PORTLAND GENERAL ELECTRIC CO /OR/, 10-K, 1998-03-30

PORTLAND GENERAL ELECTRIC CO /OR/
10-K, 1998-03-30
ELECTRIC SERVICES

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
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 1-5532-99

PORTLAND GENERAL ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)

OREGON 93-0256820
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

121 SW SALMON STREET, PORTLAND, OREGON 97204
(Address of principal executive offices) (zip code)

Registrant's telephone number, including area code: (503) 464-8000

Securities registered pursuant to Section 12(b) of the Act:

NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED

Portland General Electric Company
8.25% Quarterly Income Debt Securities
(Junior Subordinated Deferrable Interest Debentures,
Series A) New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

TITLE OF CLASS
Portland General Electric Company,
7.75% Series, Cumulative Preferred Stock, no par value None

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. [ X ]

State the aggregate market value of the voting stock held by non-affiliates of
the registrant as of February 28, 1998: $0.

Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of February 28, 1998: 42,758,877 shares of Common Stock,
$3.75 par value. (All shares are owned by Enron Corp.)

1
<PAGE>

DEFINITIONS

The following abbreviations or acronyms used in the text and notes are defined
below:

Abbreviations
OR ACRONYMS TERM

Beaver..............................Beaver Combustion Turbine Plant
Bethel..............................Bethel Combustion Turbine Plant
Boardman............................Boardman Coal Plant
BPA.................................Bonneville Power Administration
Centralia...........................Centralia Coal Plant
COB.................................California/Oregon Border
Colstrip............................Colstrip Units 3 and 4 Coal Plant
Coyote Springs......................Coyote Springs Generation Plant
CUB.................................Citizens' Utility Board
DEQ.................................Oregon Department of Environmental Quality
EFSC................................Oregon Energy Facility Siting Council
Enron...............................Enron Corp
EPA.................................Environmental Protection Agency
FASB................................Financial Accounting Standards Board
FERC................................Federal Energy Regulatory Commission
Financial Statements................Refers to Financial Statements of Portland
General Electric
Company included in Part II, Item 8 of this
report.
Intertie............................Pacific Northwest Intertie Transmission
Line
IOUs................................Investor-Owned Utilities
IRS.................................Internal Revenue Service
kWh.................................Kilowatt-Hour
MMBtu...............................Million British thermal units
MW..................................Megawatt
MWa.................................Average megawatts
MWh.................................Megawatt-hour
NRC.................................Nuclear Regulatory Commission
NYMEX...............................New York Mercantile Exchange
OPUC or the Commission..............Oregon Public Utility Commission
Portland General or PGC.............Portland General Corporation
PGE or the Company..................Portland General Electric Company
PUD.................................Public Utility District
Regional Power Act..................Pacific Northwest Electric Power Planning
and Conservation Act
SFAS................................Statement of Financial Accounting Standards
issued by the FASB
WPPSS or Supply System..............Washington Public Power Supply System
Trojan..............................Trojan Nuclear Plant
USDOE...............................United States Department of Energy
WAPA................................Western Area Power Authority
WNP-3...............................Washington Public Power Supply System Unit 3
Nuclear Project
WSCC................................Western Systems Coordinating Council

2
<PAGE>

TABLE OF CONTENTS
PAGE

Definitions................................................................. 2

PART I
Item 1. Business.................................................... 4

Item 2. Properties.................................................. 12

Item 3. Legal Proceedings........................................... 14

PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters................................. 16

Item 6. Selected Financial Data..................................... 16

Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................... 17

Item 8. Financial Statements and Supplementary Data................. 27

Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure......................... 44

PART III
Item 10. Directors and Executive Officers of the Registrant.......... 45

Item 11. Executive Compensation...................................... 48

Item 12. Security Ownership of Certain Beneficial Owners
and Management.............................................. 54

Item 13. Certain Relationships and Related Transactions............. 55

PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K......................................... 56

Signatures................................................................. 57

Exhibit Index.............................................................. 58

3
<PAGE>

Part I

ITEM 1. BUSINESS

GENERAL

PGE, incorporated in 1930, is an electric utility engaged in the generation,
purchase, transmission, distribution, and sale of electricity in the State of
Oregon. PGE also sells energy to wholesale customers throughout the western
United States. PGE's Oregon service area is 3,170 square miles, including
54 incorporated cities, of which Portland and Salem are the largest, within a
state-approved service area allocation of 4,070 square miles. PGE estimates
that at the end of 1997 its service area population was approximately
1.5 million, constituting approximately 44% of the state's population. At
December 31, 1997 PGE served approximately 685,000 customers.

On July 1, 1997 Portland General Corporation (PGC), the former parent of PGE,
merged with Enron Corp. (Enron) with Enron continuing in existence as the
surviving corporation. PGE is now a wholly owned subsidiary of Enron and
subject to control by the Board of Directors of Enron.

As of December 31, 1997, PGE had 2,729 employees. This compares to 2,587 and
2,533 PGE employees at December 31, 1996 and 1995, respectively.

OPERATING REVENUES

RETAIL
PGE serves a diverse retail customer base. Residential customers constitute
the largest customer class and account for 44% of retail revenues.
Residential demand is highly sensitive to the effects of weather. Commercial
customers consume 40% and industrial customers 16% of retail revenues. Since
1995 commercial demand has grown by 9%, making this the Company's most rapidly
growing retail customer class. Sales to industrial customers rebounded in 1997
after a 4% decline in 1996. The commercial and industrial classes are not
dominated by any single industry. While the 20 largest customers constitute
21% of retail demand, they represent 10 different industrial groups including
paper manufacturing, high technology, metal fabrication, transportation
equipment, and health services. No single customer represents more than 10% of
PGE's retail load. PGE's retail revenues peak during the winter season.

In late 1997 PGE filed a proposal before the OPUC which would give all its
customers a choice of electricity providers as early as January 1, 1999. PGE's
Customer Choice Implementation Proposal includes new price tariffs and a new
structure for the company. If the proposal is approved by the OPUC, PGE
would become a regulated transmission and distribution company focused on
delivering, but not selling electricity.

WHOLESALE
Wholesale revenues continued to make a significant contribution to overall
revenues, providing over 35% of total operating revenues for 1997. During the
last several years PGE has actively marketed wholesale power throughout the
western United States and has experienced record sales growth since 1994. Most
of the Company's wholesale growth has come through sales to marketers and
brokers. These sales are predominantly of a short-term nature. Due to
increasing volatility and reduced margins resulting from increased competition,
long-term wholesale marketing activities have been transferred to PGE's non-
regulated affiliates. PGE expects that its future revenues from the wholesale
marketplace will decline.

4
<PAGE>

The following table summarizes operating revenues and MWh sales for the years
ended December 31:

<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Operating Revenues (Millions)
Residential $ 391 $ 427 $ 380
Commercial 343 346 336
Industrial 143 149 153
Public Street Lighting 11 11 11
Tariff Revenues 888 933 880
Accrued (Collected) Revenues 10 (27) (3)
Retail 898 906 877
Wholesale 497 194 95
Other 21 10 10
Total Operating Revenues $ 1,416 $ 1,110 $ 982
Megawatt-Hours Sold (Thousands)
Residential 6,999 7,073 6,622
Commercial 6,873 6,475 6,285
Industrial 4,247 3,909 4,056
Public Street Lighting 100 102 102
Retail 18,219 17,559 17,065
Wholesale 26,934 10,188 3,383
Total MWh Sold 45,153 27,747 20,448
</TABLE>

For additional information on year-to-year revenue trends, see Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations.

REGULATION

The OPUC, a three-member commission appointed by the Governor, approves PGE's
retail rates and establishes conditions of utility service. The OPUC ensures
that prices are fair and equitable and provides PGE an opportunity to earn a
fair return on its investment. In addition, the OPUC regulates the issuance of
securities and prescribes the system of accounts to be kept by Oregon
utilities.

PGE is also subject to the jurisdiction of the FERC with regard to the
transmission and sale of wholesale electric energy, licensing of hydroelectric
projects and certain other matters.

Construction of new generating facilities requires a permit from the Energy
Facility Siting Council (EFSC).

The NRC regulates the licensing and decommissioning of nuclear power plants.
In 1993 the NRC issued a possession-only license amendment to PGE's Trojan
operating license and in early 1996 approved the Trojan Decommissioning Plan.
Approval of the Trojan Decommissioning Plan by the NRC and EFSC has allowed PGE
to commence decommissioning activities. Trojan will be subject to NRC
regulation until Trojan is fully decommissioned, all nuclear fuel is removed
from the site and the license is terminated. The Oregon Department of Energy
also monitors Trojan.

5
<PAGE>

OREGON REGULATORY MATTERS

CUSTOMER CHOICE

Proposal
In late 1997 PGE filed a proposal before the OPUC which would give all of its
customers a choice of electricity providers and provide a price decrease of
about 10% as early as January 1, 1999. PGE's Customer Choice Implementation
Proposal includes new tariffs and a new structure for the company. If the
proposal is approved by the OPUC, PGE would become a regulated
transmission and distribution company focused on delivering, but not selling
electricity. PGE would continue to operate and maintain the electricity
delivery system and handle outage restoration, while other competitive
companies would market power to customers over that system. To effect this
restructuring PGE is asking for OPUC approval to sell all its generating
assets, which represent approximately 27% of PGE's total assets, and power
supply and purchase contracts. A sale of PGE's supply portfolio would allow
the OPUC to put a dollar value on "transition costs," the costs that a
regulated utility company would be unable to recover in a competitive market.
PGE is seeking full recovery of these transition costs.

PGE is dependent upon the regulatory process to ensure that future revenues
will be provided for the recovery of regulatory assets, including the
transition costs mentioned above. In the event that the regulatory process does
not provide revenues for recovery of transition costs, PGE could be required
to write off all or a portion of such amounts from its balance sheet.

INTRODUCTORY PROGRAM
In a move to prepare for future retail competition, PGE initiated an
introductory Customer Choice Plan to allow 50,000 PGE customers in four cities
to buy their power from competing energy service providers. This program allows
certain customers in Oregon to experience a competitive electricity market. The
program, which received OPUC approval, is available to residential, small
business and commercial customers in the four cities, and industrial customers
throughout PGE's service territory. Since October 1997 PGE's large industrial
customers throughout its service territory have had the opportunity to purchase
up to 50 percent of their electricity from competing electricity providers.
Residential, small business and commercial customers were given the option of
receiving electricity from a company of their choice in December 1997. Under
this program, customers in the four cities can pool or aggregate their electric
load in order to negotiate a cheaper rate from energy suppliers. To date over
7,000 retail customers have selected alternative energy service providers. This
program, which terminates on December 31, 1998, is being undertaken to provide
information to PGE and the OPUC on the effects of future retail competition on
PGE and its customers. PGE does not expect that this program will have a
materially adverse impact on operating margins.

LEAST COST ENERGY PLANNING
The OPUC adopted Least Cost Energy Planning for all energy utilities in Oregon
with the goal of selecting the mix of resources that yields a reliable supply
of energy at the least cost to customers. In September 1997 PGE submitted its
1998-1999 Integrated Resource Plan (IRP) to the OPUC. This plan recognizes the
fundamental changes occurring in the electric industry and establishes a
transition strategy for the next two years. The plan will maintain PGE's
delivery capability and provides a bridge to a competitive environment in which
funding for public purposes is provided from a System Benefit Charge.

RESIDENTIAL EXCHANGE PROGRAM
The Regional Power Act (RPA), passed in 1980, attempted to resolve growing
power supply and cost inequities between customers of government and publicly
owned utilities, who have priority access to the low-cost power from the
federal hydroelectric system, and the customers of IOUs. The RPA created the
residential exchange program to ensure that all residential and farm customers
in the region, the vast majority of which are served by IOUs, receive similar
benefits from the publicly funded federal power system. Exchange benefits, and
any related changes in the amount of benefits, have generally passed directly
to PGE's customers in the form of price increases or decreases. Effective
January 1998 rates for PGE's residential and small farm customers increased
11.9% due to the Bonneville Power Administration's (BPA) elimination of the
Residential Exchange Credit. PGE has contested this decision and is working
with the BPA to resolve the issue.

6
<PAGE>

ENERGY EFFICIENCY
PGE has promoted the efficient use of electricity for over two decades.
Current Demand Side Management (DSM) programs provide a range of services
to all classes of PGE
customers. DSM programs seek to capitalize on windows of opportunity in which
efficiency measures are most cost-effective both for PGE's ratepayers and the
specific customers. In order to do this PGE is focusing on commercial or
industrial new construction and industrial process improvements. PGE continues
to provide a weatherization program for eligible low-income families. PGE is
also focusing on developing a regional solution to funding and delivering
energy efficiency in a competitive environment.

COMPETITION AND MARKETING

GENERAL
At the onset of nationwide electricity deregulation PGE is maintaining its
commitment to service excellence while assisting with the formation of a
competitive electricity market in the Northwest. Its Customer Choice
Implementation Proposal was filed with the OPUC in December 1997 and an
introductory program has been put in place. The proposal addresses five key
principles: bringing true market conditions to the industry, separating the
regulated and non-regulated portions of utility services, removing the
incumbent utility advantage, transferring commercial customer relationships to
the energy service provider and allowing the market to determine the cost of
transitioning from a regulated to a deregulated environment. The proposal, if
approved by the OPUC, will create one of the nation's first regulated
electricity transmission and distribution companies focused on delivering, but
not selling, power. In the new environment, PGE would continue to operate and
maintain the electricity delivery system and handle outages, while other
competitive companies would market power to customers over that system.

