SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1996
Registrant; State of Incorporation; IRS Employer
COMMISSION FILE NUMBER ADDRESS; AND TELEPHONE NUMBER IDENTIFICATION NO.
1-5532 PORTLAND GENERAL CORPORATION 93-0909442
(an Oregon Corporation)
121 SW Salmon Street
Portland, Oregon 97204
(503) 464-8820
1-5532-99 PORTLAND GENERAL ELECTRIC COMPANY 93-0256820
(an Oregon Corporation)
121 SW Salmon Street
Portland, Oregon 97204
(503) 464-8000
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes X . No .
The number of shares outstanding of the registrants' common stocks as of July
31, 1996 are:
Portland General Corporation 51,167,274
Portland General Electric Company 42,758,877
(owned by Portland General Corporation)
1
TABLE OF CONTENTS
PAGE
NUMBER
DEFINITIONS ............................................................ 2
PART I. PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
FINANCIAL INFORMATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations ............. 3
Consolidated Statements of Income .......................... 11
Consolidated Statements of Retained Earnings ............... 11
Consolidated Balance Sheets ................................ 12
Consolidated Statements of Cash Flow ....................... 13
Notes to Consolidated Financial Statements ................. 14
Portland General Electric Company and
Subsidiaries Financial Information ........................ 17
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings ................................. 20
Item 4 - Submission of Matters to a Vote of Security Holders 20
Item 6 - Exhibits and Reports on Form 8-K .................. 21
Signature Page ............................................. 22
DEFINITIONS
Bonneville Pacific .................Bonneville Pacific Corporation
BPA ...............................Bonneville Power Administration
Coyote Springs ....................Coyote Springs Generation Plant
Enron .................................................Enron Corp.
FERC .........................Federal Energy Regulatory Commission
Holdings ..........................Portland General Holdings, Inc.
kWh .................................................Kilowatt-Hour
MWa .............................................Average megawatts
MWh .................................................Megawatt-hour
NYMEX ................................New York Mercantile Exchange
OPUC or the Commission ...........Oregon Public Utility Commission
Portland General or PGC ..............Portland General Corporation
PGE or the Company ..............Portland General Electric Company
PUHCA ..................Public Utility Holding Company Act of 1935
Trojan .......................................Trojan Nuclear Plant
USDOE ..........................United States Department of Energy
2
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL AND OPERATING OUTLOOK
PORTLAND GENERAL CORPORATION - HOLDING COMPANY
Portland General Corporation (Portland General or PGC), an electric utility
holding company, was organized in December 1985. Portland General Electric
Company (PGE or the Company), an electric utility company and Portland
General's principal operating subsidiary, accounts for substantially all of
Portland General's assets, revenues and net income.
PROPOSED MERGER
On July 20, 1996, Portland General entered into an Agreement and Plan of
Merger with Enron, a Delaware corporation, to merge in a tax-free, stock-for-
stock transaction. The transaction which has been approved by both companies'
boards of directors, will entitle Portland General shareholders to receive one
share of Enron common stock for each share of Portland General common stock
held by them.
Under the terms of merger agreement, Enron will reincorporate in Oregon to
allow it to qualify as an intrastate holding company that is exempt from the
registration requirements of PUHCA. In the event that PUHCA is amended or
repealed in a manner that would make this reincorporation no longer necessary,
PGC will merge directly into the present Enron, a Delaware corporation. PGE,
Portland General's utility subsidiary, will retain
its name and most of its functions, becoming the fifth business unit of Enron.
It will join the existing four Enron business units: Enron Operations;
Enron Development/Enron Global Power and Pipelines;
Enron Capital and Trade Resources; and Enron Oil and Gas Company.
The merger is conditioned, among other things, upon the approvals of each
company's shareholders at special meetings planned for the fall of 1996
and the completion of regulatory procedures including
those at the OPUC and FERC. The
companies are hopeful that the regulatory procedures can be completed in less
than 12 months from the date of the agreement.
The merger agreement may be terminated by Enron if the average of the closing
prices of Enron Common Stock during the 20 consecutive trading day period
ending five trading days prior to the date of the special meeting of the
shareholders of Portland General is more than
$47.25 per share, and may be terminated by
PGC if the average of the closing prices of Enron Common Stock during such
period is less than $36.25 per share.
APPROVALS AND CONSENTS
OPUC - Upon completion of the PGC merger, Enron will be the
owner of the common stock of PGE. PGE
is subject to the jurisdiction of the OPUC with respect to its electric
utility operations. Under Oregon statute, the OPUC must approve any
transaction in which a person acquires the power to exercise any substantial
influence over the policies and actions of a public utility subject to its
jurisdiction. Enron and Portland General will file a joint application
with the
Commission seeking approval of the merger. The OPUC will address whether the
merger will serve the customers of PGE in the public interest. In making that
finding the OPUC considers whether the change in ownership of the public
utility will impair the ability of the utility to provide adequate service at
just and reasonable rates. Concurrent with working with the Commission on the
merger approval issues and process, PGE has presented a rate plan to the OPUC
that proposes to reduce prices and provide new options and services for
customers, as well as commits to no general price increase
3
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
through December 31, 1998 (see discussion below).
FERC - The Federal Power Act provides that no public utility
shall sell or otherwise dispose of its jurisdictional facilities or, directly
or indirectly, merge or consolidate such facilities with those of any other
person or acquire any security of any other public utility without first
having obtained authorization from FERC. The Approval of FERC is required in
order to consummate the Merger. Under the Federal Power Act, FERC will
approve the merger if it finds such merger consistent with the public
interest. In reviewing a merger, FERC generally evaluates: whether the
merger will adversely affect competition; whether the merger will adversely
affect operating costs and rates; whether the merger will impair the
effectiveness of regulation; whether the purchase price is reasonable; whether
the merger is the result of coercion; and whether the accounting treatment is
reasonable.
OTHER - The merger will require the consent and approval of various other
regulatory agencies. PGC and Enron will seek to obtain all necessary consents
and approvals in order to consummate the merger. It is anticipated that these
regulatory procedures can be completed in less than 12 months.
