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 March 31, 1994
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition period from __________ to __________
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 April
30, 1994 are:
Portland General Corporation 50,155,869
Portland General Electric Company 42,758,877
(owned by Portland General Corporation)
1
Index
Page
Number
Part I. Portland General Corporation and Subsidiaries
Financial Information
Management's Discussion and Analysis of
Financial Condition and Results of Operations 3
Statements of Income 11
Statements of Retained Earnings 11
Balance Sheets 12
Statements of Capitalization 13
Statements of Cash Flow 14
Notes to Financial Statements 15
Portland General Electric Company and
Subsidiaries Financial Information 21
Part II. Other Information
Item 1 - Legal Proceedings 26
Item 6 - Exhibits and Reports on Form 8-K 27
Signature Page 28
2
Portland General Corporation and Subsidiaries
Management's Discussion and Analysis of Financial
Condition and Results of Operations
FINANCIAL AND OPERATING OUTLOOK
Utility
General Rate Filing
On November 8, 1993, Portland General Electric Company (PGE or the
Company) filed a request with the Oregon Public Utility Commission (PUC)
to increase electric prices by an average of 5% beginning January 1,
1995. Commercial and industrial customers' rates would increase, on
average, 3.2%. The proposed increase in average annual revenues is $43
million, after the effects of the Bonneville Power Administration (BPA)
exchange benefits (under provisions of the Regional Power Act PGE
exchanges higher-cost power for lower-cost federal hydroelectric power
with BPA and passes the benefits to residential and small farm
customers). PGE requested a return on equity of 11.5%, down from the
current authorized return of 12.5%. If approved, this would be the
Company's first general price increase since 1991.
The general rate filing includes PGE's request for continued recovery of
Trojan Nuclear Plant (Trojan) costs including decommissioning, operating
expenses, taxes, return of capital invested in the plant and return on
the undepreciated investment. PGE's current rates include recovery of
these Trojan costs. In May 1994 the PUC issued an order to delay
consideration of the Trojan-related issues and cost of capital until
August 1994 in order to allow the PUC Staff to retain an expert to
consult and advise the PUC regarding Trojan plant operations. Hearings
are scheduled for October 1994.
Recovery of power cost deferrals is addressed in separate rate
proceedings, not in the general rate case (see the discussion of Power
Cost Recovery below).
Trojan Related Issues
Shutdown - In early 1993, PGE ceased commercial operation of Trojan as
recommended in PGE's Least Cost Plan (LCP). On June 3, 1993 the PUC
acknowledged PGE's LCP.
Decommissioning Estimate - The Company estimates the cost to
decommission Trojan to be $409 million, reflected in nominal dollars (actual
dollars expected to be spent in each year). This represents a site-specific
decommissioning cost estimate performed for Trojan by an experienced
decommissioning engineering firm and assumes that the majority of
decommissioning activities will occur between 1998 and 2002, after
construction of a temporary dry spent fuel storage facility.
Decommissioning of the temporary dry spent fuel storage facility and
final nonradiological site remediation activities will occur in 2018
after PGE completes shipment of spent fuel to a United States Department
of Energy (USDOE) facility.
3
Portland General Corporation and Subsidiaries
Management's Discussion and Analysis of Financial
Condition and Results of Operations
The decommissioning cost estimate includes the cost of decommissioning
planning, removal and burial of irradiated equipment and facilities as
required by the Nuclear Regulatory Commission (NRC); building demolition
and nonradiological site remediation; and fuel management costs
including licensing, surveillance and transition costs. Transition
costs of $75 million are the costs associated with operating and
maintaining the spent fuel pool and securing the plant until
dismantlement can begin. While most decommissioning costs will utilize
funds from PGE's Nuclear Decommissioning Trust (NDT), transition costs
will continue to be paid from current operating funds.
PGE plans to submit a formal decommissioning plan to the NRC in mid-1994.
Presently, PGE is planning to accelerate the removal of some of Trojan's
large components which is expected to result in overall decommissioning
cost savings. Since the Company plans to perform this work prior to
receiving NRC approval of its formal decommissioning plan, specific
approvals will be required from the NRC and the Energy Facility Siting
Council of Oregon. Additionally, the NRC must approve the use of PGE's
NDT funds for removal of large components. The Company plans to begin
this work in 1994.
Assumptions used to develop the site-specific cost estimate for
decommissioning represent the best information PGE has currently.
However, the Company is continuing its analysis of various options which
could change the timing and scope of decommissioning activities. The
Company expects any future changes in estimated decommissioning costs to
be incorporated in future revenues to be collected from customers.
Investment Recovery - In its general rate filing PGE requested continued
recovery of Trojan plant costs, including decommissioning. See the
General Rate Filing discussion above for details regarding the order to
delay the schedule for Trojan-related issues.
The analysis performed for the LCP assumed that continued recovery of
the Trojan plant investment, including future decommissioning costs,
would be granted by the PUC. Regarding the authority of the PUC to
grant recovery, the Oregon Department of Justice (Attorney General)
issued an opinion that the PUC may allow rate recovery of total plant
costs, including operating expenses, taxes, decommissioning costs,
return of capital invested in the plant and return on the undepreciated
investment. While the Attorney General's opinion does not guarantee
recovery of costs associated with the shutdown, it does clarify that
under current law the PUC has authority to allow recovery of such costs
in rates.
PGE asked the PUC to resolve certain legal and policy questions
regarding the statutory framework for future ratemaking proceedings
related to the recovery of the Trojan investment and decommissioning
costs. On August 9, 1993 the PUC issued a declaratory ruling agreeing
with the Attorney General's opinion discussed above. The ruling also
stated that the PUC will favorably consider allowing PGE to recover in
rates some or all of its return on and return of its undepreciated
investment in Trojan, including decommissioning costs, if PGE meets
certain conditions. PGE believes that its general rate filing provides
evidence that satisfies the conditions established by the PUC. See
Legal Proceedings for further discussion of legal challenges to the
declaratory ruling.
4
Portland General Corporation and Subsidiaries
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Management believes that the PUC will grant future revenues to cover
all, or substantially all, of Trojan plant costs with an appropriate
return. However, future recovery of the Trojan plant investment and
future decommissioning costs requires PUC approval in a public
regulatory process. Although the PUC has allowed PGE to continue, on an
interim basis, collection of these costs in the same manner as
prescribed in the Company's last general rate proceeding, the PUC has
yet to address recovery of costs related to a prematurely retired plant
when the decision to close the plant was based upon a least cost
planning process. Due to uncertainties inherent in a public process,
management cannot predict, with certainty, whether all, or substantially
all, of the $361 million Trojan plant investment and $352 million of
future decommissioning costs will be recovered. Management believes the
ultimate outcome of this public regulatory process will not have a
material adverse effect on the financial condition, liquidity or capital
resources of Portland General. However, it may have a material impact
on the results of operations for a future reporting period.