RETAIL COMPETITION AND MARKETING
PGE operates within a state-approved service area and under current regulation
is substantially free from direct retail competition with other electric
utilities. PGE's competitors within its Oregon service territory include other
fuel suppliers, such as the local natural gas company, which compete with PGE
for the residential and commercial space and water heating market. In
addition, there is the potential of a loss of PGE service territory to the
creation of public utility districts or municipal utilities by voters. In the
future PGE will focus on transitioning to a regulated transmission and
distribution company.

WHOLESALE COMPETITION AND MARKETING
During the last few years, the western United States has become a vibrant
marketplace for the trading of electricity and PGE has been an active
participant. During 1997 PGE's wholesale revenues increased 156% over 1996
levels with wholesale activities accounting for 35% of total revenues and
60% of total megawatt-hour sales. However, due to increasing volatility and
reduced margins resulting from increased competition, long-term wholesale
marketing activities have been transferred to PGE's non-regulated affiliates.

The FERC has taken steps to provide a framework for increased competition in
the electric industry. In 1996 the FERC issued Order 888 requiring non-
discriminatory open access transmission by all public utilities that own
interstate transmission. The final rule requires utilities to file tariffs
that offer others the same transmission services they provide themselves under
comparable terms and conditions. This rule also allows public utilities to
recover stranded costs in accordance with the terms, conditions and procedures
set forth in Order 888. The ruling requires reciprocity from municipals,
cooperatives and federal power marketers receiving service under the tariff.

The Company's transmission system connects winter-peaking utilities in the
Northwest and Canada, which have access to low-cost hydroelectric generation,
with summer-peaking wholesale customers in California and the Southwest, which
have higher-cost fossil fuel generation. PGE has used this system to purchase
and sell in both markets depending upon the relative price and availability of
power, water conditions, and seasonal demand from each market.

7
<PAGE>

POWER SUPPLY

Growth within PGE's service territory, as well as its wholesale trading
activities has underscored the Company's need for sources of reliable, low-
cost energy supplies. The demand for energy within PGE's service territory has
experienced an average annual growth rate of approximately 2.5% over the last
10 years. Wholesale demand has experienced significant increases. In 1996 and
1997 PGE's wholesale sales increased approximately 200% annually. Although
wholesale activity is expected to decline, PGE's retail demand should continue
its upward trend. PGE has relied increasingly on short-term purchases to
supplement its existing base of generating resource and long-term power
contracts to meet its energy needs. Short-term purchases include spot market,
or secondary, purchases as well as firm purchases for periods less than one
year in duration. The availability of short-term firm purchase agreements and
PGE's ability to renew these contracts on a month-by-month basis have enabled
PGE to minimize risk and enhance its ability to provide reliable low-cost
energy to retail customers. Increased competition has placed competitive
pressures on the price of short-term power as well as enhanced its
availability. Northwest hydro conditions also have a significant impact on
regional power supply. Plentiful water conditions can lead to surplus power
and the economic displacement of more expensive thermal generation.

GENERATING CAPABILITY
PGE's existing hydroelectric, coal-fired and gas-fired plants are important
resources for the Company, providing 2,120 MW of generating capability (see
Item 2. Properties, for a full listing of PGE's generating facilities). PGE's
lowest-cost producers are its eight hydroelectric projects on the Clackamas,
Sandy, Deschutes, and Willamette rivers in Oregon. These facilities
operate under federal licenses, which will be up for renewal between the
years 2001 and 2006.

PURCHASED POWER
PGE has long-term power contracts with four hydro projects on the mid-Columbia
River which provide PGE with 590 MW of firm capacity. PGE also has firm
contracts, ranging in term from one to 30 years, to purchase 512 MW, primarily
hydro-generated, from other Pacific Northwest utilities. In addition, PGE has
long-term exchange contracts with summer-peaking Southwest utilities to help
meet its winter-peaking requirements. These resources, along with short-term
contracts, provide PGE with sufficient firm capacity to serve its peak loads.

SYSTEM RELIABILITY AND THE WSCC
PGE relies on wholesale market purchases within the WSCC in conjunction with
its base of generating resources to supply its resource needs and maintain
system reliability. The WSCC is the largest and most diverse of the 10
regional electric reliability councils. The WSCC performs an essential role in
developing and monitoring established reliability criteria guides and
procedures to ensure continued reliability of the electric system. During the
last few years, the area covered by WSCC has become a dynamic marketplace for
the trading of electricity. This area, which extends from Canada to Mexico and
includes 14 Western states, is very diverse in climates. Peak loads occur at
different times of the year in the different regions within the WSCC area.
Energy loads in the Southwest peak in summer due to air conditioning; northern
loads peak during winter heating months. Further, according to WSCC forecasts,
the nearly 80 electric organizations participating in the WSCC, which include
utilities, independent power producers and transmission utilities, have
sufficient generating capacity to meet forecast demand and energy requirements
during the next 10 years. Favorable water conditions have the ability to
further increase energy supplies.

JANUARY RESERVE MARGIN WSCC REGION

MEGAWATTS PERCENT
1993 22,997 0.217
1994 31,033 0.310
1995 28,693 0.288
1996 24,500 0.221
1997 36,246 0.325
1998 37,145 0.326
1999 33,240 0.286
2000 33,735 0.286
2001 32,680 0.273
2002 30,842 0.253

8
<PAGE>

During 1997, PGE's peak load was 3,448 MW, of which 52% was met through
economical short-term purchases. PGE's firm resource capacity, including
short-term purchase agreements, totaled approximately 4,714 MW as of December
31, 1997.

RESTORATION OF SALMON RUNS
Several species of salmon found in the Snake River and the Columbia rivers, have
been granted protection under the federal Endangered Species Act (ESA). In an
effort to help restore these fish, the federal government has reduced the
amount of water allowed to flow through the turbines at the hydroelectric dams
on the Snake and Columbia rivers while the young salmon are migrating to the
ocean. This has resulted in reduced amounts of electricity generated at the
dams. Favorable hydro conditions helped mitigate the effect of these actions
in 1996 and 1997. If this practice is continued in future years it could mean
less water available in the fall and winter for generation when demand for
electricity in the Pacific Northwest is highest. Although PGE does not own any
hydroelectric facilities on the Columbia and Snake rivers, it does buy energy
from both utilities and federal agencies which do.

In early 1997, the State of Oregon proposed an aggressive recovery plan for the
Oregon coastal Coho salmon. The National Marine Fisheries Service (NMFS)
accepted this recovery plan and as a result this run of salmon was not listed
for federal protection. PGE has no hydroelectric projects that will be
impacted by this action.

Also in 1997, a petition to protect winter steelhead trout under the federal
Endangered Species Act was reviewed by NMFS. In early 1998 NMFS listed this
species as threatened. The affected areas include the lower Columbia River
tributaries in Oregon and Washington. PGE is currently evaluating what impact
this listing will have on the operation of its hydroelectric projects on the
Willamette, Clackamas and Sandy rivers.

9
<PAGE>

FUEL SUPPLY

Fuel supply contracts are negotiated to support annual planned plant
operations. Flexibility in contract terms is sought to allow for the most
economic dispatch of PGE's thermal resources in conjunction with the current
market price of wholesale power.

COAL

BOARDMAN
PGE has an agreement to purchase coal for Boardman through the year 2000. The
agreement does not require a minimum amount of coal to be purchased, allowing
PGE to obtain coal from other sources. During 1997 PGE did not take deliveries
under this contract but purchased coal under favorable short-term agreements.
Coal purchases in 1997 contained less than 0.4% of sulfur by weight and emitted
less than the EPA allowable limit of 1.2 pounds of sulfur dioxide per MMBtu
when burned. The coal, from surface mining operations in Montana and Wyoming,
was subject to federal, state and local regulations. Coal is delivered to
Boardman by rail under a contract which expires in 2002.

COLSTRIP
Coal for Colstrip Units 3 and 4, located in southeastern Montana, is provided
under contract with Western Energy Company, a wholly owned subsidiary of
Montana Power Company. The contract provides that the coal delivered will not
exceed a maximum sulfur content of 1.5% by weight. The Colstrip plant has
sulfur dioxide removal equipment to allow operation in compliance with EPA's
source-performance emission standards.

CENTRALIA
Coal for Centralia Units 1 and 2, located in Southwestern Washington, is
provided under contract with PacifiCorp doing business as PacifiCorp Electric
Operations. Most of Centralia's coal requirements are expected to be provided
under this contract for the foreseeable future.

<TABLE>
<CAPTION>
SULFUR TYPE OF POLLUTION
PLANT CONTENT CONTROL EQUIPMENT
<S> <C> <C> <C>
Boardman, OR 0.4% Electrostatic precipitators
Centralia, WA 0.7% Electrostatic precipitators
Colstrip, MT 0.7% Scrubbers and precipitators
</TABLE>

NATURAL GAS

In addition to the agreements discussed below, the Company utilizes short-term
and spot market purchases to secure transportation capacity and gas supplies
sufficient to fuel plant operations.

BEAVER
PGE owns 90% of the Kelso-Beaver Pipeline which directly connects its Beaver
generating station to Northwest Pipeline, an interstate gas pipeline operating
between British Columbia and New Mexico. During 1997, PGE had access to 76,000
MMBtu/day of firm transportation capacity, enough to operate Beaver at a 70%
load factor.

COYOTE SPRINGS
The Coyote Springs generating station utilizes 41,000 MMBtu/day of firm
transportation on three interconnected pipeline systems accessing the gas
fields in Alberta, Canada. Coyote Springs' one and two-year gas supply
contracts expire in November 1998 and November 1999. Gas supplies and
transportation capacity are sufficient to fully fuel Coyote Springs. Minimum
purchase requirements represent 50% of the plant's capacity.

10
<PAGE>

ENVIRONMENTAL MATTERS

PGE operates in a state recognized for environmental leadership. PGE's
environmental stewardship policy emphasizes minimizing waste in its operations,
minimizing environmental risk and promoting energy efficiency.

REGULATION
PGE's current and historical operations are subject to a wide range of
environmental protection laws covering air and water quality, noise, waste
disposal, and other environmental issues. PGE is also subject to the Federal
Rivers and Harbors Act of 1899 and similar Oregon laws under which it must
obtain permits from the U.S. Army Corps of Engineers or the Oregon Division of
State Lands to construct facilities or perform activities in navigable waters
of the State. The EPA regulates the proper use, transportation, cleanup and
disposal of polychlorinated biphenyls (PCBs). State agencies or departments
which have direct jurisdiction over environmental matters include the
Environmental Quality Commission, the DEQ, the Oregon Department of Energy and
EFSC. Environmental matters regulated by these agencies include the siting and
operation of generating facilities and the accumulation, cleanup, and disposal
of toxic and hazardous wastes.

CLEANUP
PGE is involved with others in the environmental cleanup of PCB contaminants
at various sites as a potentially responsible party (PRP). The cleanup effort
is considered complete at several sites which are awaiting consent orders from
the appropriate regulatory agencies. These and future cleanup costs are not
expected to be material.

AIR/WATER QUALITY
The Clean Air Act (Act) requires significant reductions in emissions of sulfur
dioxide, nitrogen oxide and other contaminants over the next several years.
Coal-fired plant operations will be affected by these emission limitations.
State governments are also charged with monitoring and administering certain
portions of the Act. Each state is required to set guidelines that at least
equal the federal standards.

Boardman was assigned sufficient emission allowances by the EPA to operate
after the year 2000 at a 60% to 67% capacity factor without having to further
reduce emissions. If needed PGE will purchase additional allowances to meet
excess capacity needs. Centralia will be required to reduce emissions by the
year 2000. The owner-operator utility is considering the installation of
scrubbers. It is not anticipated that Colstrip will be required to reduce
emissions because it utilizes scrubbers. However, future legislation, if
adopted, could affect plant operations and increase operating costs or reduce
coal-fired capacity.

Air contaminant discharge permits or federal operating permits, issued by the
DEQ, have been obtained for all of PGE's fossil fuel generating facilities with
only one limitation, at the Bethel plant, on power production. DEQ limits
night operations of Bethel to one unit due to noise considerations. Maximum
plant operations are allowed during the day.

The water pollution control facilities permit for Boardman expired in May 1991.
The DEQ is processing the permit application and renewal is expected. In the
interim, Boardman is permitted to continue operating under the terms of the
original permit.

PGE is no longer accepting oil shipments by river for its Beaver plant in order
to eliminate the risk of an oil spill into the Columbia River. Instead, the
rail off-loading facility has been upgraded. This plant is normally fired by
natural gas, and only small amounts of oil are used.

