 0 etiis ovely othet m 1997 by the pun h.ne of a map tramaction wnh interest rate tinurn and forwards 6hB approxinutely the ume ternn.The net amount of the swaps shouhl not h.ne a ugn icant impact on future net mcome. o e4 ii>si onp 47 i 9s sNNrA1 f( t eok 1

d < ouuom t t a m unna un s - 'I he Cornpany has utthred cln- 'I he fair salue of the Companyilong term debt has been ntimated j triuty fo:nani tonnatis Orferred to as "mnuad Ihr dificiem n") to by dnt onntmg pmjeded futuir (ash thm s mmg the t urrent rate at bedge rhpomte to electriaty pri(r ink on antu tpated tramattiom or wlm h unnlar loam woukt be made to bornnscn wnh unular medit firm nunmitmtun in its Australon i lettric Operanom. Under thew satmp atul (br the same nutuntict Current matuntin of long-term forward omtract% the Cornpany in rnes or maln payment based on debt were tra hnled arul opital leaw chhgations were culuded.The a ditierential between a mntra< int price and the actual spot market of fair salue of the I referred Seconon was based on ihnmg ma:Let pr a n cleunuty. Adshuonally, elettuuty fbtuin omtraus ate unbird to atui the fait value of redcemable picfortcJ stotl was bawd on bid hedge 1)omotit Lin tric Opetanom' ruew or shottage of net ein-pru n fiom an imnonent bank. tnoty for future immtin. The f air value of internt rate dcnvatnn, c urrency swaps and ein-At I)crember 31, 1996 Austrahan Iininc Operanom had 23 trusty fumin a the nonuted annonut the Company wonkiluce to pay forward contrasts with riet trioty genctauon compamn on notiorul to ternunate the agicements taking into amount cmrent mternt and l quanoon atnounung to appmsimately 263 nnlhon MWh through tura no euhange rates rin tricity market pru n and the current l)cccml er 31,2Ml hc astrage tised pure to be paid by Aust:ahan < trdo-wonhmew of the agtcement wunterpartiet It n mit prac tuable 1 1:Intue Operanom was $28.75 per MWh compared to the average to detenmne the fait value of the fbtward omtr ut brid by Amtrahan price of unnlar mntracts at I)nember 31.1996 of $27 46. Llntric Operatiom bn ame of the lumted number of tramacnom At 1)erember 31,19Wi, lhunnor Hn tric Operanom had 67 ent.rcJ into for the long term Ibrward contracts and the inaoive 2 NYMt X futmn omtracts to sell cintuaty with notional quanoon tradmg m the clo tnoty spot market. amounting to approsimately 49,300 MWh all espinng in 1997.The average fixnl pra e to be recened by 1)omnoc l.In o n Operatmm was $19.33 per MWh compared to the NYMI X average spot market pru e OT t of $15.78 per MWh. u i m i n - 1)uring 1996 a subuduty ofIlohhnp began L I-A $ l S in Am% to trade electruity related products $uch tramactmm mvolved the .I hr Compames lease c ertam propemn under leasn w ah variom i phyucal dehvery of tlntrioty and are accounted fbe as revenue or pur-expiranon datn and renewal opuont llentah on leaw renewah are (hawd pimer upon dcherry and, at I)nember 31,1996, amoumed to iubpd to wgotiauon.(,.crtam leaws provide fbr optmm to pun haw at 7 a net punhaw pmmon of 1,200 MWh As addiuon.J markets the elec-fair market value..I he Companin are aho wnumttni to pay au tasn, triory.related produca develois includmg denvanvc products the espemn of operanon (other than deprecianon) and nuintenance Company antiupatn that this acovay w di espand apphcable to the leawd property j Net rcot espeme fbr the yean ended lierember 31,1996,1995 and 1994 was $29 nulhon, $50 nulhen and $59 nulhon, rnpecovely. OE emu,e min _ m s w pom o unan n _ am<n m pmong j leasn are $20 nulhon, $14 nulhon, $7 nnthon, $5 nulhon and $4 mil. I: A I il V A 1. U L oi hon for 1997 through 2001, respectncly. 1INANCIAL I N S T it U M E N 'l S o-.a-u m nm n s., y em 3 o l ( uni g on tumy N, wa w wm um 4 j Long-term debt $ 5,536,6 $ 5.62 L5 5 5,134.4 $ 5,370.5 C O M M i1 M L N T S A N 1) C O N 'l I N G L N C I 1 S j Preferred securmn of PacitiCor p debenturn 209.7 210.9 Comtruction.md aojumtions are ntimated at $1 bdhon for 1997, i Preferred unck suljen to As a part of these progrann,substantul wnumonents have been made, mandatory redempoon 17H 0 los 8 219 o 240.3 The Company is sulject to numerom conronmental law s includmg: Derivatives relatmg to the I:cderal Clean Air Act as enibrced by the Environmental I rotection 1 Cunenn' (21.5) (21.5) (1.4) Agency and vanom uate agenoes; the 1940 Clean Air A t Amend-Imernt (10m) (52.5) (35 4) ments; the l'ndangered Spean Act as u relatn to certam potentially 1 Ekctriaty futurn .2 endmgered specin of sainmn; the Comprehemive Envimoment.d 1(nponse Compemanon and 1.iabihty Act irlatmg to enviromnental i The carrymg valu-of cash and cash equivalents recewables payabin, cleanups along wah the lederal Itnoutre Conwrvation and accrued habihtin and short-term borrowmps appro6nute fair value 1(novery An and the Cbn Water Act relaang to water quahty. Thew bec.me of the short-term matunty of thew mstrumentCl he f.ur value laws conhl potenuaHy unpad future operatiom I or thme contingen- ] cin idenutied at Dnember 31,1996, pnnopaHy the Superfbnd sitn of the finance no,e recewable approximates m carrymg value at Dn ember 31,1996. where the Compam has been or may be deugnated as a potentiaUy inpomible party and violatiom under the Clean Air Aa, future cosh Y %( ti 1i L* R F .$ N 4 t A $v N t' A ( A i r tv k I , ~.,

1 t i l i ( j aumiated with dit dnposinon of tilew sitatters are not espet ted to be t U a i u A s e in t iis t 9 j nuterial to the Company'$ (omohdatnl fmancial statemenS Domnnc I In tric Operanom managn m energy enourte reqtme-j The Company'$ mining operatioin are a bject to iniamation and inents by integranng long-tum firm, short-tenn and spot nurlet l (lonne requirementtThe Company umnitors thne vrqunements and purchasm with m am n generating rnounn to economically dnpatih

periodiolly revisn its (mts ntimatn to meet esisting legal and regu-the systent and meet tomontments thr w holnale uln, mchidmg uln i