Power Cost Recovery
In early 1993, the PUC authorized PGE to defer 80% of the incremental
power costs incurred from December 4, 1992 through March 31, 1993 to
replace Trojan generation. In total, $44 million of accrued revenues
were recorded for later collection. In accordance with Oregon law
collection is subject to a PUC review of PGE reported earnings, adjusted
for the regulatory treatment of unusual and/or nonrecurring items, as
well as the determination of an appropriate rate of return on equity for
the deferral period. In early 1994, the PUC granted approval for full
recovery and PGE began collection in April 1994. Amounts will be
collected over a three year period.
In August 1993, the PUC authorized PGE to defer, for later collection,
50% of the incremental replacement power costs incurred from July 1,
1993 through March 31, 1994. The PUC granted the lower deferral rate to
reflect expected nuclear operating cost savings. In total, $48 million
of revenues were recorded. The amount of revenues PGE will be allowed
to collect will be established by the PUC following its review of PGE
earnings, as adjusted, and its determination of a rate of return on
equity for the July 1, 1993 through March 31, 1994 period. PGE expects
to submit its filing to the PUC by July 1994.
Customer Growth and Revenues
During the first quarter of 1994, 3,000 retail customers were added to
PGE's service territory. For the twelve-months ended March 31, 1994,
over 10,000 retail customers were added. PGE's weather-adjusted retail
energy sales for the first quarter of 1994 were 3.2% higher than
weather-adjusted retail energy sales during the same period in 1993.
The Company expects 1994 load growth to be approximately 2.6%.
5
Portland General Corporation and Subsidiaries
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Seasonality
PGE's retail sales peak in the winter,
therefore, first quarter earnings are not
necessarily indicative of results to be
expected for fiscal year 1994.
Nonutility
Portland General Corporation (Portland
General), Portland General Holdings, Inc.
(Holdings) and certain Portland General
affiliated individuals have been named in
a class action suit by investors in Bonneville Pacific Corporation
(Bonneville Pacific) and in a suit filed by the bankruptcy trustee for
Bonneville Pacific. The class action suit alleges various violations of
securities law, fraud and misrepresentation. The suit by the bankruptcy
trustee for Bonneville Pacific alleges federal and Utah securities
violations, common law fraud, breach of fiduciary duty, tortious
interference, negligence, negligent misrepresentation and other
actionable wrongs.
Regarding the class action suit, in May 1994 the U.S. District Court for
the District of Utah (the Court)
issued an order on the defendants' motion to dismiss. The order
dismisses the claims filed by the plaintiffs against Portland General,
Holdings and the Portland General affiliated individuals for common law
fraud and negligent misrepresentation, primary liability for violations
of the federal securities laws and secondary liability for aiding and
abetting and conspiracy to violate the federal securities laws. The
order permanently dismisses the secondary liability claims. The Court
stated that it will consider an amendment to the complaint with regard
to the other claims. The Court also held that it would not consider the
claims for Utah state securities law violations until certain issues are
addressed by the Utah state courts.
Holdings has filed a complaint seeking approximately $228 million in
damages against Deloitte & Touche and certain parties associated with
Bonneville Pacific alleging that it relied on fraudulent and negligent
statements and omissions when it acquired a 46% interest in and made
loans to Bonneville Pacific.
A detailed report released in June 1992, by a U.S. Bankruptcy examiner
outlined a number of questionable transactions that resulted in gross
exaggeration of Bonneville Pacific's assets prior to Holdings'
investment. This report includes the examiner's opinion that there was
significant mismanagement and very likely fraud at Bonneville Pacific.
These findings support management's belief that a favorable outcome on
these matters can be achieved.
For background information and further details, see Note 3, Legal
Matters, in Notes to Financial Statements.
6
Portland General Corporation and Subsidiaries
Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
First Quarter 1994 Compared to First Quarter 1993
Portland General earned $39 million, or $0.80 per share, for the first
quarter of 1994 compared to $37 million, or $0.77 per share, in 1993.
Lower average variable power costs and declining operating costs
resulted in higher earnings in 1994.
Operating revenues rose slightly in 1994 reflecting improved wholesale
revenues offset by lower retail revenues. Wholesale revenues rose $9
million due to increased availability of power and opportunities for
sales. During 1994 PGE sold more than double the amount of wholesale
energy than in 1993.
Retail revenues decreased $8 million.
Despite 3.2% load growth, retail
megawatt-hour sales declined 2.8% as a
result of warmer weather in the first
quarter of 1994. In 1994, $18 million in
revenues associated with the 50% deferral
of replacement power costs (see Power
Cost Recovery in the Financial and
Operating Outlook section above) were
accrued, down from $37 million relating
to the 80% deferral in 1993. The lower
deferral rate, coupled with lower power
costs, reduced the amount of the power
cost deferral. Retail revenues increased
$12 million due to the effect of a
decrease in BPA exchange benefits (resulting from the 1993 BPA rate
increase).
Variable power costs rose $10 million or 11% over 1993. A decrease in
BPA exchange benefits resulted in a $12 million increase in variable
power costs and retail revenues as discussed above. Variable power
costs, excluding the effects of BPA exchange benefits, declined despite
the increase in total system send-out. Generation at Company-owned
plants was
up 14% which enabled the Company to
purchase less power. As a result,
purchased power expense declined $9
million while fuel expense increased $6
million. Overall, average variable power
costs fell to 19.6 mills per kilowatt-
hour (10 mills = 1 cent) in 1994 from
21.0 mills per kilowatt-hour in 1993.
The Company experienced significant
nuclear cost savings. Due to fewer
personnel at Trojan, nuclear operating
costs declined $17 million in 1994
contributing to a 20% decline in
operating expenses (excluding variable
power costs and depreciation). During the first quarter of 1994,
$4 million of these costs were amortized to operating expenses.
7
Portland General Corporation and Subsidiaries
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Higher taxable income contributed to the $4 million increase in income
tax expense for the quarter.
1994 Compared to 1993 for the Twelve Months Ended March 31
Portland General earned $92 million, or $1.92 per share, for the twelve-
months ended March 31, 1994 compared to $100 million, or $2.14 per
share, for the 1993 period. Excluding the effects of Trojan steam
generator repair costs of $11 million, after tax, which were restored to
1992 calendar earnings (and included in the 1993 twelve-month period),
1993 earnings would have been $89 million.
Operating revenues rose $26 million due
to a 4% increase in retail revenues.
This increase was partially offset by a
decline in wholesale sales.
Variable power costs increased $72
million in 1994. PGE purchased 28% more
power which drove the average variable
power cost up from 16.2 mills in 1993 to
19.0 mills in 1994.
A primary contributor to the 19% decline
in operating expenses (excluding variable
power costs and depreciation) in the 1994
period was a $67 million decline in
nuclear operating expenses.
Depreciation, decommissioning and amortization rose 23% as a result of
the capitalization of $18 million, before tax, of steam generator repair
costs discussed above.