11
<PAGE>

ITEM 2. PROPERTIES

PGE's principal plants and appurtenant generating facilities and storage
reservoirs are situated on land owned by PGE in fee or land under the control
of PGE pursuant to valid existing leases, federal or state licenses, easements,
or other agreements. In some cases meters and transformers are located upon
the premises of customers. The Indenture securing PGE's first mortgage bonds
constitutes a direct first mortgage lien on substantially all utility property
and franchises, other than expressly excepted property. The map below shows
PGE's Oregon service territory and location of generating facilities:

OREGON

12
<PAGE>

Generating facilities owned by PGE are set forth in the following table:
<TABLE>
<CAPTION>

PGE Net MW
Facility Location Fuel Capability
<S> <C> <C> <C> <C>
WHOLLY OWNED:
Faraday Clackamas River Hydro 44
North Fork Clackamas River Hydro 54
Oak Grove Clackamas River Hydro 44
River Mill Clackamas River Hydro 23
Pelton Deschutes River Hydro 108
Round Butte Deschutes River Hydro 300
Bull Run Sandy River Hydro 22
Sullivan Willamette River Hydro 16
Beaver Clatskanie, OR Gas/Oil 500
Bethel Salem, OR Gas/Oil 116
Coyote Springs Boardman, OR Gas/Oil 241
PGE
JOINTLY OWNED: INTEREST
Boardman Boardman, OR Coal 331 @ 65.0%
Centralia Centralia, WA Coal 33 @ 2.5%
Colstrip 3 & 4 Colstrip, MT Coal 288 @ 20.0%
Trojan Rainier, OR Nuclear - @ 67.5%
2,120
</TABLE>

PGE holds licenses under the Federal Power Act for its hydroelectric generating
plants. All of its licenses expire during the years 2001 to 2006. FERC
requires that a notice of intent to relicense these projects be filed
approximately five years prior to expiration of the license. PGE is actively
pursuing the renewal of these licenses. The State of Oregon also has licensed
all or portions of five hydro plants. For further information see the Hydro
Relicensing discussion in Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.

Following the 1993 Trojan closure, PGE was granted a possession-only license
amendment by the NRC. In early 1996 PGE received NRC approval of its Trojan
decommissioning plan. See Note 11, Trojan Nuclear Plant, in the Notes to the
Financial Statements for further information.

LEASED PROPERTIES
Combustion turbine generators at Bethel and Beaver are leased by PGE. These
leases expire in 1998 and 1999. PGE is currently evaluating its renewal
options. PGE leases its headquarters complex in downtown Portland and the
coal-handling facilities and certain railroad cars for Boardman.

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<PAGE>

ITEM 3. LEGAL PROCEEDINGS

UTILITY

UTILITY REFORM PROJECT V. OPUC, MULTNOMAH COUNTY CIRCUIT COURT

On February 18, 1992 the Utility Reform Project (URP) filed a complaint in
Multnomah County Oregon Circuit Court asking the court to set aside OPUC Order
No. 91-1781 which authorized deferred accounting, suspended certain rate
schedules and opened an investigation on PGE's request for a temporary rate
increase to recover a portion (approximately $22 million) of the excess power
costs incurred during the 1991 Trojan outage. URP's challenge was stayed
pending the outcome of a similar jurisdictional issue in another case already
on appeal. That other case has been decided, and the URP challenge will now
proceed. PGE plans to intervene in this case shortly.

COLUMBIA STEEL CASTING CO., INC. V. PGE, PACIFICORP, AND MYRON KATZ, NANCY
RYLES AND RONALD EACHUS, NINTH CIRCUIT COURT OF APPEALS

On June 19, 1990 Columbia Steel filed a complaint for declaratory judgment,
injunctive relief and damages in U.S. District Court for the District of Oregon
contending that a 1972 territory allocation agreement between PGE and
PacifiCorp, dba Pacific Power & Light Company (PP&L), which was subsequently
approved by the OPUC and the City of Portland, does not give PGE the exclusive
right to serve them nor does it allow PP&L to deny service to them. Columbia
Steel is seeking an unspecified amount in damages amounting to three times the
excess power costs paid over a 10-year period.

On July 3, 1991 the Court ruled that the Agreement did not allocate customers
for the provision of exclusive services and that the 1972 order of the OPUC
approving the Agreement did not order the allocation of territories and
customers. Subsequently, on August 19, 1993 the Court ruled that Columbia
Steel was entitled to receive from PGE approximately $1.4 million in damages
which represented the additional costs incurred by Columbia Steel for electric
service from July 1990 to July 1991, trebled, plus costs and attorney's fees.

PGE appealed to the U.S. Court of Appeals for the Ninth Circuit which, on July
20, 1995, issued an opinion in favor of PGE, reversing the judgment and
ordering judgment to be entered in favor of PGE. Columbia Steel filed a
petition for reconsideration and on December 27, 1996 , the Ninth Circuit Court
of Appeals reversed its earlier decision, ruling in favor of Columbia Steel and
remanding the case to the U.S. District Court for a new determination of damages
for service rendered from early 1987 to July 1991. In early 1997 PGE's request
for reconsideration by the Ninth Circuit was denied. On July 2, 1997 PGE filed
a request for certiorari with the U.S. Supreme Court. A response is expected in
1998. On August 2, 1997 the U.S. District Court entered a new judgment in favor
of Columbia Steel for approximately $3.7 million.

CITIZENS' UTILITY BOARD OF OREGON V. PUBLIC UTILITY COMMISSION OF OREGON AND
UTILITY REFORM PROJECT AND COLLEEN O'NEIL V. PUBLIC UTILITY COMMISSION OF
OREGON, MARION COUNTY OREGON CIRCUIT COURT

The Citizens' Utility Board (CUB) appealed a 1994 ruling from the Marion County
Circuit Court which upheld the order of the OPUC in its Declaratory Ruling
proceeding (DR-10). In the DR-10 proceeding, PGE filed an Application with the
OPUC requesting a Declaratory Ruling regarding recovery of the Trojan
investment and decommissioning costs. On August 9, 1993 the OPUC issued the
declaratory ruling. In its ruling, the OPUC agreed with an opinion issued by
the Oregon Department of Justice (Attorney General) stating that under current
law, the OPUC has authority to allow recovery of and a return on Trojan
investment and future decommissioning costs.

In PGE's 1995 general rate case, the OPUC issued an order granting PGE full
recovery of Trojan decommissioning costs and 87% of its remaining investment in
the plant. The URP filed an appeal of the OPUC's order. URP alleges that the
OPUC lacks authority to allow PGE to recover Trojan costs through its rates.
The complaint seeks to remand the case back to the OPUC and have all costs
related to Trojan immediately removed from PGE's rates.

14
<PAGE>

The CUB also filed an appeal challenging the portion of the OPUC's order issued
in PGE's 1995 general rate case that authorized PGE to recover a return on its
remaining investment in Trojan. CUB alleges that the OPUC's decision is not
based upon evidence received in the rate case, is not supported by substantial
evidence in the record of the case, is based on an erroneous interpretation of
law and is outside the scope of the OPUC's discretion, and otherwise violates
constitutional or statutory provisions. CUB seeks to have the order modified,
vacated, set aside or reversed.

On April 4, 1996 a circuit court judge in Marion County, Oregon rendered a
decision that contradicted a November 1994 ruling from the same court. The
1996 decision found that the OPUC could not authorize PGE to collect a return
on its undepreciated investment in Trojan currently in PGE's rate base. Both
the 1994 and 1996 circuit court decisions have been appealed to the Oregon
Court of Appeals where they have been consolidated. PGE expects a ruling in
1998.

15
<PAGE>

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

PGE is a wholly owned subsidiary of Enron. PGE's common stock is not publicly
traded. Aggregate cash dividends declared on common stock were as follows
(millions of dollars):

QUARTER 1997 1996
First $14 $15
Second 16 18
Third 17 56
Fourth - 16

PGE is restricted, without prior OPUC approval, from making any dividend
distributions to Enron that would reduce PGE's common equity capital below 48%
of total capitalization.

ITEM 6. SELECTED FINANCIAL DATA

FOR THE YEARS ENDED DECEMBER 31
1997 1996 1995 1994 1993
(millions of dollars)

Operating Revenues $1,416 $1,110 $ 982 $ 959 $ 945
Net Operating Income 208 230 201 159 160
Net Income 126 156 93{1} 106 100

Total Assets $3,256 $3,398 $3,246 $3,354 $3,227
Long-Term Obligations{2} 1,038 963 931 856 873

NOTES TO THE TABLE ABOVE:
1 Includes a loss of $50 million from regulatory disallowances.
2 Includes long-term debt, preferred stock subject to mandatory redemption
requirements, long-term capital lease obligations and short-term debt intended
to be refinanced.

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<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

GENERAL

1997 COMPARED TO 1996
Portland General Electric's net income for 1997 was $126 million, including a
$14 million non-recurring loss provision associated with non-utility property.
Excluding this provision 1997 net income would have been $140 million compared
to $156 million in 1996. PGE's strong operating performance reflected the
addition of over 17,000 new customers in one of the fastest growing service
territories in the U.S. Continued customer growth helped mitigate the impact of
a December 1996 rate settlement which resulted in a $70 million annual rate
reduction for PGE's regulated retail customers.

Retail revenues decreased $8 million primarily due to the price decrease
mentioned above.

OPERATING REVENUE AND NET INCOME (LOSS) GRAPH:
($ MILLIONS):

OPERATING NET
REVENUE INCOME
1993 945 100
1994 959 106
1995 982 93
1996 1110 156
1997 1416 126

Wholesale revenues totaled $497 million in 1997, an all-time record for PGE and
an increase of over $300 million from 1996 levels. Favorable market conditions
prompted PGE to increase its participation in the wholesale marketplace.

PGE ELECTRICITY SALES GRAPH:
(BILLIONS OF KWH)

1993 Residential 6.8
Commercial 6.0
Industrial 3.8
Wholesale 2.7

1994 Residential 6.7
Commercial 6.2
Industrial 3.9
Wholesale 2.7

1995 Residential 6.6
Commercial 6.4
Industrial 4.1
Wholesale 3.4

1996 Residential 7.1
Commercial 6.5
Industrial 3.9
Wholesale 10.2

1997 Residential 7.0
Commercial 7.0
Industrial 4.2
Wholesale 26.9

MEGAWATT-HOURS SOLD
(THOUSANDS)

1997 1996
Retail 18,219 17,559
Wholesale 26,934 10,188

Purchased power and fuel costs rose $367 million or 119% to support increased
wholesales sales volume. Energy purchases were up 79%, with prices averaging
16.2 mills compared to 13.8 mills for 1996. Increased gas prices during the
winter followed by tight market conditions in the southwestern United States
and increased competition in the wholesale marketplace were the major
contributors to this increase in price. Company generation provided 16% of
total power needs.

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<PAGE>

MEGAWATT-HOURS/VARIABLE POWER COSTS

Megawatt-Hours Average Variable
(thousands) Power Cost (Mills/KWh)
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Generation 7,326 7,223 6.3 6.6
Firm Purchases 36,014 18,099 16.5 14.5
Secondary Purchases 2,958 3,714 12.2 10.4
Total 46,298 29,036 14.6 12.0
</TABLE>

Operating expenses (excluding purchased power, fuel, depreciation and taxes)
were comparable to 1996.

Depreciation expense increased $6 million or 5% due to recent capital additions
to PGE's distribution system.

Amortization expense decreased $13 million primarily due to the amortization of
regulatory credits. These items were partially offset by the amortization of
bondable conservation investments.

Other Income decreased due to loss provisions recorded for the future removal
of non-utility property.

OPERATING EXPENSES GRAPH:
($ MILLIONS)

1993 Depreciation 125
Operating Costs 357
Variable Power 303

1994 Depreciation 128
Operating Costs 334
Variable Power 338

1995 Depreciation 140
Operating Costs 356
Variable Power 285

1996 Depreciation 162
Operating Costs 410
Variable Power 308

1997 Depreciation 155
Operating Costs 378
Variable Power 675

1996 COMPARED TO 1995
PGE reported 1996 net income of $156 million compared to $93 million for 1995.
1995 net income included a $50 million after-tax charge to income related to
the OPUC's rate orders disallowing certain deferred power costs and 13% of
PGE's remaining investment in Trojan.

Excluding the effect of regulatory disallowances, net income in 1995 would have
been $143 million.

Strong operating earnings reflected the benefits of low variable power costs
due to optimal hydro conditions and a competitive wholesale market. Sales
growth due to a growing retail customer base, along with favorable weather
conditions, contributed to new record peak loads for both the summer and winter
periods.

Retail revenues exceeded the prior year by $29 million, largely due to rate
increases accompanied by 3% higher energy sales. These increases were partially
offset by revenue refund provisions for SAVE adjustments and certain state tax
benefits.

Wholesale revenues exceeded 1995 levels by $99 million due to increased trading
activities.

The price of purchased power and fuel dropped 25% in 1996, averaging 12 mills
versus 15.9 mills last year. Total costs increased only $23 million or 8%,
despite a 36% rise in total Company energy requirements. Optimal hydro
conditions brought steep reductions in the cost of secondary power, as well as
the cost of firm power purchased from the mid-Columbia projects. Power
purchases amounted to 75% of total PGE load in 1996 at an average cost of
13.8 mills compared to 18.3 mills in 1995.

PGE hydro projects generated 9% of the Company's energy needs, an 11% increase
in production levels. PGE's thermal plants operated efficiently, and with the
addition of Coyote Springs, average overall costs dropped to 6.6 mills from 8.0
mills in 1995. Excluding Coyote Springs, thermal plants generation was down
13% due to economic displacement early in the year.

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<PAGE>

Operating expenses (excluding purchased power, fuel, depreciation and
taxes)
were $30 million or 14% higher than 1995. The increase is primarily due to
additional costs associated with fixed natural gas transportation, storm
related repair and maintenance projects, and increased customer support.
Incremental operating costs associated with Coyote Springs, which was placed in
operation in late 1995, were offset by decreased costs at other thermal
facilities resulting from economic displacement. Throughout the year PGE was
able to economically dispatch or displace thermal generation in response to
movements in the cost of short-term power and the availability of low-cost
hydro power.

Depreciation and amortization increased $22 million, or 16%, due
primarily to depreciation related to Coyote Springs.

Excluding regulatory disallowances of $50 million in 1995, other income
declined $9 million due to a reduced return on regulatory assets and the
absence of equity AFDC.

