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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-5152
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PACIFICORP
(Exact name of registrant as specified in its charter)
STATE OF OREGON 93-0246090
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
700 N.E. MULTNOMAH,
PORTLAND, OREGON
(Address of principal executive 97232-4116
offices) (Zip Code)
Registrant's telephone number, including area code: (503) 731-2000
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) of the Act:
NAME OF EACH EXCHANGE ON WHICH
TITLE OF EACH CLASS REGISTERED
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Common Stock New York Stock Exchange
Pacific Stock Exchange
$1.98 No Par Serial Preferred Stock, New York Stock Exchange
($25 Stated Value), Series 1992
8 3/8% Quarterly Income Debt Securities New York Stock Exchange
(Junior Subordinated Deferrable Interest
Debentures, Series A)
8.55% Quarterly Income Debt Securities New York Stock Exchange
(Junior Subordinated Deferrable Interest
Debentures, Series B)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) of the Act:
TITLE OF EACH CLASS
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5% Preferred Stock (Cumulative; $100 Stated Value)
Serial Preferred Stock (Cumulative; $100 Stated Value)
No Par Serial Preferred Stock (Cumulative; Various Stated Values)
Indicate by check mark whether the Registrant (1) has 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
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES _X_ NO ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
On March 1, 1996, the aggregate market value of the shares of voting stock
of the Registrant held by nonaffiliates was approximately $6.5 billion.
As of March 1, 1996, there were 284,760,988 shares of the Registrant's
common stock outstanding.
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders of the Registrant for the year
ended December 31, 1995 are incorporated by reference in Parts I and II.
Portions of the Annual Report on Form 10-K of Pacific Telecom, Inc. for the
year ended December 31, 1995 are incorporated by reference in Part I.
Portions of the proxy statement of the Registrant for the 1996 Annual
Meeting of Shareholders are incorporated by reference in Part III.
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TABLE OF CONTENTS
PAGE
NO.
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Definitions............................................................. ii
Part I
Item 1. Business.................................................. 1
The Organization........................................ 1
Electric Utility Operations............................. 2
Pacific Telecom......................................... 10
Other................................................... 10
Employees............................................... 16
Item 2. Properties................................................ 17
Item 3. Legal Proceedings......................................... 18
Item 4. Submission of Matters to a Vote of Security Holders....... 20
Item 4A. Executive Officers of the Registrant...................... 20
Part II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters...................................... 21
Item 6. Selected Financial Data................................... 22
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................... 22
Item 8. Financial Statements and Supplementary Data............... 22
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure...................... 22
Part III
Item 10. Directors and Executive Officers of the Registrant........ 22
Item 11. Executive Compensation.................................... 22
Item 12. Security Ownership of Certain Beneficial Owners and
Management............................................... 22
Item 13. Certain Relationships and Related Transactions............ 22
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K................................................. 23
Signatures.............................................................. 28
Appendices
Statements of Computation of Ratio of Earnings to Fixed Charges
Statements of Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends
List of Subsidiaries
Portions of the Annual Report on Form 10-K of Pacific Telecom, Inc.
for the year ended December 31, 1995
i
DEFINITIONS
When the following terms are used in the text they will have the meanings
indicated:
TERM MEANING
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BPA.......................................... Bonneville Power Administration
Company...................................... PacifiCorp, an Oregon corporation
FERC......................................... Federal Energy Regulatory Commission
Holdings..................................... PacifiCorp Holdings, Inc., a wholly owned subsidiary of the Company
PGC.......................................... Pacific Generation Company, a wholly owned subsidiary of Holdings,
and its subsidiaries
PFS.......................................... PacifiCorp Financial Services, Inc., a wholly owned subsidiary of
Holdings, and its subsidiaries
Pacific Power................................ Pacific Power & Light Company, the assumed business name of the
Company under which it conducts a portion of its retail electric
operations
Pacific Telecom.............................. Pacific Telecom, Inc., a wholly owned subsidiary of Holdings, and
its subsidiaries
Powercor..................................... Powercor Australia Limited, a wholly owned subsidiary of Holdings,
and its immediate parent companies, PacifiCorp Australia Holdings
Pty Ltd and PacifiCorp Australia LLC
Utah Power................................... Utah Power & Light Company, the assumed business name of the
Company under which it conducts a portion of its retail electric
operations
ii
PART I
ITEM 1. BUSINESS
THE ORGANIZATION
The Company is an electric utility that conducts a retail electric utility
business through Pacific Power and Utah Power, and engages in power production
and sales on a wholesale basis under the name PacifiCorp. The Company formed
Holdings in 1984 to hold the stock of the Company's principal subsidiaries and
to facilitate the conduct of businesses not regulated as electric utilities. The
Company's strategic business plan is to strengthen the scope and competitive
position of its electric utility and telecommunications operations and to
develop and expand its nonregulated, energy-related activities, including its
independent power production and cogeneration business.
Through Holdings, the Company indirectly owns 100% (previously 87% owned) of
Pacific Telecom, a telecommunications company that provides local telephone
service and access to the long distance network in Alaska, seven other western
states and three midwestern states, provides cellular mobile telephone services
in six states and is engaged in sales of capacity in and operation and
maintenance of a submarine fiber optic cable between the United States and
Japan. On December 12, 1995, Holdings purchased 100% of Powercor, an electricity
distributor in Australia. Powercor serves approximately 540,000 customers in
suburban Melbourne and the western and central regions of the State of Victoria
in southeast Australia. Holdings also has interests in the independent power
production and cogeneration businesses through PGC, and continues to liquidate
portions of the loan, leasing and real estate investment portfolio of PFS. PFS
presently expects to retain only its tax-advantaged investments in leveraged
lease assets (primarily aircraft) and affordable housing, and is limiting its
pursuit of tax-advantaged investment opportunities to affordable housing.
Holdings is expanding its nonregulated businesses that are engaged in
wholesale marketing and aggregating of electricity, plant and fuels management,
utilities services and retail energy services. On January 30, 1996, Holdings and
Big Rivers Electric Corporation ("Big Rivers"), a generation and transmission
cooperative based in Henderson, Kentucky, signed a letter of intent providing
for PacifiCorp Kentucky Energy Company ("PKE"), a wholly owned subsidiary of
Holdings, to operate and manage Big Rivers' power plants under a 25-year
operating agreement.
Note 14 to the Company's Consolidated Financial Statements, incorporated
herein by reference under Item 8, contains information with respect to the
revenue and income from operations contributed by each of the Company's industry
segments for the past three years and the identifiable assets attributable to
each segment at the end of each of those years; this information is incorporated
herein by this reference. For the year ended December 31, 1995, 77% of
PacifiCorp's revenues from operations were derived from Electric Operations,
while Pacific Telecom contributed 19%.
From time to time, the Company may issue forward-looking statements that
involve a number of risks and uncertainties. The following factors are among the
factors that could cause actual results to differ materially from the
forward-looking statements: utility commission practices; regional economic
conditions; weather variations affecting customer usage, competition in bulk
power markets and hydroelectric production; wholesale power marketing results;
environmental, regulatory and tax legislation; technological developments in the
electricity and telecommunications industries; and the cost of debt and equity
capital. Any forward-looking statements issued by the Company should be
considered in light of these factors.
The Company's common stock (symbol PPW) is traded on the New York and
Pacific Stock Exchanges. The Company's $1.98 No Par Serial Preferred Stock,
Series 1992, 8 3/8% Quarterly Income Debt Securities (Junior Subordinated
Deferrable Interest Debentures, Series A) and 8.55% Quarterly Income Debt
Securities (Junior Subordinated Deferrable Interest Debentures, Series B) are
traded on the New York Stock Exchange.
1
ELECTRIC UTILITY OPERATIONS
PacifiCorp conducts its retail electric utility operations as Pacific Power
and Utah Power, and engages in wholesale electric transactions under the name
PacifiCorp. Pacific Power and Utah Power provide electric service within their
respective service territories. Power production, wholesale sales, fuel supply
and administrative functions are managed on a coordinated basis.
SERVICE AREA
The Company serves over 1.3 million retail customers in service territories
aggregating about 153,000 square miles in portions of seven Western states:
Utah, Oregon, Wyoming, Washington, Idaho, California and Montana. The service
area contains diversified industrial and agricultural economies.
Principal industrial customers include oil and gas extraction, lumber and
wood products, paper and allied products, chemicals and primary metals and
mining companies. Agricultural products include potatoes, hay, grain and
livestock.
The geographical distribution of retail electric operating revenues for the
year ended December 31, 1995 was Utah, 37%; Oregon, 32%; Wyoming, 14%;
Washington, 8%; Idaho, 4%; California, 3%; and Montana, 2%.
CUSTOMERS
Electric utility revenues and energy sales, by class of customer, for the
three years ended December 31, 1995 were as follows:
1995 1994 1993
--------------------- --------------------- ---------------------
Operating Revenues (Dollars in millions):
Residential........................................ $ 721.9 28% $ 724.9 28% $ 698.9 29%
Commercial......................................... 575.9 23 570.4 22 543.9 22
Industrial......................................... 697.6 28 726.3 28 696.2 28
Government, Municipal and Other.................... 29.7 1 30.7 1 29.8 1
---------- --- ---------- --- ---------- ---
Total Retail Sales............................... 2,025.1 80 2,052.3 79 1,968.8 80
Wholesale Sales-Firm............................... 487.7 19 456.2 18 422.5 17
Wholesale Sales-Nonfirm............................ 32.3 1 76.5 3 77.3 3
---------- --- ---------- --- ---------- ---
Total Energy Sales............................... 2,545.1 100% 2,585.0 100% 2,468.6 100%
--- --- ---
--- --- ---
Other Revenues(1).................................. 71.0 62.8 38.3
---------- ---------- ----------
Total Operating Revenues......................... $ 2,616.1 $ 2,647.8 $ 2,506.9
---------- ---------- ----------
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Kilowatt-hours Sold (kWh in millions):
Residential........................................ 12,030 20% 12,127 21% 12,055 21%
Commercial......................................... 10,797 18 10,645 18 10,085 18
Industrial......................................... 19,748 33 20,306 34 19,671 34
Government, Municipal and Other.................... 592 1 623 1 602 1
---------- --- ---------- --- ---------- ---
Total Retail Sales............................... 43,167 72 43,701 74 42,413 74
Wholesale Sales-Firm............................... 13,946 24 12,418 21 11,919 21
Wholesale Sales-Nonfirm............................ 2,430 4 3,207 5 3,030 5
---------- --- ---------- --- ---------- ---
Total kWh Sold................................... 59,543 100% 59,326 100% 57,362 100%
---------- --- ---------- --- ---------- ---
---------- --- ---------- --- ---------- ---
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(1) Includes miscellaneous and steam heating revenues.
The Company's seven-state service territory has complementary seasonal load
patterns. In the western sector, customer demand peaks in the winter months due
to space heating requirements. In the eastern sector, customer demand peaks in
the summer when irrigation and cooling systems are
2
heavily used. Many factors affect per customer consumption of electricity. For
residential customers, within a given year, weather conditions are the dominant
cause of usage variations from normal seasonal patterns. However, the price of
electricity is also considered a significant factor.
During 1995, no single retail customer accounted for more than 1.6% of the
Company's retail utility revenues and the 20 largest retail customers accounted
for 11.7% of total retail electric revenues.
COMPETITION
Although the Company operates as a regulated monopoly within its service
territories, the Company encounters significant competition from both
traditional and nontraditional energy suppliers. Competition varies in form and
intensity and includes competition from both utility and nonutility energy
suppliers for industrial customers, as well as for wholesale power sales to
other utilities; self generation and cogeneration by industrial customers; and
substitute energy forms for residential and commercial space heating, cooling
and water heating.
The Energy Policy Act of 1992 eased restrictions on independent power
production and gave the FERC authority to mandate wholesale wheeling. The FERC
is moving quickly to set the stage for competition. In a series of orders and
notices of proposed rulemaking, the FERC has heightened the level of industry
discussion regarding topics such as transmission access and pricing, stranded
investment, unbundling of services and comparability of service standards. In
addition, several states have taken actions that may increase competition at the
retail level. In connection with these developments, the Company has filed open
access point-to-point and network integration tariffs with the FERC.
The Company is formulating strategies to meet these new challenges and
maintain its competitive position. The Company has restructured its electric
operations into three internal business units -- generation, wholesale
transactions and transmission, and retail sales. The Company is also seeking
alternate forms of regulation that would include performance indexes to give
shareholders an appropriate opportunity to share in the rewards and risks of
competition. The Company plans to focus on the development of new products and
services, as well as the use of existing technologies in new ways. The Company
has begun to offer power supply services to other utilities, including dispatch
assistance, daily system load monitoring, backup power, power storage and power
marketing, and services to retail customers that encourage efficient use of
energy. In addition, the Company has opened a wholesale power marketing office
in Nevada. A wholly owned subsidiary of Holdings, PacifiCorp Power Marketing,
has obtained authorization from the FERC to sell power at market prices
nationwide. Depending upon the success of these strategies, the Company will
continue to adjust its competitive direction.
For a discussion of accounting for the effects of regulation, see Note 1 to
the Company's Consolidated Financial Statements incorporated herein by reference
under Item 8.
CURRENT POWER AND FUEL SUPPLY
The Company's generating facilities are interconnected through its own
transmission lines or by contract through the lines of others. Substantially all
generating facilities and reservoirs located within the Pacific Northwest are
managed on a coordinated basis to obtain maximum load carrying capability and
efficiency.