Interest expense fell 3% as the Company took advantage of lower interest
rates.
CASH FLOW
Portland General Corporation
Portland General requires cash to pay dividends to its common
stockholders, to provide funds to its subsidiaries, to meet debt service
obligations and for day to day operations. Sources of cash are
dividends from PGE, its principal subsidiary, asset sales and leasing
rentals, short- and intermediate-term borrowings and the sale of its
common stock.
Portland General received $15.4 million in dividends from PGE during the
first quarter of 1994 and $2.2 million in proceeds from the issuance of
shares of common stock under its Dividend Reinvestment and Optional Cash
Payment Plan.
In February 1994 Portland General issued 2,300,000 shares of common
stock. Proceeds to Portland General were $41 million. These proceeds
were used to purchase 2,300,000 additional shares of PGE common stock.
8
Portland General Corporation and Subsidiaries
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Portland General Electric Company
Cash Provided by Operations
Operations are the primary source of cash used for day to day operating
needs of PGE and funding of construction activities. PGE also obtains
cash 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. The increase in cash flow from
operations, when comparing first quarter 1994 to first quarter 1993, is
primarily due to fewer non-cash revenues (relating to accrued revenues
for replacement power costs) in the 1994 quarter.
Future cash requirements may be affected by the ultimate outcome of the
IRS audit of PGE's 1985 WNP-3 abandonment loss deduction. The IRS has
issued a statutory notice of tax deficiency, which Portland General is
contesting, related to its examination of Portland General's 1985 tax
return. See Note 4, Income Taxes, for further information.
PGE has been named a "potentially responsible party" (PRP) of PCB
contaminants at various environmental cleanup sites. The total cost of
cleanup is estimated at $27 million, of which the Company's share is
approximately $3 million. PGE has made an assessment of the other
involved PRP's and is satisfied that they can meet their share of the
obligation. Should the eventual outcome of these environmental matters
result in additional cash requirements, PGE expects internally generated
cash flows or external borrowings to be sufficient to fund such
obligations.
Investing Activities
PGE invests in facilities for generation, transmission and distribution
of electric energy and for energy efficiency improvements. Estimated
capital expenditures for 1994 are expected to be $265 million.
Approximately $54 million has been expended for capital projects,
including energy efficiency, through March 31, 1994.
PGE continues to fund an external trust for the future costs of Trojan
decommissioning. Funding began in March 1991. Currently PGE funds $11
million each year. As of March 31, 1994 the fund had a current market
value of $50 million which was invested in investment-grade tax-exempt
bonds. Upon approval from the NRC these funds will become available to
PGE for use in the removal of some of Trojan's large components in
addition to other future decommissioning activities.
Financing Activities
First quarter 1994 financing activities include the February issuance of
2,300,000 shares of $3.75 par value common stock to Portland General
(see Portland General cash flow discussion above). Proceeds to PGE were
$41 million which were used for its construction program.
9
Portland General Corporation and Subsidiaries
Management's Discussion and Analysis of Financial
Condition and Results of Operations
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 the Indenture securing its First
Mortgage Bonds. As of March 31, 1994 PGE could issue $475 million of
preferred stock and $410 million of additional First Mortgage Bonds.
10
Graph Descriptions
Page 5
Quarterly Increase in Residential Customers
Increase in
Qtr Year Residential Customers
4Q 1991 3,876
1Q 1992 2,374
2Q 1992 1,839
3Q 1992 2,300
4Q 1992 2,927
1Q 1993 2,025
2Q 1993 1,803
3Q 1993 3,688
4Q 1993 1,783
1Q 1994 2,986
Page 7
Gross Margin
12 Months Ending March 31
Mills/kWh
1992 1993 1994
Net Variable Power 7 9 13
Retail Revenues 49 50 52
(Net variable power costs are variable power
less wholesale revenues)
Page 7
Operating Expenses
12 Months Ending March 31
Millions of Dollars
1992 1993 1994
Operating Costs 368 332 270
Variable Power 239 250 322
Depreciation 116 99 122
Page 8
PGE Electricity Sales
12 Months Ending March 31
Billions of kWhs
1992 1993 1994
Residential 6.3 6.7 6.6
Commercial 5.7 6.0 6.0
Industrial 3.5 3.7 3.8
Wholesale 3.8 2.1 2.0
Portland General Corporation and Subsidiaries
Consolidated Statements of Income for the
Three Months and Twelve Months Ended March 31, 1994 and 1993
(Unaudited)
Three Months Ended Twelve Months Ended
March 31 March 31
1994 1993 1994 1993
(Thousands of Dollars)
OPERATING REVENUES $278,014 $276,832 $948,011 $922,483
OPERATING EXPENSES
Purchased power and fuel 100,970 90,808 321,875 249,579
Production and distribution 15,406 20,591 68,391 91,996
Maintenance and repairs 9,159 15,118 49,361 73,615
Administrative and other 22,432 24,571 98,182 109,821
Depreciation, decommissioning and
amortization 30,849 30,744 122,323 99,562
Taxes other than income taxes 14,294 16,125 53,899 56,394
193,110 197,957 714,031 680,967
OPERATING INCOME BEFORE
INCOME TAXES 84,904 78,875 233,980 241,516
INCOME TAXES 27,788 23,688 71,620 69,623
NET OPERATING INCOME 57,116 55,187 162,360 171,893
OTHER INCOME (DEDUCTIONS)
Interest expense (17,051) (17,740) (70,113) (72,350)
Allowance for funds used
during construction 464 173 1,076 2,456
Preferred dividend requirement - PGE (2,988) (3,068) (11,966) (12,487)
Other - net of income taxes 1,624 2,004 10,370 10,259
NET INCOME $ 39,165 $ 36,556 $ 91,727 $ 99,771
COMMON STOCK
Average shares outstanding 48,670,211 47,243,743 47,749,975 47,030,077
Earnings per average share $0.80 $0.77 $1.92 $ 2.14*
Dividends declared per share $ .30 $ .30 $1.20 $ 1.20
* includes $.02 for tax benefits from ESOP dividends
Consolidated Statements of Retained Earnings for the
Three Months and Twelve Months Ended March 31, 1994 and 1993
(Unaudited)
Three Months Ended Twelve Months Ended
March 31 March 31
1994 1993 1994 1993
(Thousands of Dollars)
BALANCE AT BEGINNING OF PERIOD $ 81,159 $ 50,481 $ 72,481 $ 32,236
NET INCOME 39,165 36,556 91,727 99,771
ESOP TAX BENEFIT & AMORTIZATION OF
PREFERRED STOCK PREMIUM (370) (379) (1,515) (3,079)
119,954 86,658 162,693 128,928
DIVIDENDS DECLARED ON
COMMON STOCK 15,015 14,177 57,754 56,447
BALANCE AT END OF PERIOD $104,939 $ 72,481 $104,939 $ 72,481
[FN]
The accompanying notes are an integral part of these consolidated statements.