Interest charges were $7 million above 1995 due to reduced AFDC and higher
levels of short-term debt. Preferred dividend requirements were down $7
million due to the retirement of nearly $80 million in preferred stock in 1995.

CASH FLOW

CASH PROVIDED BY OPERATIONS is used to meet the day-to-day cash requirements
of PGE. Supplemental cash is obtained from external borrowings as needed.

PGE maintains varying levels of short-term debt, primarily in the form of
commercial paper, which serves as the primary form of daily liquidity. In 1997
monthly balances ranged from $73 million to $115 million. PGE has committed
borrowing facilities totaling $200 million which are used as backup for PGE's
commercial paper facility.

A significant portion of cash provided by operations comes from depreciation
and amortization of utility plant, charges which are recovered in customer
revenues but require no current period cash outlay. Changes in accounts
receivable and accounts payable can also be significant contributors or users
of cash. Decreased cash flow was due to price and related retail revenue
decreases.

CAPITAL EXPENDITURES GRAPH:
($ MILLIONS)

1993 149
1994 246
1995 234
1996 200
1997 180

INVESTING ACTIVITIES include generation, transmission and distribution
facilities improvements, energy efficiency programs and decommissioning
expenditures. 1997 capital expenditures of $180 million were primarily for the
expansion and upgrade of PGE's distribution system. Annual capital
expenditures are expected to be approximately $170 million over the next few
years. The majority of anticipated capital expenditures are for improvements
to the Company's expanding distribution system to support the addition of new
customers.

PGE does not anticipate construction of new generating resources in the
foreseeable future. PGE will continue to make energy efficiency
expenditures similar to 1997 levels.

FINANCING ACTIVITIES provide supplemental cash for day-to-day operations and
capital requirements as needed. PGE has issued no new long-term debt in 1997
and has instead relied on short-term borrowings to manage its day-to-day
financing requirements. During 1997 PGE's cash dividend payments to its parent
totaled $65 million compared $106 million in 1996.

The issuance of additional First Mortgage Bonds and preferred stock requires
PGE to meet earnings coverage and security provisions set forth in the Articles
of Incorporation and the Indenture securing its First Mortgage Bonds. As of
December 31, 1997, PGE had the capability to issue preferred stock and
additional First Mortgage Bonds in amounts sufficient to meet its capital
requirements.

19
<PAGE>

FINANCIAL AND OPERATING OUTLOOK

PORTLAND GENERAL ELECTRIC COMPANY - ELECTRIC UTILITY

BUSINESS COMBINATION

CUSTOMER CHOICE

PGE is dependent upon the regulatory process to ensure that future revenues
will be provided for the recovery of regulatory assets, including the
transition costs mentioned above. In the event that the regulatory process does
not provide revenues for recovery of transition costs, PGE could be required to
write off all or a portion of such amounts from its balance sheet.

INTRODUCTORY PROGRAM
In a move to prepare for future retail competition, PGE initiated an
introductory Customer Choice Plan to allow 50,000 PGE customers in four cities
to buy their power from competing energy service providers. This program allows
certain customers in Oregon to experience a competitive electricity market. The
program, which received OPUC approval, is available to residential, small
business and commercial customers in the four cities, and industrial customers
throughout PGE's service territory. Since October 1997 PGE's large industrial
customers throughout its service territory have had the opportunity to purchase
up to 50 percent of their electricity from competing electricity providers.
Residential, small business and commercial customers were given the option of
receiving electricity from a company of their choice in December 1997.
Under this program, customers in the four cities can pool or aggregate their
electric load in order to negotiate a cheaper rate from energy suppliers. To
date over 7,000 retail customers have selected alternative energy service
providers. This program, which terminates on December 31, 1998, is being
undertaken to provide information to PGE and the OPUC on the effects of future
retail competition on PGE and its customers. PGE does not expect that this
program will have a materially adverse impact on operating margins.

REGULATION AND COMPETITION

FEDERAL
The Energy Policy Act of 1992 (Energy Act) set the stage for change in federal
and state regulations aimed at increasing both wholesale and retail competition
in the electric industry. The Energy Act eased restrictions on independent
power production and granted authority to the FERC to mandate open access for
the wholesale transmission of electricity.

20
<PAGE>

public utilities to recover stranded costs in accordance with the terms,
conditions and procedures set forth in Order 888. The ruling requires
reciprocity from municipals, cooperatives and federal power marketers receiving
service under the tariff. The new rules which became effective July 1996 have
resulted in increased competition, lower prices and more choices to wholesale
energy customers.

STATE
Since the passage of the Energy Act, various state utility commissions have
addressed proposals which would allow retail customers direct access to
generation suppliers, marketers, brokers and other service providers in a
competitive marketplace for energy services (retail wheeling). Although
several bills proposing retail competition were introduced during the 1997
Oregon legislative session, none were approved. Industry restructuring bills
have also been introduced at the federal level.

RETAIL CUSTOMER GROWTH AND ENERGY SALES
During 1997 weather adjusted retail energy sales grew 5.7%. Commercial and
industrial sales increased by 4.2% and 12% respectively due to strong growth in
most industry segments. The addition of over 17,000 customers resulted in
residential sales growth of 2.9%. PGE expects retail energy sales growth to be
approximately 3%.

Effective January 1998 rates for PGE's residential and small farm customers
increased 11.9 percent due to the Bonneville Power Administration's (BPA)
elimination of the Residential Exchange Credit. PGE has contested this
decision and is working with the BPA to resolve the issue. Exchange benefits,
and any related changes in the amount of benefits, have generally passed
directly to PGE's customers in the form of price increases or decreases.

WHOLESALE SALES
The surplus of electric generating capability in the Western U.S., the entrance
of numerous wholesale marketers and brokers into the market, and open access
transmission is contributing to increasing pressure on the price of power. In
addition, the development of financial markets and NYMEX electricity contract
trading has led to increased price discovery available to market participants,
further adding to the competitive pressure on wholesale margins. During 1997
PGE's wholesale revenues increased over $300 million compared to the same
period last year, accounting for 35% of total revenues and 60% of total sales
volume. PGE will continue its participation in the wholesale marketplace in
order to balance its supply of power to meet the needs of its retail customers,
manage risk and to administer PGE's current long-term wholesale contracts. Due
to increasing volatility and reduced margins resulting from increased
competition, long-term wholesale marketing activities have been transferred to
PGE's non-regulated affiliates. PGE expects that its future revenues from the
wholesale marketplace will decline.

POWER & FUEL SUPPLY
PGE's base of hydro and thermal generating capacity provides the Company with
the flexibility needed to respond to seasonal fluctuations in the demand for
electricity both within its service territory and from its wholesale customers.
PGE has long-term power contracts with four hydro projects on the mid-Columbia
River which provide PGE with 590 MW. Early forecasts indicate slightly below
average water conditions for 1998. Efforts to restore salmon runs on the
Columbia and Snake rivers may reduce the amount of water available for
generation which could affect the supply, availability and price of purchased
power. Additional factors that could affect the availability and price of
purchased power include weather conditions in the Northwest during winter
months and in the Southwest during summer months, as well as the performance of
major generating facilities in both regions.

During 1997 PGE generated approximately 40% of its retail load requirements,
with firm and secondary purchases meeting the remaining load. Purchases
were used to support PGE's wholesale sales activity. During 1997 PGE relied on
purchases to supply approximately 84% of its total energy needs. PGE expects
purchases will decline in 1998 due to the transfer of wholesale marketing
activities to non-regulated affiliates.

PGE has increasingly relied upon short-term purchases to meet its energy needs.
The Company anticipates that an active wholesale market and a surplus of
generating capacity within the WSCC should provide sufficient wholesale energy
available at competitive prices to supplement Company generation and purchases
under existing firm power contracts.

21
<PAGE>

RESTORATION OF SALMON RUNS - Several species of salmon found in the Snake River
and the Columbia River have been granted protection under the federal
Endangered Species Act (ESA). In an effort to help restore these fish, the
federal government has reduced the amount of water allowed to flow through the
turbines at the hydroelectric dams on the Snake and Columbia rivers while the
young salmon are migrating to the ocean. This has resulted in reduced amounts
of electricity generated at the dams. Favorable hydro conditions helped
mitigate the effect of these actions in 1996 and 1997. If this practice is
continued in future years it could mean less water available in the fall and
winter for generation when demand for electricity in the Pacific Northwest is
highest. Although PGE does not own any hydroelectric facilities on the
Columbia and Snake rivers, it does buy energy from both utilities and federal
agencies which do.

HYDRO RELICENSING
PGE HYDRO - PGE's hydroelectric plants are some of the Company's most valuable
resources supplying economical generation and flexible load following
capabilities. Company-owned hydro generation produced 2.9 million MWh of
renewable energy in 1997, meeting 6% of PGE's load. PGE's hydroelectric plants
operate under federal licenses, which will be up for renewal between the years
2001 and 2006. PGE continued the relicensing process for its 408-MW Pelton
Round Butte Project throughout 1997. The Confederated Tribes of Warm Springs,
currently the licensee for a powerhouse located at the reregulating dam (one of
three dams within the Pelton Round-Butte Project), also proceeded with their
competing relicensing process for the entire project. Several meetings with
federal and state agencies, as well as members of the public and non-
governmental organizations were conducted in 1997 in support of relicensing
PGE's four Westside hydroelectric projects, with license expiration dates in
2004 and 2006 and combined generating capacity of 230 MW. Should relicensing
not be completed prior to the expiration of the original license, annual
licenses will be issued, usually under the original terms and conditions.

The relicensing process includes the involvement of numerous interested parties
such as governmental agencies, public interest groups and communities, with
much of the focus on environmental concerns. PGE has already performed many
pre-filing activities including more than 50 public meetings with such groups.
The cost of relicensing includes legal and filing fees as well as the cost of
environmental studies, possible fish passage measures and wildlife habitat
enhancements. Relicensing cost may be a significant factor in determining
whether a project remains cost-effective after a new license is obtained,
especially for smaller projects. Although FERC has never denied an application
or issued a license to anyone other than the incumbent licensee, there is no
assurance that a new license will be granted to PGE.

MID-COLUMBIA HYDRO - PGE's long-term power purchase contracts with certain
public utility districts in the state of Washington expire between 2005 and
2018. Certain Idaho Electric Utility Co-operatives have initiated proceedings
with FERC seeking to change the allocation of generation from the Priest Rapids
and Wanapum dams between electric utilities in the region upon the expiration
of the current contracts. In early 1998 the FERC ruled that the portion of the
output from these dams to be made available to purchasers such as PGE be
reduced to 30%. FERC also ruled that such purchases be at market-based rather
than cost-based prices. This decision could substantially change PGE's share of
power from these facilities, as well as the price of such power. PGE, along
with other purchasers, has filed for a rehearing on this decision.

For further information regarding the power purchase contracts on the mid-
Columbia dams, including Priest Rapids and Wanapum, see Note 7, Commitments, in
the Notes to Financial Statements.

NUCLEAR DECOMMISSIONING
PGE currently estimates the cost to decommission Trojan at $339 million in
nominal dollars (actual dollars to be spent in each year). This estimate
assumes that the majority of decommissioning activities will be

22
<PAGE>

completed by 2002, after the spent fuel has been transferred to a temporary dry
spent fuel storage facility. The plan anticipates final site restoration
activities will begin in 2018 after PGE completes shipment of spent fuel to a
USDOE facility (see Note 11, Trojan Nuclear Plant, for further discussion of
the decommissioning plan and other Trojan issues).

Trojan's single-package reactor vessel removal concept and spent fuel storage
concept are first-of-a-kind designs requiring approval by federal and state
regulatory agencies. The precedent-setting nature of these designs has
prompted intense scrutiny and has resulted in schedule delays. Further,
financial concerns associated with the spent fuel facility vendor have resulted
in cost increases to the spent fuel project.

In 1998, PGE will focus on the licensing and construction of a temporary dry
spent fuel storage facility and preparation for the removal of the Trojan
reactor vessel. Equipment removal and disposal activities will also continue.
These efforts position PGE to safely dispose of all radiological hazards,
other than spent nuclear fuel, on the Trojan site and to initiate a final
radiation survey, thereby proving these hazards are no longer present. PGE
expects the final site survey to be completed by the end of 2002.

YEAR 2000
PGE utilizes software and related technologies that will be affected by the
date change in the year 2000. In 1997 PGE developed an inventory of date
sensitive software, equipment and embedded processors. PGE is currently
assessing the impact of the date change on these systems and is developing a
remediation plan. PGE expects to complete remediation activities by mid 1999.
PGE does not expect that Year 2000 remediation will have a material effect on
its operation, liquidity or capital resources.

In 1998, PGE will survey its major vendors and suppliers to assess their Year
2000 compliance.

INFORMATION REGARDING FORWARD LOOKING STATEMENTS
This Annual Report on Form 10-K includes forward looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Although PGE believes that its expectations
are based on reasonable assumptions, it can give no assurance that its goals
will be achieved. Important factors that could cause actual results to differ
materially from those in the forward looking statements herein include
political developments affecting federal and state regulatory agencies, the
pace of electric industry deregulation in Oregon and in the United States,
environmental regulations, changes in the cost of power, adverse weather
conditions, and the effects of the Year 2000 date change during the periods
covered by the forward looking statements.

23
<PAGE>

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING

The following financial statements of Portland General Electric Company and
subsidiaries (collectively, PGE) were prepared by management, which is
responsible for their integrity and objectivity. The statements have been
prepared in conformity with generally accepted accounting principles and
necessarily include some amounts that are based on the best estimates and
judgments of management.

