<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
______________
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
______
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
Suite 1600
Portland, Oregon 97232-4116
(Address of principal executive offices) (Zip code)
503-731-2000
(Registrant's telephone number)
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 twelve 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 at least the past 90 days.
YES X NO
_____ _____
At April 30, 1998, there were 297,254,422 shares of registrant's common stock
outstanding.
<PAGE>1
PACIFICORP
<TABLE>
<CAPTION>
Page No.
________
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Income
and Retained Earnings 2
Condensed Consolidated Statements of Cash Flows 3
Condensed Consolidated Balance Sheets 4
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 22
Signature 23
</TABLE>
<PAGE>2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
PACIFICORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(Millions of Dollars, except per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
______________________
1998 1997
______ ______
<S> <C> <C>
REVENUES $2,075.7 $1,041.8
_______ _______
EXPENSES
Operations and maintenance 1,599.6 574.7
Administrative and general 79.2 69.0
Depreciation and amortization 116.7 109.3
Taxes, other than income taxes 27.6 27.4
Special charges 113.1 -
_______ _______
TOTAL 1,936.2 780.4
_______ _______
INCOME FROM OPERATIONS 139.5 261.4
_______ _______
INTEREST EXPENSE AND OTHER
Interest expense 94.3 106.0
Interest capitalized (3.3) (2.8)
Other (income)/expense - net 78.7 (0.6)
_______ _______
TOTAL 169.7 102.6
_______ _______
Income (loss) from continuing operations
before income taxes (30.2) 158.8
Income tax expense/(benefit) (15.1) 56.1
_______ _______
Income (loss) from continuing operations (15.1) 102.7
Discontinued Operations (less applicable
income tax expense: 1997/$12.9 - 18.3
_______ _______
NET INCOME (LOSS) (15.1) 121.0
RETAINED EARNINGS BEGINNING OF PERIOD 1,106.3 782.8
Cash dividends declared
Preferred stock (4.3) (5.6)
Common stock per share of $0.27 (80.3) (79.8)
_______ _______
RETAINED EARNINGS END OF PERIOD $1,006.6 $ 818.4
======= =======
EARNINGS (LOSS) ON COMMON STOCK $ (19.9) $ 114.9
Average number of common shares
outstanding - Basic and dilutive (Thousands) 297,059 295,393
EARNINGS (LOSS) PER COMMON SHARE - Basic and dilutive
Continuing operations $ (0.07) $ 0.33
Discontinued operations - 0.06
_______ _______
TOTAL $ (0.07) $ 0.39
======= =======
<FN>
See accompanying Notes to Condensed Consolidated Financial Statements
</FN>
</TABLE>
<PAGE>3
<TABLE>
PACIFICORP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of Dollars)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
______________________
1998 1997
______ ______
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Income (loss) from continuing operations $ (15.1) $ 102.7
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities
Depreciation and amortization 120.1 113.3
Deferred income taxes and investment tax
credits - net (40.2) 4.1
Special charges 113.1 -
Other 23.4 9.2
Accounts receivable and prepayments (11.4) 107.5
Materials, supplies and fuel stock (7.0) (.3)
Accounts payable and accrued liabilities 41.4 (61.6)
______ ______
Net cash provided by continuing operations 224.3 274.9
Net cash used in discontinued operations (304.0) (13.9)
______ ______
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES (79.7) 261.0
______ ______
CASH FLOWS FROM INVESTING ACTIVITIES
Construction (111.0) (127.7)
Investments in and advances to
affiliated companies - net (21.0) (20.3)
Assets acquired (6.8) (4.6)
Proceeds from sales of finance assets
and principal payments 47.1 26.7
Investment in shares of The Energy Group PLC (625.5) -
Other 5.3 6.5
______ ______
NET CASH USED IN INVESTING ACTIVITIES (711.9) (119.4)
______ ______
CASH FLOWS FROM FINANCING ACTIVITIES
Changes in short-term debt 108.7 24.8
Proceeds from long-term debt 417.5 12.3
Proceeds from issuance of common stock 7.9 10.5
Dividends paid (84.1) (85.2)
Repayments of long-term debt (369.2) (66.0)
Redemptions of preferred stock - (3.0)
Other 20.0 (28.8)
______ ______
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 100.8 (135.4)
______ ______
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (690.8) 6.2
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 741.3 8.4
______ ______
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 50.5 $ 14.6
====== ======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for
Interest (net of amount capitalized) $ 135.7 $ 176.9
Income taxes 367.3 (1.3)
<FN>
See accompanying Notes to Condensed Consolidated Financial Statements
</FN>
</TABLE>
<PAGE>4
<TABLE>
PACIFICORP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Millions of Dollars)
(Unaudited)
ASSETS
<CAPTION>
March 31, December 31,
1998 1997
_________ ____________
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 50.5 $ 741.3
Accounts receivable less allowance
for doubtful accounts: 1998/$17.7
and 1997/$18.8 948.5 919.5
Materials, supplies and fuel stock at
average cost 205.3 194.3
Real estate investments held for sale 295.8 272.2
Shares of The Energy Group PLC 649.4 -
Other 90.4 55.0
________ ________
TOTAL CURRENT ASSETS 2,239.9 2,182.3
PROPERTY, PLANT AND EQUIPMENT
Domestic Electric Operations 12,159.4 12,094.6
Australian Electric Operations 1,192.1 1,161.2
Other Operations 56.6 56.9
Accumulated depreciation and amortization (4,331.5) (4,242.4)
________ ________
TOTAL PROPERTY, PLANT AND EQUIPMENT - NET 9,076.6 9,070.3
OTHER ASSETS
Investments in and advances to affiliated
companies 266.4 281.6
Intangible assets - net 526.7 524.9
Regulatory assets - net 864.1 871.1
Finance note receivable 210.2 211.2
Finance assets - net 333.2 349.8
Deferred charges and other 295.0 389.0
________ ________
TOTAL OTHER ASSETS 2,495.6 2,627.6
________ ________
TOTAL ASSETS $13,812.1 $13,880.2
======== ========
<FN>
See accompanying Notes to Condensed Consolidated Financial Statements
</FN>
</TABLE>
<PAGE>5
<TABLE>
PACIFICORP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Millions of Dollars)
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
<CAPTION>
March 31, December 31,
1998 1997
_________ ____________
<S> <C> <C>
CURRENT LIABILITIES
Long-term debt currently maturing $ 427.4 $ 365.5
Notes payable and commercial paper 297.9 189.2
Accounts payable 701.8 630.7
Taxes, interest and dividends payable 370.3 701.2