The Company's transmission system connects with other utilities in the
Northwest having low-cost hydroelectric generation and with utilities in
California and the Southwest having higher-cost, fossil-fuel generation. In
periods of favorable hydro conditions, the Company utilizes lower-cost
hydroelectric power to supply a greater portion of its load and attempts to sell
its displaced higher-cost thermal generation to other utilities. In periods of
less favorable hydro conditions, the Company seeks to sell excess thermal
generation to utilities that are more dependent on hydroelectric generation than
the Company. During the winter, the Company is able to purchase power from
Southwest utilities,
3
either for its own peak requirements or for resale to other Northwest utilities.
During the summer, the Company is able to sell excess power to Southwest
utilities to assist them in meeting their peak requirements. See "Wholesale
Sales and Purchased Power."
The Company owns or has interests in generating plants with an aggregate
nameplate rating of 8,412.4 megawatts ("MW") and plant net capability of 7,995.2
MW. See "Item 2. Properties." With its present generating facilities, under
average water conditions, the Company expects that approximately 7% of its
energy requirements for 1996 will be supplied by its hydroelectric plants and
76% by its thermal plants. The balance of 17% is expected to be obtained under
long-term purchase contracts, interchange and other purchase arrangements. Note
9 to the Company's Consolidated Financial Statements, incorporated by reference
under Item 8, contains additional details relating to the Company's purchase of
power under long-term arrangements.
The Company is purchasing 1,100 MW of firm capacity from the BPA pursuant to
a long-term agreement that extends through August 1, 2011. The Company's current
annual payment under this agreement is $80.3 million. The agreement provides for
this amount to change at the rate of change of BPA's average system cost. See
"Regulation" for information concerning an increase in the BPA's rates.
In January 1993, the Operating Committee for the Trojan Plant formally
approved the permanent cessation of nuclear operations at the plant. A proposed
decommissioning plan has been submitted to the Nuclear Regulatory Commission and
the State of Oregon. Portland General Electric Company is the operator of the
Trojan Plant and owns a 67.5% share. The Eugene Water and Electric Board has
assigned its 30% interest in the plant to the BPA, and the Company owns a 2.5%
interest. Recovery of the Company's remaining investment in the Trojan Plant
($13.2 million at December 31, 1995) and estimated share of plant closure and
decommissioning costs ($15.1 million at December 31, 1995) is subject to
regulatory approval.
Under the requirements of the Public Utility Regulatory Policies Act of 1978
("PURPA"), the Company purchases the output of qualifying facilities constructed
and operated by entities that are not public utilities. During 1995, the Company
purchased an average of 108 MW from qualifying facilities, compared to an
average of 102 MW in 1994.
The Company plans and manages its capacity and energy resources based on
critical water conditions. Under critical or better water conditions in the
Northwest, the Company believes that it has adequate reserve generation capacity
for its requirements. The Company's historical total firm peak load (including
both retail and firm wholesale sales) of 10,082 MW occurred on February 2, 1996,
and historical on-system firm peak load of 7,678 MW occurred on February 2,
1996.
WHOLESALE SALES AND PURCHASED POWER
Wholesale sales continue to contribute significantly to total revenues. The
Company's wholesale sales complement its retail business and enhance the
efficient use of its generating capacity. In 1995, wholesale sales accounted for
28% of total energy sales and 20% of total energy revenues.
In addition to its base of thermal and hydroelectric resources, the Company
utilizes a mix of long-term and short-term firm power purchases and nonfirm
purchases to meet its load obligations and to make sales to other utilities when
prices are favorable. Firm power purchases supplied 11% of the Company's total
energy requirements in 1995. Nonfirm purchases were 6% of total energy
requirements in 1995.
PROPOSED ASSET ADDITIONS
In accordance with the Company's long-range integrated resource planning
process, also referred to as "least-cost planning," the Company considers
various future demand and supply options for providing customers with reliable,
low-cost energy services. See "Projected Demand." In this connection, the
Company also seeks opportunities to acquire existing assets from other
utilities.
4
In 1993, the Company signed a contract to purchase the entire output from
the Hermiston Generating Project located near Hermiston, Oregon. This 474
megawatt natural gas cogeneration project is being developed by U.S. Generating
Company ("U.S. Generating"). In November 1994, U.S. Generating commenced
construction of the plant. In 1995, the Company exercised its option to
purchase, subject to certain conditions, a 50% ownership interest in this
project for approximately $174 million. The payment is also contingent upon
commercial operation of the project, which is expected to occur in July 1996.
The Company built a 50 MW cogeneration project at the James River paper mill
in Camas, Washington. The steam royalty agreement extends for 20 years. The
facility uses steam produced for the paper making process to drive an electric
turbine generator and began commercial operation on January 1, 1996.
The Company plans to participate in two wind generation projects, a 68 MW
project in Wyoming and a 31 MW project in Washington, both of which are to be
built by Kenetech Windpower and scheduled to begin producing power in 1997. The
Company plans to own 55%, or about 38 MW, of the Wyoming project, and 60%, or
about 19 MW, of the Washington project.
The terms of the Company's 1991 transaction with Arizona Public Service
Company ("APS") call for the construction by APS of 150 MW of combustion
turbines to be owned by the Company. The Company will pay a $20 million fee in
January 1997 for rights and services provided by APS. Commercial operation dates
for the turbines have not been established.
PROJECTED DEMAND
Annual increases in retail kilowatt-hour sales for the Company have averaged
1.4% since 1990. Although the sale of the Sandpoint, Idaho properties and the
closure of oil and gas wells in Wyoming have negatively impacted retail sales,
the Company has benefited from improved economic conditions in portions of its
service territory and the Company's commitment to price stability. Price
reductions in many of the Company's service territories have helped sustain
sales volume growth.
In connection with its long-range integrated resource planning process,
which includes load growth projections for its service areas, the Company
considered a range of average annual growth in energy requirements from 0.3% to
3.8% over a 20-year horizon. For the period 1996 to 2000, the average annual
growth is expected to be about 2%. Actual results will be determined by a
variety of factors, including economic and demographic growth, competition and
the effectiveness of energy efficiency programs.
The Company's base of existing resources, in combination with actions
outlined in its integrated resource plan, are expected to be sufficient to meet
the above range of possible load growth conditions throughout the 1990s. Actions
outlined in the integrated resource plan include energy efficiency by customers
(demand-side management), efficiency improvements to existing generation,
transmission and distribution systems, and investments in cogeneration, single
cycle and combined cycle combustion turbines and in renewable resources. See
"Proposed Asset Additions." The Company intends to use the results of its
integrated resource planning process as a framework to evaluate opportunities to
acquire surplus generating facilities from other utilities.
Demand-side management is an element of the Company's diversified portfolio
of resources identified in its integrated plan. The use of an energy service
charge concept in the Company's demand-side resource programs is intended to
allow these resources to be acquired at competitive costs. Under the energy
service charge program, the customers receiving the benefits of energy
efficiency measures are expected to pay most of the related costs. The Company
expended an aggregate of $40 million for demand-side resources in 1995, while
acquiring 30.9 average MW of energy efficiency.
5
ENVIRONMENT
In addition to land use restrictions and other controls by local
governments, the Company is subject to regulation by federal, state and local
authorities pursuant to legislation designed to protect and enhance the quality
of the environment, including air and water quality, remediation of
contamination, waste disposal and protection of endangered species.
Environmental regulation has not only increased the cost of providing electric
service, it has adversely affected various industrial groups, thereby negatively
impacting sales of electricity by the Company to certain customers in those
industries. However, the Company has been able to manage these additional costs
to date without having to pass the costs directly to its customers in the form
of higher rates. The Company's ability to avoid such price increases in the
future is uncertain.
AIR QUALITY. The Company's operations are subject to regulation under the
Federal Clean Air Act, as enforced by the Environmental Protection Agency
("EPA") and various state agencies. Some of the Company's plants have recently
modified their fuel supply systems or processes in order to meet air quality
standards. The Company recently received a notice of alleged violations of the
opacity limitations applicable to its Jim Bridger Power Plant. See Item 3.
"Legal Proceedings."
In August 1993, the Sierra Club filed an action against the owners of the
Hayden Generating Station alleging violations of state and federal air quality
regulations at the station since 1988. In April 1992, the Company acquired
interests in two units of the station, which is operated by Public Service
Company of Colorado. Among other things, the complaint alleges violations of
opacity emission standards and seeks civil monetary penalties and an injunction.
The Company has also received a notice of additional violations at the Station
from the EPA. See Item 3. "Legal Proceedings."
Various federal and state agencies have raised concerns with respect to
perceived visibility degradation in areas where the Company owns coal-fired
generating plants. Two visibility studies have been completed within the
Company's service territory, one in Washington and the other in the Canyonlands
area of Utah. To date, no additional emission control requirements have resulted
from these studies. The Company is participating in additional visibility
studies in western Wyoming, Colorado and the Grand Canyon area. The findings of
these studies may have a significant impact on operations at a number of
generating plants owned by the Company or in which the Company has an ownership
interest.
The 1990 Clean Air Act Amendments require an overall reduction in the
emission of sulfur dioxide ("SO(2)") and nitrogen oxides ("NO(x)") from utility
generating plants, and establish a system of marketable SO(2) emission
allowances. The Company's generating plants burn low-sulfur coal and the
majority of the Company's plants representing a majority of its installed
capacity have been equipped with SO(2) emission controls. However, this Federal
law has resulted in additional operating costs. The Company has installed
approximately $13 million of emission monitoring equipment and must reduce NO(x)
emissions at some of its generating plants. The SO(2) emission allowances
awarded to the Company are sufficient to enable the Company to meet its current
requirements and expansion plans and have enabled the Company to take advantage
of opportunities to sell surplus allowances to other utilities. The Company
recorded sales of surplus SO(2) allowances of $6 million and $9 million in 1995
and 1994, respectively. In 1995, the Company sold surplus NO(x) emissions
credits for $.6 million. The Company may have approximately 20,000 to 25,000
tons of surplus SO(2) emission allowances available for sale each year until
2024. The Company also has over 1,000 tons of surplus NO(x) emission credits
that originated from the retirement of the Hale generating station and emission
reductions at the Gadsby thermal generating plant in the state of Utah.
The Southwest Air Pollution Control Authority ("SWAPCA") has ordered SO(2)
emission limitations to be imposed on the Centralia steam electric generating
plant through the application of Reasonably Available Control Technology
("RACT") as mandated by the state of Washington's Clean Air Act. Such
limitations could be achieved through the use of low-sulfur coal from sources
other than the Centralia mine, or by flue gas desulfurization systems on a
portion of the flue gasses, or a combination of those or other means, certain of
which could require capital expenditures. The RACT
6
order has been appealed to the Washington Pollution Controls Hearings Board by a
private citizen who alleges that SWAPCA failed to consider adequately the
plant's emission impact on human health. A hearing has been scheduled for April
1996.
Emissions from coal-fired generating plants include carbon dioxide (CO(2)).
Carbon dioxide emissions are not currently subject to regulation, but have been
the subject of increasing public concern. In 1994, the Company joined with 37
other investor-owned utilities to sign a voluntary agreement with the U.S.
Department of Energy addressing CO(2) emissions. The Company's specific
agreement includes a commitment to reduce its CO(2) emissions to an amount that
is 10% less than the emissions in 1990 and to spend $1 million on offset
projects by the year 2000. The Company is testing various techniques of
offsetting CO(2) emissions to determine their feasibility and cost
effectiveness.
ENDANGERED SPECIES. Enforcement of the Endangered Species Act ("ESA") and
other laws by the National Marine Fisheries Service ("NMFS") and the U.S. Fish
and Wildlife Service ("FWS") is affecting the Company's operations in a number
of areas.
Environmental regulation under the ESA has resulted in reduced availability
of timber for use by the Company's customers in the wood products industry, and
long-range timber management plans for timberlands managed by federal and state
agencies are expected to further reduce the volume of timber available for
processing. In addition, the listing of the Northern Spotted Owl and other
species under the ESA is expected to result in further restrictions on timber
harvesting from both public and private timber lands. These actions have
adversely affected energy sales to the Company's customers in the wood products
industry.
Protection of habitat of endangered and threatened species will make it more
difficult to site and construct new transmission and distribution facilities and
generating plants, and is also a consideration in connection with the
relicensing of existing hydroelectric generating projects.
NMFS is responsible for ESA actions regarding marine fish and certain marine
mammals. As a result of recent decisions with respect to the listing of species
of Columbia River salmon as endangered or threatened, NMFS is involved in
recovery measure planning that could result in changes in federal hydrosystem
operations and flows. These changes could affect the availability and cost of
power from the BPA. Pending and threatened lawsuits under the ESA and the
Northwest Power Act could result in further restrictions on the federal
hydropower system and affect regional power supplies and costs.
The FWS has identified the Lost River sucker, the shortnose sucker, and the
bald eagle as species listed under the ESA that may be affected by operations of
the Klamath Project, a hydroelectric project in southern Oregon and Northern
California. Waterflows through the Klamath Project are directed by the U.S.
Bureau of Reclamation during periods of critically low flows. In recent periods,
flows past the Link River Dam have been substantially reduced, which has
contributed to a reduction in hydroelectric generation at certain of the
Company's downstream hydroelectric plants.
The Company anticipates that other fish species will be nominated for ESA
listings, and such actions could further impact the Company's hydroelectric
resources. The Company is continuing to monitor and participate in regional ESA
activities to minimize the generation and economic impacts resulting from such
actions. It is unknown at this time what impact, if any, these actions will have
on the Company's operations.