j latory intuirenienn of the various juriwhitmm in u hich it operatn. sontrun with mmimum payment reqmremenn, and retad load Cmn Ihr rnlanutmn are acaued uung the omtwif prodmnon gnmth As part of m energy enounc pottfobo. Domnts llntrie g method mth that ntunated final unne redamation and timure own Operanom auluirn p(mer ihmugh long-term purihaws anJ/or i are fully unord at (omplenon of numng utninn. Tim is comntent cu bange agreements wint h require nunnnom tised papnenn of $298 i ! with indmtry praction, and the Company bdievn m redamation mdhon in 1997,$294 mdhon in 1999 and 1999, $291 mdhon in 2000 ) obhganom are adequately pmvided tin. aml $252 un! bon in 2001, i The Company and its mbidunn are paron to umn legal tlanm, 'I hoe connaco imlude agreemton woh the llonnevdle Power { actiom and complamn. cen.en of which unuhe tencrut amountt Adminntration, the llermnton Plant and a number of topenerat- } l Although the Company h unable to prnhct with certamty whether or mg faohtiet j not it will ohmta.cly be mcceutid m thne legal pmcenhngs or if not, Luluded thun the nununum hxnl,moual paymenn above, are I what the impact might be,inanagement cmrendy bdievn that dnpo-conmutments to punhaw power inun wveral hydroelntric pn9ern f sition of thne m tters wdl not have a materially adverw etint on the unJrr long-term arrangemena w nh pubhc unhty dnttiittThew pur- } Companyi conohdated finam ial staternentt (hasn are made on a "smt-of4cryice" bas for a stated pen entage of i pngert output and Ibr a hLe penenuge of pmjnt annual (mts (oper. JoINTtY ou N t n N aN1s atmg expemn and debt wrvit e).1 hne unts are mduded m operatiorn At Onember 31,1996,Domotic Lin tric Operanom'partuipanon in expeme. Domotic i;lectric Operatiom n icymred to pay m portion of l joindy owned plann was as followc the ddit wrtke, w hether or not any power h pmducedflhe arrange. menn pmvnic lbr nonw nhdrawable power and the majonty aho pm-1 i kon. rum o.m emn ormmo m A,ommin a wmt m i %Ih.mi nr dnibn Wre km. e IETm um.c hwem Vide for addlOotial power, WuhdraWahle by the datt Cl4 upon one to { I' 47.5%. $ 17R1 $ toro $ 4.2 iive yea n' notice. I:or 1996, sm h pun han appnwimated - Centtaha 3.5%. of energy reqmremenit Jun Bridger t At Deccinber 31,199n, Domntic Ucctric Operanom' hare of 4 i Uma 1,2,3 and 4 66.7 789.7 3n8.1 2.2 i 2.5 long-term atrangemenn wuh pubhc utihty dnnien we a followv { 'i.nvan+. ! Cohtrip Utun 3 and 4 10 0 203 4 63 2 1.1 t.enm% w come cm n, nu m, Ama l ilunter Umt i 93.8 260 2 100 9 .8 ! Ilunter Unit 2 60.3 187.6 66A 1.3 Wanapum 2009 155,444 IK7% $ 5.0 ! Wyodak .80,0 3n3.9 961 1.8 Print llapids 2005 109,602 13.9 37 l Craig 5tation llocky lleach 2011 64,297 5.3 2.4 Umts I and 2 19.3 150o' 56.9 1,1 Welk 2018 59617 7J-1.9 llayden Station Umt i 24.5 17.1* 10.6 1.1 lotal 3ss 96n S Oo Ilayden Station Umt 2 12.6 17 # 9.9 .8 Anma o.m. m maaom s mun, up 6 a m y a s, mas.n llerinnton" $0.0 -

• bl.9 3,4

-+ t j_ o l '

• Pbm, num4wy hwt and dmmamemy onn w img SP wthou etwy u de In9a tw l he Contpany has a 4'% internt m the Intermountani Power Pnvect l

m uxhukd m repd.iu.sv m 1, -swt at ik, r dvr 31. 4-88, n i j A I v imbs un,lb md dopmu.m 4dnes un H 1814 mdim (" Project ), lot Jted in M*ntral Utahl he Company and the City ofI os - Aaamomum.m,n, L.omwa w pma omme% sme.a.,os, c m u i Angeln have agreed that the (,aty wdl purch.ne capaaty and esiergy .Under the joint agtcemenn, exh partiopatmg uuhry a rnpomible from Company plants equal to the Companyi 4% enutlement of the for tinancmg its share of comtrucuon, operating and leasing cmn. Pmject at a price eqmvalent to 4% of the expemn and debt service of l Domntic Ucciric Operation' portion n rnurded in m apphcable - the Pmject, 2 l operatiom, nuintename and tax accountt 4 J a i i l-8 rsi Iicont il 4 %% vsi nt eok 1 - =

~ OT INCt>Mi 1ANI5 'I he ('oinpanyi ontdiined fedctal and state ellh tne ini oine t.is tale w as 3.6'~., in 1996. 32"" in 199; and 35"o in 19%~1 he ditirien( c licturen tasci t ah ubtrd as it'the statutor) fhicial tas satt of Wh w.n apphed to nionne ter6ue income tases and the in ordol tas nprme n teiont iled as fo%v i l t ne... a a2.. n o o~.. i,- i ~s m i CoinpatrJ l cdetal Ini onie lam 276 1 26n 3 5 2;l.2 Ins tcase (lt rdm oon) ni las it uninng inim l)cpiedation ditlerenin 12 A 97 x_4 li've tinent tas tiedits ( l l.ti; (12.3) (Is ;) s Im ew of tas over book stot L basn (1.0) (24 4) (14) i AU hl sott}ct'artit (16 H) Alfotdable iotaltig (tedits (10 6) (x 4) (M 2) l l Other irrini capitalued and nmiellancons diff errm n 1; 3) 4x .7 'lotal (14 f.) (47 4) (Ife 01 l ederal inuune 'las 2613 212.9 235.2 t hiate Int ome law Net of i ederal l l locome lh lienefit 224.- - 259 . _ _ -. 14 6 l 'lotal Innune Tas lapense 283 9 23H H 249 x i filt' fn)Vistoll l kit IllcolnC IJst414 %nlllnlaf'l/cd as bt!!L1W E u.n....,..t a..nm h., o,, u. y im m n.4 ( Int IcIlt l'cdcral 207.5 152.2 222.7 State 28 0 23 1 34 6 l oreign 1.0 Total 235.5 176 3 257,3 !)cter red i cderal 437 56 5 17 8 Ntate 7 ti 17,3 (9 x) r I~ot elgri 8l ],t ) Iotal 59 4 74.N 8o l Imt,tinent 'las Ctedits (11.0) (12 3) (15 5) 1 I lbtal inconne las 1 xpense 283.9 238.8 249N i I k( kI l i k* l% I O

• T k N h I'