Customer deposits and other 211.0 218.9
________ ________
TOTAL CURRENT LIABILITIES 2,008.4 2,105.5
DEFERRED CREDITS
Income taxes 1,649.7 1,676.1
Investment tax credits 133.2 135.2
Other 764.4 646.2
________ ________
TOTAL DEFERRED CREDITS 2,547.3 2,457.5
LONG-TERM DEBT 4,425.1 4,414.5
COMMITMENTS AND CONTINGENCIES (See Note 5) - -
GUARANTEED PREFERRED BENEFICIAL INTERESTS
IN COMPANY'S JUNIOR SUBORDINATED DEBENTURES 340.4 340.4
PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION 175.0 175.0
PREFERRED STOCK 66.4 66.4
COMMON EQUITY
Common shareholders' capital
shares authorized 750,000,000;
shares outstanding: 1998/297,231,736
and 1997/296,908,110 3,282.3 3,274.2
Retained earnings 1,006.6 1,106.3
Accumulated other comprehensive income (39.4) (59.6)
________ ________
TOTAL COMMON EQUITY 4,249.5 4,320.9
________ ________
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $13,812.1 $13,880.2
======== ========
<FN>
See accompanying Notes to Condensed Consolidated Financial Statements
</FN>
</TABLE>
<PAGE>6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 1998
1. FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements as
of March 31, 1998 and December 31, 1997 and for the periods ended March 31,
1998 and 1997, in the opinion of management, include all adjustments,
constituting only normal recording of accruals, necessary for a fair
presentation of financial position, results of operations and cash flows for
such periods. A significant part of the business of PacifiCorp (the
"Company") is of a seasonal nature; therefore, results of operations for the
periods ended March 31, 1998 and 1997 are not necessarily indicative of the
results for a full year. These condensed consolidated financial statements
should be read in conjunction with the financial statements and related notes
incorporated by reference in the Company's 1997 Annual Report on Form 10-K.
The condensed consolidated financial statements of the Company include
the integrated domestic electric utility operations of Pacific Power and Utah
Power and its wholly owned and majority owned subsidiaries. Major
subsidiaries, all of which are wholly owned, are: PacifiCorp Group Holdings
Company ("Holdings"), which holds directly or through its wholly owned
subsidiary, PacifiCorp International Group Holdings Company, all of the
Company's nonintegrated electric utility investments, including Powercor
Australia Limited ("Powercor"), an Australian electricity distributor;
PacifiCorp Financial Services, Inc. ("PFS"), a financial services business;
PacifiCorp Power Marketing, Inc. ("PPM"), engaged in wholesale electricity
trading in the eastern United States energy markets; and TPC Corporation
("TPC"), a natural gas marketing and storage company, purchased April 15,
1997. Together these businesses are referred to herein as the Companies.
Significant intercompany transactions and balances have been eliminated.
The Company sold its wholly owned telecommunications subsidiary, Pacific
Telecom, Inc. ("PTI"), on December 1, 1997. See Note 3. The Company sold
Pacific Generation Company ("PGC") on November 5, 1997, and the natural gas
gathering and processing assets of TPC on December 1, 1997. In addition, on
May 1, 1998, the Company sold the real estate assets held by PFS.
Investments in and advances to affiliated companies represent investments
in unconsolidated affiliated companies carried on the equity basis, which
approximates the Company's equity in their underlying net book value.
2. BID FOR THE ENERGY GROUP
During 1997 and 1998, the Company sought to acquire The Energy Group PLC
("TEG"), a diversified international energy group with operations in the
United Kingdom, the United States and Australia. The Company made three
tender offers for TEG. The last offer was valued at $11.1 billion, including
the assumption of $4.1 billion of TEG's debt. In March 1998, Texas Utilities
Company also made a tender offer at a higher price. On April 30, 1998, the
Company announced that it would not increase its revised offer for TEG on the
basis that a price in
<PAGE>7
excess of 820 pence per share would not have provided acceptable financial
returns for PacifiCorp shareholders.
The Company recorded an $86 million pretax charge to first quarter 1998
earnings, included in "Other (income)/expense-net," for bank commitment and
facility fees, legal expenses and other related costs incurred since the
Company's original bid for TEG in June of 1997. These costs had been deferred
pending the outcome of the transaction.
Additionally, in connection with the attempt to acquire TEG, a subsidiary
of the Company purchased approximately 46 million shares of TEG at a price of
820 pence per share, or $625 million. The Company will record any gain on the
TEG shares when they are sold, which is expected to occur in the second
quarter of 1998. The Company has entered into forward foreign currency
exchange contracts to remove the foreign currency risk associated with its
investment in TEG shares.
The Company incurred a pretax loss of $3 million in April 1998 in
connection with closing its foreign currency option contract associated with
the bid for TEG. This loss will be recorded in the second quarter of 1998.
3. DISCONTINUED OPERATIONS
On December 1, 1997, Holdings completed the sale of PTI for $1.5 billion
in cash plus the assumption of PTI's debt of $713 million. A portion of the
proceeds from the sale of PTI were used to repay short-term debt of Holdings.
The remaining proceeds were invested in short-term money market instruments
and Holdings temporarily advanced excess funds to Domestic Electric Operations
for retirement of short-term debt.
Summarized operating results for PTI were as follows:
<TABLE>
<CAPTION>
Three-Month
Period Ended
March 31,
____________
1997
______
(Dollars in Millions)
<S> <C>
Revenues $128.0
_____
Income before income taxes $ 31.2
Income taxes 12.9
_____
Net income $ 18.3
=====
</TABLE>
4. ACCOUNTING FOR THE EFFECTS OF REGULATION
Domestic Electric Operations prepares its financial statements in
accordance with Statement of Financial Accounting Standards ("SFAS") 71,
"Accounting for the Effects of Certain Types of Regulations." Under this
statement, the Company may defer certain costs as regulatory assets and
certain obligations as regulatory liabilities. Regulatory assets and
liabilities represent probable future revenues that will be recovered from, or
refunded to, customers through the ratemaking process.