The system of internal controls of PGE is designed to provide reasonable
assurance as to the reliability of financial statements and the protection of
assets from unauthorized acquisition, use or disposition. This system is
augmented by written policies and guidelines and the careful selection and
training of qualified personnel. It should be recognized, however, that there
are inherent limitations in the effectiveness of any system of internal
control. Accordingly, even an effective internal control system can provide
only reasonable assurance with respect to the preparation of reliable financial
statements and safeguarding of assets. Further, because of changes in
conditions, internal control system effectiveness may vary over time.

PGE assessed its internal control system for the years ended December 31, 1997,
1996 and 1995, relative to current standards of control criteria. Based upon
this assessment, management believes that its system of internal controls was
adequate during the periods to provide reasonable assurance as to the
reliability of financial statements and the protection of assets against
unauthorized acquisition, use or disposition.

Arthur Andersen LLP was engaged to audit the financial statements of PGE and
issue reports thereon. Their audits included developing an overall
understanding of PGE's accounting systems, procedures and internal controls and
conducting tests and other auditing procedures sufficient to support their
opinion on the financial statements. Arthur Andersen LLP was also engaged to
examine and report on management's assertion about the effectiveness of PGE's
system of internal controls over financial reporting and the protection of
assets against unauthorized acquisition, use or disposition. The Reports of
Independent Public Accountants appear in this Annual Report.

The adequacy of PGE's financial controls and the accounting principles employed
in financial reporting are under the general oversight of the Audit Committee
of Enron Corp.'s Board of Directors. No member of this committee is an officer
or employee of Enron or PGE. The independent public accountants have direct
access to the Audit Committee, and they meet with the committee from time to
time, with and without financial management present, to discuss accounting,
auditing and financial reporting matters.

24
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders of
Portland General Electric Company:

We have examined management's assertion that the system of internal control of
Portland General Electric Company and its subsidiaries for the year ended
December 31, 1997 was adequate to provide reasonable assurance as to the
reliability of financial statements and the protection of assets against
unauthorized acquisition, use or disposition, included in the accompanying
report on Management's Responsibility for Financial Reporting.

Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly, included
obtaining an understanding of the system of internal control over financial
reporting and the protection of assets against unauthorized acquisition, use or
disposition, testing and evaluating the design and operating effectiveness of
the system of internal control and such other procedures as we considered
necessary in the circumstances. We believe that our examination provides a
reasonable basis for our opinion.

Because of inherent limitations in any system of internal control, errors or
irregularities may occur and not be detected. Also, projections of any
evaluation of the system of internal control to future periods are subject to
the risk that the system of internal control may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

In our opinion, management's assertion that the system of internal control of
Portland General Electric Company and its subsidiaries for the year ended
December 31, 1997 was adequate to provide reasonable assurance as to the
reliability of financial statements and the protection of assets against
unauthorized acquisition, use or disposition is fairly stated, in all material
respects, based upon criteria established in "Internal Control-Integrated
Framework" issued by the Committee of Sponsoring Organizations of the Treadway
Commission.

Arthur Andersen LLP

Portland, Oregon
January 20 , 1998

25
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders of
Portland General Electric Company:

We have audited the accompanying consolidated balance sheets of Portland
General Electric Company and subsidiaries as of December 31, 1997 and 1996, and
the related consolidated statements of income, retained earnings and cash flows
for each of the three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Portland General Electric
Company and subsidiaries as of December 31, 1997 and 1996, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1997 in conformity with generally accepted accounting
principles.

Arthur Andersen LLP

Portland, Oregon,
January 20, 1998

26
<PAGE>

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31 1997 1996 1995
<S> <C> <C> <C>
(MILLIONS OF DOLLARS)
OPERATING REVENUES $ 1,416 $ 1,110 $ 982
OPERATING EXPENSES
Purchased power and fuel 675 308 285
Production and distribution 132 138 112
Administrative and other 107 104 100
Depreciation and amortization 155 162 140
Taxes other than income taxes 56 52 51
Income taxes 83 116 93
1,208 880 781
NET OPERATING INCOME 208 230 201
OTHER INCOME (DEDUCTIONS)
Regulatory disallowances - net of income taxes of $26 - - (50)

Miscellaneous (21) (3) 3
Income taxes 13 5 8
(8) 2 (39)
INTEREST CHARGES
Interest on long-term debt and other 69 67 62
Interest on short-term borrowings 5 9 7
74 76 69
NET INCOME 126 156 93
PREFERRED DIVIDEND REQUIREMENT 2 3 10
INCOME AVAILABLE FOR COMMON STOCK $ 124 $ 153 $ 83

PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31
1997 1996 1995
(MILLIONS OF DOLLARS)
BALANCE AT BEGINNING OF YEAR $ 292 $ 246 $ 216
NET INCOME 126 156 93
MISCELLANEOUS (2) (2) (4)
416 400 305
DIVIDENDS DECLARED
Common stock - cash 47 105 50
Common stock - property 97 - -
Preferred stock 2 3 9
146 108 59
BALANCE AT END OF YEAR $ 270 $ 292 $ 246
The accompanying notes are an integral part of these consolidated statements.
</TABLE>

27
<PAGE>

PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
AT DECEMBER 31 1997 1996
<S> <C> <C> <C>
(MILLIONS OF DOLLARS)
ASSETS
ELECTRIC UTILITY PLANT - ORIGINAL COST
Utility plant (includes Construction Work in Progress of
$27 and $37) $ 3,078 $ 2,937
Accumulated depreciation and amortization (1,260) (1,155)
1,818 1,782
OTHER PROPERTY AND INVESTMENTS
Contract termination receivable 104 112
Receivable from parent 106 -
Trojan decommissioning trust, at market value 84 78
Corporate Owned Life Insurance, less loans of $30 and $26 58 51
Miscellaneous 17 21
369 262
CURRENT ASSETS
Cash and cash equivalents 3 19
Accounts and notes receivable 125 145
Unbilled and accrued revenues 46 53
Inventories, at average cost 30 33
Prepayments and other 21 17
225 267
DEFERRED CHARGES
Unamortized regulatory assets 819 896
WNP-3 settlement exchange agreement - 163
Miscellaneous 25 28
844 1,087
$ 3,256 $ 3,398

CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common stock equity
Common stock, $3.75 par value per share, 100,000,000 shares authorized,
42,758,877 shares outstanding $ 160 $ 160
Other paid-in capital - net 480 475
Retained earnings 270 292
Cumulative preferred stock
Subject to mandatory redemption 30 30
Long-term obligations 1,008 933
1,948 1,890
CURRENT LIABILITIES
Long-term debt due within one year - 93
Short-term borrowings - 92
Accounts payable and other accruals 167 145
Accrued interest 11 14
Dividends payable 1 17
Accrued taxes 63 31
242 392
OTHER
Deferred income taxes 363 498
Deferred investment tax credits 43 47
Trojan decommissioning and transition costs 313 358
Unamortized regulatory liabilities 258 149
Miscellaneous 89 64
1,066 1,116
$ 3,256 $ 3,398
The accompanying notes are an integral part of
these consolidated balance sheets.
</TABLE>

28
<PAGE>

PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR THE YEARS ENDED DECEMBER 31 1997 1996 1995
(MILLIONS OF DOLLARS)
CASH FLOWS FROM OPERATING ACTIVITIES:
Reconciliation of net income to net cash provided by (used in)
operating activities
Net Income $ 126 $ 156 $ 93
Non-cash items included in net income:
Depreciation and amortization 127 119 102
Amortization of Trojan investment 39 38 38
Amortization of deferred charges (credits) (1) 11 3
Deferred income taxes - net (58) (9) 2
Regulatory disallowances - - 50
Other non-cash expenses 24 - -
Changes in working capital:
(Increase) Decrease in receivables 27 (32) (12)
(Increase) Decrease in inventories 3 5 (7)
Increase (Decrease) in payables and accrued taxes 51 38 13
Other working capital items - net (4) (1) 2
Other, net 25 44 1
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 359 369 285
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures & energy efficiency programs (180) (200) (234)
Trojan decommissioning expenditures (19) (8) (11)
Trojan decommissioning trust activity - (8) (3)
Other, net (9) (5) (9)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (208) (221) (257)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in short-term borrowings 8 (78) 22
Borrowings from Corporate Owned Life Insurance 5 - 5
Issuance of long-term debt - 171 147
Repayment of long-term debt (115) (98) (69)
Retirement of Preferred stock - (20) (80)
Dividends paid (65) (106) (60)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (167) (131) (35)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (16) 17 (7)
CASH AND CASH EQUIVALENTS, THE BEGINNING OF YEAR 19 2 9
CASH AND CASH EQUIVALENTS, END OF YEAR $ 3 $ 19 $ 2
Supplemental disclosures of cash flow information
Cash paid during the year:
Interest, net of amounts capitalized $ 71 $ 73 $ 64
Income taxes 96 108 94
The accompanying notes are an integral part of these
consolidated statements.
</TABLE>

29
<PAGE>

PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS

PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES NOTES TO FINANCIAL
STATEMENTS

NATURE OF OPERATIONS
On July 1, 1997 Portland General Corporation (PGC), the former parent of PGE,
merged with Enron Corp. (Enron) with Enron continuing in existence as the
surviving corporation. PGE is now a wholly owned subsidiary of Enron and
subject to control by the Board of Directors of Enron. PGE is engaged in the
generation, purchase, transmission, distribution, and sale of electricity in
the State of Oregon. PGE also sells energy to wholesale customers,
predominately utilities, marketers and brokers throughout the western United
States. PGE's Oregon service area is 3,170 square miles, including 54
incorporated cities, of which Portland and Salem are the largest, within a
state-approved service area allocation of 4,070 square miles. At the end of
1997, PGE's service area population was approximately 1.5 million, constituting
approximately 44% of the state's population and serving approximately 685,000
customers.

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION PRINCIPLES
The consolidated financial statements include the accounts of PGE and its
majority-owned subsidiaries. Intercompany balances and transactions have been
eliminated.

BASIS OF ACCOUNTING
PGE and its subsidiaries' financial statements conform to generally accepted
accounting principles. In addition, PGE's accounting policies are in
accordance with the requirements and the ratemaking practices of regulatory
authorities having jurisdiction. PGE's consolidated financial statements do
not reflect an allocation of the purchase price that was recorded by Enron as a
result of the PGC Merger.

USE OF ESTIMATES
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

RECLASSIFICATIONS
Certain amounts in prior years have been reclassified for comparative purposes.

REVENUES
PGE accrues estimated unbilled revenues for services provided from the meter
read date to month-end.

PURCHASED POWER
PGE credits purchased power costs for the benefits received through a power
purchase and sale contract with the BPA. Reductions in purchased power costs
that result from this exchange are passed directly to PGE's residential and
small farm customers in the form of lower prices. BPA terminated these
benefits in October 1997 resulting in no future purchased power credits and a
retail price increase of 11.9%.

DEPRECIATION
PGE's depreciation is computed on the straight-line method based on the
estimated average service lives of the various classes of plant in service.
Depreciation expense as a percent of the related average depreciable plant in
service was approximately 4.3% in 1997 and 1996, and 4.0% in 1995.

The cost of renewal and replacement of property units is charged to plant,
while repairs and maintenance costs are charged to expense as incurred. The
cost of utility property units retired, other than land, is charged to
accumulated depreciation.

PGE's capital leases are amortized over the life of the lease. As of December
31, 1997 and 1996 accumulated amortization for capital leases totaled $33 and
$31 million, respectively.

30
<PAGE>

ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION (AFDC)
AFDC represents the pretax cost of borrowed funds used for construction
purposes and a reasonable rate for equity funds. AFDC is capitalized as part
of the cost of plant and is credited to income but does not represent current
cash earnings. The average rates used by PGE were 5.5%, 5.5% and 7.2% for the
years 1997, 1996 and 1995, respectively.

INCOME TAXES
PGE's federal income taxes are a part of its parent company's consolidated
federal income tax return. PGE pays for its tax liabilities when it generates
taxable income and is reimbursed for its tax benefits by the parent company on
a stand-alone basis. Deferred income taxes are provided for temporary
differences between financial and income tax reporting. Amounts recorded for
Investment Tax Credits (ITC) have been deferred and are being amortized to
income over the approximate lives of the related properties, not to exceed
25 years. See Note 3, Income Taxes, for more details.

CASH AND CASH EQUIVALENTS
Highly liquid investments with original maturities of three months or less are
classified as cash equivalents.

DERIVATIVE FINANCIAL INSTRUMENTS
PGE uses financial instruments such as forwards and swaps to hedge against
exposures to interest rate risks. The objective of PGE's hedging program is to
mitigate risks due to market fluctuations associated with external financings.
Gains and losses on financial instruments that reduce interest rate risk of
future debt issuances are deferred and amortized over the life of the related
debt as an adjustment to interest expense.

REGULATORY ASSETS AND LIABILITIES
The Company is subject to the provisions of Statement of Financial Accounting
Standards No. 71, "Accounting for the Effects of Certain Types of Regulation"
(SFAS No. 71). When the requirements of SFAS No. 71 are met PGE defers certain
costs which would otherwise be charged to expense, if it is probable that
future prices will permit recovery of such costs. In addition PGE defers
certain revenues, gains or cost reductions which would otherwise be reflected
in income but through the ratemaking process ultimately will be refunded to
customers.

Regulatory assets and liabilities are reflected as deferred charges, and other
liabilities in the financial statements are amortized over the period in which
they are included in billings to customers.