k l lt l P iI b {

4,..Js4.__- a.a 4 &* uma A .h_---.m.ma.. 4.ht.,&..mam_u.haah-. h_-- ~J.4.m&. .2_m oa_ m.l%-, -. eA4RJa..4am4__ -. 41s 4 s#_.4Jk-_4 44_4.M., _4s - w 4.a u a _.bc - _ %ws ;.e Aws J.-,.. meg.Jawaae. lbf tJh cf c(Ib of Al{f uth Jlil nelin L LHilfr bul[ tlle (.Lulipany ~s vn't ] defened ta habday we re as tidlow-O'T 4 4 y_._. n_, R I I I it i M i N i p l A N s. 1 licfened 'In i ulnhon Property, plant and npopment $ 1.h N $ 1,2131 I he Goujunin h.nr prouon plam tosenng substantially all of then 9 llegubtory aucts 733 6 756 8 < nil' loan lit nefits under pbm m the Unnul stain are gennaly Other defet ted lutnhoes 3n 7 52.5 bawd on the emplogci 3can of wn n e aini average monthh juv m i the si mnwt utwe months of highnt luy out of the le,t 120 montin. 1)clcried ~ln Auen with adjustinents to erflet t benchh ntmuted to be In'ened froin f l(egulatory halohnn (63 0) (ra7) Nooal Seconty Penuon mso are hmded annualb by no moic than the i llook enervn not deductible lot in M 0) _N 2_M. masunum amount of pcmion esprme w huh on be dedmted for ficJ-t m i ctal itu ome in juttpowt Unfunded pt nor wn n e t osh ate.unottttrd Net Deferrtd in i nluht3 $ 1,9u_1 5 1,9 p i.1 over the venunnog wrute penod of employen opnied to recene j benchit At l >nember 31, tirn., pbn aucu woe pennanh unnted m 1)onng Un% the Company and the Internal lhvenor Snwe (the mnunon stods. bomb and U S govnnment obhganom. r l "l16") agiced on a wtdement of a!! iwun relatcJ to the irs n.munation All pernonent emplown oflwcron mgaged poor to Oitober 4, i of the Compmy\\ federal income in retmm hit the yean Una through Iw4 are monben of Dn mmn 11 or C of the Superannuanon I und i 19MM, intludnig nutten telanng to the ('omluny's abandonment of ("l und") whh h proudn defined benchts m the form of penuom in liN mtont in %dungton Pubhe Powu Supph System Unit No 3 (1)nmon ll) or lamp suna (linnion E) lloih defined bene 6t i unds 3 j Doting 1996.the Company in ened an runnnanon icport for 1989 air <lowd to new membcn. Dnwon 11 memben sontribute at us of j and 1*M propodog adjusoncon that woulJ tm reaw mmme tn by supnannuanon sabry,,ont linicon C memben on motobute at 0,3. l $11 nulhon. I he Com;uny fded a tuotnt of(criam propowd adjmt. or ua Dunng 199n,motobutions une nude to the 1-umi at the rate g ( I mounc tn tcturin are cunently undet rununation by the Ilh Net penuon wo is suunnarucd,n followe I mancul Scrvit n aupiina houdog projn ti th,a <p.ahiy for the low - m - a m M on u m im um i j muune houung aubt ntabinbed,n p.nt of thc lu lletonn At t of N em bmcha urnd 5 P' $ N $ 34

1%6 to prmide an im entwe for the development and prewivanon of hanen osa on poWM j pocately owned athmbble rental homing Annual tn benchn u heJ" bene obhaio$

89 o Hol RI uled to be in rwed nom thne pmjn is.ne espn ted to be $13 nulhon, Actud (gam) low on pbn auct. (79 9) (I R S) 4.9 $12 nulhon,$11 nulhon, $7 nothon and $n uuthon for 19'n ihmugh Net amosuranon and defctral %3 lu 5 ( M 7)

' 2001 scspntacir Rc uhmtv ddend' N2 2H

,7 4 Net Penuun Cmt $ (Al $ 80 9 5 4n 4 4 -o em omn,o m n 6 m eam mmongo.ao,nm.,m e mn.,ra m n,,o,o nyulun 4umane in A kt Ow JA em..' bogvo p n +,o e 4 e &in mmnt m 4, mrde r w nh si % V' ea M and out dim oed f4 tweamr pq% M btc 2 r 4 1 i I 1 5 7 > ri jt I( tt nr 4j a* 4 % N U AI R 5 0 6* li !

l he folhled status, not pensn.n habihty athi ugfutn ant aniunptlOln o :e 3 a, m," - n,%,,,, e a m., om,,,.u o n em d( til Af idl )'f t W11t table Ol. () I il l R p()s ! R I 1 l n i M i N I 11 i N 1.I I I 5 kiroffit Oldigalloll4 !IOIllr\\th ! !Mif h Opriatnin% and'lr!rt OHHnulut atlOnt pHiside heJhh Yr\\trd britellt ObbgAtton $ l,n45 \\ $ ),0 0 9 raf t alhi bfC nhn!Jok e brorfit% thf Uugh UllOUs p\\ ant [UI thrit ib}r $t ( LilllulJtod brilrfit Obbg illoti l,12Il N 1,094 ), ) f rtiltr% Of t J kbnl% %U!MtJntiall) UNHlaf 10 th0W M hD aff JL the Cl, Oy* hf DJM lf t! brorlit O}d1 gallon 1,270.7 j,262, \\ 00L l br CUst Ob pO%ttettf enient brnelitt b aa f urd OVvf tbr at tor trl-I l'latt aut t4 Jt faif Yahar 1,1442 $ W)$ h VRC prfited (s[ rlllpht)CCg l hr (f angthen tehllga(lull grpfrstngs the Ultijet h d brlirbt Oldigalb en Unf M Upfll/rd filOf WlVh e (tht Jild B bVlflg althlf tiffd O\\rf si prflOJ !!! PXI r% b[phn nytg 228 2 3Meh DI 20 yra!% l Or (BOW ( n tpkOyCM frtord at January l, Ph3, thr Ullf M i tput/ Od filOf ht f Vh r ( th! (ll.9) (9.8) ( inipally lulld4 pDstivtif tfilt'lll brntfit CXlirfiq On a ply-Aquu go UnfrtOgniird nrt iou (65 s) (104 oj b.nn. IUr those rinp!O3res fetinng attrf January 1,1993,the COnipany i UllfG(8plik/rt! firt O!d!gillOfl (7,b) (Y)I) billdi pt4f f rt Hrillellt k'ellrfit C\\})cilW (!iNiLipIl J ( OlnblllatlDil (if fldid+ Miniirisurn liability :lJjtatintiit _2 9 65,1 ing vtliitlet 'llie CD:npaliy fiilidt d $38 tiidliofi and $40 inilhon Of p(hlf otifC111ritt IhrnrI!! r\\prn%C Lluf tflg 199h,ltid ]9'J$, inpn tnt}y, . Net Penuun liabihty $ lan ? $ 228 4 ~I hne fiinds att ontsted in muunOn stOc ks.1,Onds and US gover n-llirli! Okdigalloili l) lit DOlit f.Itr 7 2b"nc 7 $"a

7. 2 $",

! kar not prflildh pD%tf rilfrinellt kirtlefil ( thl h %%tnlinallied as fiillOwt I ApN ted Liiig-ttf rii rafe of it-tuf ri w-' oi a m I" er " ivm tm nm Ofl auch N YoM h K5 br#o krf i h r L O%l--liriliIith Caf fletl 9.h H.3 $ 4.h kateOjinifrJW lll (Olmpril%AlHDH leit'lt 4 Yo'Ib YrO lf1tef t%t (Ost till as t uintl}atrd pthtf rf tf rfilefit ItrllrInt l)olnf% tit l lrt tl k ()pefathifh til}Cf Cd rafIV Trtiltinent ll!L olith r ptogrann ili 1987 Jehl 1990 lnt hidrd tu the table abOVr is the picWnt killurt1/JtlOli of f f afettitif t Valtar Of all iUfute f(f nunation brortitt pnnidCd Ol $$N nulhOn l ObhganOn 14.3 15.7 16 3 I)t itit%tir l'In tf10 ()peratit ttn f et ris ed fCgul.itOly at's Hunting tilders 10 drirf Pht}y lettf rinrot (Osts.n a trgt!!atOf y aurt to be ainOf fi/rd Net awel gain (liio) dufing j thfuogh the yeaf 2020 Nrr Notr 2. IIlr prflOd def.rfied (.Or lutuir forOgniht tl 37 3,7 (4.4) At tual frtufil On plan aurts (14 $) (10.7) .3 NCt l'onodir l\\ntretif rinent lienefit ('04t 1 44.4 5 45.1 5 47,2 l r k II ,..m,. .._,__._.,m .. ~.. ~ _ _. -. _ _,.. m...