11
Portland General Corporation and Subsidiaries
Consolidated Balance Sheets as of March 31, 1994 and December 31, 1993
(Unaudited)
March 31 December 31
1994 1993
(Thousands of Dollars)
ASSETS
ELECTRIC UTILITY PLANT -ORIGINAL COST
Utility plant (includes Construction Work
in Progress of $75,781 and $46,679 ) $ 2,417,646 $ 2,370,460
Accumulated depreciation and decommissioning (914,245) (894,284)
1,503,401 1,476,176
Capital leases - less amortization of $24,168 and $23,626 13,150 13,693
1,516,551 1,489,869
OTHER PROPERTY AND INVESTMENTS
Leveraged leases 155,380 155,618
Net assets of discontinued real estate operations 30,767 31,378
Trojan decommissioning trust, at market value 49,852 48,861
Other investments 102,164 102,164
338,163 338,021
CURRENT ASSETS
Cash and cash equivalents 6,586 3,202
Accounts and notes receivable 93,216 91,641
Unbilled and accrued revenues 149,991 133,476
Inventories, at average cost 45,417 46,534
Prepayments and other 28,238 22,128
323,448 296,981
DEFERRED CHARGES
Unamortized regulatory assets
Trojan abandonment - Plant 361,031 366,712
Trojan abandonment - Decommissioning 352,237 355,718
Trojan other 66,825 66,387
Income taxes recoverable 222,887 228,233
Debt reacquisition costs 34,267 34,941
Energy efficiency programs 43,488 39,480
Other 32,938 33,857
WNP-3 settlement exchange agreement 176,829 178,003
Miscellaneous 27,172 21,126
1,317,674 1,324,457
$ 3,495,836 $ 3,449,328
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common stock $ 187,636 $ 178,630
Other paid-in capital 553,904 519,058
Unearned compensation (17,706) (19,151)
Retained earnings 104,939 81,159
828,773 759,696
Cumulative preferred stock of subsidiary
Subject to mandatory redemption 60,000 70,000
Not subject to mandatory redemption 69,704 69,704
Long-term debt 838,778 842,994
1,797,255 1,742,394
CURRENT LIABILITIES
Long-term debt and preferred stock due within one year 53,900 51,614
Short-term borrowings 120,265 159,414
Accounts payable and other accruals 105,682 109,479
Accrued interest 21,900 18,581
Dividends payable 18,444 17,657
Accrued taxes 54,678 25,601
374,869 382,346
OTHER
Deferred income taxes 657,554 660,248
Deferred investment tax credits 59,389 60,706
Regulatory reserves 120,034 120,410
Trojan decommissioning reserve and misc. closure costs 404,838 407,610
Miscellaneous 81,897 75,614
1,323,712 1,324,588
$ 3,495,836 $ 3,449,328
The accompanying notes are an integral part of these consolidated balance sheets.
12
Portland General Corporation and Subsidiaries
Consolidated Statements of Capitalization
as of March 31, 1994 and December 31, 1993
(Unaudited)
March 31 December 31
1994 1993
(Thousands of Dollars)
COMMON STOCK EQUITY
Common stock, $3.75 par value per
share 100,000,000 shares authorized,
50,048,400 and 47,634,653 shares outstanding $ 187,636 $ 178,630
Other paid-in capital - net 553,904 519,058
Unearned compensation (17,706) (19,151)
Retained earnings 104,939 81,159
828,773 46.1% 759,696 43.6%
CUMULATIVE PREFERRED STOCK
Subject to mandatory redemption
No par value, 30,000,000 shares authorized
7.75% Series, 300,000 shares outstanding 30,000 30,000
8.10% Series, 500,000 shares outstanding 50,000 50,000
Current sinking fund (20,000) (10,000)
60,000 3.3 70,000 4.0
Not subject to mandatory redemption
7.95% Series, 298,045 shares outstanding 29,804 29,804
7.88% Series, 199,575 shares outstanding 19,958 19,958
8.20% Series, 199,420 shares outstanding 19,942 19,942
69,704 3.9 69,704 4.0
LONG-TERM DEBT
First mortgage bonds
Maturing 1994 through 1999
4-3/4% Series due April 1, 1994 - 8,119
4.70% Series due March 1, 1995 3,045 3,220
5-7/8% Series due June 1, 1996 5,366 5,366
6.60% Series due October 1, 1997 15,363 15,363
Medium-term notes - 5.65%-9.27% 242,000 242,000
Maturing 2002 through 2004 - 6.47%-9.07% 165,845 166,283
Maturing 2016 through 2023 - 7.75%-9-5/8% 195,000 195,000
Pollution control bonds
Port of Morrow, Oregon, variable rate
(Average 2.3% for 1993), due 2013 23,600 23,600
City of Forsyth, Montana, variable rate
(Average 2.4% for 1993), due 2013
through 2016 118,800 118,800
Amount held by trustee (8,621) (8,537)
Port of St. Helens, Oregon, due 2010 and 2014
(Average variable 2.2%-2.4% for 1993) 51,600 51,600
Medium-term notes maturing 1994 through 1996 - 7.23%-8.09% 47,500 50,000
Capital lease obligations 13,150 13,693
Other 30 101
872,678 884,608
Long-term debt due within one year (33,900) (41,614)
838,778 46.7 842,994 48.4
Total capitalization $1,797,255 100.0% $1,742,394 100.0%
[FN]
The accompanying notes are an integral part of these consolidated statements.