Amounts in the Consolidated Balance Sheets as of December 31 relate to the
following:

<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
(millions of dollars)
Regulatory Assets
Trojan-related $488 $ 557
Income taxes recoverable 174 196
Debt reacquisition and other 47 51
Conservation investments - secured 72 80
Energy efficiency programs 19 12
Regional Power Act 19 -
Total Regulatory Assets $819 $ 896
Regulatory Liabilities
Deferred gain on SCE termination $103 $ 113
Merger payment obligation 103 -
Miscellaneous 52 36
Total Regulatory Liabilities $258 $ 149
</TABLE>

31
<PAGE>

As of December 31, 1997, a majority of the Company's regulatory assets and
liabilities are being reflected in rates charged to customers. Based on rates
in place at year-end 1997, the Company estimates that it will collect the
majority of its regulatory assets within the next 10 years and substantially
all of its regulatory assets within the next 20 years.

CONSERVATION INVESTMENTS - SECURED - In 1996, $81 million of PGE's energy
efficiency investment was designated as Bondable Conservation Investment upon
PGE's issuance of 10-year conservation bonds collateralized by an OPUC assured
future revenue stream. These bonds provide savings to customers while granting
PGE immediate recovery of its prior energy efficiency program expenditures.
Future revenues collected from customers will pay debt service obligations.

DEFERRED GAIN ON SCE TERMINATION - In 1996, PGE and SCE entered into a
termination agreement for the Power Sales Agreement between the two companies.
The agreement requires that SCE pay PGE $141 million over 6 years ($15 million
per year in 1997 through 1999 and $32 million per year in 2000 through 2002).

MERGER PAYMENT OBLIGATION - Pursuant to the Enron/PGC merger agreement PGE
customers are guaranteed $105 million in compensation and benefits, payable
over an eight-year period, in the form of reduced prices. These benefits are
being paid by Enron, received by PGE and passed on to PGE's retail customers.

TRANSACTIONS WITH RELATED PARTIES
As part of its ongoing operations, PGE also provides and receives incidental
services from Enron affiliated companies. Amounts paid and received are not
material.

32
<PAGE>

NOTE 2 - EMPLOYEE BENEFITS

PENSION PLAN
PGE participates in a non-contributory defined benefit pension plan (the
Plan) with other affiliated companies. Substantially all of the plan members
are current or former PGE employees. Benefits under the Plan are based on
years of service, final average pay and covered compensation. PGE's
policy is to contribute annually to the Plan at least the minimum
required under the Employee Retirement Income Security Act of 1974 but not
more than the maximum amount deductible for income tax purposes. The
Plan's assets are held in a trust and consist primarily of investments in
common stocks, corporate bonds and U.S. government issues.

PGE determines net periodic pension expense according to the principles of
SFAS No. 87, "Employers' Accounting for Pensions". Differences between the
actual and expected return on Plan assets are considered in the determination
of future pension expense. The following table sets forth the Plan's funded
status and amounts recognized in PGE's financial statements (millions of
dollars):

<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including
vested benefits of $187 and $171 $ 201 $ 184
Effect of projected future compensation levels 39 38
Projected benefit obligation (PBO) 240 222
Plan assets at fair value 375 315
Plan assets in excess of PBO 135 93
Unrecognized net experience gain (128) (90)
Unrecognized prior service costs amortized
over 13- to 16-year periods 11 12
Unrecognized net transition asset being
recognized over 18 years (14) (16)
Pension prepaid asset/(liability) $ 4 $ (1)
</TABLE>

<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
ASSUMPTIONS:
Discount rate used to calculate PBO 7.25% 7.50% 7.00%
Rate of increase in future compensation levels 5.25 5.50 5.00
Long-term rate of return on assets 9.00 8.50 8.50
</TABLE>
<TABLE>
<CAPTION>
COMPONENTS OF NET PERIODIC PENSION EXPENSE
(MILLIONS OF DOLLARS):
<S> <C> <C> <C>
Service cost $ 6 $ 7 $ 5
Interest cost on PBO 17 15 15
Actual return on plan assets (71) (38) (59)
Net amortization and deferral 43 15 37
Net periodic pension expense/(benefit) $ (5) $ (1) $ (2)
</TABLE>

OTHER POST-RETIREMENT BENEFIT PLANS
PGE accrues for health, medical and life insurance costs
during the employees' service years, in accordance with SFAS No. 106. PGE
receives recovery for the annual provision in customer rates. Employees are
covered under a Defined Dollar Medical Benefit Plan which limits PGE's
obligation by establishing a maximum contribution per employee. The
accumulated benefit obligation for post-retirement health and life
insurance benefits at December 31, 1997 was $27 million, for which there were
$32 million of assets held in trust.

33
<PAGE>

PGE also provides senior officers with additional benefits under an unfunded
Supplemental Executive Retirement Plan (SERP). Projected benefit obligations
for the SERP are $12 million and $10 million at December 31, 1997 and 1996,
respectively.

DEFERRED COMPENSATION
PGE provides certain employees with benefits under an unfunded Management
Deferred Compensation Plan (MDCP). Obligations for the MDCP were $26 million
and $21 million at December 31, 1997 and 1996, respectively.

EMPLOYEE STOCK OWNERSHIP PLAN
PGE participates in an Employee Stock Ownership Plan (ESOP) which is a part of
its 401(k) retirement savings plan. One-half of employee contributions up to
6% of base pay are matched by employer contributions in the form of ESOP common
stock. Shares of common stock to be used to match contributions by PGE
employees are purchased from Enron Corp. at current market prices.

34
<PAGE>

NOTE 3 - INCOME TAXES

The following table shows the detail of taxes on income and the items used in
computing the differences between the statutory federal income tax rate and
PGE's effective tax rate (millions of dollars):

<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Income Tax Expense
Currently payable
Federal $114 $ 98 $ 74
State & local 14 22 10
128 120 84
Deferred income taxes
Federal (45) (4) (11)
State & local (9) (1) (7)
(54) (5) (18)
Investment tax credit adjustments (4) (4) (6)
$ 70 $111 $ 60
Provision Allocated to:
Operations $ 83 $112 $ 90
Other income and deductions (13) (1) (30)
$ 70 $111 $ 60
Effective Tax Rate Computation:
Computed tax based on statutory
federal income tax rates applied
to income before income tax $ 69 $ 93 $ 53
Flow through depreciation 6 9 7
Regulatory disallowance - - 3
State and local taxes - net 13 12 6
State of Oregon refund (9) - (4)
Investment tax credits (4) (3) (5)
Excess deferred tax (1) (1) (1)
Other (4) 1 1
$ 70 $111 $ 60
Effective tax rate 35.7% 41.6% 39.2%
</TABLE>

As of December 31, 1997 and 1996, the significant components of PGE's deferred
income tax assets and liabilities were as follows (millions of dollars):

<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
DEFERRED TAX ASSETS
Plant-in-service $ 56 $ 64
Other 50 21
SCE termination payment 49 -
155 85
DEFERRED TAX LIABILITIES
Plant-in-service (402) (415)
Energy efficiency programs (32) (32)
Trojan abandonment (65) (69)
WNP-3 exchange contract - (59)
Other (19) (8)
(518) (583)
Total $(363) $(498)
</TABLE>

PGE has recorded deferred tax assets and liabilities for all temporary
differences between the financial statement bases and tax basis of assets and
liabilities.

35
<PAGE>

NOTE 4 - COMMON AND PREFERRED STOCK

COMMON AND PREFERRED STOCK

<TABLE>
<CAPTION>
COMMON STOCK CUMULATIVE PREFERRED Other
Number $3.75 Par Number $100 Par No-Par Paid-in Unearned
OF SHARES VALUE OF SHARES VALUE VALUE CAPITAL COMPENSATION*

(millions of dollars)
except share amounts)

<S> <C> <C> <C> <C> <C> <C> <C>
December 31, 1994 42,758,877 $ 160 1,297,040 $100 $30 $470 $(12)
Redemption of preferred stock (797,040) (80) - 3 -
Repayment of ESOP loan
and other - - - - - - 5

December 31, 1995 42,758,877 $ 160 500,000 $ 20 $30 $473 $ (7)
Redemption of preferred stock (200,000) (20) - 2 -
Repayment of ESOP loan
and other - - - - - 2 5

December 31, 1996 42,758,877 $ 160 300,000 - $30 $477 $ (2)
Repayment of ESOP loan
and other - - - - - 3 2

December 31, 1997 42,758,877 $ 160 300,000 $ - $30 $480 $ -

</TABLE>

CUMULATIVE PREFERRED STOCK
The 7.75% series preferred stock has an annual sinking fund requirement which
requires the redemption of 15,000 shares at $100 per share beginning in 2002.
At its option, PGE may redeem, through the sinking fund, an additional 15,000
shares each year. All remaining shares shall be mandatorily redeemed by sinking
fund in 2007. This series is only redeemable by operation of the sinking fund.

<TABLE>
<CAPTION>
PGE's cumulative preferred stock consisted
of:

At December 31, 1997 1996
(millions of dollars)
<S> <C> <C>
Subject to mandatory redemption
No par value 30,000,000 shares authorized
7.75% Series 300,000 shares outstanding $30 $30
</TABLE>

No dividends may be paid on common stock or any class of stock over which the
preferred stock has priority unless all amounts required to be paid for
dividends and sinking fund payments have been paid or set aside, respectively.

COMMON DIVIDEND RESTRICTION OF SUBSIDIARY
Enron Corp. is the sole shareholder of PGE common stock. PGE is restricted
from paying dividends or making other distributions to Enron Corp. without
prior OPUC approval to the extent such payment or distribution would reduce
PGE's common stock equity capital below 48% of its total capitalization.

36
<PAGE>

NOTE 5 - CREDIT FACILITIES AND DEBT

At December 31, 1997, PGE had total committed lines of credit of $200 million
expiring in July 2000. These lines of credit have an annual fee of 0.10% and do
not require compensating cash balances. These lines of credit are used
primarily as backup for both commercial paper and borrowings from commercial
banks under uncommitted lines of credit. At December 31, 1997, there were no
outstanding borrowings under the committed lines of credit.

PGE has a $200 million commercial paper facility. Unused committed lines of
credit must be at least equal to the amount of PGE's commercial paper
outstanding. Commercial paper and lines of credit borrowings are at rates
reflecting current market conditions.

PGE sells commercial paper to provide financing for various corporate purposes.
As of December 31, 1997, commercial paper borrowings of $100 million have been
classified as long-term debt based upon the availability of committed credit
facilities with expiration dates exceeding one year and management's intent to
maintain such amounts in excess of one year. Similarly, at December 31, 1997,
$71 million of long-term debt due within one year is classified as long-term.

Short-term borrowings and related interest rates were as follows:

<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
AS OF YEAR-END: (millions of dollars)
Aggregate short-term debt outstanding
Commercial paper $100 $ 83 $170
Bank loans - 9 -
Weighted average interest rate*
Commercial paper 6.0% 5.6% 6.1%
Bank loans - 7.3 -
Committed lines of credit $200 $200 $200

FOR THE YEAR ENDED:
Average daily amounts of short-term
debt outstanding
Commercial paper $ 89 $158 $111
Bank loans - 5 -
Weighted daily average interest rate*
Commercial paper 5.6% 5.6% 6.3%
Bank loans - 5.7 -
Maximum amount outstanding
during the year $115 $251 $170
</TABLE>

* Interest rates exclude the effect of commitment fees, facility
fees and other financing fees.

37
<PAGE>

The Indenture securing PGE's First Mortgage Bonds constitutes a direct first
mortgage lien on substantially all utility property and franchises, other than
expressly excepted property.

<TABLE>
<CAPTION>
<S> <C> <C>
Schedule of long-term debt at December 31 1997 1996
(millions of dollars)
First Mortgage Bonds
Maturing 1997 through 2002
6.60% Series due October 1, 1997 $ - $ 15
Medium-term notes 5.65% - 8.88% 241 295
Maturing 2003 - 2007 6.47% - 9.07% 153 168
Maturing 2021 - 2023 7.75% - 9.46% 170 195
564 673
Pollution Control Bonds
Port of Morrow, Oregon, variable rate
(Average 3.7% - 3.8% for 1997), due 2013 & 29 29
2031
City of Forsyth, Montana, variable rate
(Average variable rates 3.6%- 3.7% for 119 119
1997), due 2013-2016
Amount held by trustee (8) (8)
Port of St. Helens, Oregon, variable rate due 2010
and 2014 (Average variable rates 3.6% - 3.7% 52 52
for 1997
192 192
Other
8.25% Junior Subordinated Deferrable Interest Debentures,
due December 31, 2035 75 75
6.91% Conservation Bonds maturing monthly to 2006 73 80
Capital lease obligations 4 7
Amount reclassified from short-term debt 100 -
Other - (1)
252 161
1,008 1,026
Long-term debt due within one year - (93)
Total long-term debt $1,008 $ 933
</TABLE>

The following principal amounts of long-term debt become due
through regular maturities (millions of dollars):

<TABLE>
<CAPTION>
1998 1999 2000 2001 2002
<S> <C> <C> <C> <C> <C>
Maturities:
PGE $71 $102 $32 $53 $23
</TABLE>

38
<PAGE>

NOTE 6 - OTHER FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the
fair value of each class of financial instruments for which it is
practical to estimate that value.

CASH AND CASH EQUIVALENTS - The carrying amount of cash and cash
equivalents approximates fair value because of the short maturity
of those instruments.

OTHER INVESTMENTS - Other investments approximate market value.