'l he au umulatnl pmtirntoncnt benefit obbgatum ("APilO") wa (in 1)n ember 12, 1995, llohhnp puuluwd l\\menor, an sln. n fidlowv inoty datubotor m Amitaba, the attimanatelv $1.6 bdhon m seh. wi,- aaas % + u m. m hmen ori teruir tcr ntorv iin hides a portmn of subuiban Mcibouine and the woto n aini t ennal tepom of the huic of Va tona. Powen ot , II,rtian and drpendum $ 2n9,5 $ 267.7 l ully thgdde at twe plan natently he approumately Sl7mi cmtomen t he aujunmon we u mtmtal for.n a puu hase,uul the inula of. operanum of hmen or pat tiopanti 22 2 23 5 luw bron on huini m the t omohdatnl finanual stati ments ume Other at ore plan pattuipano l ho M __. 174 5-- 1)n ember 12 PW5 APilo 392 5 465.7 On \\vptunbtr 27,1995, hohirts of a nujurity of the 5.3 mdhon Phn auen at iait value Inq2_ t 17 4_ shatn of oubt.mdmg uonnion uot L bcht bs nunorn) sharrholten of APlio m curu of p!m auch 2263 34 0 P~ll soted in favor of, the inctger of a w holly (m ned sulnidiary of Untru*purni prior sen ice ont .5 6 ilohhnp into Pil. Sluf tholden terulet mp duin punuant to the Unremgniini tranunon obhgatum (251.0) (2n67) merget wete pani a total of $131 nullmo, or $3n per dure, and an Umecogmied net g.mi (losy 48.2 (5nM 4 cued habihty of $2N nothon un ntabinhed to cover numatrd ,u i j Att runl hattelneturnt llenttit amounn papble to dmenten Ihn nig 19% P I1 purt hEt'd 4 citain haf al trlef lone esllunge,iurb i 4 Obhgation 5 24 0 $ 32 1 i m Colorato,Wehington and ( hegon for approutnately $376 nulhon. (In Aupl4 7 I49b, PII t jowd the tile of the 4 tick o[Alaw olu, jnr, 4 Ihsmunt rate ., 5 u, 7.25% f. a "E " ' " d """ i"" I'" '"E , I unnated lon -term tate of 1 $ %n nulkon in pioteeds. Under torna of the agttrinent Al AT paid ~ rtruin oil aurh 9 !h KH,4-9,N i $291 lin!lloll in t Uh lot' the AlaWoln Mot k athl for wttleturill of all TaQ I Imtul heahh ore cmt twnd unt uudy mun. ATAT agreed m allow PTl to retam a $75 unthon i 4 rate-under 63 H x,v-l Pn, 1 Ps butial heahh i.or imt uend traminon payment made by AI AT to Alaxom m July 1994 AlWI e a dow n pa>nn nt of $ nuHion to Pil upon ugning the uot L ) in rate-over 65 8 avin.5% Hrs pun hae apccment m ( h tober PnUI he remaining $261 unthon we Uhnnate heahh are t ost trend rate 4A 4 h, p.nd w ben the trantu non t imed.The Company inogmied an after-tax palf1 of $37 nulhon from the tale of Alahom. .t.he aumned heahh care tost actul rain gradually decrene over 3 Sununatired income statement data f.ut Alawotn are a followt right yean. Ihe heahh iaie ont trend rate aunmpnom hne a iigmfi-7 inm,% mut n,o-(ant 0l Int on the JulounD repotted. llKir,Nng the awumed heahh -his R m, uaim a au o u.aua. w.. care co4 tiend rate by one poltelltage point wonId llMT tlkrCawd tile i APilO M of l)ctenibrr 31,1996 by $29 onlliofh and the,mnual Ort hrVrinin $ 193,1 $ 343 5 perioshe pmneturment benefit cosa by $3 nulhon. Innune hom optranom 36.9 8n.7 ,_O':e. 5 O':e f A C Q U i S I ~I I O N N AND DINP(15l11ON$ N U llSI Q U l. N ~1 1V1N1% in hertember 1996, a comornum, known n the liaielwood Pown on Man h 4,1997 the Uuh lxghlature pawed a biH whu h t reatn a Partnenhap, pun hard a 1,600 intgawatt, mal-tired generating uanon legidative tek ibrte to qudy uranded co-t mun and the imung ot and anocuted mal mine in Wroru, Amtiaba lbr approumately cmtomer t hoke.'I hr bill hecin ratn at Januaiy 31,1997 leveh untd $ 1,9 bdhon. 'I he tomoroum tinanced ihe aniunition of ihe 60 days tidlowing the mm imion of the 1998 legisbnvc general scumn. Ibithsood pbnt and mine unh appmunutely $x58 million m 1he PNC o pinluded from hohhng any hearmp on rate slungn equity tontnbutiom from the partnen and $1 bdhon of nontnourw dming the frecie penoJ.1 he Company ha ronumrted to reduce borrowmp at the partnenlup level. llohhnp,w hich ha a 199% inter-pinn to Utah cu tomen by $12 on1 hon annuaHy on approumately nt in the pannenhip, financed in $145 mdhon pornon of the nimty May 1, Pn7 invntment and the,motiated $12 nulhon advame with long-tenn On Manh 11,1997, liohhnp enterni mio an apreinent to aujune bornming m the Umtnl Ntatn.The other pannen in the partnenhip 1PC Corporanon, a natural ge gathenng, procewing, uorage and are mbsidiann of National Power Pl C (51.9% Dntec I nergy (2tN) marketing mmpany.'l he aupmmon n expnted to cou approunutely alk! Conllnonwealth llank Group o[ AmtrahJ (h.2% $2H8 nulhon in cah phh a%umed debt of appmunutcly $149 mdhon, ,sv i.it ,ac n i,... s., e * < u e r o e, e

.~-- 1~o<:e'6 % 1 i l' C 1 I li i iNANCIA1 A N I) SIGMiNI 1 N I tiil M A Iiti N t mm m..a a.,tu g,,o h.w s,....omu 6., o.c u en im im m on. Iln enues f I )omotit-I lerttu Operattom $ 2.960 N $ 2.616 I $ 2.64 7.h 5 2.6h6 9 5 2,362 4 Autuah.m I les tint (1ptratunn 658 H 28i9 1cleo umnuun anom 521 1 640 1 696.5 693 H f 00 6 Other Opreahone 15%1 l' M 107 106 4 1751 a ' lot al $ 4.29 % M $ 3.410 9 5 3.49H H $ 33971 $ 3.22k 1 inuonc t' rom ( 7peratiom I)otonth I lot u ic ()petatiom M69.8 hoo.9 5 H19 3 7x4 3 677.7 Amirahan 1intric Operatmm 127 4 53 4 h In ono nunk abom 1M7 1653 164 7 140.N 13H 6 i I (Itht r (Iprf atioin ' b9 2 64.2 34.3 44.1 {ll2 N) lotal 5 1.24; I 1.O W 9 5 1.022 J 969 2 5 701 5 Et innone (I ow 504.9 5