PORTLAND GENERAL ELECTRIC COMPANY - ELECTRIC UTILITY
REGULATORY MATTERS
RATE PROPOSAL - On August 6, 1996 PGE presented a plan to the OPUC to address
issues related to lower than expected power and natural gas costs. The plan
seeks Commission approval for change to certain PGE
tariffs. Changes include expansion of PGE's market based retail rates,
a 3.5 percent reduction in residential customer rates, development of
tariffs for time of day and direct access experimental programs for
residential and small commercial customers,
a potential extension beyond its 1996 expiration of a rate mechanism to
decouple short-term profits from retail kilowatt-hour sales
and acceleration of the Trojan investment recovery.
PGE's current rates were established after a lengthy formal public process
ending in March 1995. Since PGE's last general rate case the Company has
benefited from significant savings as a result of falling natural gas and
power purchase prices. In early 1996, PGE agreed
to develop a plan for sharing some of these savings
with customers beginning in 1997. If approved, the rate plan will provide
approximately $50 million in annual rate reductions, benefiting all
customer classes, as well as accelerating PGE's recovery of its Trojan
investment.
The proposal is based on forecasts that assume regulatory
approval of the merger between Portland General and Enron. The Company has
included in the plan a request to accelerate certain of the rate reductions
upon the OPUC's approval of the merger application. PGE's goal is
to obtain Commission
approval for both the rate plan and the merger application this fall.
TROJAN INVESTMENT RECOVERY - In April 1996 a circuit court judge in Marion
County, Oregon contradicted a November 1994 ruling from the same court,
finding that the OPUC could not authorize PGE to collect a return on its
undepreciated investment in Trojan currently in PGE's rate base. The ruling
was the result of an appeal of PGE's 1995 general rate order which granted PGE
recovery of, and a return on, 87 percent of its remaining investment in
Trojan.
The November 1994 ruling, by a different judge of the same court, upheld the
Commission's 1993
4
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Declaratory Ruling (DR-10). In DR-10 the OPUC ruled that
PGE could recover and earn a return on its undepreciated Trojan investment,
provided certain conditions were met. The Commission relied on a 1992 Oregon
Department of Justice opinion issued by the Attorney General's office stating
that the Commission had the authority to set prices including recovery of and
on investment in plant that is no longer in service.
The 1994 ruling was appealed to the Oregon Court of Appeals and stayed
pending the appeal of the Commission's March 1995 order. Both PGE and the
OPUC have separately appealed the April 1996 ruling which was
combined with the appeal of the November 1994 ruling at the Oregon Court of
Appeals.
For further information regarding the legal challenges to the OPUC's authority
to grant recovery of PGE's Trojan investment see Item 3, Legal proceedings, of
Portland General's and PGE's Forms 10-K for the year ended December 31, 1995.
COMPETITION
The Energy Policy Act of 1992 (Energy Act) set the stage for change in federal
and state regulations aimed at increasing both wholesale and retail
competition in the electric industry. The Energy Act eased restrictions on
independent power production and granted authority to FERC to mandate open
access for the wholesale transmission of electricity.
FERC has taken steps to provide a framework for increased competition in the
electric industry. In 1996 FERC issued Order 888 requiring non-
discriminatory open access transmission by all public utilities that own
interstate transmission. The final rule requires utilities to file tariffs
that offer others the same transmission services they provide themselves under
comparable terms and conditions. This rule also allows public utilities to
recover stranded costs in accordance with the terms, conditions and procedures
set forth in Order 888. The ruling requires reciprocity from municipals,
cooperatives and federal power marketers receiving service under the tariff.
The new rules became effective July 9, 1996 and are expected to result in
increased competition, lower prices and more choices to wholesale energy
customers.
The FERC action applies only to the wholesale transmission of electricity and
does not proscribe terms and conditions of retail transmission service which
is subject to individual state regulation. Since the passage of the Energy
Act, various state utility commissions have addressed proposals which would
gradually allow retail customers direct access to generation suppliers,
marketers, brokers and other service providers in a competitive marketplace
for energy services (retail wheeling). Although
presently operating in a cost-based regulated environment, PGE expects
increasing competition from other forms of energy and other suppliers of
electricity. While the Company is unable to determine the future impact of
increased competition, it believes that ultimately it will result in reduced
retail as well as wholesale prices.
OREGON RESTRUCTURING WORKSHOP - In April 1996, FERC concluded that each
state should decide, given its own unique circumstances and objectives,
whether and how retail wheeling of electric power should occur. The OPUC
began its investigation into
restructuring the state's electric utility on June 19, 1996, meeting with
state utility executives, customers, environmental advocates and
other interested parties. The workshop included a discussion on how different
electric industry structures would meet public policy objectives. The
discussion centered on how competition in the generation of electric power
could be introduced and when to allow customers access to competing
power suppliers. The Commission's objective is to ensure that all electric
utility customers are able to benefit from any savings resulting from a
restructured electric industry.
5
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Four specific issues will be the focus of subsequent meetings:
how an electricity distribution company would operate and be regulated; how
energy efficiency and other public purpose programs will be offered and funded
in a restructured environment; what treatment is appropriate for utility
investment in a generating plant that is no longer economic;
and whether vertical integration of electrical utilities should be discouraged
or prohibited. The Commission intends to use future discussions to
prepare itself to act on the competitive initiatives that can be implemented
under its direct authority and to work with the legislature in assessing
proposals for restructuring or allowing greater customer access to the
electric generation market.
RETAIL CUSTOMER GROWTH AND ENERGY SALES
Weather adjusted retail energy sales were relatively flat for the three months
ended June 30, 1996 compared to the same period last year. Residential and
commercial sales increased 2.5 percent
and 1.7 percent respectively with the addition of 3,740 new customers during
the quarter. High-tech and transportation industrial sales were strong as
well; however, production cutbacks by paper and metal manufacturers caused
total industrial sales to be off approximately
4.1 percent for the year. Energy sales have also been adversly affected by
the lingering impact of the December 1995 wind storms and February 1996
flooding which interrupted services for extended periods. As a result the
Company has revised its projected retail energy sales growth to be less than
1 percent for 1996.
WHOLESALE MARKETING
The surplus of electric generating capability in the Western U.S., the
entrance of numerous wholesale marketers and brokers into the market, and open
access transmission will contribute to increasing pressure on the price of
power. In addition the development of financial markets and the NYMEX futures
trading have led to increased information available to market participants,
further adding to the competitive pressure on wholesale prices.