REDEEMABLE PREFERRED STOCK - The fair value of redeemable
preferred stock is based on quoted market prices.

LONG-TERM DEBT - The fair value of long-term debt is estimated
based on the quoted market prices for the same or similar issues
or on the current rates offered to PGE for debt of similar
remaining maturities.

The estimated fair values of debt and equity instruments are as
follows (millions of dollars):

1997 1996

Carrying Fair Carrying Fair
Amount Value Amount Value
<S> <C> <C> <C> <C>
Preferred stock subject to
mandatory redemption $ 30 $ 34 $ 30 $ 31

Long-term debt $831 $861 $940 $960

</TABLE>

INTEREST RATE SWAPS - In August 1996 PGE entered into a 3-year
interest rate swap agreement with a notional amount of $50
million. This puts PGE in a floating rate position on the
additional $50 million of long-term debt issued in August 1996.
In December 1997 PGE canceled this agreement. The amount
received at cancellation was not material.

NOTE 7 - COMMITMENTS

NATURAL GAS AGREEMENTS
PGE has long-term agreements for transmission of natural gas from
domestic and Canadian sources to natural gas-fired generating
facilities. The agreements provide firm pipeline capacity.
Under the terms of these agreements, PGE is committed to paying
capacity charges of approximately $16 million annually in 1998
through 2002 and $137 million over the remaining years of the
contracts. These contracts expire at varying dates from 2001 to
2015. PGE has the right to assign unused capacity to other
parties.

PURCHASE COMMITMENTS
Purchase commitments outstanding, which include construction,
coal, and railroad service agreements, totaled approximately $28 million
at December 31, 1997. Cancellation of these purchase agreements
could result in cancellation charges.

39
<PAGE>

PURCHASED POWER
PGE has long-term power purchase contracts with certain public
utility districts in the state of Washington and with the City of
Portland, Oregon. PGE is required to pay its proportionate share
of the operating and debt service costs of the hydro projects
whether or not they are operable.

Selected information is summarized as follows (millions of
dollars):

<TABLE>
<CAPTION>
ROCKY PRIEST PORTLAND
REACH RAPIDS WANAPUM WELLS HYDRO
<S> <C> <C> <C> <C> <C>
Revenue bonds outstanding at
December 31, 1997 $ 235 $ 174 $ 207 $ 178 $ 36
PGE's current share of:
Output 12.0% 13.9% 18.7% 20.4% 100%
Net capability (megawatts) 154 128 194 171 36
Annual cost, including debt service:
1997 $ 7 $ 3 $ 4 $ 6 $ 4
1996 5 4 5 6 4
1995 5 4 5 6 4
Contract expiration date 2011 2005 2009 2018 2017
</TABLE>

PGE's share of debt service costs, excluding interest, will be
approximately $5 million for 1998, $6 million for 1999 and 2000,
and $7 million for 2001 and 2002. The minimum payments through
the remainder of the contracts are estimated to total
$84 million.

PGE has entered into long-term contracts to purchase power from
other utilities in the West. These contracts will require fixed
payments of up to $23 million in 1998 through 1999, $20 million
in 2000, and $19 million in 2001 through 2002. After that date,
capacity contract charges will average $19 million annually until
2016.

LEASES
PGE has operating and capital leasing arrangements for its
headquarters complex, combustion turbines and the coal-handling
facilities and certain railroad cars for Boardman. PGE's
aggregate rental payments charged to expense amounted to $24
million for 1997, and $22 million for 1996 and 1995. PGE has
capitalized its combustion turbine leases. However, these leases
are considered operating leases for ratemaking purposes.
Future minimum lease payments under non-cancelable leases are as
follows (millions of dollars):

<TABLE>
<CAPTION>
YEAR ENDING OPERATING LEASES
DECEMBER 31 CAPITAL LEASES (NET OF SUBLEASE RENTALS) TOTAL
<S> <C> <C> <C>
1998 $ 3 $ 22 $ 25
1999 1 23 24
2000 - 23 23
2001 - 23 23
2002 - 11 11
Remainder - 174 174
Total 4 $276 $280
Imputed Interest -
Present Value of
Minimum Future
Net Lease Payments $ 4
</TABLE>

Included in the future minimum operating lease payments schedule above
is approximately $119 million for PGE's headquarters complex.

40
<PAGE>

NOTE 8 - WNP-3 SETTLEMENT EXCHANGE AGREEMENT

During 1997 PGE transferred its rights and certain obligations under the
WNP-3 Settlement Exchange Agreement (WSA) and the long-term power sale
agreement with the Western Area Power Administration (WAPA). The
transfer of PGE's net investment in these contracts to Enron Corp.,
PGE's parent and sole common stockholder transaction was executed in the
form of a special non-cash dividend.

NOTE 9 - JOINTLY OWNED PLANT

At December 31, 1997, PGE had the following investments in jointly owned
generating plants (millions of dollars):

<TABLE>
<CAPTION>
MW PGE % PLANT ACCUMULATED
FACILITY LOCATION FUEL CAPACITY INTEREST IN SERVICE DEPRECIATION
<S> <C> <C> <C> <C> <C> <C>
Boardman Boardman, OR Coal 508 65.0 $376 $197
Colstrip 3&4 Colstrip, MT Coal 1,440 20.0 453 220
Centralia Centralia, WA Coal 1,310 2.5 10 6
</TABLE>

The dollar amounts in the table above represent PGE's share of each
jointly owned plant. Each participant in the above generating plants
has provided its own financing. PGE's share of the direct expenses of
these plants is included in the corresponding operating expenses on
PGE's consolidated income statements.

NOTE 10 - LEGAL MATTERS

TROJAN INVESTMENT RECOVERY - In April 1996 a circuit court judge in
Marion County, Oregon found that the OPUC could not authorize PGE to
collect a return on its undepreciated investment in Trojan, contradicting
a November 1994 ruling from the same court. The ruling was the result
of an appeal of PGE's 1995 general rate order which granted PGE recovery
of, and a return on, 87 percent of its remaining investment in Trojan.

The 1994 ruling was appealed to the Oregon Court of Appeals and stayed
pending the appeal of the Commission's March 1995 order. Both PGE and
the OPUC have separately appealed the April 1996 ruling which was
combined with the appeal of the November 1994 ruling at the Oregon Court
of Appeals.

Management believes that the authorized recovery of and return on the
Trojan investment and decommissioning costs will be upheld and that
these legal challenges will not have a material adverse impact on the
results of operations or financial condition of the Company for any
future reporting period.

OTHER LEGAL MATTERS - PGE and certain of its subsidiaries are party to
various other claims, legal actions and complaints arising in the
ordinary course of business. These claims are not considered material.

NOTE 11 - TROJAN NUCLEAR PLANT

PLANT SHUTDOWN AND TRANSITION COSTS - PGE is a 67.5% owner of Trojan.
In early 1993, PGE ceased commercial operation of the nuclear plant.
Since plant closure, PGE has committed itself to a safe and economical
transition toward a decommissioned plant. Remaining transition costs
associated with operating and maintaining the spent fuel pool and
securing the plant until fuel is transferred to dry storage in 1999 are
estimated at $17 million and will be paid from current operating funds.

41
<PAGE>

DECOMMISSIONING - In December 1997, PGE filed an updated decommissioning
plan estimate with the OPUC. The plan estimates PGE's cost to
decommission Trojan at $339 million, reflected in nominal dollars
(actual dollars expected to be spent in each year). The primary reason
for the reduction in decommissioning estimate is a lower inflation rate,
coupled with accelerating certain decommissioning activities and
partially offset by cost increases related to the spent fuel storage
project. The current estimate assumes that the majority of
decommissioning activities will occur between 1998 and 2002, while fuel
management costs extend through the year 2018. The original plan
represents a site-specific decommissioning estimate performed for Trojan
by an engineering firm experienced in estimating the cost of
decommissioning nuclear plants. Updates to plan's original estimate have
been prepared by PGE. Final site restoration activities are anticipated
to begin in 2018 after PGE completes shipment of spent fuel to a USDOE
facility (see the Nuclear Fuel Disposal discussion below). Stated in
1997 dollars, the decommissioning cost estimate is $286 million.

TROJAN DECOMMISSIONING LIABILITY
(millions of dollars)

Estimate - 12/31/94 $351
Upates files with NRC - 11/16/95 7
Updates filed with OPUC - 12/01/97 (19)
339
Expenditures through 12/31/97 (43)
Liability - 12/31/97 $296

Decommissioning $296
Transition costs 17
Total Trojan obligation $313

PGE is collecting $14 million annually through 2011 from customers for
decommissioning costs. These amounts are deposited in an external trust
fund which is limited to reimbursing PGE for activities covered in
Trojan's decommissioning plan. Funds were withdrawn during 1997 to
cover the costs of planning and licensing activities in support of the
independent spent fuel storage installation and the reactor vessel and
internals removal project. Decommissioning funds are invested primarily
in investment-grade, tax-exempt and U.S. Treasury bonds. Year-end
balances are valued at market.

Earnings on the trust fund are used to reduce the amount of
decommissioning costs to be collected from customers. PGE expects any
future changes in estimated decommissioning costs to be incorporated in
future revenues to be collected from customers.

INVESTMENT RECOVERY - The OPUC issued an order in March 1995 authorizing
PGE to recover all of the estimated costs of decommissioning Trojan and
87% of the remaining investment in the plant. Amounts are to be
collected over Trojan's original license period ending in 2011. The
OPUC's order and the agency's authority to grant recovery of the
Trojan investment under Oregon law are being challenged in state courts.
Management believes that the authorized recovery of the Trojan investment
and decommissioning costs will be upheld and that these legal challenges
will not have a material adverse impact on the results of operations or
financial condition of the Company for any future reporting period.

DECOMMISSIONING TRUST ACTIVITY
(millions of dollars)
1997 1996
Beginning Balance $78 $69
ACTIVITY
Contributions 14 15
Gain 6 2
Disbursements (14) (8)

Ending Balance $84 $78

NUCLEAR FUEL DISPOSAL AND CLEANUP OF FEDERAL PLANTS - PGE contracted
with the USDOE for permanent disposal of its spent nuclear fuel in
federal facilities at a cost of .1<cent> per net kilowatt-hour sold at
Trojan which the Company paid during the period the plant operated.
Significant delays are expected in the USDOE acceptance schedule of
spent fuel from domestic utilities. The federal repository, which was
originally scheduled to begin operations in 1998, is now estimated to
commence operations no earlier than 2010. This may create difficulties
for PGE in disposing of its high-level radioactive waste by 2018.
However, federal legislation has been introduced which, if passed, would
require USDOE to provide interim storage for high-level waste until a
permanent site is established. PGE intends to build an interim storage
facility at Trojan to house the nuclear fuel until a federal site is
available.

42
<PAGE>

The Energy Policy Act of 1992 provided for the creation of a
Decontamination and Decommissioning Fund to finance the cleanup of USDOE
gas diffusion plants. Funding comes from domestic nuclear utilities and
the federal government. Each utility contributes based on the ratio of
the amount of enrichment services the utility purchased to the total
amount of enrichment services purchased by all domestic utilities prior
to the enactment of the legislation. Based on Trojan's 1.1% usage of
total industry enrichment services, PGE's portion of the funding
requirement is approximately $17 million. Amounts are funded over 15
years beginning with the USDOE's fiscal year 1993. Since enactment, PGE
has made the first six of the 15 annual payments with the first payment
made in September 1993.

NUCLEAR INSURANCE - The Price-Anderson Amendment of 1988 limits public
liability claims that could arise from a nuclear incident and provides
for loss sharing among all owners of nuclear reactor licenses. Because
Trojan has been permanently defueled, the NRC has exempted PGE from
participation in the secondary financial protection pool covering losses
in excess of $200 million at other nuclear plants. In addition, the NRC
has reduced the required primary nuclear insurance coverage for Trojan
from $200 million to $100 million following a 3 year cool-down period of
the nuclear fuel that is still on-site. The NRC has allowed PGE to
self-insure for on-site decontamination. PGE continues to carry non-
contamination property insurance on the Trojan plant at the $155 million
level.

43
<PAGE>

QUARTERLY COMPARISON FOR 1997 AND 1996 (UNAUDITED)

MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
(MILLIONS OF DOLLARS)
1997
Operating revenues $368 $308 $391 $349
Net operating income 65 46 46 51
Net income 48 28 15 35
Income available for
common stock 47 28 14 35

1996
Operating revenues $300 $233 $260 $317
Net operating income 68 52 47 63
Net income 50 35 28 43
Income/(loss) available for
common stock 49 34 27 43

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

None.

44
<PAGE>

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS OF THE REGISTRANT (*)

JAMES V. DERRICK, JR., age 53
Director since 1997
Mr. Derrick has served as Senior Vice President and General Counsel of Enron
Corp. since June 1991. Prior to joining Enron Corp. In 1991, Mr. Derrick was
a partner at the law firm of Vinson & Elkins L.L.P. for more than 13 years.

KEN L. HARRISON, age 55
Director since 1987
Mr. Harrison serves as a Director and Vice Chairman of Enron Corp. and has
served as Chairman of the Board and Chief Executive Officer of Portland
General Electric Company since 1987.

JOSEPH M. HIRKO, age 41
Director since 1997.
Mr. Hirko serves as Senior Vice President of Enron Corp. and Portland
General Electric Company. Mr. Hirko also serves as President and Chief
Executive Officer of First Point Communications. From 1991 to 1998 he served
as Vice President-Finance, Chief Financial Officer, Chief Accounting Officer
and Treasurer of Portland General Electric Company.