oS n 46H 4 5

479.1 ~$ (340 4) i 1.arnuigs Conttsbuuou (I oo) on l'ononon Stot L Cononning opetanom 1)onic%ttC llrittil (IpfrJtioin 341.5 276 4 339.8 322.3 202.9 Amtralun 1lntric Operahom 30.1 .7 l l liletonuntuuratiom 74 7 103 0 70.5 50 9 57 3 Othet Operationc (14_7 2) 28 8 b6 2 lH O 10.2 'lotal 475.1 466.3 42MJ 3N3.4 112.9 l hu ono nuril opriatiom 52 4 (490 6) i Otonulauve etib: ofihange in an onoting for income taxes 4,0 - ~ _ ) 'li>tal 5 4751 5 466 3 5 428 3 5 4Wb (377.7) 1:atsonp (L ow) per Sh.nc Contuunng opetanom 1)omesne i lertrw ()perahom 1.17 5 .97 l.20 l.17 .76 Amualun iIn tric Operatiom .10 Tcles onununu atiom .25 36 25 .19 .21 Other Operationc 10 31 06 .04 (W ' Total 1.62 1,64 1.51 1.40 .42 lh ontmord opetahone .19 (1.84) Cumulative eflect of(lunge in accountmg for mcotue tasci .01 local 5 1 62 5 1 64 5 1 51 5 1.60 (1.42) Cash !)wulena lin lated }irr ( Mnunon Sh ne 5 1.HM 5 1.08 l.t m 5 1 US 5 1.53 Matlet Price pet Cononon %hur' 20% 21'. IMt. 19% 19*. Capitahra00n 5hott-term clebt 5 937 5 1.227 5 551 5 709 5 473 I ong term tiebt 5.324 4.968 3,76H 3.924 4,1 x l Preferred wrurittes of Trmt 210 lletleemable prefc.:rni stos k 17M 219 219 219 219 Pretetini sim L 136 312 367 367 417 Conunon cymty 4.032 3.633 __3.460 3.263 2.908 lotal 5 10.817 5 10);9 5 H365 8.4 H2 5 M.698 'lotal Awets 5 14.6 % 14.015 5 11.M46 5 l l.M7 5 11.257 + 4 % o,c ou.. nAh (*w een m.% oft %adorp bu%ui w m.n t.m. e,ot., t.+ncicum (.. mpm wJ wm d supup t w u ntwn r. art; e Sc 4. ta uw. H I% W bsp h H a.tne tw a t#hng i o4n-my 6N-

• 1itw onhnm a strmuw 64h%. ow (hmpm1 mtnot m NIR<T1 Inc ni lIli Lumnum u m.Im

- UntAhwd F A ( lP l I 3k I h4 '3 9 4 4h

• t t-4 L P.

i l' ( 4 k I

J t I i 11OMi5T1C 1: I l'. C T R I C D l' l. R A "I I o N A f s w, i j t wa, to Utt*4 4 ompt umt f { M4llusse of rk.lbn to ett as suen d 1 og ab. tr.a ) Vsf, t was 19.,4 ( g i Revenuov I l R eudental 7h3 6 5 728.9 5 724.9 97, 4% { Ctuninen tal 622.4 575 9 570 4 H 5 g indmittal 70'i.0 697 6 726 3 1 l ( hI'er 32 5 29.7 30.7 9 3 Retad halm 2,1 J V 5 2.025 1 _ 23 523 6 3 Wholnale-firin fa5 4 487.7 456 2 30 15 t Wholnale-noof n ni 103 4 32 3 _76 5-10 Wholnalc $ aln 738 H $2n O 80 2.7 42 14 [ i Other 76 5 71.0 62 8 N 2(i i 'liital I 2,9f.o N 26161 2.647.8 13 6 b petan f t j l'uel 4430 431.6 4H3 0 3 l l'un h.nni pimet $46 9 3%6.4 356.7 65 23 j_ Other opraanom 277,7 274.0 2fd2 1 2 l Maintenatu r 167.3 lu.4 174 5 (1) (1) l= Adininkiratne and gencial 17f. 3 160.5 142.7 10 8 [ } licptniation and antoituat on 343.4 320.4 301,6 7 7 i ) Tan, other than income inn 96.4 103 9 t ot. 8 Q), (3) I 'lotal 2.091 O 1,H 15.2 1,H2H $ 15 7 f i tilf ollit' l'fon t ( Ipf t alloll% 869.H bi ll i,9 N193 9 4 [ Intrint rkprene 304.2 311,9 2643 (2) 4 internt capitahted (11.4) (14.9) (14.5) 23 6 Other inmine-nct (11.2) (253) (30.2) 56 5 Inconte in espense _ 216.9 214.1_ 220.2 1 7, a Nr:Intoine 371 3 315.1 379 3 IN 1 4 I. l'rrfrired t hvidend Rnluirement __29 8 38.7 39.7 (23) (9) ,- _ t - 34, 3 2,,. 4 24 2 id_,m, a_ .4 e.5. .. e.m 3 3 Capital *pending 5 595 5 455 638 31 (2)

• n a a w ou +,i mma,,
• 1km run trelot dun.mnon of isorns tm mn vomy-r-twar ming covements and nieluJn un >mw um on a wiw4w4reywm num treieat ogp rg i u_,, gsyeat p t.. t o it a

i i !) O M I',$ T I C f.!LCTRfC O P t it A I l O N % S T A 'l 1 % 1 10 %" $w 19*, en a wi i omg.oumi l n+vi ruty Anmul ktilloua ad d.4 tin e u r;< n o,it-d I a the we t u ar, tws On4 t.migur 6an (.n ne th 1:nergy Sales (Milhorn of kWin Itnidential 12.Hl9 12.030 12.127 7'n, 2"4, Cominen ial 11.497 10,797 10.645 6 4 Industtial 20.332 10,748 20,306 3 1 Other (.4 0 - 592 623 H 2 Itet.nl galm .2K54 43,167 4),701 5 2 Winilewle-brin 23,l H9 13,946' 12,41 H 66 25 l Wholnale-nonht m 6,479 _ 2,430 3,207 29 1 1 Wholnale saln 29,6fA I fi,376 1 A,625 _Mt 26 l 'lotal 74,953 b9.b 43 b9,%2fe 26 9 i i Number oflletail Cust<nnets (Thomando j linidential 1.194 1,176 1.155 2 2 l Conunen ial 167 162 159 3 3 indmtrial 20 20 19 4 Other 4 3 4 33 10 '1btal J3x5 t 1,361 1,337 2 2 ) Itnidential Customers t Average annual mage (LWi0 10,H15 10,321 10,568 5 Avesage annual revenue ( per s'tittomer (1)ollah) 663 619 63) 7 2 Ilevenue per LWh (Crnn)- 61 6.0 60 2 2 ) h Miln ofI..ine i 'Irainminion 14,9t ki 14,900 14,9t n i ] I)istribunon -Ovethead 45,( K H) 4 4,9t H1 4 4,Ht N I -Underground 9,N n i 9,100 H,800 32 l $ystem l'eak 1)cmand (Megawath) Net sptem load

• mitnunri 7,257

' 6,H 55 7,151 6 3. j - winter 7,615 7,030 7,174 8 2 t ^!otal fit m load { m utnttner'- 10,572 H,899 H,830 19 H ~ winter 10.775 H,404 H,903 21 7 l 1 Sptem Capabihty (Megawata)4 l --sun uner ! ?,115 10.224 10,020 lH 7 j ~wmter 12,160 10,994 10,391 11 7 i ) 1 1 .I i

• Nm a monmpi.d mu dwt
• Un odia 4
• 1.ulo.b uff wurm uW
• Im h,Ja ethunn wh.**,4 utn
• betwuur g talwl elav s'nt tu puda.cs as wiie 14 firm pol ratieit opr:

3f, tev6 4% N tr 4i st atonT

AUSTR ALI AN i. l. l C T it. l C O P I: ll A T I O N S 1 O9e opt tN doi!cfg Pop rjit es h ste-d 'lvt thee st af )(tw. jP6 limetmr batninp Contributione llevenues l Rendential 2314 Ins Conuuertial Iris.5 59 linfustrial 179.3 6,4 I Other 44_4 21. { Retail bles 628 ti 25.4 i Otlict 30 2 5 l 'lotal 6MH 2% 9 l Opctatmg Expemn i l'unliased pmet 305.1 11M . t IcI ofcIMkkOll% ' f).) .5 h Maintenance 50m .3 Adnunistrative and general -40.7 3.4 I I)cpreciation and ainonisation 71 Ji 31 ) hkn other than inco!ne tasci 1.7 1 l .~Iotal 531.4 20 4 - Incoine froni Operatium 127.4 55 j luterest expense 75.2 . -3,8 Other expense A .5 inconic tax expeme 19 I .5 I l'owercor 1 attung Contribution

• 32.7

.7 t llafe! Wood baInillg% Colatfiliuliurl# (2 (d ~ identifiable anets 2#5 I 751 t Capital mperahng 226 1,591 Energy Sales (Milhom of LWh)' linidential 2,N iH 112 Corutnen ial 1,926 f.6 ' Indmirial 12M2 152 Other 494 32 'lotal H 310 362 i

• Rendia i4 ttreamin et texluk<i ustte ditet of a gnmtion,IM endo Q l*fi tut hmttiot and hqtmdwr 11, l'Av. kee Iiwiemt
• Attwauon el mirwas tuvw on nu remened iwroute dd4 mtmnd m the Uniw,1 kurs e pari 4 the ihmA t tM a.ipuanon wiutt he,v ndo ni hme,mri utump iusednnino
• l'hw+tnmowh $2h mdhon Art sat m 19%

t r al hird r4( ii tooae 57 11 *

• i4Nvai k 4 P O m 't

~

- - - _... - - - ~ ~ - -. ~. ~ - -. ~._.- _ -.- i ) T 1: L l', C O M M U N I (? A T l O N S 5 w, i+. i, ivn r..o.s.o,u.4 j li tirtay Aium.1 nihom sd A.fbn su rps.p noint f of s; s 1% 19 4 t re4 ( i.myu m.n ( *mm h j l llevenuet Iwal network service 140.9 120.5 %9 17% 2(rs Network arru servi < e 259.1 223 7 16H.5 16 12 Cellular 44.0 33.9 23 ti 30 40 Other 77.1 68.9 64.0 12 1 3 Alascopi l'81 3435 j 'lotal 521.1 640.1 696.5 (19) (9) l f I lixpernet Operatiotn. Mi 5 78.2 fi6.7 4 9 i Maintenance - 91.2 86 0 74.4 6 H I Atlinittistrauve and general 63 6 53.5 4 M.0 19 5 ) i)cptrciation and antortiration 106.5 86.2 66.2 24 15 'Ines other than incotne fases 19 6 14.7 13.7 33 15 f 156.2 - 262.H l Alawoin [ lotal 362.4 474 8 531 H (24) _ (13) l 4 i incoine frotn Operations 15H 7 165.3 164.7 (4) 4 Intelest exprine 40,M 42.3 34.M (4) (3) f Other (income) expeine-net (4.9) (63 f ) 7.7 92 income tax cxperne 47.5 47.0 40.H 1 26 Net income " 75.3 139.6 Hl.4 (46) (9) - t Manotity interest and other .6 36.6 10.9 (98) (57) i t !!artunp Contribution

• 74 7 5

loi n 70 5 (27) 14 l identifuble auets 1.592 5 1,599 1,378 Capital $pendmg 5 127 498 153 (75) Telephone uten hnes (Thouund*)* 559 530 418 5 12 E 1 i

• Nte a vnr4

+kt

• then one n'11er.'WI tm*'knowimri of nmot on mien.mlum baramg mmgemrun

'hulie e kIihim$dd e45 ti 1 5;- u n r 1+v+ ANNE 4 4 $ t t u t< 1 . _ - _, _ -. _ _ _, _, _ ~.. _. _ ~,. _ _. _..,.,. _, _. - -... ~. _. _ _,.. _.. _,.. _, - -.. -.. _.

m___ - ~ _ 1 i l O 1 ll !. li, O l' I k A 1 I O N $ i [ Other Operatiom m(ludes the operatiom of Pu thCotp i mancul Sen h et loc. ("PI $"), Panfit Generanon Cotopany ("PGC") and severali, tart. l } up-pluse ventutri, as well as the activines ofIlohhnp indudmg Onancmg onts. j 4 \\ Ni g$ y im u, em ny,m.a h e,e myr Am%el a Mdi.ew of dotha ro de us - in n+A tw4 t ~,.ngone.n t in.ve { t R evenues 153.1 5 134,8 153.7 14 % (Hj% j ! locome from operanom h%2 84 2 3(3 6 27 I)epicaation and amortiution M.9 l(t2 18 2 (13) (14) l~.atnmp Contril4utmn i l'l $ 34 1 3t L 4 30 12 l PGG 7.x 5 t. H.5 39 6 1 j Tax settlement 32.2 l Ilohimp md other (13 1) 18.o 6.s i Total 2M N 86 2 IN o (67 % 41 %, ! jdentifi Ahle dwels PI 5 70H 697 7 31 2N. (14rn PGC 123 l i t. 113 (, i finidmp anti other 283 253 252 12 4 l. 'liital 1.114 5 1.066 5 1pm 5 en i ! Capital spetidmg 5 56 5 175 5 13 (6%)% M"h

• N 4 uw m,nga,,miae,
• Dem sua tribe thmausmo of immu on notenom;un, twummg arrmermems m.1 m.luim munne tari on s = gurmo omtwn te S U P P L F. M I. N T A I l N 1 O ll M A l l O N QU A n1: nts et4AsetA DA1A (U N A U ht 11 D)

Mai,"ms utm,.,r,ihm,nomm v, ,,nAa Mmny som s, wnae, w n...enae, u ? 1996-Revenuen 1,f u t2.6 976.4 $ 1.134.5 $ 1.181L3 f locome 60m operanom 312.3 25h3 33H9 337.6 Net income 12%9 99.2 142.9 1323 Earnint; ion wmmon stosk 1203 9t L2 136.6 127.4 Earnmp per common share .42 .31 46 .43 Conunon dividends paid and declared per share .27 .27 .27 .27 Common stock pri< e per share (NYSE)- liigh - 22 % 22 i.ow 20% 19H 1% 19 4 1995 t i lin enues 5 M36.5 811.4 954.2 894,8 -l Inwme from opeianom 266.2 219.9 '87.2 2N2.6 l Net inmme - 114.8 93.5 i n9 o

• J.7 Earmnp on common stock 104.7

- H3.3 158 9 + 119.4 1:armnp per conanon slure .37 .29 .56" .42 Common dahlends paid and dedated perilure .27 .27 .27 .27 Common uoil piice per slure (NYht?) i ihgh 19 % 1% 19 % 2 P i, - 1ow I8 18b 17M 18 %

• Ths iud ywin inunwt ymtu,m 5 Iva auani a en of p; masa m s oneaun.thono.Ac u,ot h m n

8 HgnillCallt pottidtl o[ tile ope!'attolM are of a seasonal DJlure. Previomly reported quarterly informanon las been revised to retica cert.un reclawificationtThese rednuncatium had no etIcct on premuy reported consohdated net menine, On March 1,1997, there were 127,412 common thareholiers of record. ? e n t _i s e r o r r w i =u 4 *. S u s i at romi r, .,..,,e+- mw.- me,-4..~w ,.-4,v.--t--w---, .m-- -~m-..,w.m.-- -,-.~e+,. w..-,y.-%,-