ELECTROMAGNETIC FIELDS. A number of studies have examined the possibility
of adverse health effects from electromagnetic fields ("EMF"), without
conclusive results. Certain states and cities have enacted regulations to limit
the strength of magnetic fields at the edge of transmission line rights-of-way;
however, other than California, none of the jurisdictions in which the Company
operates has adopted formal rules or programs with respect to EMF or EMF
considerations in the siting of electric facilities. In California, the Public
Utilities Commission has issued an interim order requiring utilities to
implement no cost or low-cost mitigation measures in the certification process
for their facilities.
7
The Company expects that public concerns about EMF will make it more difficult
to site and construct new power lines and substations in the future. It is
uncertain whether the Company's operations may be adversely affected in other
ways as a result of EMF concerns.
ENVIRONMENTAL CLEANUPS. Under the Comprehensive Environmental Response,
Compensation and Liability Act and comparable state statutes, entities that
disposed of or arranged for the disposal of hazardous substances, and the owners
and operators of the affected property, may be liable for the remediation of
contaminated sites. The Company has been identified as a potentially responsible
party in connection with a number of cleanup sites to which it may have sent
transformers containing polychlorinated biphenyls ("PCBs"), used oil and other
hazardous wastes. In addition, certain of the Company's own properties have been
identified as requiring remediation. The Company is conducting or participating
in investigations and remedial actions with respect to those sites; however, the
costs associated with those actions are not expected to be material to the
Company's consolidated financial statements.
WATER QUALITY. The Clean Water Act requires permits for the discharge of
certain pollutants into the waters of the United States, including storm water
runoff. Under this Act, the EPA has issued effluent limitation guidelines,
pretreatment standards and new source performance standards for the control of
certain pollutants; and individual states may impose still more stringent
limitations. The Company currently has the required discharge permits for its
facilities, except for a dredging permit with respect to Bear Lake in Idaho
which is expected to involve a contested hearing. Failure to obtain that permit
could adversely affect the Company's ability to supply contracted irrigation
water in future drought years. Additional regulations may be promulgated in the
future, but the Company is unable to predict the extent to which such additional
regulations will affect its operations and capital expenditure requirements.
HAZARDOUS WASTES. The federal Resource Conservation and Recovery Act
("RCRA") has established a national program for the handling, treatment,
recycling, storage and disposal of hazardous wastes. To date, RCRA has not had a
material impact on the Company's operations or expenditures; however, the EPA
and the Congress are studying the impacts of high volume, low toxicity utility
wastes, such as fly ash, which are now exempt from RCRA regulations. If this
exception were to be withdrawn, the Company may be faced with considerable
expense to change its disposal practices and modify its existing disposal
facilities.
MISCELLANEOUS. In cooperation with Bureau of Land Management ("BLM") and
the FWS, the Company has installed a system to prevent birds from landing in the
flue gas desulfurization waste pond at the Naughton Plant pond. The Company is
in the process of installing a different system on a similar pond at the Jim
Bridger plant.
REGULATION
The Company is subject to the jurisdiction of public utility regulatory
authorities of each of the states in which it conducts retail electric
operations as to prices, services, accounting, issuance of securities and other
matters. The Company is a "licensee" and a "public utility" as those terms are
used in the Federal Power Act and is, therefore, subject to regulation by the
FERC as to accounting policies and practices, certain prices and other matters.
Most of the Company's hydroelectric plants are licensed as major projects under
the Federal Power Act and certain of these projects are licensed under the
Oregon Hydroelectric Act.
Prices charged to retail customers are subject to regulation in each of the
states the Company serves. Interstate sales of electricity at wholesale prices
and interstate wheeling rates are regulated by the FERC. Except in Montana,
where the commission is elected, commissioners are appointed by the individual
state's governor for varying terms. While regulation varies from state to state,
industry analysts consider the overall quality of the regulatory commissions
having jurisdiction over the Company to be about average in their treatment of
the rate applications of utilities.
8
On September 1, 1995, the Company filed a request with the Oregon Public
Utility Commission to raise prices in Oregon by an average of 3.8%. The proposed
rate increase amounts to $25 million annually and involves a performance-based
formula. The Company expects that any changes to prices under this filing would
not occur until July 1996. This would be the Company's first general rate
increase in Oregon since 1987.
On November 8, 1995, the Company filed a request with the Wyoming Public
Service Commission ("PSC") for an overall price increase averaging approximately
4% for its Wyoming customers. The proposed rate increase amounts to $10 million
annually and also involves a performance-based formula. The Company expects any
changes in prices under this filing to occur during the third quarter of 1996,
subject to approval from the Wyoming PSC. This would be the Company's first
price increase filing in Wyoming since 1986.
It is uncertain whether or not the Company's proposal or any other
alternative form of regulation will be adopted in these jurisdictions.
The Company is currently in the process of relicensing certain of its
hydroelectric projects under the Federal Power Act and will be seeking licenses
for other projects in the future. The licenses of 12 of the Company's
hydroelectric projects expire within the next 10 years. These projects represent
664 MW, or 62%, of the Company's hydroelectric generating capacity, or 8% of
total generating capacity. In the new licenses, the FERC is expected to impose
conditions designed to address the impact of the projects on fish and other
environmental concerns. See "Environment; Endangered Species." The Company is
unable to predict the impact of imposition of such conditions, but capital
expenditures and operating costs are expected to increase in future periods. In
addition, the Company may refuse relicenses for certain projects if the terms of
renewal make the projects uneconomical to operate.
BPA, a wholesale power and wheeling supplier, increased its rates effective
October 1, 1995. The new rates increased the Company's capacity and wheeling
expenses by approximately $4 million annually and reduced the exchange benefits
directly received by the Company's residential and small farm customers by
approximately $10 million annually. The Company has received approval for price
increases that will allow it to recover the loss of exchange benefits.
On July 10, 1995, BPA issued its initial 1996 rate case proposal. This
proposal will be subject to a rate hearing which is expected to conclude May 31,
1996, with final wholesale power and wheeling rates to be effective October 1,
1996.
CONSTRUCTION PROGRAM
The following table shows actual construction costs for 1995 and the
Company's estimated construction costs for 1996 through 1998, including costs of
acquiring demand-side resources. The estimates of construction costs for 1996
through 1998 are subject to continuing review and the Company makes appropriate
revisions. These estimates do not include expected expenditures for purchases of
generating assets. See "Proposed Asset Additions" for information concerning
recent and proposed additions to the Company's generating assets.
ESTIMATED
-------------------------------
TYPE OF FACILITY ACTUAL 1995 1996 1997 1998
- ------------------------------------------------------------- ----------- --------- --------- ---------
(DOLLARS IN MILLIONS)
Production................................................... $ 106 $ 97 $ 97 $ 110
Transmission................................................. 17 38 47 45
Distribution................................................. 244 185 209 210
Mining....................................................... 19 25 42 43
Other........................................................ 69 106 80 85
----- --------- --------- ---------
Total...................................................... $ 455 $ 451 $ 475 $ 493
----- --------- --------- ---------
----- --------- --------- ---------
9
PACIFIC TELECOM
Pacific Telecom provides local telephone service and access to the long
distance network in Alaska, seven other western states and three midwestern
states. Pacific Telecom's sale of its long distance business, Alascom, Inc., to
AT&T Corp. was completed in August 1995. Pacific Telecom has acquired and is
developing, operating and managing cellular mobile telephone services in six
states. Pacific Telecom is also involved in the operation and maintenance of and
sale of capacity in a submarine fiber optic cable between the United States and
Japan. For further information with respect to the business of Pacific Telecom
and the merger under which Holdings acquired the minority interest of Pacific
Telecom, see "Item 1. Business" of the Annual Report on Form 10-K of Pacific
Telecom, Inc. for the year ended December 31, 1995; such information is
incorporated herein by this reference.
OTHER
POWERCOR
GENERAL
On December 12, 1995, Holdings completed the acquisition of Powercor, an
Australian electric distribution company, from Victoria for approximately $1.6
billion in cash. The acquisition, which was structured through a series of
wholly owned United States and Australian companies, was financed with
borrowings of A$1.2 billion (approximately U.S. $900 million based on the
applicable exchange rate as of December 12, 1995) in Australia under a $984
million credit facility and with an equity contribution of $700 million from
Holdings that was initially financed with short-term debt in the United States
and an equity contribution from PacifiCorp. Holdings is not obligated with
respect to repayment of the Australian borrowings.
Powercor is one of five electricity distribution businesses ("DBs") formed
by Victoria, each comprising a geographically based, regulated distribution
network function and a retail function that supplies a combination of franchise
customers on a geographic basis and non-franchise or contestable customers on a
competitive basis. Powercor serves approximately 540,000 customers in suburban
Melbourne and the western and central regions of Victoria. Powercor's
distribution area covers approximately 57,915 square miles. This region is the
largest franchise area in Victoria, representing approximately 64% of the total
area of Victoria. The Powercor distribution area accounts for over 1,450,000
people (approximately 32% of Victoria's population).
Powercor's business is organized into two strategic divisions, Network and
Retail, which are supported by a corporate function providing various services,
including finance, strategic development, engineering and technology,
information technology, human resources, corporate affairs and company
secretarial. The key functions of Powercor's divisions are briefly described
below.
NETWORK
Network is responsible for the effective transportation of electrical energy
from the extra high voltage transmission network of Power Net Victoria ("PNV"),
a body corporate established under Victoria's Electricity Industry Act 1993 (the
"Electricity Act"), to Powercor's customers' points of supply. Network is a
regulated monopoly and must provide open access to large customers who purchase
energy directly from the wholesale market, embedded generators including
co-generation, other licensed distributors and licensed retailers, including the
Retail division of Powercor. Network's activities are divided into two
functions, Distribution and Construction, with support provided by a small
number of specialist groups.
Powercor's electrical distribution network comprises: (i) 66 kV and 22 kV
subtransmission lines and underground subtransmission cables that transport
wholesale energy from 11 terminal stations owned by PNV and controlled, under
lease, by the Victorian Power Exchange, a body corporate established under the
Electricity Act ("VPX"); (ii) 51 zone substations that transform electricity to
10
lower voltages (22 kV and below) and then distribute the energy through the
distribution network; and (iii) 22 kV, 11 kV and 6.6 kV distribution lines,
including distribution substations that transform electricity to low voltages
(415 V and below) suitable for connection to the majority of the customers.
Powercor is party to the following key network contracts: (i) a grid
connection agreement with PNV; (ii) a grid use of system agreement with VPX; and
(iii) distribution use of system agreements with Solaris Power Ltd. and Eastern
Energy Ltd. (two of the five DBs formed by Victoria). The contracts define the
technical relationships at all grid interface points, together with commercial
relationships for the associated payments. Although payment for connections and
use of system is defined under the relevant contracts, pricing of all network
services is subject to regulatory overview.
Almost all customers within the Powercor franchise area are connected to
Powercor's distribution system and have no effective choice in the system over
which electricity is supplied to them. Customers may establish or increase their
capacity for own generation, become directly connected to the Victorian grid, or
relocate operations outside Powercor's franchise area.
There are currently 11 independent systems operating within Powercor's
distribution area that supply (one intermittently) electricity to Powercor's
network. They include Cabot Australia (Altona/16 MW), Lake Mulwala mini-hydro
plant (Yarrawonga/9 MW), GEC Alsthom Australia (Sunshine/7.7 MW) and Varnsdorf
(Geelong and Bendigo/5.6 MW at each site). The combined capacity of all
independent systems in Powercor's distribution area is 65.1 MW. Shell (Corio)
also generates on-site for a percentage of its needs, but currently does not
supply electricity to Powercor.
Construction operates as a major group within Network and provides
construction, maintenance and operational services to Powercor's distribution
network. It was established from the consolidation of the previous construction
and maintenance workforce distributed across Powercor's distribution area.
Construction has six strategically located centers in Victoria at Ballarat,
Bendigo, Geelong, Sunshine, Swan Hill and Warrnambool providing a full range of
functions and an additional 15 small satellite depots primarily providing
day-to-day operational services.
RETAIL
Retail conducts the commercial functions of purchasing, marketing and
selling of electricity and collecting sales revenue. Retail is responsible for
the management of the price, purchasing and volume risks associated with energy
sales and end-use demand management. Retail has the following principal
interfaces with other divisions within Powercor: (i) performs the sales,
marketing and customer service functions for Powercor; and (ii) administers
connections, metering and billing for Network.
The customer metered sites, energy demand and revenue percentages of
Powercor for the year ended December 31, 1995 are set forth below.
ENERGY DEMAND(2)
CUSTOMER SITES(1)
-------------------- -------------------- REVENUE(2)
CUSTOMER SEGMENT NO. % GWH % %
- ----------------------------------------------- --------- --------- --------- --------- -------------
Residential.................................... 448,623 83 2,560 34 41
Commercial..................................... 47,475 9 1,388 19 23
Industrial..................................... 8,427 2 3,030 41 28
Farm........................................... 34,236 6 338 4 5
Public lighting and traction................... 1,460 -- 73 1 2
Other.......................................... 4 -- 75 1 1
--------- --- --------- --- ---
Total........................................ 540,225 100 7,464 100 100
--------- --- --------- --- ---
--------- --- --------- --- ---
- ------------------------
(1) Connections as of December 31, 1995.
(2) For the year ended December 31, 1995.
Powercor's distribution area has a significant proportion of industrial
energy demand. As of December 31, 1995, industrial customers accounted for only
2% of customer sites, but, for the year
11
ended December 31, 1995, such customers demanded approximately 3,000 GWh of
electricity and accounted for 28% of total electricity revenue. This compares to
Powercor's residential customers, who accounted for 83% of the total customer
sites at December 31, 1995 and 41% of total electricity revenue for the year
ended December 31, 1995. See "Regulation" for information concerning the
contestable profile of Powercor's customer base.