Company wholesale revenues continue to make a
growing contribution providing nearly 14 percent of total
operating revenues; this represents an 89 percent increase compared to the
second quarter of 1995. The growth in wholesale sales is in part attributed to
PGE's aggressive sales efforts as part of the Company's plan to expand its
existing marketing capabilities and activities throughout the Western U.S.
INDEPENDENT TRANSMISSION GRID OPERATOR
PGE has signed a memorandum of understanding with six other Northwest
utilities to create an independent transmission grid operator called "IndeGo".
The plan between PGE, Idaho Power Company, Montana Power Company, PacifiCorp,
Puget Sound Power & Light Company, Sierra Pacific Power Company and The
Washington Water Power Company is scheduled to be filed with FERC by the end
of the year, in anticipation of operations commencing mid-1997.
6
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
IndeGo's purpose is to ensure non-discriminatory open access to electricity
transmission facilities in compliance with FERC rules. FERC has required open
transmission access in its recent Order 888, as part of deregulation of the
electric utility industry. Under the agreement, IndeGo would assume
responsibility for day to day operation of main transmission lines which are
directly owned by the seven utilities. Each of the companies would maintain
ownership of the lines, as well as responsibility for repair and upgrades.
RESULTS OF OPERATIONS
The following discussion focuses on utility operations, unless otherwise
noted. Due to seasonal fluctuations in electricity sales, as well as the
price of wholesale energy and fuel costs, quarterly operating earnings are not
necessarily indicative of results to be expected for calendar year 1996.
1996 COMPARED TO 1995 FOR THE THREE MONTHS ENDED JUNE 30
Portland General earned $34 million or $0.66 per share for the second quarter
of 1996 compared to earnings of $32 million or $0.64 per share in 1995.
Improved 1996 operating earnings include continued strong growth in
residential sales and wholesale sales, the benefits of an abundant, low cost
supply of electricity resulting from very favorable water conditions and a
competitive wholesale power market.
Operating revenues increased $14 million or 6 percent over the same period
last year primarily driven by an 89 percent jump in wholesale revenues.
Power marketing efforts led to increased sales as PGE was able to purchase
and remarket abundant northwest hydro-generated power. Wholesale sales were
profitable despite a 57 percent decrease in the average sales price
which remained well above the Company's average cost of power.
Retail revenues of $199 million were comparable to 1995.
Residential sales remained strong,
increasing 2.9 percent and providing $6 million in additional revenue.
Residential weather-adjusted sales were 2.5 percent above 1995. This increase
was propelled by the addition of 3,664 residential customers for the quarter.
The Company served an average of 14,300 more customers than in 1995.
Commercial sales were in line with 1995 but an increase in average prices
contributed nearly $3 million to revenues. However, industrial sales are off
last years pace despite robust demand from high-tech customers as paper and
metals manufacturers experienced cutbacks due to weak paper markets and
competitive pressures. The Company deferred $6 million in revenues
related to a one time Oregon state excise tax reduction for refund to
customers which offseet retail revenue increases.
Variable power costs of $46 million approximated the level incurred in 1995
despite a 36 percent increase in total energy sales. An abundant supply of
power available in the market, much of it hydro-generated, displaced more
expensive thermal
generation throughout the region. PGE took advantage of competitive market
prices and purchased 87 percent of its power needs with an additional 10
percent generated by PGE hydro-electric plants.
Company generation, primarily hydro, provided 13 percent of PGE's power needs.
Hydro plant generation increased 7 percent from 1995, or 44,480 MWh,
reflecting good water conditions on the Clackamas River system. PGE thermal
generation accounted for only 3 percent of total Company energy requirements
compared to 9 percent last year.
7
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESOURCE MIX/VARIABLE POWER COSTS
Average Variable
Resource Mix Power Cost (Mills/kWh)
1996 1995 1996 1995
Generation 13% 22% 3.6 4.6
Firm Purchases 72 29 10.3 22.4
Spot Purchases 15 49 8.8 10.0
Total Resources 100% 100% Average 10.4 13.7
PGE does not have a fuel adjustment clause as part of its retail rate
structure; therefore, changes in fuel and purchased power expenses are
reflected currently in earnings.
Energy purchases were up 48 percent due to higher loads and thermal
displacement. A competitive market and abundant supplies of energy drove
wholesale prices below 1995 levels saving PGE almost $25 million. Firm
purchases, primarily from mid-Columbia projects, averaged 10.3 mills
compared to 22.4 mills while spot market purchases averaged 8.8 mills
compared to an average 10.0 mills in 1995.
Operating expenses (excluding variable power, depreciation and income
taxes) were $5 million higher than last year. Operating costs associated
with the new Coyote Springs facility, including higher firm natural gas
transportation costs, and increased customer marketing and service
costs contributed to this increase. Decreased operations and
maintenance costs at Company generating plants helped partially offset the
increases for the quarter. PGE effectively utilized personnel from its
idle thermal plants to reduce expenditures for temporary, contract and
overtime labor as well as assist in Trojan decommissioning activities.
Depreciation, Decommissioning and Amortization increased $4 million due to
depreciation taken on Coyote Springs as well as depreciation taken on
other general plant investment completed since the second quarter of 1995.
Other income decreased nearly $3 million due to discontinuation of
carrying costs accruals on regulatory assets. Interest charges were 9
percent above 1995
due to higher levels of short-term debt, decreased AFDC accruals since the
completion of Coyote Springs in November 1995 and the refinancing of $80
million in preferred stock with Junior Subordinated Deferrable Interest
Debentures. This refinancing of preferred stock has lowered the preferred
dividend requirement by nearly $2 million.
1996 COMPARED TO 1995 FOR THE SIX MONTHS ENDED JUNE 30
Portland General earned $83 million or $1.63 per share for the six months
ended June 30, 1996 compared to $30 million or $0.60 per share in 1995.
1995 earnings include a one time $37 million after tax charge to income
relating to the regulatory disallowance of 13 percent of PGE's investment
in Trojan. Excluding the Trojan charge, 1995 earnings would have been $67
million. Improved earnings for the year reflect the benefits of record
water conditions, cooler temperatures coupled with a growing residential
customer base and the Company's aggressive wholesale marketing efforts.
