See accompanying Notes to Condensed Consolidated Financial Statements

3

See accompanying Notes to Condensed Consolidated Financial Statements

4

See accompanying Notes to Condensed Consolidated Financial Statements

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(a) The company does not currently have capital gains to offset this
    capital loss and therefore no tax benefit has been anticipated. Future
    capital gains will be used to offset these capital losses.

In July 2000, Holdings paid off $250 million of debt in anticipation of this sale.

On May 4, 2000, the utility partners (including the Company) who owned the Centralia Power Plant, sold the plant and the adjacent coal mine for approximately $500 million. As a result of the sale, the Company has agreed to return approximately $153 million to its customers mainly relating to the gain on the sale. This amount was included in regulatory liabilities and is being amortized by regulatory jurisdiction over periods of up to 20 years. After reflecting the amount to be returned to customers, the Company recorded a one-time loss of $14 million associated with this sale. For more information on the sale, see the Company's 2000 Annual Report on Form 10-K.

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 8.  COMPREHENSIVE INCOME

The components of comprehensive income are as follows:

 9.  NEW ACCOUNTING STANDARDS

On June 26, 2000, the SEC issued Staff Accounting Bulletin ("SAB") No. 101B "Second Amendment: Revenue Recognition in Financial Statements" which delays the implementation date of SAB 101 "Revenue Recognition in Financial Statements" until no later than the fourth quarter of fiscal years beginning after December 15, 1999. The effect of adoption of this bulletin is not expected to have a material effect on the Company's consolidated financial position or results of operations.

10.  SEGMENT INFORMATION

Selected information regarding the Company's operating segments, Domestic electric operations, Australian electric operations, and Other operations, are as follows:

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11.  INDEPENDENT ACCOUNTANTS REVIEW REPORT

The Company's Quarterly Reports on Form 10-Q are incorporated by reference into various filings under the Securities Act of 1933 (the "Act"). The Company's independent accountants are not subject to the liability provisions of Section 11 of the Act for their report on the unaudited consolidated financial information because such report is not a "report" or a "part" of a registration statement prepared or certified by independent accountants within the meaning of Sections 7 and 11 of the Act.

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*Not a meaningful number.

(1)  (Loss) earnings contribution 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) is net of preferred dividend requirements and minority interest.

(2)  Represents the discontinued operations of TPC and the eastern United States energy trading activities of PPM.

The Company recorded a loss on common stock of $139 million in the first quarter of 2001 compared to earnings of $51 million in the first quarter of 2000.

Domestic electric operations earnings contribution was $28 million, a decrease of $10 million compared to the first quarter of 2000. Exceptionally high purchased power costs in the western U.S. reduced earnings as compared to a year ago. The purchased power prices reflect decreased hydroelectric generation and higher loads due to hotter than normal weather. Additionally, the Company experienced unanticipated outages resulting in increased power purchases in periods of high prices.

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Australian electric operations recorded a loss of $193 million in the first quarter of 2001 compared to income of $9 million in the 2000 quarter. This decrease was primarily due to a $203 million impairment loss recorded on the anticipated sale of Australian electric operations, partially offset by an increase in energy volumes sold to contestable customers.

Other operations reported income of $26 million in the 2001 quarter compared to $3 million in the 2000 quarter. This increase was primarily due to a reduction in expenses relating to exiting energy development businesses, and an impairment offset related to the anticipated settlement of foreign currency swaps associated with the Company's investment in Australian electric operations. For more information on the sale of Australian electric operations, see Note 7 to the condensed consolidated financial statements.

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DOMESTIC ELECTRIC OPERATIONS

Comparison of the three-month periods ended June 30, 2000 and 1999

The Company's operations are planned and managed to meet anticipated requirements through its portfolio of low cost generating assets and its purchase contracts. Demand for power in the first quarter of 2001 exceeded expectations as a result of stronger economic growth in the region, and hotter than normal weather conditions. Supply in the Western Systems Coordinating Council (the "WSCC") has not kept pace with growing demand and the price of natural gas in the WSCC has increased. These factors, along with unanticipated generation outages, including at some of the Company's facilities, led to increases in the level and volatility of power prices in the quarter. This imbalance of supply at higher market prices and higher retail sales at contract or tariff rates led to lower margins in the period. The underlying economic issues of tightening supply and demand balance are expected to impact power prices in the future and are reflected in current forward market prices for the next year, which are well above historical norms. Demand variances from anticipated requirements and the volatility of power prices could impact the Company's power purchase costs in future periods.

Revenues

Total domestic electric operations revenues increased $77 million, or 10%, from the first quarter of 2000. This was primarily attributable to increases in wholesale sales of $46 million and an increase of $23 million in retail revenues.