<PAGE>8
The Emerging Issues Task Force of the Financial Accounting Standards
Board (the "EITF") concluded in 1997 that SFAS 71 should be discontinued when
detailed legislation or regulatory orders regarding competition are issued.
Additionally, the EITF concluded that regulatory assets and liabilities
applicable to businesses being deregulated should be written off unless their
recovery is provided for through future regulated cash flows. Recoverability
of regulatory assets is assessed at each reporting period.
During 1997, the Utah Public Service Commission (the "PSC") held hearings
on the proper method to be used in allocating costs among the Company's seven
jurisdictions that resulted in an order issued on April 16, 1998. Under the
order, differences in allocations associated with the merger of Pacific Power
and Utah Power will be eliminated over five years on a straight-line basis.
When fully implemented, the order will result in $125 million to $150 million
of primarily generation and transmission assets being disallowed from the
Company's rate base in Utah. The phase-out of the differences is to be
completed by January 1, 2001 and could reduce Utah prices by approximately
$50 million to $60 million per year once fully implemented. The order itself
will not decrease revenues, but will be included in the overall determination
of revenue requirement by the PSC and will be combined with other cost
increases and decreases to determine the overall impact to customer rates.
The rate case is expected to be heard by the PSC in October 1998. The Company
is currently evaluating its regulatory strategy with respect to the Utah
allocation order and the impact of the order, if any, in its other regulatory
jurisdictions.
In December 1997, the California Public Utilities Commission issued an
order with respect to the Company's filing concerning transition to direct
access requirements enacted in that state. The order mandated a 10% rate
reduction effective January 1, 1998, which would result in a $3.5 million
annual reduction in revenues. The Company has requested a rehearing of this
issue.
The Oregon Public Utility Commission and the Company have agreed to an
Alternate Form of Regulation ("AFOR") for the Company's Oregon distribution
business. The AFOR allows for index-related price increases in 1998, 1999 and
2000, with an annual cap of 2% of distribution revenues in any one year and an
overall cap of 5% over the three-year period. The estimated revenue increase
in 1998 is approximately $6.9 million. The AFOR also includes incentives to
invest in renewable resources and incentives to maintain current service
quality levels or penalties for failure to maintain the service quality
levels.
The Oregon AFOR agreement and the Utah allocation order are examples of
the changing regulatory environment in which the Company operates. The
Company continues to evaluate the accounting impact of all changes in
regulation in the context of its regulatory strategy. Changes in regulatory
structure may significantly affect the Company's future financial condition
and results of operations.
<PAGE>9
5. CONTINGENT LIABILITIES
The Company and its subsidiaries are parties to various legal claims,
actions and complaints, certain of which involve material amounts. Although
the Company is unable to predict with certainty whether or not it will
ultimately be successful in these legal proceedings or, if not, what the
impact might be, management currently believes that disposition of these
matters will not have a materially adverse effect on the Company's
consolidated financial statements.
6. COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income." This statement requires items previously reported as a
component of common equity be more prominently reported in a separate
financial statement as a component of comprehensive income.
The components of comprehensive income are as follows:
<TABLE>
<CAPTION>
Millions of dollars/For three months ended March 31 1998 1997
______________________________________________________________________
<S> <C> <C>
Net income (loss) $(15.1) $121.0
Other comprehensive income
Foreign currency translation adjustment, net
of taxes 1998/$9.1 and 1997/$(2.1) 13.0 (3.3)
Unrealized gain on shares of The Energy
Group PLC, net of taxes of $4.6 7.2 -
_____ _____
Total comprehensive income $ 5.1 $117.7
===== =====
</TABLE>
7. NEW ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board (the "FASB")
issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information." SFAS No. 131 requires that companies disclose segment data
based on how management makes decisions about allocating resources to segments
and measuring performance. This standard is effective for fiscal years
beginning after December 15, 1997. Adoption of this standard may result in
additional financial disclosure but will not have an effect on the Company's
financial position or results of operations.
In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures
About Pensions and Other Postretirement Benefits." This statement, which is
effective for fiscal years beginning after December 15, 1997, revises
employers' disclosures about pension and other postretirement benefit plans.
Adoption of this standard will not change the measurement of the liability nor
recognition of expense of these plans.
<PAGE>10
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SUMMARY RESULTS OF OPERATIONS
This report includes forward-looking statements that involve a number of risks
and uncertainties that may influence the financial performance and earnings of
the Company and its subsidiaries, including the factors identified in the
Company's 1997 Annual Report on Form 10-K. Such forward-looking statements
should be considered in light of those factors.
Comparison of the three-month periods ended March 31, 1998 and 1997
___________________________________________________________________
<TABLE>
<CAPTION>
%
1998 1997 Change Change
____ ____ ______ ______
(Dollars in Millions)
<S> <C> <C> <C> <C>
Earnings contribution (loss) on
common stock (1)
Domestic Electric Operations $ 5.6 $ 74.6 $ (69.0) (92)
Australian Electric Operations 14.1 21.0 (6.9) (33)
Unregulated Energy Trading (0.5) (1.0) 0.5 50
Other Operations (39.1) 2.0 (41.1) *
_____ _____ ______
Continuing Operations (19.9) 96.6 (116.5) (121)
Discontinued Operations (2) - 18.3 (18.3) (100)
_____ _____ ______
Total $(19.9) $114.9 $(134.8) (117)
===== ===== ======
Earnings (loss) per common
share - Basic and dilutive
Continuing Operations $ (0.7) $ 0.33 $ (0.40) (121)
Discontinued Operations (2) - 0.06 (0.06) (100)
_____ _____ ______
Total $ (0.7) $ 0.39 $ (0.46) (118)
===== ===== ======
<FN>
*Not a meaningful number.
(1) Earnings contribution (loss) on common stock by segment: (a) does not
reflect elimination for interest on intercompany borrowing arrangements;
(b) includes income taxes on a separate company basis, with any benefit
or detriment of consolidation reflected in Other Operations; (c) amounts
are net of preferred dividend requirements and minority interest.