8
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Retail Revenues exceeded 1995 by $23 million or 5 percent largely due to
April 1995 and November 1995 rate increases accompanied by a 2.2 percent
growth in energy sales. Significantly colder mean temperatures in January
and February, 2.6 and 4.5 degrees respectively, contributed to higher
energy sales in both residential and commercial sectors. For the year the
Company has seen a 13 percent increase in residential heating days. In
addition, residential load growth has contributed significantly to
increased revenues with PGE serving an average of over 16,000 more retail
customers during the period. Although industrial loads have benefited
from the anticipated growth in high-tech industries weak demand from paper
and metals manufacturers has led to a 4 percent decline in industrial
sales for the year.
Aggressive marketing and active trading enabled the Company to increase
wholesale sales by 291 percent contributing $32 million in additional
revenues. A competitive marketplace led to a reduction in the average
sales price by nearly 53 percent.
Variable power costs were $6 million or 4 percent below 1995. Steep
reductions in the cost of purchased power helped more than offset a 34
percent increase in energy needs. Optimal hydro conditions brought sharp
declines in the cost of firm power purchased from the mid-Columbia
projects as well as Company owned hydro projects on the Clackamas River
system. Power purchases amounted to 85 percent of total PGE load at an
average cost of 11.9 mills compared to 18.3 mills in 1995. PGE hydro
projects generated 11 percent of the Company is energy needs with a 12
percent increase in production levels. PGE's thermal plants were largely
displaced contributing to reduced fuel expenditures.
RESOURCE MIX/VARIABLE POWER COSTS
Average Variable
Resource Mix Power Cost (Mills/KWh)
1996 1995 1996 1995
Generation 15% 32% 4.1 6.9
Firm Purchases 70 37 12.5 24.8
Spot Purchases 15 31 9.1 10.5
Total Resources 100% 100% Average 11.7 16.0
PGE does not have a fuel adjustment clause as part of its retail
rate structure; therefore, changes in fuel and purchased power
expenses are reflected currently in earnings.
Operating expenses (excluding variable power, depreciation and
income taxes) were $18 million higher than last year. The increase
is primarily due to an additional $7 million in fixed natural gas
transportation costs, approximately $7 million in increased costs
for transmission and distribution most of which is related to storm
related repair costs and maintenance deferred from December 1995,
and an increase in planned customer marketing and support costs to
meet 1996 marketing objectives and improve to PGE's
Customer Information System.
Depreciation, Decommissioning and Amortization increased $10
million, or 15 percent, due to depreciation taken on Coyote
Springs, new depreciation rates effective April 1, 1995 and
depreciation taken on other general plant investment completed
since the second quarter of 1995.
9
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Excluding the Trojan write-down, other income declined $6 million
due to the discontinuance of accruals of carrying costs on
regulatory assets in late 1995. Interest charges are $4 million
above 1995 due to the lack of AFDC accruals in 1996 as well as
higher levels of short-term debt. PGE's preferred dividend
requirement is down $3 million due to the refinancing of nearly $80
million in preferred stock in 1995.
CASH FLOW
PORTLAND GENERAL CORPORATION
Portland General requires cash to pay dividends to its common
shareholders, to provide funds to its subsidiaries, to meet debt
service obligations and for day to day operations. Sources of cash
are dividends from PGE, leasing rentals, short- and intermediate-
term borrowings and the sale of its common stock. During the
second quarter of 1996 Portland General received $15 million in
dividends from PGE. The retirement of Portland General's $30 million
in medium term notes which mature in September 1996 is expected to be
funded through a special cash dividend from PGE.
Portland General has agreed, as to itself, PGE and other subsidiaries, to
certain limitations on its ability to declare or pay dividends on or
repurchase or redeem its securities, issue securities, and incur
indebtedness pending consummation of the merger agreement with Enron.
This is not expected to interfere with the ability of Portland General or PGE
to declare dividends, obtain financing or conduct its business operations
in a manner consistent with past practice. For further details regarding
these limitations please see Portland General's Form 8-K dated July 20, 1996.
PORTLAND GENERAL ELECTRIC COMPANY
CASH PROVIDED BY OPERATIONS is used to meet the day-to-day cash
requirements of PGE. Supplemental cash is obtained from external
borrowings as needed. A significant portion of cash from operations
comes from
depreciation and amortization of utility plant, charges which are
recovered in customer revenues but require no current cash outlay.
Changes in accounts receivable and accounts payable can also be
significant contributors or users of cash. Improved cash flow for
the current year reflects a higher percentage of cash revenues
combined with lower variable power costs.
INVESTING ACTIVITIES include improvements to generation,
transmission and distribution facilities and continued investment
in energy efficiency programs. Capital expenditures for 1996 of
approximately $170 million are expected to be fully funded by
operating cash flows. Through June 30, 1996 nearly $ 98 million
has been expended for capital projects, including energy efficiency
programs, primarily for improvements to the Company's distribution
system to support the addition of new customers to PGE's service
territory.
PGE funds an external trust for Trojan decommissioning costs
through customer collections at a rate of $14 million annually.
The trust invests in investment-grade tax-exempt and U.S. Treasury
bonds. The Company makes withdrawals from the trust, as necessary,
for reimbursement of decommissioning expenditures.
FINANCING ACTIVITIES - On April 15, 1996 PGE redeemed the 200,000
outstanding shares of its 8.10 percent preferred stock, at par.
The $20 million redemption leaves outstanding only the Company's
7.75 percent preferred stock which has sinking fund requirements
beginning in 2002.
The issuance of additional preferred stock and First Mortgage Bonds
requires PGE to meet earnings coverage and security provisions set
forth in the Articles of Incorporation and Indenture securing its
First Mortgage Bonds. As of June 30, 1996, PGE has the capability
to issue in excess of $500 million each of preferred stock and
additional First Mortgage Bonds under the earnings coverage test.