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Residential revenues were up $1 million, or 1%. Growth in the average number of residential customers of 2% added $3 million to revenues. Price increases in Oregon, Utah and Wyoming added $2 million to revenues in 2001. Volume decreases of 1% reduced residential revenues by $4 million.

Commercial revenues were up $11 million, or 7%, primarily as a result of increased economic activity in Utah and Oregon. Growth in the average number of commercial customers of 3% added $6 million to revenues and volume increases of 6% added $5 million to revenues.

Industrial revenues were up $11 million, or 6%. Energy volumes were up 5%, which added $3 million to revenues. As a result of weather conditions in the region, irrigation usage increased, adding $7 million to revenues.

Wholesale sales increased $46 million, or 19%. Sales prices for short-term firm and spot market sales prices averaged $48 per megawatt hour ("MWh") in 2001 compared to $20 per MWh in 2000, creating a $154 million increase in revenues. Partially offsetting this increase was a $105 million decrease resulting from lower short-term firm and spot market energy volumes. In addition, decreased long-term firm contract prices lowered wholesale revenues by $5 million in 2001. The decline in energy volumes is consistent with the Company's decision to scale back short-term wholesale sales.

Other revenues increased by $8 million, or 42%, primarily due to $7 million in revenues resulting from a favorable AFOR price increase calculation in Oregon. These revenue increases were partially offset by costs mandated by regulators. For more information, see Note 5 to the condensed consolidated financial statements.

See Note 5 to the condensed consolidated financial statements regarding recent regulatory action for domestic electric operations' utility properties.

Operating Expenses

Total operating expenses increased $94 million, or 15%. This increase was primarily attributable to increased purchased power expense due to increased prices on short-term purchased power.

Purchased power expense was $334 million, an increase of $107 million, or 47%. Higher prices on short-term firm and spot market purchases increased purchased power expense by $143 million. Short-term firm and spot market purchase prices averaged $50 per MWh in the quarter versus $20 per MWh in 2000. Increased demand for electricity, driven by hotter than normal weather and lower than anticipated generation, drove electricity prices exceptionally higher throughout the western U.S. Partially offsetting the higher prices was a 28% decrease in short-term firm and spot market purchases which decreased costs by $47 million. Increased volumes relating to long-term firm contracts added $8 million to purchased power expense.

Fuel costs decreased $2 million, or 2%, to $102 million, primarily due to the average cost per MWh decreasing from $9.11 in the prior year to $8.82, which resulted from increased generation at plants with lower fuel costs.

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Administrative, general and taxes - other expenses decreased $4 million, or 6%, to $63 million. Decreases in contract services costs relating to SAP conversion and Year 2000 conversion were $4 million and $2 million, respectively.

Included within Operating expenses in 2001 were two offsetting items. First, the Utah rate order received in May 2000 successfully resolved the issues surrounding previously denied costs and resulted in the establishment of a $17 million regulatory asset. Second, the Company recorded a one-time loss of $14 million on the sale of the Centralia Power Plant and mine. (For more information, see Note 7 to the condensed consolidated financial statements.)

Other Income and Expense

Domestic electric operations interest expense decreased $3 million primarily due to lower debt balances. First quarter 2000 results included $8 million of ScottishPower merger costs. Other income - net was $5 million of income in the first quarter of 2001, a decrease of $2 million over the prior year. Income tax expense remained unchanged due to the decrease in taxable income being offset by the income tax impact of the Centralia sale.

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AUSTRALIAN ELECTRIC OPERATIONS

On August 2, 2000, the Company reached an agreement to sell the Company's indirect ownership of Powercor and the Company's 19.9% interest in Hazelwood. For more information on the sale, see Note 7 to the condensed consolidated financial statements.

Australian electric operations' financial results for the quarter ended March 31, 2000 are included in PacifiCorp's financial results for the quarter ended June 30, 2000. For purposes of this discussion, these financial results are referred to as "June 30, 2000" results.

Comparison of the three-month periods ended June 30, 2000 and 1999

*Not a meaningful number.

Currency Exchange Rates

The currency exchange rate for converting Australian dollars to U. S. dollars was 0.63 in the 2001 period as compared to 0.65 in the 2000 period, a 3% decrease. The effect of this change in exchange rates decreased revenues by $5 million and costs by $5 million in the first quarter of 2001.

The following discussion excludes the effects of the lower currency exchange rates in 2001.

Revenue

Overall, Australian electric operations' total revenues remained flat compared to the June 1999 quarter. Electricity revenues increased $7 million primarily due to an 8% increase in energy volumes sold to contestable customers. Other revenues decreased $8 million because the June 1999 quarter included an $8 million contract settlement received from the Australian government.