A mal worc Q R Q d6 Sh &e A John $mith lirtue Croast lirian Sickels Don 1:urnun I kr l'inant lir twhnt Ii.r l'n od< ni lir l'n_adaa GL,bal Retal %hi (.lobal M u krimg (.h,bal I nergy inadmg lbmnty Duunru linvlopment Vision and strategy are vital to the achievement of success, but even more important are the people who embrace the vision and execute the strategy that enable us to meet our goals. PacifiCorp is fortunate to have a dynam c workforce that embraces the bold ideas, new oppor-tunities and even the uncertainty that ch:,racterize today's perpetually changing electric industry. As PacifiCorp's Chief Executive Ollicer, I am privileged to work with some of the brightest people in our industry today. I'd like to share with you the success stories of several employees who represent the creative, entrepreneurial skills that will make us one of the industry's leading global energy providers. 10ll N SMITil and llRUC E CRO An played a crucial role in making Powercor the most successfid electricity retailer in the State of Victoria, Australia. John and llruce developed a sales 7 and marketing strategy that provides customers with unique solutions to their needs that are both cost-efTective and profitable, llruce and John also developed strong ties between the marketing, sales and energy trading groups that produced a unified team able to quickly make decisions and react to change. Now that Powercor is poised to succeed in New South Wales' contestable maiket, .llruce and John are moving to Oregon to share their expertise with PacifiCorp's Global Sales, Marketing and Energy Trading Group. Even before adding that strength, PacifiCorp's wholesale bu..aess had a record year in 1996, due in large part to the leadership of HRl A N SICK ELS and

DON 1:URM AN. Ilrian strengthened our position in the western wholesale power market,while Don led our expansion ef1brts in the eastern U.S. Flexibility is the key to success in an ever-changing market, and llrian and Don developed creative solutions like our interim marketing agreement with llig Rivers that strengthened our position as a leader in the wholesale power market.

rm,,,<e., m ,m 4 s~m oi,o,

? i i ( 1 a h) r } j QQ) ( j[y j yf e f% l w% 's t d i y w g (!. h( l Joe Goodrich Ed O'Mara liarban Cronise Donn Wonnell I w, uawom ne nos.m ne sw&m ne nuaa,, g r<m s,,rr Apom l w u pm J,hmion nmer Plam en.atJe New Produtt. ni ihmocu initutim Puitw Tr!r<om l Managing through change is diflicult, but managing through crisis presents extra challenges. in late 1995,a fatal accident occurred at PacifiCorp's DaveJohnston Power Plant Jo n coOniuc u-I had only managed the plallt for two years,but his tireless efforts to work with everyone fium inves-I tigators to victims' flunilies were instruinental in getting tile })lant back on track in a way ) that restored the confidence of einployees and the coinnuinity liispiring customer confidence is i etjually important to PacillCorp, and thanks to eo O'uan A and n Aiusan A cRONISE, our customers will have an even larger variety of value-added energy products and services to choose firom. llarbara and Ed's bold vision and initiative help?d create en.able, our newjoint-venture with KN Energy,which will shape the future of the markeeplace for both utilities and their consumers. PacifiCorp's prospects for continued success as a rural teleconununications provider received a-boost from oONN WONNLi L. His vision, persuasiveness and partnership with others in the indusa resulted in favorable treatment for rural teleconununications providers within the Telecomnianications Act of 1996. Donn's etrorts have helped provide us with a framework to sustain and grow the quality of service to our customers.These are just a few examples of the i employees who thrtify PacifiCorp's vision,and are dedicated to finding innovative ways to deliver additional value to our customers and our shareholders. -Frederick W. Iluckman ,n.me., u .ssv., m, ,_m... ,. _.. -,.,.. -.. _ _. -. -,. -. ~,, _ - _,,,...,,._. - ......-,m,.,, ,.m

o O MO Paci::1 ora O::::1cers '4 I tederick W. Ilut Luun,51 I)ennis it Steinberg. 50 J. lhett liarvey,46 l'anl N. l'echersty,56 iv a,a a,a o.,,j 1 ,,u,,,, nn o u n.., na sm a rs unto,,,x.na s u, is us,a o,a i t, n,.acet a,a cu11,as,,, awn nr., IW4 (bt poord the Compny) 14 mo. I hulci", cut l'n4h PN 'i pnN llichant T. O'llr ien, 42 i) avid it ilotlinan,52 Wdham E. l'ercuini. 40 Veri IUI' pham,62 n.: iso A,", snaa,cu syn.us,e i w iw a n,.,,a nau,,,

3. m, na sw a.a o

,md Chrt I nn,m.ul < nhr, M,ma i Le lwns nr and ( rmal C.u ml an) Iwum a luia %mo Iw4 a 19 0 U02 Un1 Mic hael J. l'ittinan,44 John A. Ilohling,53 lloiuhl A. liloothrotth,4n James I L 1lueigen,47 n., nua. a ne.mm no... o s.,m, i w ima. c n,a,u q,,omm cm.,mur, i.uaan, na sw a,s. en9 Pohh 1%s ,,cd Chu!Inun uli>lha la gu u..g.,o 14. lirian 1). Sit Lch,51 Mit hael C. Ilenderson,50 Wilham C. Iliauer. 58 i,a i m a,a. u +alin.,o w!",e i, nea,a. 7,a,m !*r."a N,u,,' l w noao". U. ' nu it Joam,i Thomas J. Imeson,46 cm4 l,aa,ursonal 1%anen Ikul ment 19M ikr lwudon. iwu Al lam t im a,a c. ..m.m. aim.., l'eter J. Vines, 47 Anne E. Lakin,47 p,o u msmf l a,,ue, l'anl G.1 of enlitti,54 S Lr i% uh nt. Re guluun l'aqt Gni Anasa!,a Holhos. I',y DJ w,n. rim a.,v,AJ,m..a,emn i%i Thomas A. l.ocLhart,61 tum 19h? Iir swa an. Shelley li. Faigle,45 u,o.g.- cm.un..n uc&a sema, Ernest E.Wruman,49 Chat 105 E. Iloblilson,63 smo, iis sw u1,u, cm,oma ius t w sw u A ni, i'guo _%,r;4 ( purum ou,, man, tw.ac,a,ua s J swir smo sa,an,, namu,g a a u,,m,s,a en Chfi un.mv ( yNee. lWtk 7;len. Im 19n Sally A. Nofiiger,6n vo9 IWi 1k swuAn, va Co,pmn uu,y Ilichani 1).Westerberg,47 Thomas W. Forsgren,54 1%2 1)aniel L Spahiing,43 iwimaou.was wiro inswa % nmoqsoum 'l Ouuma.na ( hf Lua.twe Q4r,. .va lia,m o i hw Lynu nr Ethvin J. (')'Mara,4 I th h ut,w, Auauh. lenard - 1970 f.u.utar lir swo4 nt, rs,.ahlr A ma, I b ibarn,, Ib.(,,Gry I b lui4,,r, iWhG er i Phi 1)onahl N. Furman,4h r"4 Ih l% aJ nt Pna i F AL i i I L *i K P h) ) 4 *a 4 *i N1 At 9t i P (, R i