13
Portland General Corporation and Subsidiaries
Consolidated Statements of Cash Flow for the
Three Months and Twelve Months Ended March 31, 1994 and 1993
(Unaudited)
Three Months Ended Twelve Months Ended
March 31 March 31
1994 1993 1994 1993
CASH PROVIDED (USED) BY -
OPERATIONS:
Net income $ 39,165 $ 36,556 $ 91,727 $ 99,771
Adjustments to reconcile net income
to net cash provided by operations:
Depreciation, decommissioning and amortization 21,724 23,157 90,934 101,470
Amortization of WNP-3 exchange agreement 1,174 1,122 4,541 5,366
Amortization of deferred charges - Trojan 9,526 7,976 32,969 9,407
Amortization of deferred charges - other 2,339 1,455 5,971 6,337
Deferred income taxes - net 2,812 15,263 48,635 40,939
Other noncash revenues (334) (458) (1,802) (2,360)
(Increase) Decrease in receivables (17,769) (28,093) (62,513) (56,997)
(Increase) Decrease in inventories 1,117 680 15,454 (3,075)
Increase (Decrease) in payables 28,758 15,406 (16,485) 8,768
Other working capital items - net (7,618) (8,098) 12,953 6,637
Deferred charges - other (1,710) (456) (5,062) (11,167)
Miscellaneous - net 2,361 702 19,933 15,629
81,545 65,212 237,255 220,725
INVESTING ACTIVITIES:
Utility construction (49,594) (19,528) (155,853) (134,676)
Energy efficiency programs (4,834) (2,379) (20,604) (10,846)
Rentals received from leveraged leases 9,668 4,132 17,541 14,035
Trojan decommissioning trust (2,805) (2,805) (11,220) (12,155)
Other (746) (540) (12,929) (10,853)
(48,311) (21,120) (183,065) (154,495)
FINANCING ACTIVITIES:
Short-term borrowings - net (39,149) (18,703) (1,710) 56,998
Long-term debt issued - - 252,000 60,000
Long-term debt retired (11,232) (8,689) (282,529) (90,515)
Repayment of nonrecourse borrowings for
leveraged leases (9,159) (4,942) (15,172) (12,782)
Preferred stock issued - - - 30,000
Preferred stock retired - - (3,600) (31,225)
Common stock issued 43,307 2,680 50,147 10,142
Dividends paid (14,228) (14,146) (56,932) (56,418)
(30,461) (43,800) (57,796) (33,800)
NET CASH PROVIDED BY (USED IN)
CONTINUING OPERATIONS 2,773 292 (3,606) 32,430
DISCONTINUED OPERATIONS 611 1,036 2,175 (29,189)
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 3,384 1,328 (1,431) 3,241
CASH AND CASH EQUIVALENTS AT THE BEGINNING
OF PERIOD 3,202 6,689 8,017 4,776
CASH AND CASH EQUIVALENTS AT THE END
OF PERIOD $ 6,586 $ 8,017 $ 6,586 $ 8,017
Supplemental disclosures of cash flow information
Cash paid during the period:
Interest $ 12,608 17,110 $ 69,759 $73,884
Income taxes (211) (490) 12,538 21,785
The accompanying notes are an integral part of these consolidated statements.
14
Portland General Corporation and Subsidiaries
Notes to Financial Statements
(Unaudited)
Note 1
Principles of Interim Statements
The interim financial statements have been prepared by Portland
General Corporation (Portland General) and, in the opinion of
management, reflect all material adjustments which are necessary to a
fair statement of results for the interim periods 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 1993 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
Regulatory Matters
Public Utility Commission of Oregon
Portland General Electric Company (PGE) had sought judicial review of
three rate matters related to a 1987 general rate case. In 1989, PGE
reserved $89 million for an unfavorable outcome of these matters. In
July 1990 PGE reached an out-of-court settlement with the Oregon
Public Utility Commission (PUC) on two of the three rate matter issues
being litigated. As a result of the settlement $16 million was
restored to income in 1990. The settlement resolved the dispute with
the PUC regarding treatment of accelerated amortization of certain
investment tax credits (ITC) and 1986-1987 interim relief. As a
settlement of the interim relief issue PGE refunded approximately
$17 million to customers.
In 1991 the Utility Reform Project (URP) petitioned the PUC to
reconsider the order approving the settlement. The Oregon legislature
subsequently passed a law clarifying the PUC's authority to approve
the settlement. As a result, the PUC issued an order implementing the
settlement. URP filed an appeal in Multnomah County Circuit Court to
overturn the PUC's order implementing settlement which was later
dismissed in December 1992.
In addition, the Citizen's Utility Board (CUB) filed a complaint in
1991 in Marion County Circuit Court seeking to modify, vacate, set
aside or reverse the PUC's order implementing settlement. In
September 1992 the
15
Portland General Corporation and Subsidiaries
Notes to Financial Statements
(Unaudited)
Marion County Circuit Court judge issued a decision
upholding the PUC orders approving the settlement. CUB appealed this
decision to the Oregon Supreme Court which denied CUB's petition for
review in April 1994.
The settlement, however, did not resolve the Boardman/Intertie gain
issue, which the parties continue to litigate. PGE's position is that
28% of the gain should be allocated to customers. The 1987 rate order
allocated 77% of the gain to customers over a 27-year period. PGE has
fully reserved this amount, which is being amortized over a 27-year
period in accordance with the 1987 rate order. The unamortized gain,
$120 million at March 31, 1994, is shown as "Regulatory reserves" on
the balance sheet.
Note 3
Legal Matters
WNP Cost Sharing
PGE and three other investor-owned utilities (IOUs) are involved in
litigation surrounding the proper allocation of shared costs between
Washington Public Power Supply System (Supply System) Units 1 and 3
and Units 4 and 5. A court ruling issued in May 1989 stated that Bond
Resolution No. 890, adopted by the Supply System, controlled
disbursement of proceeds from bonds issued for the construction of
Unit 5, including the method for allocation of shared costs. It is
the IOUs' contention that at the time the project commenced there was
agreement among the parties as to the allocation of shared costs and
that this agreement and the Bond Resolution are consistent such that
the allocation under the agreement is not prohibited by the Bond
Resolution.
In October 1990, the US District Court ruled that the methodology for
the allocation of shared costs required the application of principles
akin to those espoused by Chemical Bank, the Trustee for the
bondholders. In February 1992, the Court of Appeals reversed the US
District Court's decision and ruled that shared costs between Units 3
and 5 should be allocated in proportion to benefits under the
equitable method supported by PGE and the IOUs. A trial remains
necessary to assure that the allocations are properly performed.
Bonneville Pacific Class Action Suit and Lawsuit
A consolidated case of all previously filed class actions has been
filed in U.S. District Court for the District of Utah (the Court)
purportedly on behalf of purchasers of common shares and convertible
subordinated debentures of Bonneville Pacific Corporation (Bonneville
Pacific) in the period from August 18, 1989 until January 22, 1992
alleging violations of federal and Utah state securities laws, common
law fraud and negligent misrepresentation. The defendants are
specific Bonneville Pacific insiders, Portland General, Portland
General Holdings, Inc. (Holdings), certain Portland General affiliated
individuals, Deloitte &
16
Portland General Corporation and Subsidiaries
Notes to Financial Statements
(Unaudited)
Touche and three underwriters of a Bonneville Pacific offering of
subordinated debentures.
In May 1994 the Court issued an order on the defendants' motion to
dismiss. The order dismisses the claims filed by the plaintiffs
against Portland General, Holdings and the Portland General affiliated
individuals for common law fraud and negligent misrepresentation,
primary liability for violations of the federal securities laws and
secondary liability for aiding and abetting and conspiracy to violate
the federal securities laws. The order permanently dismisses the
secondary liability claims. The Court stated that it will consider an
amendment to the complaint with regard to the other claims. The Court
also held that it would not consider the claims for Utah state
securities law violations until certain issues are addressed by the
Utah state courts.
A separate legal proceeding has been initiated by the bankruptcy
trustee for Bonneville Pacific who has filed an amended complaint
against Portland General, Holdings and certain
affiliated individuals in US District Court for the District of Utah
alleging common law fraud, breach of fiduciary duty, tortious
interference, negligence, negligent misrepresentation and other
actionable wrongs. The original suit was filed by Bonneville Pacific
prior to the appointment of the bankruptcy trustee. The amount of
damages sought is not specified in the complaint.