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Operating Expenses

Operating expenses increased $198 million primarily due to a $203 million impairment loss recorded on the anticipated sale of Australian electric operations, partially offset by a decrease of $6 million in purchased power expense. The decrease in purchased power expense was due to lower contract prices paid for power resulting from the favorable court ruling Powercor received in a dispute with one of its suppliers, as described below. This decrease was partially offset by an increase in administrative and general expenses incurred in 2001, primarily due to costs associated with a project to transition to full retail contestability.

The power supplier in the dispute noted above did not meet its contractual obligation to deliver power to Powercor at the agreed upon rate, which forced Powercor to purchase power on the open market in 2000 at a rate higher than it paid in 2001. On November 17, 1999, the Supreme Court of Victoria upheld the validity of the contracts with the supplier and, on December 14, 1999, ordered specific performance on the remaining contracts and payment of $29 million for failure to perform in the past. On December 21, 1999, the power supplier filed a notice of appeal seeking to overturn all of the judgments against it. The appeal is listed for hearing on October 2, 2000.

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OTHER OPERATIONS

Comparison of the three-month periods ended June 30, 2000 and 1999

*Not a meaningful number.

Other operations reported income of $26 million in the quarter compared to income of $3 million in the same period a year ago.

In 2001, PFS's earnings contribution increased $2 million compared to the first quarter of 2000 primarily due to increased revenues and tax credits of $23 million, offset by increased operating expenses of $21 million, at the synthetic coal fuel plants owned by subsidiaries of PFS.

Holdings and other operations' 2000 results included losses associated with exiting energy development businesses of approximately $4 million. Additionally, interest income in 2001 increased $1 million compared to the prior year, and the anticipated settlement of foreign currency swaps associated with the Company's investment in Australian electric operations resulted in an impairment offset of $14 million. For more information on the sale, see Note 7 to the condensed consolidated financial statements.

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FINANCIAL CONDITION -

For the three months ended June 30, 2000:

OPERATING ACTIVITIES

Net cash flows provided by continuing operations were $228 million during the period compared to $126 million in the first quarter of 2000. The $102 million increase in operating cash flows was primarily attributable to decreased working capital requirements.

Net cash used in discontinued operations in 2000 represents cash funding of TPC operations through an intercompany note payable with Holdings.

INVESTING ACTIVITIES

Capital spending totaled $116 million in 2001 compared with $160 million in 2000. Construction expenditures decreased in 2001 primarily due to lower expenditures at domestic electric operations. Proceeds from asset sales in 2001 were primarily the result of the sale of the Centralia plant and mine, while proceeds from asset sales in 2000 are attributable to the sale of TPC.

The Company has an agreement with Nor-Cal Electric Authority for the sale of the Company's California electric assets, which recently was the subject of a Draft Decision by the Administrative Law Judge for the CPUC. For more information, see Note 5 to the condensed consolidated financial statements.

CAPITALIZATION

At June 30, 2000, PacifiCorp had approximately $112 million of commercial paper and uncommitted bank borrowings outstanding at a weighted average rate of 6.6%. These borrowings are supported by $800 million of revolving credit agreements. The consolidated subsidiaries had access to $490 million of short-term funds through committed bank revolving credit agreements, and at June 30, 2000, they had $31 million outstanding under bank revolving credit facilities. At June 30, 2000, the Company and its subsidiaries had $368 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.

On August 2, 2000, the Company reached an agreement to sell the Company's indirect ownership of Powercor and the Company's 19.9% interest in Hazelwood. For more information on the sale, see Note 7 to the condensed consolidated financial statements.

DIVIDENDS

On May 15, 2000, the Company declared a dividend on common stock of $149 million payable to ScottishPower, the sole common shareholder of record. The dividend was paid June 14, 2000. On June 22, 2000, the Company declared a dividend on common stock of $80 million, which was payable to ScottishPower at June 30, 2000.

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_____________________________________________________________________________

The condensed consolidated financial statements as of June 30, 2000 and for the three-month period ended June 30, 2000 have been reviewed by PricewaterhouseCoopers LLP, independent accountants, in accordance with standards established by the American Institute of Certified Public Accountants. A copy of their report is included herein.

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REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of PacifiCorp:

We have reviewed the accompanying condensed consolidated balance sheet of PacifiCorp and its subsidiaries as of June 30, 2000, and the related condensed consolidated statements of income and retained earnings for the three-month period ended June 30, 2000 and the condensed consolidated statement of cash flows for the three-month period ended June 30, 2000. 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 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 the accompanying condensed consolidated interim financial statements for them to be in conformity with generally accepted accounting principles.

We previously audited in accordance with generally accepted auditing standards, the consolidated balance sheet as of March 31, 2000, and the related statements of consolidated income, common shareholders' equity and cash flows for the year then ended (not presented herein), and in our report dated May 4, 2000, 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 March 31, 2000, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.





PricewaterhouseCoopers LLP
Portland, Oregon

August 9, 2000

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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.

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