Retail's electricity revenue and load for the year ended December 31, 1995
were approximately A$745 million and 7,464 GWh, respectively. Electricity
revenue is derived from major industries such as chemicals, petroleum, food and
beverage, wholesale and retail, metal processing and transport equipment.
Powercor's largest customers include Smorgon Steel, Shell Refinery, Ford Motor
Company, Kemcor and Petroleum Refineries Australia. No single customer accounted
for more than 2% of Powercor's total revenue in 1995.
Powercor purchases all of its power, other than co-generation output,
through the VPX pool (the "Pool") for franchise customers. There are two major
components of the wholesale electricity market: (i) the competitive energy
market, centered around the Pool, which covers the sale of electricity by
generators; and (ii) the contract trade, involving bilateral financial contracts
between electricity buyers and sellers outside the Pool. The principal function
of the Pool is to allow market forces rather than monopolized central planning
to determine the amount, mix and cost characteristics of generating plants, and
the level and shape of demand. A spot price is determined for each half hour
period during the day, based on the market clearing price.
The Pool operations are governed by the Pool Rules developed by the industry
and issued by the Office of the Regulator General (the "ORG"), created by
Victoria's Office of the Regulator-General Act of 1994 (the "ORG Act"). Pool
trading is currently conducted through a system known as VicPool III. Each
licensed generator is required to sell its entire energy output through the
Pool, except if the electricity output from the generating unit, or a group of
generating units connected to the transmission or distribution network at a
common point of connection, is rated at less than 30 MW, in which case the
generator is not eligible to join the Pool.
Each retailer is required to purchase its entire demand for electricity
through the Pool unless the electricity is purchased from either a generator too
small to trade through the Pool or through another retailer who has purchased
that electricity from the Pool. A contestable customer may also apply to VPX to
become a participant in the Pool. New participants will be admitted to the Pool
if they satisfy VPX that they are of sufficient financial standing to meet their
financial obligations under the Pool Rules, including any prudential
requirements established by VPX, and will be able to maintain compliance with
certain system codes and wholesale metering codes.
Powercor is a party to a series of vesting contracts that have been
structured to hedge the price for the forecast franchise energy requirements
from July 1, 1995 to December 31, 2000. Vesting contracts take the form of
"two-way" and "one-way" contracts. Two-way contracts are structured such that
generators and DBs compensate each other for the difference between the System
Marginal Price ("SMP"), which is the price payable to generators in the
wholesale market, and the exercise price up to A$300/MWh. One way contracts
provide for amounts to be paid by generators to DBs for differences between the
SMP and the exercise price between A$300 and A$1,000/MWh.
Powercor has negotiated additional hedging contracts with the generators for
contestable customer loads. These non-vested contracts are optimized to fit a
generator's offering to the contestable load according to price, volume and load
factor constraints, while maintaining a minimum spread of supply sources among
generators.
12
REGULATION
Powercor is one of the five electric DBs which came into existence as a
result of the restructuring and subsequent privatization of the Victorian
electric industry. The five DBs have each been granted an exclusive license to
sell electricity to franchise customers whose facilities are in its distribution
area, and a non-exclusive state wide license to sell to contestable customers.
Customers who are able to choose between retailers are referred to as
contestable or non-franchise customers, while customers who cannot choose
between retailers are referred to as franchise customers. Franchise customers
will progressively become contestable over the period to January 1, 2001. All
customers with loads in excess of one MW are now contestable. Other customers
will become contestable over the next five years depending on their energy
demand level, with substantially all residential customers remaining as
franchise customers until January 1, 2001. If a Powercor customer chooses a
different retailer, it is expected that Powercor will continue to receive the
Network revenues associated with that customer.
The following table sets forth information regarding the estimated
contestability profile of Powercor's customer base as of December 31, 1995.
DATE FOR APPROXIMATE ESTIMATED % ESTIMATED REVENUE
INTRODUCTION OF NUMBER OF OF TOTAL (AUSTRALIAN DOLLARS
COMPETITION CUSTOMER LOAD DEMAND LEVEL CUSTOMERS(1) CONSUMPTION(2) IN MILLIONS)(2)
- ------------------------- --------------------------------- ------------ ------------------- -----------------------
December 1994............ Loads in excess of 5 MW 15 19 76
July 1995................ Loads in excess of 1 MW and less 103 15 73
than 5 MW
July 1996................ Energy demand in excess of 750 482 10 68
MWh/yr and loads less than 1 MW
July 1998................ Energy demand in excess of 160 1,504 6 56
MWh/yr and less than
750 MWh/yr
January 2001............. All remaining customers 538,121 50 472
- ------------------------
(1) As of December 31, 1995.
(2) For the year ended December 31, 1995.
Regulation of the Victorian electricity supply industry is the
responsibility of the ORG, an independent regulatory body established under the
ORG Act. The ORG is required to facilitate efficiency in the industry and ensure
that users and consumers benefit from competition and efficiency in the
industry.
The structure of prices within the Victorian electricity industry reflects
the establishment of maximum uniform tariffs ("MUTs") which apply to franchise
customers and some limited categories of non-franchise customers until January
1, 2001. Under applicable regulations, the DBs are required to supply
electricity to franchise customers at no greater than the prices specified in
the applicable MUT. The prices specified in the MUTs are an all inclusive price,
including grid charges and energy costs. In general, annual movements in MUTs
for franchise customers are based upon the Consumer Price Index ("CPI"), a
measure of price inflation. DBs may, with the approval of the ORG, alter retail
tariffs either by varying the price components of existing tariffs (within the
prescribed price movement rate) or introducing new tariffs with the approval of
the ORG to which consumers may elect to transfer. Prices for contestable
customers are subject to competitive forces and overall prices are not directly
regulated by the ORG. However, the network tariff component of the contestable
price is regulated by the ORG.
Network tariffs include recovery of distribution use of system costs, use of
transmission system fees and PNV's connection charges. Network tariffs are
intended to cover the costs of providing,
13
operating or maintaining the distribution network, except to the extent the
relevant costs are recoverable through connection charges or other excluded
services, and the charges levied by PNV and VPX for connection to and use of the
transmission systems. Network tariffs are paid by retailers supplying
electricity through a DB's distribution network, or by large customers dealing
directly with the Pool or are reflected in such DB's charges to its franchise
customers. Through December 31, 2000, the DBs have the ability to vary network
tariffs subject to the approval of the ORG. The approval process takes into
account a variety of factors, including the distribution charge price control,
the restrictions on annual variations of CPI plus 2% in any one year in the
average price for each of its network tariffs and restrictions designed to
ensure the DBs do not charge more in transmission and connection services than
they themselves are charged by PNV and VPX by way of connection and use of
system fees. After the year 2000, network tariffs will still be subject to
regulation by the ORG.
These retail and network prices are subject to regulation by the ORG, with
the regulatory arrangements being reviewed every five years. Pricing of the
competitive functions within the industry are also subject to market forces. The
first major review of the regulatory arrangements and respective transmission
and distribution network charges will be carried out by the ORG, with any
changes to apply from January 1, 2001. Any subsequent price control arrangements
for Network are required to apply for not less than five years.
PROPERTIES
In addition to Powercor's properties described above, Powercor leases its
principal executive offices at Level 3, 177 Southbank Boulevard, Southbank in
Victoria under a five-year lease with an option to renew for another five years.
Substantially all of the assets and stock of Powercor are pledged to secure the
obligations of PacifiCorp Australia LLC, an indirect subsidiary of the Company
and an indirect parent company of Powercor, under a credit facility used to
finance the acquisition of Powercor.
PACIFICORP FINANCIAL SERVICES
PFS is a holding company with two principal business segments, Financial
Services and Real Estate. PFS presently expects to retain only its
tax-advantaged investments in leveraged lease assets (primarily aircraft) and
affordable housing, and is limiting its pursuit of tax-advantaged investment
opportunities to affordable housing. To achieve PacifiCorp's strategic objective
of significantly reducing PFS's financial services assets, PFS has sold
substantial portions of its assets over the last five years. For the five-year
period ended December 31, 1995, PFS's total assets have declined by $984 million
to $702 million and the disposition of assets has generated $767 million in
proceeds, which have been used to reduce outstanding debt.
FINANCIAL SERVICES
As a result of PacifiCorp's strategic decision to reduce financial services
assets, PFS has made only limited new investments in aircraft or loans relating
to aircraft since 1991, and the last such investment was made in 1992. PFS's
portfolio consists primarily of Stage III noise compliant aircraft, both narrow
and widebody. At December 31, 1995, approximately 97% of aircraft in PFS's
portfolio investment were Stage III noise compliant. At December 31, 1995, PFS's
Aviation Finance portfolio had total leveraged lease and other financial assets
of $364 million (41 aircraft), representing approximately 52% of PFS's
consolidated assets.
Other financial services activities include centralized credit
administration and asset management for PFS. Although no longer originating new
business, PFS continues to manage its remaining lending portfolio and other
assets. At December 31, 1995, these assets totaled $152 million, or
approximately 22% of PFS's consolidated assets.
REAL ESTATE
Enacted as part of the Tax Reform Act of 1986, the Low Income Housing Tax
Credit (the "Tax Credit") provides a tax credit of approximately 9% of the
eligible basis of qualifying newly constructed
14
low income housing projects each year for 10 years. The actual credit percentage
applicable to a new project is set at the outset of the project based on the
then current percentage announced by the Internal Revenue Service ("IRS"). The
Tax Credit percentage for new low income projects is set each month based on
changes in the "applicable federal rate," which is the arm's-length benchmark
interest rate set monthly by the IRS. In certain areas designated as "difficult
to develop" or "qualified census tracts," the project will receive 130% of the
normal credit amount. Although the Tax Credit is received over 10 years, it is
necessary to continue meeting the qualification standards for a longer period,
typically 15 years, in order to avoid recapture. Tax Credits are allocated by
the states to new projects annually on a competitive basis.
PFS shares interest in some of its multifamily residential rental projects
with third party investors. Typically, PFS retains a 20% or more limited
partnership interest and performs as the general partner while providing
extensive indemnifications relating to qualification for the Tax Credit and
deficit funding obligations.
At December 31, 1995, PFS had investments in 19 projects, consisting of
3,527 rental units, which were approximately 97% occupied. These projects, which
are generally suburban, garden style apartment complexes, are located throughout
the United States. Third parties participate as equity investors of up to an 80%
interest in seven of the 19 projects, representing 1,312 units. PFS expects to
complete similar transactions in the future. At December 31, 1995, affordable
housing assets totaled $186 million, representing approximately 26% of PFS's
consolidated assets.
COMPETITION
The only remaining business in which PFS continues to actively participate
is affordable housing. Within this market, PFS competes for Tax Credits with
owners and developers of residential rental properties, with investors who are
seeking acquisition transactions and with syndicators who are selling Tax
Credits to institutional investors. PFS's established projects have historically
had occupancy levels in excess of 95%. These projects are competitive as
compared to market rent projects because PFS's restricted rents are
significantly below market rates due to the economic subsidy provided by the Tax
Credit and PFS's adherence to a strong project maintenance and oversight
program.
The market for developing and acquiring projects having allocations of the
Tax Credit has become increasingly competitive. Many of the newer entrants are
willing to accept lower yields than PFS. As a result, PFS has migrated to the
development side of the business. By seeking its own allocation of Tax Credits
from the states, and acting as its own developer, PFS has been able to maintain
acceptable yields.
REGULATION
The affordable housing projects of PFS can only rent to eligible tenants in
order to maintain their qualification for, and avoid recapture of, the Tax
Credit. PFS monitors its compliance with Tax Credit requirements through various
controls, including site visits, central review of all tenant applications for
eligibility requirements and independent audits of certain projects. PFS's
management believes that these controls are effective in monitoring and
maintaining its compliance with the eligibility and qualification requirements.
The Tax Credit has been targeted for elimination as part of some recent tax
proposals, including H.R. 2491, which was passed by Congress, but ultimately
vetoed by the President on December 6, 1995. If such a provision becomes law, it
will terminate the origination side of the business. Current expectations are
that any such provision to terminate the Tax Credit would be effective only
after the end of 1997 and would not affect the Tax Credit available to PFS's
existing projects or additional projects in which it invests prior to the end of
1997.
15
PACIFIC GENERATION COMPANY
PGC is engaged in the acquisition, development and operation of independent
power production and cogeneration facilities, principally in the United States.
PGC has interests in 12 power generation facilities representing an aggregate of
808 MW of generation capacity. At December 31, 1995, PGC also had a 3.1% limited
partnership interest and a $2 million investment in Energy Investors Fund, L.P.,
a fund that has investments in a number of independent power projects
aggregating 1,273.6 MW of generation capacity in various locations in the United
States.
During 1994, PGC, through its subsidiaries, began construction of a 248 MW
Crockett cogeneration facility in California. The Crockett facility produced
first energy late in 1995 and is expected to go into commercial operation in
April 1996. When completed, the facility will be operated by PGC and PGC will
own approximately 46% of the completed project. PGC plans to continue to pursue
opportunities in the U.S. market and has begun a preliminary investigation of
opportunities in the international markets.
EMPLOYEES
PacifiCorp and its subsidiaries had 12,651 employees on December 31, 1995.
Of these employees, 8,966 were employed by PacifiCorp and its mining affiliates,
2,233 were employed by Pacific Telecom, 1,230 were employed by Powercor and 222
were employed by PFS, PGC and other subsidiaries.
Approximately 64% of the employees of PacifiCorp and its mining affiliates
are covered by union contracts, principally with the International Brotherhood
of Electrical Workers, the Utility Workers Union of America and the United Mine
Workers of America. The Company believes that a significant portion of
Powercor's employees are represented by unions in Australia.