(2) Represents the discontinued operations of PTI.
</FN>
</TABLE>
The Company recorded a loss on common stock of $20 million, or $0.07 per
share, in the first quarter of 1998, a decline of $135 million, or $0.46 per
share, from the same period in 1997. The 1998 results included an after-tax
charge of $70 million, or $0.24 per share, associated with the Company's work
force reduction in the United States and an after-tax charge of $54 million,
or $0.18 per share, associated with the Company's terminated bid for TEG. The
first quarter 1997 results included $18 million, or $0.06 per share, from the
Company's telecommunications operations that were sold in December of 1997.
<PAGE>11
Domestic Electric Operations earnings contribution was $6 million in the first
quarter of 1998. Excluding the $70 million charge relating to the work force
reduction, the earnings contribution would have been $76 million as compared
to $75 million in the first quarter of 1997. Higher commercial and industrial
energy sales contributed to the increase in adjusted earnings. The combined
rate of growth in nonfuel operations and maintenance and general and
administrative costs was reduced to one percent in the quarter.
Earnings from Australian Electric Operations were $14 million in the first
quarter of 1998, compared to $21 million in the same quarter last year.
Earnings in the quarter were reduced by $2 million as the result of
unfavorable fluctuations in the currency exchange rate, which partially offset
the benefit of higher sales to commercial and industrial customers in the
quarter. Earnings in the first quarter of 1997 were benefited by adjustments
totaling $7 million associated with the renegotiation of certain industrial
customer contracts.
The unregulated energy trading segment reported losses of $0.5 million in the
quarter as compared to a $1 million loss in the first quarter of 1997.
Other Operations reported a net loss of $39 million in 1998, primarily due to
the $54 million after-tax charge for costs associated with the Company's
terminated bid for TEG. These costs, dating back to June of 1997, had been
deferred pending the outcome of the proposed transaction.
<PAGE>12
RESULTS OF OPERATIONS
Domestic Electric Operations
____________________________
Comparison of the three-month periods ended March 31, 1998 and 1997
___________________________________________________________________
<TABLE>
<CAPTION>
%
1998 1997 Change Change
____ ____ ______ ______
(Dollars in Millions)
<S> <C> <C> <C> <C>
Revenues
Residential $ 231.8 $ 233.1 $ (1.3) (1)
Commercial 161.4 150.2 11.2 7
Industrial 162.7 155.0 7.7 5
Other 7.6 7.8 (0.2) (3)
_______ _______ _______
Retail sales 563.5 546.1 17.4 3
Wholesale sales 499.1 229.7 269.4 117
Other 14.4 17.4 (3.0) (17)
_______ _______ _______
Total 1,077.0 793.2 283.8 36
Operating expenses 981.2 596.5 384.7 64
_______ _______ _______
Income from operations 95.8 196.7 (100.9) (51)
Interest expense 80.0 74.1 5.9 8
Minority interest and other (2.7) (7.3) 4.6 63
Income taxes 8.1 49.2 (41.1) (84)
_______ _______ _______
Net income 10.4 80.7 (70.3) (87)
Preferred dividend requirement 4.8 6.1 (1.3) (21)
_______ _______ _______
Earnings contribution $ 5.6 $ 74.6 $ (69.0) (92)
======= ======= =======
Energy sales (millions of kWh)
Residential 3,751 3,827 (76) (2)
Commercial 2,992 2,784 208 7
Industrial 4,891 4,745 146 3
Other 159 169 (10) (6)
______ ______ ______
Retail sales 11,793 11,525 268 2
Wholesale sales 22,443 10,240 12,203 119
______ ______ ______
Total 34,236 21,765 12,471 57
====== ====== ======
Residential average usage (kWh) 3,042 3,187 (145) (5)
Total customers (end of period) 1,445,900 1,410,212 35,688 3
</TABLE>
Revenues
Domestic Electric Operations revenues increased $284 million, or 36%. This
increase was primarily attributable to a $269 million increase in wholesale
revenues.
Wholesale volumes continued to expand with the active markets. The $269
million increase in revenues was driven by energy volumes that more than
doubled in 1998 to a total of 22.4 million mWh. Higher short-term and spot
market wholesale energy volumes increased revenues by $239 million. Related
energy prices averaged $20 per mWh in the quarter, a 25% increase over the
prior year. The higher prices for short-term and spot market sales added $21
million to revenues in the quarter. Higher long-term volumes and prices added
$9 million to revenues.
<PAGE>13
Residential revenues and energy sales volumes were down $1 million and 2%,
respectively. Growth in the average number of residential customers of 3%
added $6 million to revenues. This increase was more than offset by volume
decreases due to warmer weather and other usage changes, which lowered
revenues by $6 million, and lower Utah rates that decreased revenues by $1
million.
Commercial revenues were up $11 million, or 7%. Energy sales volumes
increased 7% over the prior year. Increased usage by existing commercial
customers added $8 million to revenues and a 2% increase in commercial
customers added $5 million. Warmer weather in 1998 decreased revenues by $2
million and lower Utah rates decreased revenues by $1 million.
Industrial revenues increased $8 million, or 5%. A 3% increase in energy
sales volumes drove a $4 million increase in revenues. Revenues in 1997 were
reduced by billing adjustments of $6 million for certain industrial customers.
See Note 4 regarding regulation of Domestic Electric Operations' utility
properties.
Operating Expenses
Total operating expenses increased $385 million, or 64%. This increase was
primarily attributable to increased purchased power expense to serve the
expanding wholesale market and the $113 million pretax cost for the work force
reduction.
Purchased power expense increased $255 million, to $459 million. The higher
expense was due to a 10.7 million mWh increase in short-term firm and spot
market energy purchases, more than double the amount of purchases in the same
period of 1997, which increased purchased power expense $233 million.
Short-term firm and spot market purchase prices averaged $20 per mWh in the
quarter versus $14 per mWh in 1997, a 36% increase. The increase in purchase
prices added $13 million to costs. Higher volumes and prices relating to
long-term firm purchased power contracts added $4 million and $3 million,
respectively, to purchased power costs.