10
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME FOR THE
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
(Thousands of Dollars)
OPERATING REVENUES $ 233,425 $ 219,892 $ 534,006 $ 479,069
OPERATING EXPENSES
Purchased power and fuel 46,262 46,616 128,559 134,312
Production and distribution 20,018 16,288 41,970 31,441
Maintenance and repairs 11,845 11,384 25,094 21,317
Administrative and other 27,566 26,409 55,251 51,549
Depreciation and amortization 38,550 34,785 76,083 66,243
Taxes other than income taxes 12,766 13,026 27,659 26,783
157,007 148,508 354,616 331,645
OPERATING INCOME BEFORE INCOME TAXES 76,418 71,384 179,390 147,424
INCOME TAXES 24,743 24,205 60,971 50,692
NET OPERATING INCOME 51,675 47,179 118,419 96,732
OTHER INCOME (DEDUCTIONS)
Regulatory disallowance - net of income
taxes of $17,101 - - - (36,708)
Interest expense (19,835) (20,134) (39,603) (39,329)
Allowance for funds used during construction 500 2,926 742 5,074
Preferred dividend requirement - PGE (645) (2,417) (1,631) (5,000)
Other - net of income taxes 1,984 4,849 5,114 9,680
NET INCOME $ 33,679 $ 32,403 $ 83,041 $ 30,449
COMMON STOCK
Average shares outstanding 51,109,790 50,697,040 51,086,325 50,644,415
Earnings per average share $0.66 $0.64 $1.63 $0.60
Dividends declared per share $0.32 $0.30 $0.64 $0.60
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS FOR THE
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
(Thousands of Dollars)
BALANCE AT BEGINNING OF PERIOD $ 168,365 $ 101,063 $ 135,885 $ 118,676
NET INCOME 33,679 32,403 83,041 30,449
ESOP TAX BENEFIT AND OTHER (605) (474) (1,135) (948)
201,439 132,992 217,791 148,177
DIVIDENDS DECLARED ON COMMON STOCK 16,358 15,215 32,710 30,400
BALANCE AT END OF PERIOD $ 185,081 $ 117,777 $ 185,081 $ 117,777
The accompanying notes are an integral part of these consolidated statements.
11
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1996 AND DECEMBER 31, 1995
(Unaudited)
June 30 December 31
1996 1995
(Thousands of Dollars)
ASSETS
ELECTRIC UTILITY PLANT - ORIGINAL COST
Utility plant (includes Construction Work in Progress of
$49,011 and $33,382) $ 2,828,860 $ 2,754,280
Accumulated depreciation (1,089,073) (1,040,014)
1,739,787 1,714,266
Capital leases - less amortization of $29,388 and $27,966 7,980 9,353
1,747,767 1,723,619
OTHER PROPERTY AND INVESTMENTS
Leveraged leases 151,911 152,666
Trojan decommissioning trust, at market value 75,170 68,774
Corporate owned life insurance, less loans of $27,763 and $26,432 78,481 74,574
Other investments 36,752 28,603
342,314 324,617
CURRENT ASSETS
Cash and cash equivalents 7,549 11,919
Accounts and notes receivable 101,115 104,815
Unbilled and accrued revenues 45,438 64,516
Inventories, at average cost 38,269 38,338
Prepayments and other 16,670 16,953
209,041 236,541
DEFERRED CHARGES
Unamortized regulatory assets
Trojan investment 289,897 301,023
Trojan decommissioning 300,382 311,403
Income taxes recoverable 210,318 217,366
Debt reacquisition costs 29,306 29,576
Energy efficiency programs 82,092 77,945
Other 26,640 27,611
WNP-3 settlement exchange agreement 166,239 168,399
Miscellaneous 30,388 29,917
1,135,262 1,163,240
$ 3,434,384 $ 3,448,017
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common stock equity
Common stock, $3.75 par value per share, 100,000,000 shares
authorized, 51,116,367 and 51,013,549 shares outstanding $ 191,686 $ 191,301
Other paid-in capital - net 576,929 574,468
Unearned compensation (6,208) (8,506)
Retained earnings 185,081 135,885
947,488 893,148
Cumulative preferred stock of subsidiary
Subject to mandatory redemption 30,000 40,000
Long-term debt 865,067 890,556
1,842,555 1,823,704
CURRENT LIABILITIES
Long-term debt and preferred stock due within one year 66,542 105,114
Short-term borrowings 226,532 170,248
Accounts payable and other accruals 85,990 133,405
Accrued interest 16,754 16,247
Dividends payable 17,318 16,668
Accrued taxes 23,500 15,151
436,636 456,833
OTHER
Deferred income taxes 635,991 652,846
Deferred investment tax credits 48,944 51,211
Trojan decommissioning and transition obligation 372,933 379,179
Miscellaneous 97,325 84,244
1,155,193 1,167,480
$ 3,434,384 $ 3,448,017
The accompanying notes are an integral part of these consolidated balance sheets.
12
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
(Thousands of Dollars)
CASH PROVIDED (USED) BY -
OPERATIONS:
Net income $ 33,679 $ 32,403 $ 83,041 $ 30,449
Adjustment to reconcile net income to net cash
provided by operations:
Depreciation and amortization 30,503 27,039 59,616 50,845
Amortization of WNP-3 exchange agreement 864 1,227 2,160 2,455
Amortization of Trojan investment 5,935 5,946 11,760 12,409
Amortization of Trojan decommissioning 3,511 3,510 7,021 6,315
Amortization of deferred charges - other 1,355 833 (118) (178)
Deferred income taxes - net (7,087) (140) (11,859) (3,872)
Other noncash revenues (416) (1,405) (799) (1,687)
Regulatory disallowance - - - 36,708
Changes in working capital:
(Increase) Decrease in receivables 22,321 5,914 22,725 10,801
(Increase) Decrease in inventories 590 (946) 69 (7,591)
Increase (Decrease) in payables (59,441) (41,773) (32,545) (17,107)
Other working capital items - net 8,821 11,835 283 785
Nuclear decommissioning expenditures (1,609) (2,497) (2,139) (3,871)
Deferred items - other 13,709 (7,373) 11,626 (5,869)
Miscellaneous - net (1,557) 2,351 3,147 5,043
51,178 36,924 153,988 115,635
INVESTING ACTIVITIES:
Utility construction - new resources (4) (13,452) (15) (29,411)
Utility construction - other (56,922) (36,729) (90,196) (65,163)
Energy efficiency programs (4,694) (5,050) (7,405) (8,952)
Rentals received from leveraged leases 10,516 7,262 16,092 11,685
Nuclear decommissioning trust deposits (3,511) (7,702) (7,950) (10,507)
Nuclear decommissioning trust withdrawals 91 1,670 1,447 6,608
Other (3,594) (2,969) (10,602) 2,247
(58,118) (56,970) (98,629) (93,493)
FINANCING ACTIVITIES:
Short-term borrowings - net 54,133 (24,898) 56,284 (48,525)
Borrowings from corporate owned life insurance - - 1,312 2,589
Long-term debt issued - 75,000 35,000 75,000
Long-term debt retired (5,066) - (87,661) (3,045)
Repayment of nonrecourse borrowings for
leveraged leases (9,516) (6,757) (14,390) (10,628)
Preferred stock retired (20,000) (10,000) (20,000) (10,000)
Common stock issued 353 2,148 1,786 4,562
Dividends paid (16,757) (15,406) (32,060) (30,539)
3,147 20,087 (59,729) (20,586)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,793) 41 (4,370) 1,556
CASH AND CASH EQUIVALENTS AT THE BEGINNING
OF PERIOD 11,342 19,057 11,919 17,542
CASH AND CASH EQUIVALENTS AT THE END
OF PERIOD $ 7,549 $ 19,098 $ 7,549 $ 19,098
Supplemental disclosures of cash flow information
Cash paid during the period:
Interest, net of amounts capitalized $ 19,273 $ 18,248 $ 36,174 $ 31,623
Income taxes 67,670 41,390 67,670 41,390
The accompanying notes are an integral part of these consolidated statements.