For information with respect to the employees of Pacific Telecom, see "Item
1. Business" of the Annual Report on Form 10-K of Pacific Telecom, Inc. for the
year ended December 31, 1995; such information is incorporated herein by this
reference.
In the Company's judgment, employee relations are satisfactory.
16
ITEM 2. PROPERTIES
The Company owns 52 hydroelectric generating plants and has an interest in
one additional plant, with an aggregate nameplate rating of 1,078.1 MW and plant
net capability of 1,138.6 MW. It also owns or has interests in 15
thermal-electric generating plants with an aggregate nameplate rating of 7,334.3
MW and plant capability of 6,856.6 MW. The following table summarizes the
Company's existing generating facilities:
NAMEPLATE PLANT NET
INSTALLATION RATING CAPABILITY
LOCATION ENERGY SOURCE DATES (MW) (MW)
--------------------- --------------- ------------ ---------- --------------
HYDROELECTRIC PLANTS
Swift....................... Cougar, Washington Lewis River 1958 240.0 265.6
Merwin...................... Ariel, Washington Lewis River 1931-1958 136.0 144.0
Yale........................ Amboy, Washington Lewis River 1953 134.0 134.0
Five North Umpqua Plants.... Toketee Falls, Oregon N. Umpqua River 1950-1956 133.5 138.5
John C. Boyle............... Keno, Oregon Klamath River 1958 80.0 90.0
Copco Nos. 1 and 2 Plants... Hornbrook, California Klamath River 1918-1925 47.0 54.5
Clearwater Nos. 1 and 2
Plants..................... Toketee Falls, Oregon Clearwater
River 1953 41.0 41.0
Grace....................... Grace, Idaho Bear River 1914-1923 33.0 33.0
Prospect No. 2.............. Prospect, Oregon Rogue River 1928 32.0 34.0
Cutler...................... Collinston, Utah Bear River 1927 30.0 29.1
Oneida...................... Preston, Idaho Bear River 1915-1920 30.0 28.0
Iron Gate................... Hornbrook, California Klamath River 1962 18.0 20.0
Soda........................ Soda Springs, Idaho Bear River 1924 14.0 14.0
Fish Creek.................. Toketee Falls, Oregon Fish Creek 1952 11.0 12.0
33 Minor Hydroelectric
Plants..................... Various Various 1896-1990 98.6* 100.9*
---------- -------
Subtotal (53 Hydroelectric Plants) 1,078.1 1,138.6
THERMAL ELECTRIC PLANTS
Jim Bridger................. Rock Springs, Wyoming Coal-Fired 1974-1979 1,495.0* 1,386.7*
Huntington.................. Huntington, Utah Coal-Fired 1974-1977 892.8 845.0
Dave Johnston............... Glenrock, Wyoming Coal-Fired 1959-1972 816.7 772.0
Naughton.................... Kemmerer, Wyoming Coal-Fired 1963-1971 707.2 700.0
Centralia................... Centralia, Washington Coal-Fired 1972 693.5* 636.5*
Hunter 1 and 2.............. Castle Dale, Utah Coal-Fired 1978-1980 687.7* 639.4*
Hunter 3.................... Castle Dale, Utah Coal-Fired 1983 446.4 395.0
Cholla Unit 4............... Joseph City, Arizona Coal-Fired 1981 414.0 380.0
Wyodak...................... Gillette, Wyoming Coal-Fired 1978 289.7* 268.0*
Gadsby...................... Salt Lake City, Utah Gas-Fired 1951-1955 251.6 235.0
Carbon...................... Castle Gate, Utah Coal-Fired 1954-1957 188.6 175.0
Craig 1 and 2............... Craig, Colorado Coal-Fired 1979-1980 172.1* 165.0*
Colstrip 3 and 4............ Colstrip, Montana Coal-Fired 1984-1986 155.6* 144.0*
Hayden 1 and 2.............. Hayden, Colorado Coal-Fired 1965-1976 81.3* 78.0*
Blundell.................... Milford, Utah Geothermal 1984 26.1 23.0
Little Mountain............. Ogden, Utah Gas Turbine 1971 16.0 14.0
---------- -------
Subtotal (15 Thermal Electric Plants) 7,334.3 6,856.6
---------- -------
Total Hydro and Thermal Generating Facilities (68) 8,412.4 7,995.2
---------- -------
---------- -------
- ------------------------------
* Jointly owned plants; amount shown represents the Company's share only.
NOTE: Hydroelectric project locations are stated by locality and river
watershed.
The Company's generating facilities are interconnected through its own
transmission lines or by contract through the lines of others. Substantially all
generating facilities and reservoirs located within the Pacific Northwest region
are managed on a coordinated basis to obtain maximum load carrying capability
and efficiency. Portions of the Company's transmission and distribution systems
are located, by franchise or permit, upon public lands, roads and streets and,
by easement or license, upon the lands of others.
Substantially all of the Company's electric utility plants are subject to
the liens of the Company's Mortgages and Deeds of Trust.
17
The following table describes the Company's recoverable coal reserves as of
December 31, 1995. All coal reserves are dedicated to nearby Company operated
generating plants. Recoverability by surface mining methods typically ranges
between 90% and 95%. Recoverability by underground mining techniques ranges from
50% to 70%. The Company considers that the respective reserves assigned to the
Centralia, Craig, Dave Johnston, Huntington, Hunter and Jim Bridger plants,
together with coal available under both long-term and short-term contracts with
external suppliers, will be sufficient to provide these plants with fuel that
meets the Clean Air Act standards effective in 1996, for their current
economically useful lives. The sulfur content of the reserves ranges from 0.43%
to 0.84% and the BTU value per pound of the reserves ranges from 7,600 to
11,400. Reserve estimates are subject to adjustment as a result of the
development of additional data, new mining technology and changes in regulation
and economic factors affecting the utilization of such reserves.
RECOVERABLE TONS
LOCATION PLANT SERVED (IN MILLIONS)
- ------------------------------ --------------------- ----------------
Centralia, Washington......... Centralia 38(1)
Craig, Colorado............... Craig 72(2)
Glenrock, Wyoming............. Dave Johnston 54(1)
Emery County, Utah............ Huntington and Hunter 124(1)(3)
Rock Springs, Wyoming......... Jim Bridger 133(4)
- ------------------------
(1) These reserves are mined by subsidiaries of the Company.
(2) These reserves are leased and mined by Trapper Mining Company, a wholly
owned subsidiary of Williams Fork Company, in which the Company owns
approximately 20% of the outstanding stock.
(3) These reserves are in underground mines.
(4) These reserves are leased and mined by Bridger Coal Company, a joint venture
between Pacific Minerals, Inc., a subsidiary of the Company, and a
subsidiary of Idaho Power Company. Pacific Minerals, Inc. has a two-thirds
interest in the joint venture.
Most of the Company's coal reserves are held pursuant to leases from the
federal government through the BLM and from certain states and private parties.
The leases generally have multi-year terms that may be renewed or extended and
require payment of rentals and royalties. In addition, federal and state
regulations require that comprehensive environmental protection and reclamation
standards be met during the course of mining operations and upon completion of
mining activities. In 1995, the Company expended $2.9 million of reclamation
costs and accrued $7 million of estimated final mining reclamation costs. Final
mine reclamation funds have been established with respect to certain of the
Company's mining properties. At December 31, 1995, the Company's pro rata
portion of these reclamation funds totaled $32 million and the Company had an
accrued reclamation liability of $113 million at December 31, 1995.
For a description of the properties of Pacific Telecom, see "Item 1.
Business" and "Item 2. Properties" of the Annual Report on Form 10-K of Pacific
Telecom, Inc. for the year ended December 31, 1995; such information is
incorporated herein by this reference.
ITEM 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are parties to various legal claims,
actions and complaints, certain of which are described below. Although it is
impossible to predict with certainty whether or not the Company and its
subsidiaries will ultimately be successful in its legal proceedings or, if not,
what the impact might be, management believes that disposition of these matters
will not have a material adverse effect on the Company's consolidated financial
statements.
In April 1992, the Company acquired interests in two units at the Hayden
Generating Station (the "Station") located near Hayden, Colorado, which in total
average approximately 17.5% of each unit. The Public Service Company of Colorado
is the operator of the Station. On August 18, 1993, the
18
Sierra Club filed an action against the Company and other joint owners of the
Station under the citizen's suit provisions of the federal Clean Air Act
alleging, based upon reports from emissions monitors at the Station, that over
19,000 violations of state and federal air quality regulations have occurred
(SIERRA CLUB V. PUBLIC SERVICE COMPANY OF COLORADO, INC., SALT RIVER PROJECT
AGRICULTURAL IMPROVEMENT AND POWER DISTRICT, AND PACIFICORP, Case No. 93-B-1749,
U.S. District Court for the District of Colorado). The action seeks declaratory
and injunctive relief requiring the defendants to operate the Station in strict
compliance with applicable statutes and regulations, the imposition of civil
penalties, litigation costs, attorneys' fees and mitigation. The Court ruled as
a matter of law that the alleged violations occurred and that data from the
continuous emissions monitors at the Station are conclusive evidence of the
violations. The Tenth Circuit Court of Appeals denied the defendants' request
for an interlocutory appeal of that ruling. A trial on the injunctive phase of
the case has been set for May 1996. A trial date for the penalty phase of the
case has not been scheduled. On January 18, 1996, the EPA issued a notice of
violation with respect to the Station alleging over 28,000 additional violations
of air quality regulations. The Clean Air Act provides for penalties of up to
$25,000 per day for each violation, but the level of penalties imposed in any
particular instance is discretionary. The EPA initially proposed a civil penalty
of $24 million. The parties have been engaged in settlement discussions, and the
joint owners have expressed a willingness, subject to a number of conditions, to
install pollution control equipment at both units of the Station. The Company is
not able to predict the outcome of these discussions, the level of penalties or
other remedies that may be imposed upon the joint owners of the Station if a
settlement is not reached, or what portion of that liability would ultimately be
borne by the Company.
In December 1995, the Company received a Notice of Violation and Order
("NOV") from the Wyoming Department of Environmental Quality ("DEQ") alleging
that the Company has failed to maintain pollution control equipment at Unit 4 of
its Jim Bridger Power Plant in a manner consistent with good air pollution
control practices and alleging violations of the 30% opacity limitation in the
air quality permit issued for that Unit. The NOV states that the continuous
emissions monitors at the Unit show that violations have occurred, but does not
specify the number of alleged violations. The NOV orders the Company to identify
and perform any maintenance on Unit 4 required to bring emissions within the
allowable opacity standard, to perform certain stack tests to verify compliance
with particulate emission limitations and to submit a plan for the maintenance
and stack testing to DEQ for prior approval. Wyoming law provides for civil
penalties for violations of environmental laws not to exceed $10,000 for each
violation for each day during which violation continues, as well as temporary or
permanent injunctions. DEQ has not assessed a proposed civil penalty against the
Company or requested relief other than as ordered in the NOV. The Company has
requested a hearing on the NOV before the Wyoming Environmental Quality Council,
but the hearing has been indefinitely stayed pending discussions with DEQ
regarding a compliance plan to resolve the NOV. The Company is unable to predict
the outcome of the discussions, or of a hearing should the discussions fail to
resolve the NOV, or the amount of civil penalties, if any, that the Company may
ultimately be required to pay.
On March 1, 1996, a purported class action was filed against PacifiCorp
alleging negligence, nuisance and trespass by PacifiCorp as a result of the
operation of three dams on the Lewis River in the State of Washington during the
floods of February 1996 (LARRY AND BARBARA RAINEY, ET AL. V. PACIFICORP, Case
No. 96-2-00977-0, Superior Court of Washington for Clark County). Plaintiffs
request an unspecified amount of damages on behalf of the alleged class,
estimated by plaintiffs to have over 500 members, for injury to their property,
diminution of value of the related real estate and improvements, and
consequential damages in the form of lost income to businesses operating in the
flooded areas. The complaint also seeks injunctive relief compelling PacifiCorp
to establish additional warning systems downstream from the dams. PacifiCorp
believes that it operated the dams in an appropriate manner and intends to
vigorously defend this action.
On March 15, 1996, Utah Associated Municipal Power Systems ("UAMPS") filed
an action against PacifiCorp asserting 10 different causes of action, all
relating to the ownership interest of
19
UAMPS in the Hunter Steam Electric Generating Unit No. II ("Hunter II") in Emery
County, Utah, which is operated by PacifiCorp. (UTAH ASSOCIATED MUNICIPAL POWER
SYSTEMS V. PACIFICORP, Civil No. 2:96CV 0240B, U.S. District Court for the
District of Utah, Central Division). The complaint alleges, among other things,
an illegal tying arrangement in the supply of coal by PacifiCorp to Hunter II,
violations of various federal and state antitrust laws, breach of contract and
breach of a duty of good faith and fair dealing. The complaint seeks damages in
excess of $1,000,000 with respect to each of several of the causes of action and
certain declaratory rulings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No information is required to be reported pursuant to this item.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The following is a list of all executive officers of the Company. There are
no family relationships among the executive officers. Officers are normally
elected annually.
Frederick W. Buckman, born March 9, 1946, President and Chief Executive
Officer of the Company
Mr. Buckman was elected President and Chief Executive Officer of the Company
effective February 1, 1994 and became a director of the Company and PacifiCorp
Holdings, Inc. in February 1994. He formerly served as President and Chief
Executive Officer of Consumers Power Company, Jackson, Michigan, from 1992 to
1994 and as President and Chief Operating Officer of Consumers Power Company
from 1988 to 1991.
Charles E. Robinson, born December 3, 1933, Chairman, President and Chief
Executive Officer of Pacific Telecom, Inc.