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.
Other Bonneville Pacific Related Litigation
Holdings filed complaints seeking approximately $228 million in
damages in the Third Judicial District Court for Salt Lake County
(Utah) against Deloitte & Touche and certain other parties associated
with Bonneville Pacific alleging that it relied on fraudulent and
negligent statements and omissions by Deloitte & Touche and the other
defendants when it acquired a 46% interest in and made loans to
Bonneville Pacific starting in September 1990.
17
Portland General Corporation and Subsidiaries
Notes to Financial Statements
(Unaudited)
Note 4
Income Taxes
The IRS has issued a statutory notice of tax deficiency, which
Portland General is contesting, related to its examination of Portland
General's 1985 tax return. The IRS has proposed to disallow PGE's
1985 WNP-3 abandonment loss deduction on the premise that it is a
taxable exchange. Portland General disagrees with this position and
will take appropriate action to defend its deduction. Management
believes that it has appropriately provided for probable tax
adjustments and is of the opinion that the ultimate disposition of
this matter will not have a material adverse impact on the financial
condition of Portland General.
Note 5
Trojan Nuclear Plant
Shutdown - In early 1993, PGE ceased commercial operation of the
Trojan Nuclear Plant (Trojan) as recommended in PGE's Least Cost Plan
(LCP). On June 3, 1993 the PUC acknowledged PGE's LCP.
Decommissioning Estimate - PGE estimates the cost to decommission
Trojan to be $409 million reflected in nominal dollars (actual
dollars expected to be spent in each year). This represents a
site-specific decommissioning cost estimate performed for Trojan
by an experienced
decommissioning engineering firm and assumes that the majority of
decommissioning activities will occur between 1998 and 2002, after
construction of a temporary dry spent fuel storage facility.
Decommissioning of the temporary dry spent fuel storage facility and
final nonradiological site remediation activities will occur in 2018
after PGE completes shipment of spent fuel to a United States
Department of Energy (USDOE) facility.
The decommissioning cost estimate includes the cost of decommissioning
planning, removal and burial of irradiated equipment and facilities as
required by the Nuclear Regulatory Commission (NRC); building
demolition and nonradiological site remediation; and fuel management
costs including licensing, surveillance and transition costs.
Transition costs of $75 million are the costs associated with
operating and maintaining the spent fuel pool and securing the plant
until dismantlement can begin. While most decommissioning costs will
utilize funds from PGE's Nuclear Decommissioning Trust (NDT),
transition costs will continue to be paid from current operating
funds.
18
Portland General Corporation and Subsidiaries
Notes to Financial Statements
(Unaudited)
PGE plans to submit a formal decommissioning plan to the NRC in mid-
1994. Presently, PGE is planning to accelerate the removal of some
of Trojan's large components which is expected to result in overall
decommissioning cost savings. Since PGE plans to perform this work
prior to receiving NRC approval of its formal decommissioning plan,
specific approvals will be required from the NRC and the Energy
Facility Siting Council of Oregon. Additionally, the NRC must approve
the use of PGE's NDT funds for removal of large components. PGE plans to
begin this work in 1994.
Assumptions used to develop the site-specific cost estimate for
decommissioning represent the best information PGE has currently.
However, PGE is continuing its analysis of various options which could
change the timing and scope of decommissioning activities. PGE
expects any future changes in estimated decommissioning costs to be
incorporated in future revenues to be collected from customers.
Investment Recovery - PGE filed a general rate case on November 8,
1993, requesting continued recovery of Trojan plant costs, including
decommissioning. In May 1994, the PUC issued an order to delay
consideration of the Trojan-related issues and cost of capital until
August 1994 in order to allow the PUC Staff to retain an expert to
consult and advise the PUC regarding Trojan plant operations.
Hearings are scheduled for October 1994.
The analysis performed for the LCP assumed that continued recovery of
the Trojan plant investment, including future decommissioning costs,
would be granted by the PUC. Regarding the authority of the PUC to
grant recovery, the Oregon Department of Justice (Attorney General)
issued an opinion that the PUC may allow rate recovery of total plant
costs, including operating expenses, taxes, decommissioning costs,
return of capital invested in the plant and return on the
undepreciated investment. While the Attorney General's opinion does
not guarantee recovery of costs associated with the shutdown, it does
clarify that under current law the PUC has authority to allow recovery
of such costs in rates.
PGE asked the PUC to resolve certain legal and policy questions
regarding the statutory framework for future ratemaking proceedings
related to the recovery of the Trojan investment and decommissioning
costs. On August 9, 1993 the PUC issued a declaratory ruling agreeing
with the Attorney General's opinion discussed above. The ruling also
stated that the PUC will favorably consider allowing PGE to recover in
rates some or all of its return on and return of its undepreciated
investment in Trojan, including decommissioning costs, if PGE meets
certain conditions. PGE believes that its general rate filing
provides evidence that satisfies the conditions established by the
PUC. URP and CUB have appealed the PUC ruling.
Management believes that the PUC will grant future revenues to cover
all, or substantially all, of Trojan plant costs with an
19
Portland General Corporation and Subsidiaries
Notes to Financial Statements
(Unaudited)
appropriate return. However, future recovery of the Trojan plant
investment and future decommissioning costs requires PUC approval
in a public regulatory process. Although the PUC has allowed PGE to
continue, on an interim basis, collection of these costs in the
same manner as prescribed in the Company's last general rate proceeding,
the PUC has yet to address recovery of costs related to a prematurely
retired plant when the decision to close the plant was based upon a least cost
planning process. Due to uncertainties inherent in a public process,
management cannot predict, with certainty, whether all, or
substantially all, of the $361 million Trojan plant investment and
$352 million of future decommissioning costs will be recovered.
Management believes the ultimate outcome of this public regulatory
process will not have a material adverse effect on the financial
condition, liquidity or capital resources of Portland General.
However, it may have a material impact on the results of operations
for a future reporting period.
20
Portland General Electric Company and Subsidiaries
Financial Statements and Related Information
Table of Contents
Page
Number
Management Discussion and Analysis of
Financial Condition and Results of Operations * 3
Financial Statements 22
Notes to Financial Statements 25
* The discussion is substantially the same as that disclosed by
Portland General and, therefore, is incorporated by reference
to information provided on the page number listed above.