i Paci i or a Boarc< or Directors a W. Chailes Ar mstrong,52 Ilobes t G. Miller,52 i.. a ce,,,,,,,,,,,,.a ca.,,,,,,,,,,,,,a chu.-l i,,,,,, e p,. n ( kij i m uint ( p'h.tr i sni Mestt, liu. Ihnk ef Asnetu a Orrgun Porti md ( hep.n n,,am,i 0,rp,n em l'in (br dn trd i the lisutil Alan K. Siingwon,65 Kath*yn A. liraun,45 f.,,,,io t u vn.u. su.idor lir Iso,Je nt ( hiv. Wyoming Wruern I hgiul ( brp l'r0 imnt r umina em Veil it'lophain,62 keuse i kr l'rnsdon,rnJ ( kunal cenn,I l~rederit L W. Ilockinan,51 raot'Cor p isoan.,,,,a o,,,:, ia n may r cea s,h tat en3, unh PanhCor p pn.: h,r thod. Otryon om 1)on M. Wheeler,68 o,.,m,a.a no.f12,asr,ogi,n C. Iodd ColloVer,57 LCM i spaptnent Ctempany IknJcnt did ( b1 ( oraont ( Y!nn 'uk l Ar Cits.Uuh T he v.nuge Comr mv h,w I o, Alun. Cahtor na emi Nancy Wilgenbuwh,49 troano Nolan E. Karras,52 Mmthunt colirce f ntoni, ns Urime Mai) thant, Oregnn Kartas & Amw utes lux 6 Row Unh reo l'eter 1.Wohl. 49 nm,,o Keith IL McKeiisiori,70 wohl(wi a cas compant Ch.sm.er, ( npt t, homing Pacda br p On% PortLn.t Oregon yn; F 4 L' 11 I t' (2 P F f._3 iw 't ? A N N L A1 A 4 t' Ok I'

Investor In ormation !a l (84 A iist.Il4 NE.1 l i ti l t N o b itO N isH o llit h I N I(6 H M A li)N PacillCof fi ConHoon stoil is hsted on the NewYork Stot k i u hange 1)nn t mqmrin una ennng lost lunnh, inte!nt papnenn, tlunges of ; afnl the Pulfic Stot k Imhange undet the spnhol PPW addicu and other manen Irlanog to <m nerslup to { 'llir (ompatty has thfre other wttirion wint h att Inted and Chase MatthattJn llank tsuied on the New York Soul I.u hange (,orporate liust Servh n~Comumniutmm im.e t,,,4.- a 1201 Main Steret-17 OMP $1.98 No Par Serial Prtferred Stml, Serin 1992 PPW I: Dalle hm 75202 K375% Quatterly Imome Debt sn untin PCQ Ueneral nuiunin: 1-H!at.48-N380 i K55% Qu.uterly income Dcht Securinn PCX i orm 109'1 and tax itapnDn: 1 kia2984805 Dady 911016 on the Connnon stotk and othrt Inled securiun un 4ggg4g g7,,,yg be obtattled by thn kmg the New hk Simk Imhange compmne "I he 1997 Annual Meetmg of Paa6 Corp Sharrholden wdl be; trarnattiom hsted in tout newspapen. 'l he cong-yi fint mortgage bonds and luost perfittred stock WHn Jie inhrquently Maded in the Wedonday. May 14,19W l'""W 1" ll"lc1 Dyer-the-t ouliter inJrket 255 S. Wntlemple hatt l'akr Ctty' UtJh tNVfs1Ok i N i O h M A11 O N I itutKlal analysh,stot khniken, mternted Im nton and financial mcdu dntting InfotOution about PMihCotp shoulJ (ontact lia ntor A copy of the unnpanyi 1996 10 4, filed wah the Securitin and Relatiom at (503) 731-2075. IM h.mgr Commimon, nuy be obtalited by contartmg Inyntor t>HARIHO!DtR 51hviiIh AND IN t O R M Allo N 1 or quotiom rrgardmg PacihCorp stot k ownchhip, Shau holder i DiViDI h D PWMiN1 Servirn may lic reu hed liom all U S. long dntance all locanom at (Hoo) 233-5453. Poriland-area callen can JUd 731-2on2. Ihe toll-fire U"d'"d' "" 'k C"*P""O '"""""" '"d prefened und in W are npened to be pani on or about telephone number n amwered briwren 7 a m and 5 y m. Pauhe time Monday /i hunday, and 7 a m. to 4 p m. on fruiay. Shareholden' w ot-1 ebruary 15 May 15 Augmt 15 November 17 ten (orrnpothlcocr inay be subtnitted to: gf,Co,p Sm,.U<r s-Coraorate Ac c resses ,Do N L Mohnonuh Street, Sune 700 Portland, Oivgon 97232 4107 t ACit toon P IN il R Nt.1 ADnkihs Cepntr 11.aJguartm btips / w w w pai liicotp own 4 i 1kAN>1rh A 6 i N 'l 700 N 1 Muhnmnah Suret. Su te n.no ~ Panf 4 Corp tuainhitn shareholder records and acts as trainfer Agrnt iOUNhtt Ibrti nd. OR M232-4116 and Regntrar f.or the companyi conunon and preferred tock m.un. su,riRnnite (90) 731 2 tut I N iil P r N D I N : AUDilokti ill V I D I N ll R i IN V t s1 M t N 1 AND %10Ch PURCHAsl P AC li f C illiCOM, INC lhlm'te 45 lota be !! P Pacifi(,.or p,s dividend trinvestment plan a a s omement way for M Drouhur sharrholden to increase their intntment m the company. UnJer the m tu mi plan, quanetly dividends hom common and pretined sh un (all or a wm oumwA wmoi portion) may be antomatically applied toward punhne of addmon.d nun nwon sharn of common stos L Coh contribunons ot up to $25J N O per quar-POuraCon ter can also be nude. Pamcipants unhing to terminute dnadend rem 7 Ausi n A t A i Miii D vntment nuy wll their plan shatn through the company pros aled their flaJ opu 3 fae.w.n > account balanie is lew than If u shares. A snull (onuniwmn fee a t rva 3, n southwnt tiouinara t m kist un 14:roMtMc charged when,ipphcable. Entmg shatchoklen can open a dividend southtunk,Nont Aumau Mar.ournetJuiona. Austuha trintntment actovat with cuher dwidends from existing dures or wah towm4444 twidun Amm.ho an imtial ash contnbunon. I:or a pnwpectus, enmlhuent card or other etIwou4444 ttrom U s Illfornation, Oll or utste the Sh.ucholder Serncn Department. e ,ient o ne u 4,, o ss~u4 t raronr

T Energ ('ont 11cntal U itted Staics arid Austr. ilia .. Iq,m

j. v.9J$ +2 ~ ~ p_ __,n.

k e 4 e 7 Qg;-u )t.j p_. l ~' ) \\.; s'Tg' b,Gl.d% e %^ g.y ~ ,',~(f. x.> e1... ,.g.., .,<.sv 4 (,,, -x ~, ,,y. 3... y m \\) /.ew\\) x \\ m l(cuil Servise Area .1. n ci p3 Sources . Wholeule hmer ('ostoniers I u.nm,u .aL.,y v,n,,,o.,.nnnynno.<...r.,,n.n m am. t i nerg) In&ng i ocanoin l I C_eC0111111Un1 Cat 10nS c_ - un,,,a. _ mi i ex 'N 1 I __ iW /q p 37 % k ~~ ; }. 9* n/ 1 f_0 p A.\\ 5 r T*/[jN~. / d \\ cn c-R ,.r~~ Q Q +,a Q ~ Nbf % W hv k..i. i 'j s kr& t. <x yJ ~se \\/ N -M~ ,~ %) 3 c i e 1 '\\1 . i e m e on, s m,<< 4,ca

.b m i q l { s I 1 ) l l 4 PACIFICORP Mi N.E. Multnoinah Street Portland, Oregon (17232-41 t r> i I \\}}