Mr. Robinson was elected Chairman of Pacific Telecom, Inc. in February 1989.
He has been serving as Chief Executive Officer since April 1985 and served as
President from April 1985 to October 1990. He resumed the role of President on
December 31, 1992.
John A. Bohling, born June 23, 1943, Senior Vice President of the Company
Mr. Bohling was elected Senior Vice President of the Company in February
1993. He served as Executive Vice President of Pacific Power from September 1991
to February 1993 and as Senior Vice President of Utah Power from February 1990
to September 1991.
Shelley R. Faigle, born June 8, 1951, Senior Vice President of the Company
Ms. Faigle was elected Senior Vice President of the Company in November
1993. She served as Vice President from February 1992 to November 1993 and as
Vice President of Pacific Power from 1989 to February 1992.
Paul G. Lorenzini, born April 16, 1942, Senior Vice President of the Company
Mr. Lorenzini was elected Senior Vice President of the Company in May 1994.
He served as President of Pacific Power from January 1992 to May 1994 and as
Executive Vice President from January 1989 to January 1992.
John E. Mooney, born March 9, 1937, Senior Vice President of the Company
Mr. Mooney was elected Senior Vice President of the Company in November
1994. He served as Executive Vice President of Utah Power from September 1991 to
November 1994 and as Vice President of Pacific Power from August 1990 to
September 1991.
Richard T. O'Brien, born March 20, 1954, Senior Vice President and Chief
Financial Officer of the Company and Senior Vice President and Chief Financial
Officer of PacifiCorp Holdings, Inc.
Mr. O'Brien was elected Senior Vice President and Chief Financial Officer of
the Company in August 1995, and of PacifiCorp Holdings in February 1996. He
served as Vice President of the
20
Company from August 1993 to August 1995. He served as Senior Vice President,
Treasurer and Chief Financial Officer of NERCO, Inc., a former subsidiary of the
Company, during 1992 and 1993 and Vice President and Treasurer of NERCO from
1989 to 1992.
Daniel L. Spalding, born December 23, 1953, Chairman and Chief Executive
Officer of Powercor, Senior Vice President of the Company and Senior Vice
President of PacifiCorp Holdings, Inc.
Mr. Spalding was elected Chairman and Chief Executive Officer of Powercor in
December 1995 and was elected Senior Vice President of the Company in February
1992. He served as Vice President from October 1987 to February 1992.
Dennis P. Steinberg, born December 5, 1946, Senior Vice President of the
Company
Mr. Steinberg was elected Senior Vice President of the Company in August
1994. He served as Vice President of the Company from February 1992 to August
1994 and as Vice President of Electric Operations from August 1990 to February
1992.
Verl R. Topham, born August 25, 1934, Senior Vice President and General
Counsel of the Company
Mr. Topham was elected Senior Vice President and General Counsel and a
director of the Company in May 1994. He had served as President of Utah Power
from February 1990 to May 1994.
Sally A. Nofziger, born July 5, 1936, Vice President and Corporate Secretary
of the Company, Secretary of PacifiCorp Holdings, Inc. and PacifiCorp Financial
Services, Inc.
Mrs. Nofziger was elected Vice President of the Company in 1989 and has been
Corporate Secretary since 1983.
Thomas J. Imeson, born March 20, 1950, Vice President of the Company
Mr. Imeson was elected Vice President of the Company in February 1992. He
had served as Vice President of Electric Operations from 1990 to February 1992.
Robert F. Lanz, born October 30, 1942, Vice President of the Company
Mr. Lanz was elected Vice President of the Company in 1980. He served as
Treasurer of the Company from June 1984 to December 1993.
Jacqueline S. Bell, born November 17, 1941, Controller of the Company and
PacifiCorp Holdings, Inc.
Ms. Bell became Controller of the Company and of PacifiCorp Holdings, Inc.
in June 1989 and served as Controller of PacifiCorp Financial Services, Inc.
from October 1993 to December 1994.
William E. Peressini, born May 23, 1956, Treasurer of the Company and
PacifiCorp Holdings, Inc.
Mr. Peressini was elected Treasurer of the Company in January 1994 and of
PacifiCorp Holdings in February 1994. He served as Executive Vice President of
PacifiCorp Financial Services, Inc. from January 1992 to January 1994 and as
Senior Vice President and Chief Financial Officer of that company from 1989 to
January 1992.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required by this item is included under "Summary
Information" and "Quarterly Financial Data" on pages 24 and 41 of the Company's
Annual Report to Shareholders and is incorporated herein by this reference.
21
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is included under "Summary
Information" on page 24 of the Company's Annual Report to Shareholders and is
incorporated herein by this reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required by this item is included under "Summary
Information," "Electric Operations," "Telecommunications," "Other" and
"Liquidity and Capital Resources" on pages 24 through 40 of the Company's Annual
Report to Shareholders and is incorporated herein by this reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated by this reference from
the Company's Annual Report to Shareholders or filed with this Report as listed
in Item 14 hereof.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
No information is required to be reported pursuant to this item.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item with respect to the Company's
directors is incorporated herein by this reference to "Election of Directors" in
the Proxy Statement for the 1996 Annual Meeting of Shareholders. The information
required by this item with respect to the Company's executive officers is set
forth in Part I of this report under Item 4A. The information required by this
item with respect to compliance with Section 16(a) of the Securities Exchange
Act of 1934 is incorporated herein by this reference to "Compliance within
Section 16(a) of the Securities Exchange Act of 1934" in the Proxy Statement for
the 1996 Annual Meeting of Shareholders.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated herein by this
reference to "Executive Compensation" in the Proxy Statement for the 1996 Annual
Meeting of Shareholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated herein by this
reference to "Security Ownership of Certain Beneficial Owners and Management" in
the Proxy Statement for the 1996 Annual Meeting of Shareholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated herein by this
reference to "Director Compensation and Certain Transactions" in the Proxy
Statement for the 1996 Annual Meeting of Shareholders.
22
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
PAGE
REFERENCES
----------
(a) 1. Index to Consolidated Financial
Statements:*
Independent Auditors' Report.......... 42
Statements of consolidated income and
retained earnings for each of the
three years ended December 31,
1995................................. 43
Consolidated balance sheets at
December 31, 1995 and 1994........... 44
Statements of consolidated cash flows
for each of the three years ended
December 31, 1995.................... 46
Notes to consolidated financial
statements........................... 47
2. Schedules:**
- ------------------------
* Page references are to the incorporated portion of the Annual Report to
Shareholders of the Registrant for the year ended December 31, 1995.
** All schedules have been omitted because of the absence of the conditions
under which they are required or because the required information is
included elsewhere in the financial statements incorporated by reference
herein.
3. Exhibits:
*(2)a -- Agreement and Plan of Merger dated as of March 9, 1995 by
and among Pacific Telecom, Inc., PacifiCorp Holdings, Inc.
and PXYZ Corporation. (Exhibit 2A, Form 8-K dated March 9,
1995, File No. 0-873.)
*(2)b -- Agreement dated as of March 9, 1995 between PacifiCorp and
Pacific Telecom, Inc. (Exhibit 2B, Form 8-K dated March 9,
1995, File No. 0-873.)
*(2)c -- Asset Sale Agreement between Powercor Australia Limited and
PacifiCorp Australia Holdings Pty Ltd. (Exhibit 2.1, Form
8-K dated December 12, 1995, File No. 0-873).
*(2)d -- Share Sale Agreement between the State Electricity
Commission of Victoria and the State of Victoria and
PacifiCorp Australia Holdings Pty Ltd. and PacifiCorp
Holdings, Inc. (Exhibit 2.2, Form 8-K dated December 12,
1995, File No. 0-873).
*(2)e -- Asset Purchase Agreement between PacifiCorp Australia
Holdings Pty Ltd. and Powercor Australia Limited. (Exhibit
2.3, Form 8-K dated December 12, 1995, File No. 0-873).
*(3)a -- Second Restated Articles of Incorporation of the Company, as
amended. (Exhibit (3)a, Form 10-K for fiscal year ended
December 31, 1992, File No. 1-5152).
(3)b -- Bylaws of the Company (as restated and amended May 10,
1995).
*(4)a -- Mortgage and Deed of Trust dated as of January 9, 1989,
between the Company and Morgan Guaranty Trust Company of New
York (Chemical Bank, successor), Trustee, as supplemented
and modified by ten Supplemental Indentures (Exhibit 4-E,
Form 8-B, File No. 1-5152; Exhibit (4)(b), File No.
33-31861; Exhibit (4)(a), Form 8-K dated January 9, 1990,
File No. 1-5152; Exhibit 4(a), Form 8-K dated September 11,
1991, File No. 1-5152; Exhibit 4(a), Form 8-K dated January
7, 1992, File No. 1-5152; Exhibit 4(a), Form 10-Q for the
quarter ended March 31, 1992, File No. 1-5152; and Exhibit
4(a), Form 10-Q for the quarter ended September 30, 1992,
File No. 1-5152; Exhibit 4(a), Form 8-K dated April 1, 1993,
File No. 1-5152; Exhibit 4(a), Form 10-Q for the quarter
ended September 30, 1993, File No. 1-5152); Exhibit 4(a),
Form 10-Q for the quarter ended June 30, 1994, File No.
1-5152; and Exhibit 4b, Form 10-K for the fiscal year ended
December 31, 1994, File No. 1-5152).
23
(4)b -- Eleventh Supplemental Indenture dated as of December 1, 1995
to the Mortgage and Deed of Trust dated as of January 9,
1989 between the Company and Morgan Guaranty Trust Company
of New York (Chemical Bank, successor), Trustee.
*(4)c -- Mortgage and Deed of Trust dated as of July 1, 1947, between
Pacific Power & Light Company and Guaranty Trust Company of
New York (Chemical Bank, successor) and Oliver R. Brooks et
al. (resigned) Trustees, as supplemented and modified by
fifty-three Supplemental Indentures (Exhibit 7(d), File No.
2-7118; Exhibit 7(b), File No. 2-8354; Exhibit 4(b)-3, File
No. 2-9446; Exhibit 4(b)-4, File No. 2-9809; Exhibit 4(b)-5,
File No. 2-10731; Exhibit 4(b)-6, File No. 2-11022; Exhibit
4(b)-7, File No. 2-12576; Exhibit 4(b)-8, File No. 2-13403;
Exhibit 4(b)-2, File No. 2-13793; Exhibit 4(b)-2, File No.
2-14125; Exhibit 4(b)-2, File No. 2-14706; Exhibit 4(b)-2,
File No. 2-16843; Exhibit 4(b)-2, File No. 2-19841; Exhibit
4(b)-2, File No. 2-20797; Exhibit 4(b)-3, File No. 2-20797;
Exhibit 4(b)-2, File No. 2-15327; Exhibit 4(b)-2, File No.
2-21488; Exhibit 4(b)-2, File No. 2-15327; Exhibit 4(b)-2,
File No. 2-23922; Exhibit 4(b)-5, File No. 2-15327; Exhibit
4(b)-2, File No. 2-32390; Exhibit 4(b)-2, File No. 2-34731;
Exhibit 2(b)-1, File No. 2-37436; Exhibit 2(b)-4, Thirteenth
Amendment, File No. 2-15327; Exhibit 5(gg), File No.
2-43377; Exhibit 2(b)-1, File No. 2-45648; Exhibit 2(b)-1,
File No. 2-49808; Exhibit 2(b)-1, File No. 2-52039; Exhibit
2, Form 8-K for the month of June 1975, File No. 1-5152;
Exhibit 2, Form 8-K for the month of January 1976, File No.
1-5152; Exhibit 3(c), Form 8-K for the month of July 1976,
File No. 1-5152; Exhibit 2, Form 8-K for the month of
December 1976, File No. 1-5152; Exhibit 3(c), Form 8-K for
the month of January 1977, File No. 1-5152; Exhibit 5(yy),
File No. 2-60582; Exhibit 5(m)-2, File No. 2-66153; Exhibit
4(a)-2, File No. 2-70905; Exhibit (4)a, Form 10-K for the
fiscal year ended December 31, 1980, File No. 1-5152;
Exhibit 4(b), Form 10-K for the fiscal year ended December
31, 1981, File No. 1-5152; Exhibit (4)b, Form 10-K for the
fiscal year ended December 31, 1982, File No. 1-5152;
Exhibit (4)b, File No. 2-82676; Exhibit (4)b, Form 10-K for
the fiscal year ended December 31, 1985, File No. 1-5152;
Exhibit 4, Form 8-K dated July 25, 1986, File No. 1-5152;
Exhibit 4, Form 8-K dated May 18, 1988, File No. 1-5152;
Exhibit 4(a), Form 8-K dated January 9, 1989, File No.
1-5152; Exhibit (4)(d), File No. 33-31861; Exhibit (4)(b),
Form 8-K dated January 9, 1990, File No. 1-5152; Exhibit
4(b), Form 8-K dated September 11, 1991, File No. 1-5152;
Exhibit 4(b), Form 8-K dated January 7, 1992, File No.
1-5152; Exhibit 4(b), Form 10-Q for the quarter ended March
31, 1992, File No. 1-5152; Exhibit 4(b), Form 10-Q for the
quarter ended September 30, 1992, File No. 1-5152; Exhibit
4(b), Form 8-K dated April 1, 1993, File No. 1-5152; Exhibit
4(b), Form 10-Q for the quarter ended September 30, 1993,
File No. 1-5152; Exhibit 4(b), Form 10-Q for the quarter
ended June 30, 1994, File No. 1-5152; and Exhibit (4)d, Form
10-K for fiscal year ended December 31, 1994, File No.
1-5152).