13
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - PRINCIPLES OF INTERIM STATEMENTS
The interim financial statements have been prepared by Portland General
and, in
the opinion of management,
reflect all material
adjustments which are
necessary to a fair statement
of results for the interim
period presented. Certain
information and footnote
disclosures made in the last
annual report on Form 10-K
have been condensed or
omitted for the interim
statements. Certain costs
are estimated for the full
year and allocated to interim
periods based on the
estimates of operating time
expired, benefit received or
activity associated with the
interim period. Accordingly,
such costs are subject to
year-end adjustment. It is
Portland General's opinion
that, when the interim
statements are read in
conjunction with the 1995
Annual Report on Form 10-K,
the disclosures are adequate
to make the information
presented not misleading.
RECLASSIFICATIONS - Certain amounts in prior years have been reclassified
for comparative purposes.
NOTE 2 - LEGAL MATTERS
BONNEVILLE PACIFIC LAWSUIT - In April 1992 legal action
was filed by Bonneville
Pacific against Portland
General, Holdings, and
certain individuals
affiliated with Portland
General and Holdings alleging
breach of fiduciary duty,
tortious interference, breach
of contract, and other
actionable wrongs related to
Holdings' investment in
Bonneville Pacific.
Following his appointment,
the Bonneville Pacific
bankruptcy trustee, on behalf
of Bonneville Pacific, filed
numerous amendments to the
complaint. The complaint now
includes allegations of civil
conspiracy, negligent
misrepresentation, breach of
fiduciary duty, and breach of
contract. The amount of
damages sought is not
specified in the complaint.
The Court has rejected the
Trustee's previously filed
damage study which is
expected to be revised and
refiled.
OTHER LEGAL MATTERS - Portland General and certain
of its subsidiaries are party
to various other claims,
legal actions and complaints
arising in the ordinary
course of business. These
claims are not considered
material.
SUMMARY - While the ultimate
disposition of these matters
may have an impact on the
results of operations for a
future reporting period,
management believes, based on
discussion of the underlying
facts and circumstances with
legal counsel, that these
matters will not have a
material adverse effect on
the financial condition of
Portland General.
14
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 3 - TROJAN NUCLEAR PLANT
INVESTMENT RECOVERY - On April 4, 1996 a circuit
court judge in Marion County,
Oregon contradicted a
November 1994 ruling from the
same court, finding that the
OPUC could not authorize PGE
to collect a return on its
undepreciated investment in
Trojan currently in PGE's
rate base. The ruling was the
result of an appeal of PGE's
1995 general rate order which
granted PGE recovery of, and
a return on, 87 percent of
its remaining investment in
Trojan.
The November 1994 ruling, by
a different judge of the same
court, upheld the
Commission's 1993 Declaratory
Ruling (DR-10). In DR-10 the
OPUC ruled that PGE could
recover and earn a return on
its undepreciated Trojan
investment, provided certain
conditions were met. The
Commission relied on a 1992
Oregon Department of Justice
opinion issued by the
Attorney General's office
stating that the Commission
had the authority to set
prices including recovery of
and on investment in plant
that is no longer in service.
The 1994 ruling was appealed
to the Oregon Court of
Appeals and stayed pending
the appeal of the
Commission's March 1995
order. Both PGE and the OPUC
have separately appealed the
April 1996 ruling which was combined with the
appeal of the November 1994
ruling at the Oregon Court of
Appeals.
Management believes that the
authorized recovery of the
Trojan investment and
decommissioning costs will be
upheld and that these legal
challenges will not have a
material adverse impact on
the results of operations or
financial condition of the
Company for any future
reporting period.
NOTE 4 - SUBSEQUENT EVENT
PROPOSED MERGER - On July 20, 1996, Portland
General entered into an
Agreement and Plan of Merger
with Enron Corp. (Enron), a
Delaware corporation, to
merge in a tax-free, stock-
for-stock transaction . The
transaction which has been
approved by both companies'
boards of directors, will
entitle Portland General
shareholders to receive one
share of Enron common stock
for each share of Portland
General common stock held by
them. The merger is
conditioned, among other
things, upon the approvals of
each company's shareholders at special meetings planned for the fall of
1996 and the completion of regulatory procedures including
those at the OPUC and FERC. The companies are hopeful that the
regulatory procedures can be completed in less than 12 months from
the date of the agreement.
The merger agreement may be
terminated by Enron if the
average of the closing prices
of Enron Common Stock during
the 20 consecutive trading
day period ending five
trading days prior to the
date of the meeting of the
shareholders of the Company expected to be held this fall is more
than $47.25 per share, and may be terminated by the Company if the
aveage of the closing prices of Enron Common Stock during
such period is less than $36.25 per share.