21
Portland General Electric Company and Subsidiaries
Consolidated Statements of Income for the
Three Months and Twelve Months ended March 31, 1994 and 1993
(Unaudited)
Three Months Ended Twelve months ended
March 31 March 31
1994 1993 1994 1993
(Thousands of Dollars)
OPERATING REVENUES $277,672 $276,304 $945,899 $919,488
OPERATING EXPENSES
Purchased power and fuel 100,970 90,808 321,875 249,579
Production and distribution 15,406 20,591 68,391 91,997
Maintenance and repairs 9,159 15,118 49,361 73,609
Administrative and other 22,007 23,926 96,489 105,836
Depreciation, decommissioning and
amortization 30,770 30,638 122,030 99,013
Taxes other than income taxes 14,237 16,009 53,904 55,879
Income taxes 30,372 27,845 74,017 78,462
222,921 224,935 786,067 754,375
NET OPERATING INCOME 54,751 51,369 159,832 165,113
OTHER INCOME (DEDUCTIONS)
Allowance for equity funds used
during construction - - - 311
Other 1,815 2,339 11,247 7,167
Income taxes (136) (407) (3,731) 2,831
1,679 1,932 7,516 10,309
INTEREST CHARGES
Interest on long-term debt and other 14,711 15,208 61,320 63,017
Interest on short-term borrowings 996 884 3,555 2,900
Allowance for borrowed funds used
during construction (464) (173) (1,076) (2,146)
15,243 15,919 63,799 63,771
NET INCOME 41,187 37,382 103,549 111,651
PREFERRED DIVIDEND REQUIREMENT 2,988 3,068 11,966 12,487
INCOME AVAILABLE FOR COMMON STOCK $ 38,199 $ 34,314 $ 91,583 $ 99,164
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS FOR THE
THREE MONTHS AND TWELVE MONTHS ENDED MARCH 31, 1994 AND 1993
(Unaudited)
Three Months Ended Twelve months ended
March 31 March 31
1994 1993 1994 1993
(Thousands of Dollars)
BALANCE AT BEGINNING OF PERIOD $179,297 $165,949 $181,678 $158,286
NET INCOME 41,187 37,382 103,549 111,651
ESOP TAX BENEFIT & AMORTIZATION OF
PREFERRED STOCK PREMIUM (370) (379) (1,515) (3,079)
220,114 202,952 283,712 266,858
DIVIDENDS DECLARED
Common stock 15,393 18,206 70,013 72,693
Preferred stock 3,051 3,068 12,029 12,487
18,444 21,274 82,042 85,180
BALANCE AT END OF PERIOD $201,670 $181,678 $201,670 $181,678
The accompanying notes are an integral part of these consolidated statements.
22
Portland General Electric Company and Subsidiaries
Consolidated Balance Sheets
as of March 31, 1994 and December 31, 1993
(Unaudited)
March 31 December 31
1994 1993
(Thousands of Dollars)
ASSETS
ELECTRIC UTILITY PLANT - ORIGINAL COST
Utility plant (includes Construction Work in Progress of
$75,781 and $46,679) $2,417,646 $2,370,460
Accumulated depreciation and decommissioning (914,245) (894,284)
1,503,401 1,476,176
Capital leases - less amortization of $24,168 and $23,626 13,150 13,693
1,516,551 1,489,869
OTHER PROPERTY AND INVESTMENTS
Conservation loans 11,622 12,018
Trojan decommissioning trust, at market value 49,852 48,861
Other investments 65,798 65,696
127,272 126,575
CURRENT ASSETS
Cash and cash equivalents 5,560 2,099
Accounts and notes receivable 86,551 85,169
Unbilled and accrued revenues 149,991 133,476
Inventories, at average cost 45,417 46,534
Prepayments and other 27,869 20,646
315,388 287,924
DEFERRED CHARGES
Unamortized regulatory assets
Trojan abandonment - Plant 361,031 366,712
Trojan abandonment - Decommissioning 352,237 355,718
Trojan - other 66,825 66,387
Income taxes recoverable 222,887 228,233
Debt reacquisition costs 34,267 34,941
Energy efficiency programs 43,488 39,480
Other 32,938 33,857
WNP-3 settlement exchange agreement 176,829 178,003
Miscellaneous 25,032 18,975
1,315,534 1,322,306
$3,274,745 $3,226,674
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common stock equity $ 812,664 $ 747,197
Cumulative preferred stock
Subject to mandatory redemption 60,000 70,000
Not subject to mandatory redemption 69,704 69,704
Long-term debt 798,778 802,994
1,741,146 1,689,895
CURRENT LIABILITIES
Long-term debt and preferred stock due within one year 46,400 41,614
Short-term borrowings 87,064 129,920
Accounts payable and other accruals 107,386 111,647
Accrued interest 21,473 17,139
Dividends payable 18,736 21,486
Accrued taxes 61,726 27,395
342,785 349,201
OTHER
Deferred income taxes 536,139 534,194
Deferred investment tax credits 59,389 60,706
Regulatory reserves 120,034 120,410
Trojan decommissioning reserve and misc. closure costs 404,838 407,610
Miscellaneous 70,414 64,658
1,190,814 1,187,578
$3,274,745 $3,226,674
The accompanying notes are an integral part of these consolidated balance sheets.
23
Portland General Electric Company and Subsidiaries
Consolidated Statements of Capitalization
as of March 31, 1994 and December 31, 1993
(Unaudited)
March 31 December 31
1994 1993
(Thousands of Dollars)
COMMON STOCK EQUITY
Common stock, $3.75 par value per share,
100,000,000 shares authorized, 42,758,877
and 40,458,877 shares outstanding $160,346 $151,721
Other paid in capital, net 467,769 433,978
Unearned compensation (17,121) (17,799)
Retained earnings 201,670 179,297
812,664 46.7% 747,197 44.2%
CUMULATIVE PREFERRED STOCK
Subject to mandatory redemption
No par value, 30,000,000 shares authorized
7.75% Series, 300,000 shares outstanding 30,000 30,000
8.10% Series, 500,000 shares outstanding 50,000 50,000
Current sinking fund (20,000) (10,000)
60,000 3.4 70,000 4.2
Not subject to mandatory redemption
7.95% Series, 298,045 shares outstanding 29,804 29,804
7.88% Series, 199,575 shares outstanding 19,958 19,958
8.20% Series, 199,420 shares outstanding 19,942 19,942
69,704 4.0 69,704 4.1
LONG TERM DEBT
First mortgage bonds
Maturing 1994 through 1999
4 3/4% Series due April 1, 1994 - 8,119
4.70% Series due March 1, 1995 3,045 3,220
5 7/8% Series due June 1, 1996 5,366 5,366
6.60% Series due October 1, 1997 15,363 15,363
Medium term notes 5.65% 9.27% 242,000 242,000
Maturing 2002 through 2004 6.47% 9.07% 165,845 166,283
Maturing 2021 through 2023 7.75% 9.46% 195,000 195,000
Pollution control bonds
Port of Morrow, Oregon, variable rate
(Average 2.3% for 1993), due 2013 23,600 23,600
City of Forsyth, Montana, variable rate
(Average 2.4% for 1993), due 2013
through 2016 118,800 118,800
Amount held by trustee (8,621) (8,537)
Port of St. Helens, Oregon, due 2010 and 2014
(Average variable 2.2% 2.4% for 1993) 51,600 51,600
Capital lease obligations 13,150 13,693
Other 30 101
825,178 834,608
Long term debt due within one year (26,400) (31,614)
798,778 45.9 802,994 47.5
Total capitalization $1,741,146 100.0% $1,689,895 100.0%
The accompanying notes are an integral part of these consolidated statements.