Fuel expense was up $6 million, or 5%, to $123 million as a result of a 12% or
1.4 million mWh increase in thermal generation. The average cost per mWh of
thermal generation decreased 6% to $9.73. Hydroelectric generation decreased
7% compared to the first quarter of last year due to less favorable water
conditions.
Net power costs in the quarter were $7.12 per mWh, compared to $7.98 per mWh
in the first quarter of 1997, an 11% decrease. Net power cost represents the
net cost to serve the Company's domestic retail customers on a mWh basis.
This is measured by the sum of fuel, purchased power and wheeling expense,
less wholesale power and wheeling revenues. The decrease in net power cost
was attributable to sales through the wholesale markets of 1.1 million mWh of
the Company's generation that was in excess of its retail load requirements.
Depreciation and amortization expense increased $9 million, or 10%, to
$98 million. Higher depreciation rates that were implemented in the fourth
quarter of 1997 added $5 million to expense and increased plant in service
added $4 million.
<PAGE>14
Other operations and maintenance expense decreased $3 million, or 3%, to
$111 million. Steam plant maintenance expense decreased $2 million due to
overhaul timing differences. Distribution plant maintenance expense decreased
$1 million due to recognition of storm damage expense in 1997.
Administrative and general expenses increased $5 million, or 7%, to $78
million primarily due to timing of employee related costs, partially offset by
lower outside service expense.
Other Income and Expense
Interest expense was up $6 million to $80 million as a result of higher debt
balances. The higher debt was due to capital contributions made to Holdings
relating to the acquisition of TPC in April 1997. Income tax expense declined
$41 million due to the decline in pretax income.
<PAGE>15
Australian Electric Operations
______________________________
Comparison of the three-month periods ended March 31, 1998 and 1997
___________________________________________________________________
<TABLE>
<CAPTION>
Change Due Change % Change
to Currency Due to Due to
1998 1997 Translation Operations Operations
____ ____ ___________ __________ __________
(Dollars in Millions)
<S> <C> <C> <C> <C> <C>
Powercor Earnings Contribution
Revenues
Powercor area $116.5 $140.9 $(19.5) $ (4.9) (3)
Outside Powercor area
Victoria 20.9 23.0 (3.5) 1.4 6
New South Wales 20.2 1.8 (3.4) 21.8 *
_____ _____ _____ _____
157.6 165.7 (26.4) 18.3 11
Other 4.9 17.7 (0.8) (12.0) (68)
_____ _____ _____ _____
Total 162.5 183.4 (27.2) 6.3 3
Operating expenses 121.7 128.5 (20.4) 13.6 11
_____ _____ _____ _____
Income from operations 40.8 54.9 (6.8) (7.3) (13)
Interest expense 15.8 18.3 (2.6) 0.1 1
Equity in losses of Hazelwood 3.0 3.0 (0.5) 0.5 17
Other (income)/expense (0.4) - 0.1 (0.5) *
Income taxes 8.3 12.6 (1.4) (2.9) (23)
_____ _____ _____ _____
Earnings contribution $ 14.1 $ 21.0 $ (2.4) $ (4.5) (21)
===== ===== ===== =====
Powercor energy sales (millions of kWh)
Powercor area 1,797 1,861 (64) (3)
Outside Powercor area
Victoria 600 500 100 20
New South Wales 575 59 516 *
_____ _____ _____
Total 2,972 2,420 552 23
===== ===== =====
<FN>
*Not a meaningful number.
</FN>
</TABLE>
Currency Exchange Rates
The currency exchange rate for converting Australian dollars to U. S. dollars
was 0.67 in the first quarter of 1998 as compared to 0.78 in 1997, a 14%
decrease in the quarter. The effect of this change in exchange rates lowered
revenues by $27 million and costs by $25 million in the first quarter of 1998.
The following discussion excludes the effects of the lower currency exchange
rate in 1998.
Revenues
Powercor's revenues increased $6 million, or 3%. Excluding $11 million of
revenue in 1997 relating to Tariff H contracts, revenues would have increased
$17 million, or 10%, due to a 552 million kWh, or 23%, increase in energy
sales, which added $21 million to revenues. Declining prices reduced revenues
by $3 million.
<PAGE>16
Energy volumes sold to contestable customers outside Powercor's franchise area
were up 616 million kWh and added $22 million to revenues due to new customers
in New South Wales and $4 million due to new customers in Victoria. Lower
prices for sales to contestable customers reduced revenues by $3 million in
1998. Inside Powercor's franchise area, revenues decreased $5 million due to
a 64 million kWh decrease in energy sold.
Other revenues decreased $12 million, to $5 million, largely as a result of
the $11 million of revenues associated with renegotiation of Tariff H
contracts in the 1997 period.
Operating Expenses
Purchased power expense decreased $1 million, or 2%, to $58 million. Lower
average prices reduced power costs by $17 million. Prices for purchased power
averaged $23 per mWh in the first quarter of 1998 compared to $28 per mWh in
the first quarter of 1997 due to competition. The decrease was offset in
large part by a 23% increase in purchased power volumes that added $16 million
to costs.
Other operating expenses increased $15 million, or 37%, to $48 million.
Increased sales to contestable customers outside the Powercor service area
resulted in higher network fees of $16 million. This increase was offset in
part by higher network revenues of $3 million from customers inside Powercor's
franchise area serviced by other energy suppliers.
Other Income and Expense
The Company recorded losses in both 1998 and 1997 of $3 million on its equity
investment in the Hazelwood power station. Hazelwood sells its generation
output through a state-wide generation pool and under bilateral contracts
directly with Victorian distribution companies. Pool and contract prices vary
depending on the same factors described below with respect to Powercor's
purchases. Power prices are highest in the Australian winter months because
demand is highest, which generally is expected to result in higher profit
margins for Hazelwood during the second and third calendar quarters.
Income tax expense was down $3 million, or 23%, due to a decrease in taxable
income.
Powercor obtains most of its required electricity through a state-wide
generation pool. Pool prices vary depending on certain conditions, including
weather, economic growth and other factors influencing supply and demand for
electric power. Powercor has hedged its pool price exposure with a number of
vesting contracts. Prices under the contracts are lower in the Australian
summer months because demand is lowest, resulting in higher profit margins for
Powercor in the first and fourth calendar quarters.