15
PORTLAND GENERAL ELECTRIC COMPANY SUBSIDIARIES
FINANCIAL STATEMENTS AND RELATED INFORMATION
TABLE OF CONTENTS
PAGE
NUMBER
Management Discussion and Analysis of
Financial Condition and Results of Operations * 3-10
Financial Statements 17-19
Notes to Financial Statements ** 14-15
* The discussion is substantially the same as that disclosed by
Portland General and, therefore, is incorporated by reference to
the information on the page numbers listed above.
** The notes are substantially the same as those disclosed by
Portland General and are incorporated by reference to the
information on the page numbers shown above, excluding the
Bonneville Pacific litigation discussion contained in Note 2
which relates solely to Portland General.
16
Portland General Electric Company and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME FOR THE
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
(Thousands of Dollars)
OPERATING REVENUES $ 232,921 $ 218,476 $ 533,116 $ 477,367
OPERATING EXPENSES
Purchased power and fuel 46,262 46,616 128,559 134,312
Production and distribution 20,018 16,288 41,970 31,441
Maintenance and repairs 11,845 11,384 25,094 21,317
Administrative and other 27,066 26,144 54,136 50,961
Depreciation and amortization 38,529 34,765 76,041 66,202
Taxes other than income taxes 12,746 13,014 27,593 26,735
Income taxes 24,605 23,766 61,057 50,512
181,071 171,977 414,450 381,480
NET OPERATING INCOME 51,850 46,499 118,666 95,887
OTHER INCOME (DEDUCTIONS)
Regulatory disallowance - net
of income taxes of $17,101 - - - (36,708)
Allowance for equity funds used
during construction - 565 - 686
Other 1,643 4,814 3,391 9,504
Income taxes 105 84 428 (260)
1,748 5,463 3,819 (26,778)
INTEREST CHARGES
Interest on long-term debt and other 16,413 17,464 32,950 33,811
Interest on short-term borrowings 2,771 2,059 5,259 4,246
Allowance for borrowed funds used
during construction (500) (2,361) (742) (4,388)
18,684 17,162 37,467 33,669
NET INCOME 34,914 34,800 85,018 35,440
PREFERRED DIVIDEND REQUIREMENT 645 2,417 1,631 5,000
INCOME AVAILABLE FOR COMMON STOCK $ 34,269 $ 32,383 $ 83,387 $ 30,440
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS FOR THE
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
(Thousands of Dollars)
BALANCE AT BEGINNING OF PERIOD $ 279,904 $ 202,506 $ 246,282 $ 216,468
NET INCOME 34,914 34,800 85,018 35,440
ESOP TAX BENEFIT AND OTHER (605) (474) (1,135) (948)
314,213 236,832 330,165 250,960
DIVIDENDS DECLARED
Common stock 17,958 11,545 32,924 23,090
Preferred stock 645 2,417 1,631 5,000
18,603 13,962 34,555 28,090
BALANCE AT END OF PERIOD $ 295,610 $ 222,870 $ 295,610 $ 222,870
The accompanying notes are an integral part of these consolidated statements.
17
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1996 AND DECEMBER 31, 1995
(Unaudited)
June 30 December 31
1996 1995
(Thousands of Dollars)
ASSETS
ELECTRIC UTILITY PLANT - ORIGINAL COST
Utility plant (includes Construction Work in Progress of
$49,011 and $33,382) $ 2,828,860 $ 2,754,280
Accumulated depreciation (1,089,073) (1,040,014)
1,739,787 1,714,266
Capital leases - less amortization of $29,388 and $27,966 7,980 9,353
1,747,767 1,723,619
OTHER PROPERTY AND INVESTMENTS
Trojan decommissioning trust, at market value 75,170 68,774
Corporate owned life insurance, less loans of $27,763 and $26,432 46,508 44,635
Other investments 32,461 24,943
154,139 138,352
CURRENT ASSETS
Cash and cash equivalents 6,533 2,241
Accounts and notes receivable 101,551 102,592
Unbilled and accrued revenues 45,438 64,516
Inventories, at average cost 38,269 38,338
Prepayments and other 15,733 15,619
207,524 223,306
DEFERRED CHARGES
Unamortized regulatory assets
Trojan investment 289,897 301,023
Trojan decommissioning 300,382 311,403
Income taxes recoverable 210,318 217,366
Debt reacquisition costs 29,306 29,576
Energy efficiency programs 82,092 77,945
Other 26,640 27,611
WNP-3 settlement exchange agreement 166,239 168,399
Miscellaneous 28,518 26,997
1,133,392 1,160,320
$ 3,242,822 $ 3,245,597
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common stock equity
Common stock, $3.75 par value per share, 100,000,000 shares
authorized, 42,758,877 shares outstanding $ 160,346 160,346
Other paid-in capital - net 469,815 466,325
Retained earnings 295,610 246,282
Cumulative preferred stock
Subject to mandatory redemption 30,000 40,000
Long-term debt 865,067 890,556
1,820,838 1,803,509
CURRENT LIABILITIES
Long-term debt and preferred stock due within one year 36,542 75,114
Short-term borrowings 224,332 170,248
Accounts payable and other accruals 86,056 132,064
Accrued interest 15,937 15,442
Dividends payable 18,827 14,956
Accrued taxes 26,981 12,870
408,675 420,694
OTHER
Deferred income taxes 513,527 525,391
Deferred investment tax credits 48,944 51,211
Trojan decommissioning and transition costs 372,933 379,179
Miscellaneous 77,905 65,613
1,013,309 1,021,394
$ 3,242,822 $ 3,245,597
The accompanying notes are an integral part of these consolidated balance sheets.