(4)d -- Fifty-fourth Supplemental Indenture dated as of December 1,
1995 to the Mortgage and Deed of Trust dated as of July 1,
1947 between Pacific Power & Light Company and Guaranty
Trust Company of New York (Chemical Bank, successor) and
Oliver R. Brooks et al. (resigned), Trustees.
*(4)e -- Mortgage and Deed of Trust dated as of December 1, 1943,
between Utah Power & Light Company and Guaranty Trust
Company of New York (Morgan Guaranty, successor) and Arthur
E. Burke et al. (resigned) Trustees, as supplemented and
modified by fifty-five Supplemental Indentures (Exhibits
7(a), 7(b) and 7(e), File No. 2-6245; Exhibit 7(a), File No.
2-7420; Exhibit 7(a), File No. 2-7880; Exhibit 7(a), File
No. 2-8057; Exhibit 7(g), File No. 2-8564; Exhibit 7(h),
File No. 2-9121; Exhibit 4(d), File No. 2-9796; Exhibit
4(d), File No. 2-10707; Exhibit 4(d), File No. 2-11822;
Exhibit 4(d), File No. 2-13560; Exhibit 4(d), File No.
2-16861; Exhibit 4(d), File No. 2-20176; Exhibit 2(c), File
No. 2-21141; Exhibit 2(c), File
24
No. 2-59660; Exhibit 2(e), File No. 2-28131; Exhibit 2(e),
File No. 2-59660; Exhibit 2(e), File No. 2-36342; Exhibit
2(e), File No. 2-39394; Exhibits 2(h) and 2(i), File No.
2-59660; Exhibit 2(d), File No. 2-51736; Exhibit 2(c), File
No. 2-54812; Exhibit 2(c), File No. 2-55331; Exhibit 2(c),
File No. 2-55762; Exhibit 2(d), File No. 2-56990; Exhibit
2(e), File No. 2-56990; Exhibits 2(c) and 2(d), File No.
2-58227; Exhibit 2(r), File No. 2-59660; Exhibits 2(c) and
2(d), File No. 2-61221; Exhibit 2(c), File No. 2-63813;
Exhibit 2(c), File No. 2-65221; Exhibit 2(c)-1, File No.
2-66680; Exhibits 4(b) and 4(c)-1, File No. 2-74773; Exhibit
4(d), File No. 2-80100; Exhibits 4(d)-2 and 4(d)-3, File No.
2-76293; Exhibit 4(b), File No. 33-9932; Exhibit 4(b), File
No. 33-13207; Exhibits 4(a) and 4(b), File No. 33-01890;
Exhibit 4(b), Form 8-K dated January 9, 1989, File No.
1-5152; Exhibit (4)(f), File No. 33-31861; Exhibit (4)(c),
Form 8-K dated January 9, 1990, File No. 1-5152; Exhibit
4(c), Form 8-K dated September 11, 1991, File No. 1-5152;
Exhibit 4(c), Form 8-K dated January 7, 1992, File No.
1-5152; Exhibit 4(c), Form 10-Q for the quarter ended March
31, 1992, File No. 1-5152; Exhibit 4(c), Form 10-Q for the
quarter ended September 30, 1992, File No. 1-5152; Exhibit
4(c), Form 8-K dated April 1, 1993, File No. 1-5152; Exhibit
4(c), Form 10-Q for the quarter ended September 30, 1993,
File No. 1-5152; Exhibit 4(c), Form 10-Q for the quarter
ended June 30, 1994, File No. 1-5152; and Exhibit (4)f, Form
10-K for fiscal year ended December 31, 1994, File No.
1-5152).
(4)f -- Fifty-sixth Supplemental Indenture dated as of December 1,
1995 to the Mortgage and Deed of Trust dated as of December
1, 1943 between Utah Power & Light Company and Guaranty
Trust Company of New York (Chemical Bank, successor) and
Arthur E. Burke et al. (resigned), Trustees.
*(4)g -- Second Restated Articles of Incorporation, as amended, and
Bylaws. See (3)a and (3)b above.
In reliance upon item 601(4)(iii) of Regulation S-K, various
instruments defining the rights of holders of long-term debt
of the Registrant and its subsidiaries are not being filed
because the total amount authorized under each such
instrument does not exceed 10% of the total assets of the
Registrant and its subsidiaries on a consolidated basis. The
Registrant hereby agrees to furnish a copy of any such
instrument to the Commission upon request.
*+(10)a -- PacifiCorp Deferred Compensation Payment Plan (Exhibit 10-F,
Form 10-K for fiscal year ended December 31, 1992, File No.
1-8749) (Exhibit (10)b, Form 10-K for fiscal year ended
December 31, 1994, File No. 1-5152).
*+(10)b -- PacifiCorp Compensation Reduction Plan dated December 1,
1994, as amended (Exhibit (10)b, Form 10-K for fiscal year
ended December 31, 1994, File No. 1-5152).
*+(10)c -- Pacific Telecom Executive Bonus Plan, dated October 26, 1990
(Exhibit 10B, Form 10-K for the fiscal year ended December
31, 1990, File No. 0-873).
+(10)d -- PacifiCorp Executive Incentive Program.
*+(10)e -- PacifiCorp Non-Employee Directors' Stock Compensation Plan
dated August 1, 1985, as amended. (Exhibit (10)f, Form 10-K
for fiscal year ended December 31, 1994, File No. 1-5152).
*+(10)f -- PacifiCorp Long Term Incentive Plan, 1993 Restatement
(Exhibit 10G, Form 10-K for the year ended December 31,
1993, File No. 0-873).
*+(10)g -- Form of Restricted Stock Agreement under PacifiCorp Long
Term Incentive Plan, 1993 Restatement (Exhibit 10H, Form
10-K for the year ended December 31, 1993, File No. 0-873).
+(10)h -- PacifiCorp Supplemental Executive Retirement Plan, as
amended.
25
*+(10)i -- Pacific Telecom Executive Deferred Compensation Plan dated
as of January 1, 1994, as amended (Exhibit 10L, Form 10-K
for the year ended December 31, 1994, File No. 0-873).
*+(10)j -- Pacific Telecom Long Term Incentive Plan 1994 Restatement
dated as of January 1, 1994 (Exhibit 10F, Form 10-K for the
fiscal year ended December 31, 1993, File No. 0-873).
*+(10)k -- Pacific Telecom Executive Officer Severance Plan (Exhibit
10N, Form 10-K for the year ended December 31, 1994, File
No. 0-873).
*+(10)l -- Form of Restricted Stock Agreement under Pacific Telecom
Long-Term Incentive Plan 1994 Restatement (Exhibit (10)o,
Form 10-K for the year ended December 31, 1993, File No.
1-5152).
*+(10)m -- Incentive Compensation Agreement dated as of February 1,
1994 between PacifiCorp and Frederick W. Buckman (Exhibit
(10)k, Form 10-K for the fiscal year ended December 31,
1993, File No. 1-5152).
*+(10)n -- Compensation Agreement dated as of February 9, 1994 between
PacifiCorp and Keith R. McKennon (Exhibit (10)m, Form 10-K
for the fiscal year ended December 31, 1993, File No.
1-5152).
*+(10)o -- Amendment No. 1 to Compensation Agreement between PacifiCorp
and Keith R. McKennon dated as of February 9, 1995. (Exhibit
(10)r, Form 10-K for the fiscal year ended December 31,
1994, File No. 1-5152).
*(10)p -- Short-Term Surplus Firm Capacity Sale Agreement executed
July 9, 1992 by the United States of America Department of
Energy acting by and through the Bonneville Power
Administration and Pacific Power & Light Company (Exhibit
(10)n, Form 10-K for the fiscal year ended December 31,
1992, File No. 1-5152).
*(10)q -- Restated Surplus Firm Capacity Sale Agreement executed
September 27, 1994 by the United States of America
Department of Energy acting by and through the Bonneville
Power Administration and Pacific Power & Light Company.
(Exhibit (10)t, Form 10-K for the fiscal year ended December
31, 1994, File No. 1-5152).
(12)a -- Statements of Computation of Ratio of Earnings to Fixed
Charges. (See page S-1.)
(12)b -- Statements of Computation of Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividends. (See page S-2.)
(13) -- Portions of Annual Report to Shareholders of the Registrant
for the year ended December 31, 1995 incorporated by
reference herein.
(21) -- Subsidiaries. (See pages S-3 and S-4.)
(23) -- Consent of Deloitte & Touche LLP with respect to Annual
Report on Form 10-K.
(24) -- Powers of Attorney.
(27) -- Financial Data Schedule (filed electronically only).
(99) -- "Item 1. Business" and "Item 2. Properties" from the Annual
Report on Form 10-K of Pacific Telecom, Inc. for the year
ended December 31, 1995.
- ------------------------
* Incorporated herein by reference.
+ This exhibit constitutes a management contract or compensatory plan or
arrangement.
26
(b) Reports on Form 8-K.
On Form 8-K dated November 15, 1995, under "Item 5. Other Events," the
Company filed a press release reporting a proposed acquisition of an
electricity distributor in Australia.
On Form 8-K dated December 12, 1995, under "Item 2. Acquisition or
Disposition of Assets," the Company reported the acquisition of Powercor
Australia, Limited and under "Item 7. Financial Statements, Pro Forma
Information and Exhibits," the Company filed financial statements for
businesses acquired and pro forma financial information.
On Form 8-K dated January 16, 1996, under "Item 5. Other Events," the
Company reported information with respect to an environmental compliance
matter at the Jim Bridger Power Plant Unit 4.
On Form 8-K dated February 12, 1996, under "Item 5. Other Events," the
Company filed a press release reporting financial results for the three and
twelve months ended December 31, 1996.
(c) See (a) 3. above.
(d) See (a) 2. above.
27
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED.
PACIFICORP
By /s/ FREDERICK W. BUCKMAN
-----------------------------------
Frederick W. Buckman
(PRESIDENT)
Date: March 28, 1996
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
- ------------------------------------------------------
/s/ FREDERICK W. BUCKMAN
------------------------------------------- President, Chief Executive
Frederick W. Buckman Officer and Director March 28, 1996
(President)
/s/ RICHARD T. O'BRIEN
------------------------------------------- Senior Vice President
Richard T. O'Brien (Chief Financial Officer and March 28, 1996
(Senior Vice President) Accounting Officer)
*KATHRYN A. BRAUN
-------------------------------------------
Kathryn A. Braun
*C. TODD CONOVER
-------------------------------------------
C. Todd Conover
Director March 28, 1996
*RICHARD C. EDGLEY
-------------------------------------------
Richard C. Edgley
*NOLAN E. KARRAS
-------------------------------------------
Nolan E. Karras
28
SIGNATURE TITLE DATE
- ------------------------------------------------------
*KEITH R. MCKENNON
-------------------------------------------
Keith R. McKennon
(Chairman)
*ROBERT G. MILLER
-------------------------------------------
Robert G. Miller
*VERL R. TOPHAM
-------------------------------------------
Verl R. Topham
Director March 28, 1996
*DON M. WHEELER
-------------------------------------------
Don M. Wheeler
*NANCY WILGENBUSCH
-------------------------------------------
Nancy Wilgenbusch
*PETER I. WOLD
-------------------------------------------
Peter I. Wold
*By /s/ NANCY WILGENBUSCH
--------------------------------------
Nancy Wilgenbusch
(Attorney-in-Fact)
29
EXHIBIT INDEX
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ------------------------------------------------------------ ------------
*(2)a Agreement and Plan of Merger dated as of March 9, 1995 by
and among Pacific Telecom, Inc., PacifiCorp Holdings, Inc.
and PXYZ Corporation. (Exhibit 2A, Form 8-K dated March 9,
1995, File No. 0-873.)......................................
*(2)b Agreement dated as of March 9, 1995 between PacifiCorp and
Pacific Telecom, Inc. (Exhibit 2B, Form 8-K dated March 9,
1995, File
No. 0-873.).................................................
*(2)c Asset Sale Agreement between Powercor Australia Limited and
PacifiCorp Australia Holdings Pty Ltd. (Exhibit 2.1, Form
8-K dated December 12, 1995, File No. 0-873)................
*(2)d Share Sale Agreement between the State Electricity
Commission of Victoria and the State of Victoria and
PacifiCorp Australia Holdings Pty Ltd. and PacifiCorp
Holdings, Inc. (Exhibit 2.2, Form 8-K dated December 12,
1995, File No. 0-873).......................................
*(2)e Asset Purchase Agreement between PacifiCorp Australia
Holdings Pty Ltd. and Powercor Australia Limited. (Exhibit
2.3, Form 8-K dated December 12, 1995, File No. 0-873)......
*(3)a Second Restated Articles of Incorporation of the Company, as
amended. (Exhibit (3)a, Form 10-K for fiscal year ended
December 31, 1992, File No. 1-5152).........................
(3)b Bylaws of the Company (as restated and amended May 10,
1995).......................................................
*(4)a Mortgage and Deed of Trust dated as of January 9, 1989,
between the Company and Morgan Guaranty Trust Company of New
York (Chemical Bank, successor), Trustee, as supplemented
and modified by ten Supplemental Indentures (Exhibit 4-E,
Form 8-B, File No. 1-5152; Exhibit (4)(b), File No.
33-31861; Exhibit (4)(a), Form 8-K dated January 9, 1990,
File No. 1-5152; Exhibit 4(a), Form 8-K dated September 11,
1991, File No. 1-5152; Exhibit 4(a), Form 8-K dated January
7, 1992, File No. 1-5152; Exhibit 4(a), Form 10-Q for the
quarter ended March 31, 1992, File No. 1-5152; and Exhibit
4(a), Form 10-Q for the quarter ended September 30, 1992,
File No. 1-5152; Exhibit 4(a), Form 8-K dated April 1, 1993,
File No. 1-5152; Exhibit 4(a), Form 10-Q for the quarter
ended September 30, 1993, File No. 1-5152); Exhibit 4(a),
Form 10-Q for the quarter ended June 30, 1994, File No.