<PAGE>17
Unregulated Energy Trading
__________________________
Comparison of the three-month periods ended March 31, 1998 and 1997
___________________________________________________________________
<TABLE>
<CAPTION>
%
1998 1997 Change Change
____ ____ ______ ______
<S> <C> <C> <C> <C>
Revenues
Natural gas $318.1 $ - $318.1 *
Electricity 497.5 38.9 458.6 *
_____ _____ _____
Total 815.6 38.9 776.7 *
_____ _____ _____
Cost of Sales
Natural gas 315.2 - 315.2 *
Purchased electric power 495.2 37.9 457.3 *
_____ _____ _____
Total 810.4 37.9 772.5 *
Gross Margin 5.2 1.0 4.2 *
Depreciation and amortization 1.5 - 1.5 *
Administrative and other 4.4 2.5 1.9 76
_____ _____ _____
Income (loss) from Operations
Natural gas (0.9) - (0.9) *
Electricity 0.2 (1.5) 1.7 113
_____ _____ _____
Total (0.7) (1.5) 0.8 53
_____ _____ _____
Interest Expense 0.3 0.1 0.2 *
Other income (0.8) - (0.8) *
Income tax expense/(benefit) 0.3 (0.6) 0.9 150
_____ _____ _____
Net Income (Loss)
Natural gas (0.6) - (0.6) *
Electricity 0.1 (1.0) 1.1 *
_____ _____ _____
Total $ (0.5) $ (1.0) 0.5 50
===== ===== =====
Energy Sales
Natural gas (MMcf) 134,000 - 134,000 *
Electricity (millions of kWh) 19,886 1,461 18,425 *
<FN>
*Not a meaningful number.
</FN>
</TABLE>
PPM recorded electricity trading revenues of $498 million, a related gross
margin of $2 million and break even results in the first quarter of 1998
compared to revenues of $39 million, a gross margin of $1 million and a net
loss of $1 million in 1997.
TPC, acquired in April 1997, recorded natural gas trading revenues of
$318 million, a gross margin of $3 million and a net loss of $0.6 million in
1998.
<PAGE>18
Other Operations
________________
Comparison of the three-month periods ended March 31, 1998 and 1997
___________________________________________________________________
<TABLE>
<CAPTION>
%
1998 1997 Change Change
____ ____ ______ ______
(Dollars in Millions)
<S> <C> <C> <C> <C>
Earnings contribution (loss)
PFS $ 6.6 $ 5.1 $ 1.5 29
PGC - 1.4 (1.4) (100)
Holdings and other (45.7) (4.5) (41.2) *
_____ ____ _____
Total $(39.1) $ 2.0 $(41.1) *
===== ==== =====
<FN>
*Not a meaningful number.
</FN>
</TABLE>
Other operations reported a loss of $39 million in the quarter compared to
earnings of $2 million in the same period a year ago. The loss was the result
of an $86 million pretax charge for costs associated with the Company's
terminated bid for TEG. These costs, dating back to June of 1997, had been
deferred pending the outcome of the proposed transaction.
Results from other operations for the quarter were benefited by approximately
$23 million in increased interest income and reduced interest expense as the
result of cash received from asset sales in 1997. The after-tax cash proceeds
from these sales totaled approximately $1.5 billion.
On March 2, 1998, a subsidiary of Holdings purchased approximately 46 million
TEG shares at a price of 820 pence per share, or $625 million, utilizing a
portion of the cash proceeds from asset sales.
On May 1, 1998, the Company received approximately $70 million in cash
proceeds in the initial closing for the sale of its affordable housing
properties. The completion of this sale is expected to occur in the near
future upon receipt of various third party consents. This sale transaction
will not have a material impact on the Company's 1998 earnings.
<PAGE>19
FINANCIAL CONDITION -
For the three months ended March 31, 1998:
OPERATING ACTIVITIES
Net cash flows provided by continuing operations were $224 million during
the period compared to $275 million in the first three months of 1997. The
$51 million decrease in operating cash flows was primarily attributable to
income tax payments of $65 million relating to gains on sales of subsidiaries
in the fourth quarter of 1997 and expenditures relating to the terminated bid
for TEG, partially offset by cash flow improvements at Domestic Electric
Operations.
Net cash used in discontinued operations represents payment of income
taxes associated with a $671 million pretax gain recorded in December 1997 on
the sale of PTI.
INVESTING ACTIVITIES
Capital spending totaled $139 million in 1998 compared with $153 million
in 1997. Construction expenditures decreased to $111 million in 1998 from
$128 million in 1997 primarily as a result of lower capital expenditures for
Domestic Electric Operations and Australian Electric Operations.
Bid for The Energy Group
During 1997 and 1998, the Company sought to acquire The Energy Group PLC
("TEG"), a diversified international energy group with operations in the
United Kingdom, the United States and Australia. The Company made three
tender offers for TEG. The last offer was valued at $11.1 billion, including
the assumption of $4.1 billion of TEG's debt. In February 1998, Texas
Utilities Company also made a tender offer at a higher price. On April 30,
1998, the Company announced that it would not increase its revised offer for
TEG on the basis that a price in excess of 820 pence per share would not have
provided acceptable financial returns for PacifiCorp shareholders.
The Company recorded an $86 million pretax charge to first quarter 1998
earnings for bank commitment and facility fees, legal expenses and other
related costs incurred since the Company's original bid for TEG in June of
1997. These costs had been deferred pending the outcome of the transaction.
Additionally, in connection with its attempt to acquire TEG, a subsidiary
of the Company purchased approximately 46 million shares of TEG at a price of
820 pence per share, or $625 million. The Company will record any gain on the
TEG shares when they are sold, which is expected to occur in the second
quarter of 1998. The Company has entered into forward foreign currency
exchange contracts to remove the foreign currency risk associated with its
investment in TEG shares.
The Company incurred a pretax loss of $3 million in April 1998 in
connection with closing its foreign currency option contract associated with
the bid for TEG. This loss will be recorded in the second quarter of 1998.