18
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
1996 1995 1996 1995
(Thousands of Dollars)
CASH PROVIDED (USED IN)
OPERATIONS:
Net Income $ 34,914 $ 34,800 $ 85,018 $ 35,440
Non-cash items included in net income:
Depreciation and amortization 30,485 27,019 59,577 50,804
Amortization of WNP-3 exchange agreement 864 1,227 2,160 2,455
Amortization of Trojan investment 5,935 5,946 11,760 12,409
Amortization of Trojan decommissioning 3,511 3,510 7,021 6,315
Amortization of deferred charges - other 1,355 833 (118) (178)
Deferred income taxes - net (4,120) (662) (6,720) (690)
Regulatory disallowance - - - 36,708
Changes in working capital:
(Increase) Decrease in receivables 21,655 9,997 20,066 13,658
(Increase) Decrease in inventories 590 (946) 69 (7,591)
Increase (Decrease) in payables (60,888) (47,866) (25,441) (18,897)
Other working capital items - net 8,623 11,629 (114) (210)
Nuclear decommissioning expenditures (1,609) (2,497) (2,139) (3,871)
Deferred items - other 13,709 (7,373) 11,626 (5,869)
Miscellaneous - net (1,282) 2,242 2,765 4,292
53,742 37,859 165,530 124,775
INVESTING ACTIVITIES:
Utility construction - new resources (4) (13,452) (15) (29,411)
Utility construction - other (56,922) (36,729) (90,196) (65,163)
Energy efficiency programs (4,694) (5,050) (7,405) (8,952)
Nuclear decommissioning trust deposits (3,511) (7,702) (7,950) (10,507)
Nuclear decommissioning trust withdrawals 91 1,670 1,447 6,608
Other investments (2,162) (2,477) (9,170) (2,978)
(67,202) (63,740) (113,289) (110,403)
FINANCING ACTIVITIES:
Short-term debt - net 51,933 (24,904) 54,084 (48,512)
Borrowings from corporate owned life insurance - - 1,312 2,589
Long-term debt issued - 75,000 35,000 75,000
Long-term debt retired (5,066) - (87,661) (3,045)
Preferred stock retired (20,000) (10,000) (20,000) (10,000)
Dividends paid (16,015) (14,170) (30,684) (29,579)
10,852 25,926 (47,949) (13,547)
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (2,608) 45 4,292 825
CASH AND CASH EQUIVALENTS AT THE BEGINNING
OF PERIOD 9,141 10,370 2,241 9,590
CASH AND CASH EQUIVALENTS AT THE END
OF PERIOD $ 6,533 $ 10,415 $ 6,533 $ 10,415
Supplemental disclosures of cash flow information
Cash paid during the period:
Interest, net of amounts capitalized $ 19,454 $ 18,243 $ 34,884 $ 30,393
Income taxes 64,072 45,818 56,635 45,121
The accompanying notes are an integral part of these consolidated statements.
19
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For further information, see Portland General's and PGE's reports on Form
10-K for the year ended December 31, 1995.
NONUTILITY
ROGER G. SEGAL, AS THE CHAPTER 11 TRUSTEE FOR BONNEVILLE PACIFIC
CORPORATION V. PORTLAND GENERAL CORPORATION, PORTLAND GENERAL HOLDINGS,
INC. ET AL, U.S. DISTRICT COURT FOR THE DISTRICT OF UTAH
At pre-trial hearings held in early May and most recently on August 2, 1996
the court dismissed claims by the trustee regarding RICO
violations and RICO conspriacy, collusive tort, common law fraud and
liability as a partner for the debts of a partnership. The dismissal of
these claims significantly reduces the amount of damages the defendants
could be held liable for if the court were to rule in favor of the
plaintiff on the remaining claims. See Note 2 - Legal Matters in the
Notes to Consolidated Financial Statements for further discussion
regarding this case.
ITEM 4. RESULTS OF VOTES OF SECURITY HOLDERS
At the Annual Meeting of Shareholders held on May 7, 1996 the matters
voted upon and the results of voting were as follows:
FOR AGAINST WITHHELD
Election of Class I Directors:
Richard Geary 43,370,772 308,778 597,304
Jerry E. Hudson 43,321,567 391,809 563,478
Bruce G. Willison 43,324,390 373,420 579,044
FOR AGAINST ABSTAIN
Ratification of the appointment of
Arthur Andersen LLP as independent
public accountants for the year 1996: 43,184,628 652,352 439,874
Shareholder proposal to require new
public accountants every four years: 3,703,691 29,491,385 1,059,178
Shareholder proposal regarding
confidential voting: 6,565,088 26,383,627 1,305,539
20
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
PART II. OTHER INFORMATION
FOR AGAINST ABSTAIN
Shareholder proposal regarding
executive compensation upon change
in control: 12,206,248 19,551,457 2,496,549
Names of other directors whose terms of office as director continued after
the meeting are:
CLASS II CLASS III
Carolyn S. Chamers Gwyneth E. Gamble Booth
Ken L. Harrison Peter J. Brix
Jerome J. Meyer John W. Creighton
Randolph L. Miller
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
NUMBER EXHIBIT PGC PGE
10 Portland General Corporation Retirement Plan
for Outside Directors, 1996 Restatement dated
January 1, 1996, filed herewith X X
Portland General Corporation Management
Deferred Compensation Plan, 1996 Restatement
dated January 1, 1996, filed herewith X X
Portland General Corporation Supplemental
Executive Retirement Plan, 1996 Restatement
dated January 1, 1996, filed herewith X X
Portland General Corporation Outside Directors'
Life Insurance Benefit Plan, 1996 Restatement
dated January 1, 1996, filed herewith X X
Portland General Corporation Outside Directors'
Deferred Compensation Plan, 1996 Restatement
dated January 1, 1996, filed herewith X X
21
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
PART II. OTHER INFORMATION
NUMBER EXHIBIT PGC PGE
10 Portland General Corporation Outside Directors'
Stock Compensation Plan, Amended and
Restated February 6, 1996, filed herewith X X
24 Power of Attorney X X
27 Financial Data Schedule - UT X X
(Electronic Filing Only)
b. Reports on Form 8-K
July 22, 1996 - Item 5. Other Events: Merger Agreement with Enron Corp.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by
the undersigned hereunto duly authorized.
PORTLAND GENERAL CORPORATION
PORTLAND GENERAL ELECTRIC COMPANY
(Registrants)
August 12 , 1996 By /S/ JOSEPH E. FELTZ
Joseph E. Feltz
Assistant Controller
Assistant Treasurer
*Joseph M. Hirko
Sr. Vice President and
Chief Financial Officer
*Signed on behalf of this person.
August 12 , 1996 By /S/ JOSEPH E. FELTZ
Joseph E. Feltz
(Attorney-in-Fact)
22