1-5152; and Exhibit 4b, Form 10-K for the fiscal year ended
December 31, 1994, File No. 1-5152).........................
(4)b Eleventh Supplemental Indenture dated as of December 1, 1995
to the Mortgage and Deed of Trust dated as of January 9,
1989 between the Company and Morgan Guaranty Trust Company
of New York (Chemical Bank, successor), Trustee.............
*(4)c Mortgage and Deed of Trust dated as of July 1, 1947, between
Pacific Power & Light Company and Guaranty Trust Company of
New York (Chemical Bank, successor) and Oliver R. Brooks et
al. (resigned) Trustees, as supplemented and modified by
fifty-three Supplemental Indentures (Exhibit 7(d), File No.
2-7118; Exhibit 7(b), File No. 2-8354; Exhibit 4(b)-3, File
No. 2-9446; Exhibit 4(b)-4, File No. 2-9809; Exhibit 4(b)-5,
File No. 2-10731; Exhibit 4(b)-6, File No. 2-11022; Exhibit
4(b)-7, File No. 2-12576; Exhibit 4(b)-8, File No. 2-13403;
Exhibit 4(b)-2, File No. 2-13793; Exhibit 4(b)-2, File No.
2-14125; Exhibit 4(b)-2, File No. 2-14706; Exhibit 4(b)-2,
File No. 2-16843; Exhibit 4(b)-2, File No. 2-19841; Exhibit
4(b)-2, File No. 2-20797; Exhibit 4(b)-3, File
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ------------------------------------------------------------ ------------
No. 2-20797; Exhibit 4(b)-2, File No. 2-15327; Exhibit
4(b)-2, File No. 2-21488; Exhibit 4(b)-2, File No. 2-15327;
Exhibit 4(b)-2, File No. 2-23922; Exhibit 4(b)-5, File No.
2-15327; Exhibit 4(b)-2, File No. 2-32390; Exhibit 4(b)-2,
File No. 2-34731; Exhibit 2(b)-1, File No. 2-37436; Exhibit
2(b)-4, Thirteenth Amendment, File No. 2-15327; Exhibit
5(gg), File No. 2-43377; Exhibit 2(b)-1, File No. 2-45648;
Exhibit 2(b)-1, File No. 2-49808; Exhibit 2(b)-1, File No.
2-52039; Exhibit 2, Form 8-K for the month of June 1975,
File No. 1-5152; Exhibit 2, Form 8-K for the month of
January 1976, File No. 1-5152; Exhibit 3(c), Form 8-K for
the month of July 1976, File No. 1-5152; Exhibit 2, Form 8-K
for the month of December 1976, File No. 1-5152; Exhibit
3(c), Form 8-K for the month of January 1977, File No.
1-5152; Exhibit 5(yy), File No. 2-60582; Exhibit 5(m)-2,
File No. 2-66153; Exhibit 4(a)-2, File No. 2-70905; Exhibit
(4)a, Form 10-K for the fiscal year ended December 31, 1980,
File No. 1-5152; Exhibit 4(b), Form 10-K for the fiscal year
ended December 31, 1981, File No. 1-5152; Exhibit (4)b, Form
10-K for the fiscal year ended December 31, 1982, File No.
1-5152; Exhibit (4)b, File No. 2-82676; Exhibit (4)b, Form
10-K for the fiscal year ended December 31, 1985, File No.
1-5152; Exhibit 4, Form 8-K dated July 25, 1986, File No.
1-5152; Exhibit 4, Form 8-K dated May 18, 1988, File No.
1-5152; Exhibit 4(a), Form 8-K dated January 9, 1989, File
No. 1-5152; Exhibit (4)(d), File No. 33-31861; Exhibit
(4)(b), Form 8-K dated January 9, 1990, File No. 1-5152;
Exhibit 4(b), Form 8-K dated September 11, 1991, File No.
1-5152; Exhibit 4(b), Form 8-K dated January 7, 1992, File
No. 1-5152; Exhibit 4(b), Form 10-Q for the quarter ended
March 31, 1992, File No. 1-5152; Exhibit 4(b), Form 10-Q for
the quarter ended September 30, 1992, File No. 1-5152;
Exhibit 4(b), Form 8-K dated April 1, 1993, File No. 1-5152;
Exhibit 4(b), Form 10-Q for the quarter ended September 30,
1993, File No. 1-5152; Exhibit 4(b), Form 10-Q for the
quarter ended June 30, 1994, File No. 1-5152; and Exhibit
(4)d, Form 10-K for fiscal year ended December 31, 1994,
File No. 1-5152)............................................
(4)d Fifty-fourth Supplemental Indenture dated as of December 1,
1995 to the Mortgage and Deed of Trust dated as of July 1,
1947 between Pacific Power & Light Company and Guaranty
Trust Company of New York (Chemical Bank, successor) and
Oliver R. Brooks et al. (resigned), Trustees................
*(4)e Mortgage and Deed of Trust dated as of December 1, 1943,
between Utah Power & Light Company and Guaranty Trust
Company of New York (Morgan Guaranty, successor) and Arthur
E. Burke et al. (resigned) Trustees, as supplemented and
modified by fifty-five Supplemental Indentures (Exhibits
7(a), 7(b) and 7(e), File No. 2-6245; Exhibit 7(a), File No.
2-7420; Exhibit 7(a), File No. 2-7880; Exhibit 7(a), File
No. 2-8057; Exhibit 7(g), File No. 2-8564; Exhibit 7(h),
File No. 2-9121; Exhibit 4(d), File No. 2-9796; Exhibit
4(d), File No. 2-10707; Exhibit 4(d), File No. 2-11822;
Exhibit 4(d), File No. 2-13560; Exhibit 4(d), File No.
2-16861; Exhibit 4(d), File No. 2-20176; Exhibit 2(c), File
No. 2-21141; Exhibit 2(c), File No. 2-59660; Exhibit 2(e),
File No. 2-28131; Exhibit 2(e), File No. 2-59660; Exhibit
2(e), File No. 2-36342; Exhibit 2(e), File No. 2-39394;
Exhibits 2(h) and 2(i), File No. 2-59660; Exhibit 2(d), File
No. 2-51736; Exhibit 2(c), File No. 2-54812; Exhibit 2(c),
File No. 2-55331; Exhibit 2(c), File No. 2-55762; Exhibit
2(d), File No. 2-56990; Exhibit 2(e), File No. 2-56990;
Exhibits 2(c) and 2(d), File No. 2-58227; Exhibit 2(r), File
No. 2-59660; Exhibits 2(c) and 2(d), File No. 2-61221;
Exhibit 2(c), File
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ------------------------------------------------------------ ------------
No. 2-63813; Exhibit 2(c), File No. 2-65221; Exhibit 2(c)-1,
File No. 2-66680; Exhibits 4(b) and 4(c)-1, File No.
2-74773; Exhibit 4(d), File No. 2-80100; Exhibits 4(d)-2 and
4(d)-3, File No. 2-76293; Exhibit 4(b), File No. 33-9932;
Exhibit 4(b), File No. 33-13207; Exhibits 4(a) and 4(b),
File No. 33-01890; Exhibit 4(b), Form 8-K dated January 9,
1989, File No. 1-5152; Exhibit (4)(f), File No. 33-31861;
Exhibit (4)(c), Form 8-K dated January 9, 1990, File No.
1-5152; Exhibit 4(c), Form 8-K dated September 11, 1991,
File No. 1-5152; Exhibit 4(c), Form 8-K dated January 7,
1992, File No. 1-5152; Exhibit 4(c), Form 10-Q for the
quarter ended March 31, 1992, File No. 1-5152; Exhibit 4(c),
Form 10-Q for the quarter ended September 30, 1992, File No.
1-5152; Exhibit 4(c), Form 8-K dated April 1, 1993, File No.
1-5152; Exhibit 4(c), Form 10-Q for the quarter ended
September 30, 1993, File No. 1-5152; Exhibit 4(c), Form 10-Q
for the quarter ended June 30, 1994, File No. 1-5152; and
Exhibit (4)f, Form 10-K for fiscal year ended December 31,
1994, File No. 1-5152)......................................
(4)f Fifty-sixth Supplemental Indenture dated as of December 1,
1995 to the Mortgage and Deed of Trust dated as of December
1, 1943 between Utah Power & Light Company and Guaranty
Trust Company of New York (Chemical Bank, successor) and
Arthur E. Burke et al. (resigned),
Trustees....................................................
*(4)g Second Restated Articles of Incorporation, as amended, and
Bylaws. See (3)a and (3)b above.............................
In reliance upon item 601(4)(iii) of Regulation S-K, various
instruments defining the rights of holders of long-term debt
of the Registrant and its subsidiaries are not being filed
because the total amount authorized under each such
instrument does not exceed 10% of the total assets of the
Registrant and its subsidiaries on a consolidated basis. The
Registrant hereby agrees to furnish a copy of any such
instrument to the Commission upon request...................
*+(10)a PacifiCorp Deferred Compensation Payment Plan (Exhibit 10-F,
Form 10-K for fiscal year ended December 31, 1992, File No.
1-8749) (Exhibit (10)b, Form 10-K for fiscal year ended
December 31, 1994, File No. 1-5152).........................
*+(10)b PacifiCorp Compensation Reduction Plan dated December 1,
1994, as amended (Exhibit (10)b, Form 10-K for fiscal year
ended December 31, 1994, File No. 1-5152)...................
*+(10)c Pacific Telecom Executive Bonus Plan, dated October 26, 1990
(Exhibit 10B, Form 10-K for the fiscal year ended December
31, 1990, File No. 0-873)...................................
+(10)d PacifiCorp Executive Incentive Program......................
*+(10)e PacifiCorp Non-Employee Directors' Stock Compensation Plan
dated August 1, 1985, as amended. (Exhibit (10)f, Form 10-K
for fiscal year ended December 31, 1994, File No. 1-5152)...
*+(10)f PacifiCorp Long Term Incentive Plan, 1993 Restatement
(Exhibit 10G, Form 10-K for the year ended December 31,
1993, File No. 0-873).......................................
*+(10)g Form of Restricted Stock Agreement under PacifiCorp Long
Term Incentive Plan, 1993 Restatement (Exhibit 10H, Form
10-K for the year ended December 31, 1993, File No.
0-873)......................................................
+(10)h PacifiCorp Supplemental Executive Retirement Plan, as
amended.....................................................
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ------------------------------------------------------------ ------------
*+(10)i Pacific Telecom Executive Deferred Compensation Plan dated
as of January 1, 1994, as amended (Exhibit 10L, Form 10-K
for the year ended December 31, 1994, File No. 0-873).......
*+(10)j Pacific Telecom Long Term Incentive Plan 1994 Restatement
dated as of January 1, 1994 (Exhibit 10F, Form 10-K for the
fiscal year ended December 31, 1993, File No. 0-873)........
*+(10)k Pacific Telecom Executive Officer Severance Plan (Exhibit
10N, Form 10-K for the year ended December 31, 1994, File
No. 0-873)..................................................
*+(10)l Form of Restricted Stock Agreement under Pacific Telecom
Long-Term Incentive Plan 1994 Restatement (Exhibit (10)o,
Form 10-K for the year ended December 31, 1993, File No.
1-5152).....................................................
*+(10)m Incentive Compensation Agreement dated as of February 1,
1994 between PacifiCorp and Frederick W. Buckman (Exhibit
(10)k, Form 10-K for the fiscal year ended December 31,
1993, File No. 1-5152)......................................
*+(10)n Compensation Agreement dated as of February 9, 1994 between
PacifiCorp and Keith R. McKennon (Exhibit (10)m, Form 10-K
for the fiscal year ended December 31, 1993, File No.
1-5152).....................................................
*+(10)o Amendment No. 1 to Compensation Agreement between PacifiCorp
and Keith R. McKennon dated as of February 9, 1995. (Exhibit
(10)r, Form 10-K for the fiscal year ended December 31,
1994, File No. 1-5152)......................................
*(10)p Short-Term Surplus Firm Capacity Sale Agreement executed
July 9, 1992 by the United States of America Department of
Energy acting by and through the Bonneville Power
Administration and Pacific Power & Light Company (Exhibit
(10)n, Form 10-K for the fiscal year ended December 31,
1992, File No. 1-5152)......................................
*(10)q Restated Surplus Firm Capacity Sale Agreement executed
September 27, 1994 by the United States of America
Department of Energy acting by and through the Bonneville
Power Administration and Pacific Power & Light Company.
(Exhibit (10)t, Form 10-K for the fiscal year ended December
31, 1994, File No. 1-5152)..................................
(12)a Statements of Computation of Ratio of Earnings to Fixed
Charges. (See page S-1.)....................................
(12)b Statements of Computation of Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividends. (See page
S-2.).......................................................
(13) Portions of Annual Report to Shareholders of the Registrant
for the year ended December 31, 1995 incorporated by
reference herein............................................
(21) Subsidiaries. (See pages S-3 and S-4.)......................
(23) Consent of Deloitte & Touche LLP with respect to Annual
Report on Form 10-K.........................................
(24) Powers of Attorney..........................................
(27) Financial Data Schedule (filed electronically only).........
(99) "Item 1. Business" and "Item 2. Properties" from the Annual
Report on Form 10-K of Pacific Telecom, Inc. for the year
ended December 31, 1995.....................................
- ------------------------
* Incorporated herein by reference.
+ This Exhibit constitutes a management contract or compensatory plan or
arrangement.