<PAGE>20
CAPITALIZATION
At March 31, 1998, the Company had approximately $412 million of
commercial paper and uncommitted bank borrowings outstanding at a weighted
average rate of 5.7%. These borrowings are supported by $700 million of
revolving credit agreements. At March 31, 1998, the consolidated subsidiaries
had access to $900 million of short-term funds through committed bank
revolving credit agreements. Subsidiaries had $500 million outstanding under
bank revolving credit facilities. At March 31, 1998, the Companies had
$618 million of short-term debt classified as long-term debt as they have the
intent and ability to support short-term borrowings through the various
revolving credit facilities on a long-term basis. The Company and its
subsidiaries have intercompany borrowing arrangements providing for temporary
loans of funds between parties at short-term market rates.
In January 1998, Australian Electric Operations issued $400 million of
6.15% Notes due 2008. At the same time, in order to mitigate foreign currency
exchange risk, Australian Electric Operations entered into a series of
currency exchange agreements in the same amount and for the same duration as
the underlying United States denominated notes. The proceeds of the Notes
were used to repay Australian bank bill borrowings.
On May 12, 1998, the Company issued $200 million of 6.375% secured
medium-term notes due May 15, 2008 in the form of First Mortgage and
Collateral Trust Bonds. Proceeds were used to repay short-term debt.
______________________________________________________________________________
The condensed consolidated financial statements as of March 31, 1998 and
December 31, 1997 and for the three-month periods ended March 31, 1998 and
1997 have been reviewed by Deloitte & Touche LLP, independent accountants, in
accordance with standards established by the American Institute of Certified
Public Accountants. A copy of their report is included herein.
<PAGE>21
Deloitte & Touche LLP
_____________________ _____________________________________________________
Suite 3900 Telephone:(503)222-1341
111 S.W. Fifth Avenue Facsimile:(503)224-2172
Portland, Oregon 97204-3698
INDEPENDENT ACCOUNTANTS' REPORT
PacifiCorp:
We have reviewed the accompanying condensed consolidated balance sheet of
PacifiCorp and subsidiaries as of March 31, 1998, and the related condensed
consolidated statements of income and retained earnings and cash flows for the
three-month periods ended March 31, 1998 and 1997. These financial statements
are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and of making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to such condensed consolidated financial statements for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of PacifiCorp and subsidiaries as of
December 31, 1997, and the related consolidated statements of income,
stockholders' equity, and cash flows for the year then ended (not presented
herein); and in our report dated February 3, 1998 (March 2, 1998 as to Note
2), we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31, 1997 is fairly stated,
in all material respects, in relation to the consolidated balance sheet from
which it has been derived.
DELOITTE & TOUCHE LLP
May 5, 1998
<PAGE>22
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
______ ________________________________
(a) Exhibits.
Exhibit 12(a): Statements of Computation of Ratio of Earnings to
Fixed Charges.
Exhibit 12(b): Statements of Computation of Ratio of Earnings to
Combined Fixed Charges and Preferred Stock Dividends.
Exhibit 15: Letter re unaudited interim financial information of
awareness of incorporation by reference.
Exhibit 27: Financial Data Schedule for the quarter ended March 31,
1998 (filed electronically only).
(b) Reports on Form 8-K.
On Form 8-K, dated April 21, 1998, under Item 5. "Other Events," the
Company filed news releases reporting the receipt of a Utah
allocation order and the Company's termination of its bid for The
Energy Group. The Company also filed the Utah Allocation Order and
a news release relating to first quarter 1998 operating results.
<PAGE>23
SIGNATURE
Pursuant to the requirements 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
Date May 14, 1998 By RICHARD T. O'BRIEN
__________________________ ___________________________________
Richard T. O'Brien
Senior Vice President
(Chief Financial Officer)
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
_______ ___________ ____
<S> <C> <C>
Exhibit 12(a): Statements of Computation of Ratio of
Earnings to Fixed Charges.
Exhibit 12(b): Statements of Computation of Ratio of
Earnings to Combined Fixed Charges and Preferred Stock
Dividends.
Exhibit 15: Letter re unaudited interim financial
information of awareness of incorporation by reference.
Exhibit 27: Financial Data Schedule for the quarter
ended March 31, 1998 (filed electronically only).
</TABLE>
<PAGE>
<TABLE>
EXHIBIT (12)(a)
PACIFICORP
STATEMENTS OF COMPUTATION OF RATIO
OF EARNINGS TO FIXED CHARGES
<CAPTION>
Three Months
______________________________________________ Ended
1993 1994 1995 1996 1997 March 31, 1998
____ ____ ____ ____ ____ ______________
(In Millions of Dollars)
<S> <C> <C> <C> <C> <C> <C>
Fixed Charges, as defined:*
Interest expense..................... $ 333.5 $ 302.0 $ 336.4 $ 415.0 $ 439.8 $ 94.4
Estimated interest portion of
rentals charged to expense......... 4.8 5.6 4.5 4.1 6.6 2.3
Preferred dividends of
wholly owned subsidiary............ - - - 15.3 33.1 14.3
_______ _______ _______ _______ _______ _____
Total fixed charges.............. $ 338.3 $ 307.6 $ 340.9 $ 434.4 $ 479.5 $111.0
======= ======= ======= ======= ======= =====
Earnings, as defined:*
Income (loss) from continuing
operations......................... $ 371.8 $ 397.5 $ 402.0 $ 430.2 $ 225.4 $(30.3)
Add (deduct):
Provision for income taxes......... 163.6 209.0 191.8 236.5 109.5 (15.1)
Minority interest.................. 2.7 1.3 1.4 1.8 1.9 (0.4)
Undistributed income of less
than 50% owned affiliates........ (16.2) (14.7) (15.0) (18.2) (11.1) 3.9
Fixed charges as above............. 338.3 307.6 340.9 434.4 479.5 111.0
_______ _______ _______ _______ _______ _____
Total earnings................... $ 860.2 $ 900.7 $ 921.1 $1,084.7 $ 805.2 $ 69.1
======= ======= ======= ======= ======= =====
Ratio of Earnings to Fixed Charges..... 2.5x 2.9x 2.7x 2.5x 1.7x 0.6x
==== ==== ==== ==== ==== ====
<FN>
*"Fixed charges" represent consolidated interest charges, an estimated amount representing the interest
factor in rents and preferred dividend requirements of majority-owned subsidiaries. "Earnings" represent
the aggregate of (a) income (loss) from continuing operations, (b) taxes based on income (loss) from
continuing operations, (c) minority interest in the income of majority-owned subsidiaries that have fixed
charges, (d) fixed charges and (e) undistributed income of less than 50% owned affiliates without loan
guarantees.