24
Portland General Electric Company and Subsidiaries
Consolidated Statements of Cash Flow for the
Three Months and Twelve Months Ended March 31, 1994 and 1993
(Unaudited)
Three Months Ended Twelve Months Ended
March 31 March 31
1994 1993 1994 1993
(Thousands of Dollars)
CASH PROVIDED (USED) BY -
OPERATIONS:
Net Income $ 41,187 $ 37,382 $103,549 $111,651
Non-cash items included in net income:
Depreciation, decommissioning and amortization 21,718 23,123 90,931 101,526
Amortization of WNP-3 exchange agreement 1,174 1,122 4,541 5,366
Amortization of deferred charges - Trojan 9,526 7,976 32,969 9,407
Amortization of deferred charges - other 2,339 1,438 5,988 6,333
Deferred income taxes - net 7,577 14,293 54,005 19,421
Other noncash revenues - - - (311)
Changes in working capital:
(Increase) Decrease in receivables (17,577) (27,029) (57,979) (53,252)
(Increase) Decrease in inventories 1,117 680 15,454 (3,076)
Increase (Decrease) in payables 34,404 21,844 (14,028) 13,045
Other working capital items - net (8,730) (7,751) 9,621 7,507
Deferred charges - other (1,710) (456) (5,062) (12,010)
Miscellaneous - net 1,908 (225) 17,163 16,038
92,933 72,397 257,152 221,645
INVESTING ACTIVITIES:
Utility construction (49,594) (19,528) (155,853) (134,676)
Energy efficiency programs (4,834) (2,379) (20,604) (10,846)
Trojan decommissioning trust (2,805) (2,805) (11,220) (12,155)
Other investments (511) (485) (9,119) (8,516)
(57,744) (25,197) (196,796) (166,193)
FINANCING ACTIVITIES:
Short-term debt - net (42,856) (14,614) 1,613 41,995
Long-term debt issued - - 252,000 60,000
Long-term debt retired (8,732) (8,689) (267,029) (70,515)
Preferred stock issued - - - 30,000
Preferred stock retired - - (3,600) (31,225)
Common stock issued 41,055 - 41,055 -
Dividends paid (21,195) (21,274) (84,872) (84,167)
(31,728) (44,577) (60,833) (53,912)
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 3,461 2,623 (477) 1,540
CASH AND CASH EQUIVALENTS AT THE BEGINNING
OF PERIOD 2,099 3,414 6,037 4,497
CASH AND CASH EQUIVALENTS AT THE END
OF PERIOD $ 5,560 $ 6,037 $ 5,560 $ 6,037
Supplemental disclosures of cash flow information
Cash paid during the period:
Interest $ 10,376 $ 14,360 $ 64,248 $ 65,719
Income taxes (6,100) - 11,142 61,737
The accompanying notes are an integral part of these consolidated statements.
Page
Notes to Financial Statements* 15
* The notes are substantially the same as
that disclosed by Portland General, therefore,
are incorporated by reference to information
provided on page number listed above.
25
Portland General Corporation and Subsidiaries
Part II. Other Information
Item 1. Legal Proceedings
For background information, see Portland General's report
on Form 10-K for the year ended December 31, 1993.
UTILITY
Citizens' Utility Board of Oregon/Utility Reform Project v. Public
Utility Commission of Oregon, Marion County Circuit Court
In early 1994 the Citizens' Utility Board of Oregon (CUB) and the
Utility Reform Project (URP) appealed the Public Utility Commission
of Oregon's (PUC) decision to deny reconsideration of the PUC's
order in DR-10, the Declaratory Ruling regarding recovery of Trojan
investment and decommissioning collection. See the Investment
Recovery discussion of the Trojan Related Issues in the Financial
and Operating Outlook section for further details. These appeals
were consolidated and on March 4, 1994 Portland General Electric
Company (PGE) intervened in the litigation.
PGE v. Ronald Eachus, Myron Katz, Nancy Ryles (Oregon Public
Utility Commissioners) and the Oregon Public Utility Commission,
Marion County Circuit Court
In July 1990 PGE reached an out-of court settlement with the PUC on
two of three 1987 rate matters being litigated and the PUC issued
an order implementing the settlement in August 1991.
URP filed an appeal in the Multnomah County Circuit Court to
overturn the PUC's order implementing settlement. This appeal was
dismissed in December 1992. CUB also filed an appeal in Marion
County Circuit Court seeking to modify, vacate, set aside or
reverse the PUC's order implementing the settlement. In September
1992 Marion County Circuit Court issued a decision upholding the
PUC order. CUB appealed this decision to the Oregon Supreme Court
which denied the petition for review on April 5, 1994.
Columbia Steel Casting Co., Inc. v. Oregon Public Utility
Commission, Oregon Court of Appeals
On January 18, 1994 Columbia Steel Casting Co., Inc. (Columbia
Steel) filed with the Oregon Supreme Court for review of the Court
of Appeals decision. This filing was denied by the Oregon Supreme
Court on March 22, 1994.
NONUTILITY
Gerhard W. Gohler, IRA, et al v. Robert L. Wood, et al U.S.
District Court for the District of Utah
In May 1994 the U.S. District Court for the District of Utah (the
Court) issued an order on the defendants' motion to dismiss. The
order dismisses the claims filed by the plaintiffs against Portland
General Corporation (Portland General), Portland General Holdings,
Inc. and certain Portland
26
Portland General Corporation and Subsidiaries
Part II. Other Information
General affiliated individuals for common law fraud and negligent
misrepresentation, primary
liability for violations of the federal securities laws and
secondary liability for
aiding and abetting and conspiracy to violate the federal
securities laws. The order permanently dismisses the secondary
liability claims. The Court stated that it will consider an
amendment to the complaint with regard to the other claims. The
Court also held that it would not consider the claims for Utah
state securities law violations until certain issues are addressed
by the Utah state courts.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
Number Exhibit Page
(10) Outside Directors' Stock Compensation Plan 29
b. Reports on Form 8-K
February 15, 1994 - Item 5. Other Events
Financial Information
Portland General Corporation's and Portland General Electric Company's
1993 financial information.
March 21, 1994 - Item 5. Other Events
Regulatory Matters
In a March 1994 motion, the PUC Staff recommended the general rate
proceeding schedule for the Trojan-related issues and cost of capital be
amended to delay consideration of these issues until August 1994 with
hearings scheduled for October 1994.
27
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)
May 12, 1994 By /s/ Joseph M. Hirko
Joseph M. Hirko
Vice President Finance,
Chief Financial Officer,
Chief Accounting Officer,
and Treasurer
28