</FN>
</TABLE>
<PAGE>
<TABLE>
PACIFICORP EXHIBIT (12)(b)
STATEMENTS OF COMPUTATION OF RATIO
OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
<CAPTION>
Three Months
______________________________________________ Ended
1993 1994 1995 1996 1997 March 31, 1998
____ ____ ____ ____ ____ ______________
(In Millions of Dollars)
<S> <C> <C> <C> <C> <C> <C>
Fixed Charges, as defined:*
Interest expense..................... $ 333.5 $ 302.0 $ 336.4 $ 415.0 $ 439.8 $ 94.4
Estimated interest portion of
rentals charged to expense...... 4.8 5.6 4.5 4.1 6.6 2.3
Preferred dividends of
wholly owned subsidiary............ - - - 15.3 33.1 14.3
_______ _______ _______ _______ _______ _____
Total fixed charges.............. $ 338.3 $ 307.6 $ 340.9 $ 434.4 $ 479.5 $111.0
Preferred Stock Dividends,
as defined:*....................... 56.8 60.8 57.0 46.2 33.9 9.6
_______ _______ _______ _______ _______ _____
Total fixed charges and
preferred dividends............ $ 395.1 $ 368.4 $ 397.9 $ 480.6 $ 513.4 $120.6
======= ======= ======= ======= ======= =====
Earnings, as defined:*
Income (loss) from continuing
operations......................... $ 371.8 $ 397.5 $ 402.0 $ 430.2 $ 225.4 $(30.3)
Add (deduct):
Provision for income taxes......... 163.6 209.0 191.8 236.5 109.5 (15.1)
Minority interest.................. 2.7 1.3 1.4 1.8 1.9 (0.4)
Undistributed income of less than
50% owned affiliates............. (16.2) (14.7) (15.0) (18.2) (11.1) 3.9
Fixed charges as above............. 338.3 307.6 340.9 434.4 479.5 111.0
_______ _______ _______ _______ _______ _____
Total earnings................... $ 860.2 $ 900.7 $ 921.1 $1,084.7 $ 805.2 $ 69.1
======= ======= ======= ======= ======= =====
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.. 2.2x 2.4x 2.3x 2.3x 1.6x 0.6x
==== ==== ==== ==== ==== ====
<FN>
*"Fixed charges" represent consolidated interest charges, an estimated amount representing the interest
factor in rents and preferred dividend requirements of majority-owned subsidiaries. "Preferred Stock
Dividends" represent preferred dividend requirements multiplied by the ratio which pre-tax income from
continuing operations bears to income from continuing operations. "Earnings" represent the aggregate of
(a) income (loss) from continuing operations, (b) taxes based on income (loss) from continuing operations,
(c) minority interest in the income of majority-owned subsidiaries that have fixed charges, (d) fixed
charges and (e) undistributed income of less than 50% owned affiliates without loan guarantees.
</FN>
</TABLE>
<PAGE>
Deloitte &
Touche LLP
___________ _____________________________________________________
Suite 3900 Telephone:(503)222-1341
111 S.W. Fifth Avenue Facsimile:(503)224-2172
Portland, Oregon 97204-3698
EXHIBIT 15
May 13, 1998
PacifiCorp
700 N.E. Multnomah
Portland, Oregon
We have made a review, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited interim
financial information of PacifiCorp and subsidiaries for the periods ended
March 31, 1998 and 1997, as indicated in our report dated May 5, 1998; because
we did not perform an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended March 31, 1998, is
incorporated by reference in Registration Statement Nos. 33-51277, 33-54169,
33-57043, 33-58461, and 333-10885, and 333-45851, all on Form S-8;
Registration Statement No. 33-36239 on Form S-4; and Registration Statement
Nos. 33-62095 and 333-09115 on Form S-3.
We also are aware that the aforementioned report, pursuant to Rule 436(c)
under the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that
Act.
DELOITTE & TOUCHE LLP
Portland, Oregon
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PACIFICORP'S
FORM 10-K DATED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000075594
<NAME> PACIFICORP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 7814100
<OTHER-PROPERTY-AND-INVEST> 2055500
<TOTAL-CURRENT-ASSETS> 2239900
<TOTAL-DEFERRED-CHARGES> 295000
<OTHER-ASSETS> 1407600
<TOTAL-ASSETS> 13812100
<COMMON> 3242900
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 1006600
<TOTAL-COMMON-STOCKHOLDERS-EQ> 4249500
175000
66400
<LONG-TERM-DEBT-NET> 4401700
<SHORT-TERM-NOTES> 7100
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 290800
<LONG-TERM-DEBT-CURRENT-PORT> 426500
0
<CAPITAL-LEASE-OBLIGATIONS> 23400
<LEASES-CURRENT> 900
<OTHER-ITEMS-CAPITAL-AND-LIAB> 4170800
<TOT-CAPITALIZATION-AND-LIAB> 13812100
<GROSS-OPERATING-REVENUE> 2075700
<INCOME-TAX-EXPENSE> (15100)
<OTHER-OPERATING-EXPENSES> 1936200
<TOTAL-OPERATING-EXPENSES> 1921100
<OPERATING-INCOME-LOSS> 154600
<OTHER-INCOME-NET> (75400)
<INCOME-BEFORE-INTEREST-EXPEN> 79200
<TOTAL-INTEREST-EXPENSE> 94300
<NET-INCOME> (15100)
4800
<EARNINGS-AVAILABLE-FOR-COMM> (19900)
<COMMON-STOCK-DIVIDENDS> 80300
<TOTAL-INTEREST-ON-BONDS> 219400
<CASH-FLOW-OPERATIONS> (100200)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