KENNETH L. LAY, age 55
Director since 1997
For over five years, Mr. Lay has been Chairman of the Board and Chief
Executive Officer of Enron Corp. Mr. Lay is also a Director of Eli Lilly
and
Company, Compaq Computer Corporation, Enron Oil & Gas Company, EOTT Energy
Corp. (the general
partner of EOTT Energy Partners, L.P.) and Trust Company of the West.

JEFFREY K. SKILLING, age 44
Director since 1997
Since January 1, 1997, Mr Skilling has served as President and Chief
Operating Officer of Enron Corp. From June 1995 until December 1996 he
served as Chief Executive Officer and Managing Director of Enron Capital &
Trade Resources Corp ("ECT"). From August 1990 until June 1995, Mr. Skilling
served ECT in a variety of managerial positions.

(*)Directors of PGE hold office until the next annual meeting of shareholders
or until their respective successors are duly elected and qualified.

45
<PAGE>

EXECUTIVE OFFICERS OF THE REGISTRANT (*)

NAME AGE BUSINESS EXPERIENCE
<S> <C> <C>

Ken L. Harrison 55 Appointed to current position of Chairman of the Board and Chief Executive Officer on
Chairman of the Board, Chief December 1, 1988.
Executive Officer, PGE

Alvin Alexanderson 50 Appointed to current position on December 12, 1995. Served as Vice President, Rates and
Senior Vice President Regulatory Affairs from February 1991 until appointed to current position.
General Counsel and Secretary

Arleen Barnett 45 Appointed to current position on February 23, 1998. Served as Manager, Human Resources
Vice President from 1989 until appointed to current position.
Human Resources

David K. Carboneau 51 Appointed to current position in October 1989. Served as Vice President, Utility Service
Vice President and Telecommunications from January 1997 until July 1997. Served as Vice President,
Information Technology from January 1996 until January 1997. Served as Vice President,
Thermal and Power Operations from September 1995 to January 1996. Served as Vice
President, PGE Administration from October 1992 to September 1995.

Steven N. Elliott 37 Appointed to current position on February 23, 1998. Served as Vice President, Finance and
Vice President Treasurer from July 1997 until appointed to current position. Served as Manager, Corporate
Chief Financial Officer and Finance and Assistant Treasurer from April 1992 until July 1997.
Treasurer

Joseph E. Feltz 43 Appointed to current position on July 1, 1997. Previously served as Assistnat Controller
Controller and and Assistant Treasurer for over five years.
Chief Accounting Officer

Peggy Y. Fowler 46 Appointed to current position on July 1, 1997. Served as Executive Vice President
President and Chief Operating Officer, PGE from November 1996 until appointed to current position.
Chief Operating Officer Served as Senior Vice President, Energy Services from September 1995 until November 1996.
Distribution Operations Served as Vice President, Distribution and Power Production from January 1990 to
September 1995.

Stephen R. Hawke 48 Appointed to current position on July 1, 1997. Served as General Manager, System
Vice President Planning and Engineering until appointed to current position. Served as Manager,
Delivery System Planning & Response and Restoration from May 1993 until May 1995. Served as Manager, Western
Engineering Region from August 1990 until May 1993.

Joseph M. Hirko 41 Appointed to current position on September 12, 1995. Served as Vice President-Finance
Senior Vice President from December 1991 until July 1997. Served as Chief Financial Officer from December
1991 until February 1998. Served as Chief Accounting Officer from December 1991 until
July 1997. Served as Treasurer from June 1989 to July 1997.

Joe A. McArthur 50 Appointed to current position on July 1, 1997. Served as Manager of Western Region
Vice President from May 1996 until appointed to current position. Served as Manager, System
Substation and Line Operations Planning from May 1995 to May 1996. Served as Commercial and Industrial Market
Manager from 1993 to 1995. Served as Substation Maintenance and Metering Manager from
1980 to 1993.

James J. Piro 45 Appointed to current position on February 23, 1998. Served as General Manager, Planning Vice
President Support and Analysis from November 1992 until appointed to current position.

</TABLE>
46
<PAGE>

EXECUTIVE OFFICERS OF THE REGISTRANT (*) - CONT'D.

NAME AGE BUSINESS EXPERIENCE

Frederick D. Miller 55 Appointed to current position on July 1, 1997. Served as Senior Vice President, Public Senior
Vice President Affairs and Corporate Services from November 1996 until appointed to current position. Served
Public Policy and as Director of Executive Department, State of Oregon, from 1987 until appointed to Vice
Administrative President, Public Affairs and Corporate Services in October 1992.
Services and Distribution
System Services

Walter E. Pollock 55 Appointed to current position on July 1, 1997. Served as Vice President, Enron
Senior Vice President Capital and Trade and Senior Vice President, First Point Utility Solutions from
Power Supply November 1996 until appointed to current position. Served as Group Vice President,
Marketing Conservation and Production at Bonneville Power Administration (BPA)
from April 1994 to November 1996. Served as Assistant Administrator at BPA, Office
of Power Sales from January 1988 until March 1994.

Christopher D. Ryder 48 Appointed to current position on July 1, 1997. Served as General Manager, Customer
Vice President Services and Southern Region Operations from 1996 until appointed to current
Customer and Line Operations position. Served as General Manager, Customer Services and Marketing from 1992 to 1996.

</TABLE>
(*) Officers are listed as of February 28, 1998. The officers are elected to
serve for a term of one year or until their successors are elected and
qualified.

47
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth the total compensation earned for each year
ended December 31, 1997, 1996, 1995 by the Chief Executive Officer and the
four most highly compensated executive officers of PGE.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation All Other

Salary ($) Bonus ($) Restricted Stock Compensation
Name and Principal Position Year (1) (1) Awards ($) (2) ($) (3)
<S> <C> <C> <C> <C> <C>

Ken L. Harrison (4) 1997 $243,570 $236,592 $204,755 $68,051
Chairman of the Board, 1996 399,510 252,193 251,410 40,480
Chief Executive Officer 1995 417,113 325,439 305,250 59,646

Peggy Fowler 1997 230,000 160,000 230,185 29,406
President, Distribution Operations 1996 202,504 106,379 150,500 24,045
Chief Operating Officer 1995 165,213 78,836 111,000 18,185

Richard E. Dyer (5) 1997 219,306 165,250 215,060 27,209
Senior Vice President, 1996 209,196 111,002 150,500 23,428
Power Supply 1995 198,297 104,655 111,000 11,979

Frederick D. Miller 1997 175,020 105,000 - 48,906
Senior Vice President, Public 1996 161,259 73,811 75,250 36,400
Policy, Administrative 1995 137,634 62,341 55,500 32,517
Services and Distribution
System Services

Joseph M. Hirko (4) (6) 1997 89,835 158,270 125,038 22,885
Senior Vice President 1996 103,934 95,509 114,277 18,477
1995 204,646 100,296 138,750 18,540
</TABLE>

(1) Amounts shown include cash compensation earned and
received by the executive officer, as well as amounts
earned but deferred at the election of the officer.

(2) Restricted stock awards are valued at the closing
price of $41.4375 per share of Enron Corp. common
stock for the July 1, 1997 grant, which will vest 20%
on July 1, 1998 and 20% on each of the following four
anniversaries of the date of grant. Dividend
equivalents for the July 1, 1997 grant accrue from the
date of grant and are paid upon vesting. Restricted
stock awards are valued at the closing price of
$37.625 per share of PGC common stock for the
September 10, 1996 grant. The September 10, 1996
grant converted to Enron shares on the effective date
of the Merger. Dividends on this grant are paid as
declared. Restricted stock awards are valued at
$27.75 per share of PGC common stock for the November
6, 1995 grant. This grant vested November 1996 upon
PGC shareholder approval for the original Merger
Agreement. Aggregate restricted stock holdings listed
below are valued at $41.5625 per share, the closing
price of the Enron Corp. common stock on December 31,
1997.

Aggregate Restricted Stock Holdings

AGGREGATE SHARES (#) VALUE ($)
Ken L. Harrison 23,477 $975,763
Peggy Fowler 9,485 394,220
Richard E. Dyer 9,120 379,050
Frederick D. Miller 1,965 81,670
Joseph M. Hirko 10,947 454,985

48
<PAGE>

(3) Other compensation includes: (i) company-paid split dollar insurance
premiums; (ii) the dollar value of life insurance benefits as
determined under the Commission's methodology for valuing such
benefits; (iii) company contributions to the RSP and the MDCP; and
(iv) earnings on amounts in the MDCP which are greater than 120
percent of the federal long-term rate which was in effect at the time
the rate was set. The following table lists the amount for 1997:

Dollar Value of
Split Dollar Life Insurance Contributions to Above Market
Insurance Premium 401 (k) and MDCP Interest on MDCP
Total
<S> <C> <C> <C> <C> <C>
Ken L. Harrison $ 968 $ 2,038 $11,615 $53,430 $68,051

Peggy Fowler 705 8,833 13,800 6,068 29,406

Richard E. Dyer 1,290 9,862 10,886 5,171 27,209

Frederick D. Miller 925 21,031 13,700 13,250 48,906

Joseph M. Hirko 321 2,833 8,963 10,768 22,885

</TABLE>

(4) Mr. Harrison and Mr. Hirko also serve as executive officers of Enron
Corp. The compensation shown represents the amount allocated to PGE.

(5) Richard E. Dyer retired from Portland General Electric Company as of
February 1, 1998.

(6) Joseph M. Hirko resigned his position as Chief Financial Officer of Portland
General Electric Company as of February 23, 1998.

49
<PAGE>

The following table lists information concerning the stock options to purchase
shares of Enron Corp. common stock that were granted to PGE's five highest paid
officers during 1997. No stock appreciation rights were granted during 1997.

Options/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>

Number of % of Total
Securities Options/ Potential Realized Value at
Underlying SARs Granted Assumed Annual Rates of Stock
Options/ to Employees in Exercise or Price Appreciation for Option
SARs{(1)} Fiscal Year Base Price Expiration Term

NAME GRANTED FISCAL YEAR ($/SH) DATE 5% 10%
<S> <C> <C> <C> <C> <C> <C>

Ken L. Harrison 120,000{(2)} 0.71% $41.4375 07/01/07 $3,127,178 $7,924,884
33,335{(5)} 0.20% 41.5625 12/31/04 564,032 1,314,434
7,430{(6)} 0.04% 41.5625 12/31/07 194,209 492,163

Peggy Y. Fowler 30,000{(2)} 0.18% $41.4375 07/01/07 $ 781,795 $1,981,221
10,260{(5)} 0.06% 41.5625 12/31/04 173,600 404,563
3,255{(6)} 0.02% 41.5625 12/31/07 85,081 215,611

Joseph M. Hirko 50,000{(2)} 0.30% $41.4375 07/01/07 $1,302,991 $3,302,035
25,000{(3)} 0.15% 38.8750 10/13/07 611,207 1,548,919
4,525{(4)} 0.03% 39.8750 12/08/07 113,474 287,566
12,825{(5)} 0.08% 41.5625 12/31/04 217,000 505,703
3,680{(6)} 0.02% 41.5625 12/31/07 96,190 243,763

Richard E. Dyer 30,000{(2)} 0.18% $41.4375 07/01/07 $ 781,795 $1,981,221
3,045{(6)} 0.02% 41,5625 12/31/07 79,591 201,701

Frederick D. Miller 25,000{(2)} 0.15% $41.4375 07/01/07 $ 651,496 $1,651,018
3,850{(5)} 0.02% 41.5625 12/31/04 65,142 151,809
2,480{(6)} 0.01% 41.5625 12/31/07 64,823 164,275

</TABLE>

(1)If a "Change of Control" (as defined in the Enron Corp. 1991 Stock Plan) were
to occur before the options became exercisable and are exercised, the
vesting described below will be accelerated and all such outstanding options
shall be surrendered and the optionee shall receive a cash payment by Enron
in an amount equal to the value of the surrendered options (as defined in
the 1991 Stock Plan).
(2)Represents stock options awarded on July 1, 1997, which vested 20% at grant
and 20% each anniversary date thereafter.
(3)Represents stock options awarded on October 13, 1997, which cliff vest 100%
on the 4th anniversary date of the grant.
(4)Represents stock options awarded on December 8, 1997, which cliff vest 100%
on the 4th anniversary date of the grant.
(5)Represents stock options awarded under the Long-Term Incentive Program for
1998. Stock options awarded on December 31, 1997 became 20% vested on the
date of grant with an additional 20% vested on the anniversary of the date
of grant until 100% vested December 31, 2001.
(6)Represents shares issued on December 31, 1997, as a new employee under the
All Employee Stock Option Program.

50
<PAGE>

The following table lists information concerning the options to purchase shares
of Enron Corp. common stock that were exercised by the officers named above
during 1997 and the total options and their value held by each at year-end
1997.

Aggregate Stock Options/SAR
Exercised During 1997
and Stock Options/SAR Values
at December 31, 1997
<TABLE>
<CAPTION>

Number of Securities Underlying
Unexercised Options/SAR Value of Unexercised In-the-Money
AT DECEMBER 31, 1997 Options/SARs
AT DECEMBER 31, 1997
Shares

Acquired Value Un-EXERCISABLE Un-EXERCISABLE
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE EXERCISABLE

<S> <C> <C> <C> <C> <C> <C>
Ken L. Harrison 20,000 $449,390 128,567 130,098 $2,502,583 $ 12,000
Peggy Y. Fowler - - 9,552 33,963 938 2,813
Joseph M. Hirko - - 42,040 83,465 763,806 79,823
Richard E. Dyer - - 7,500 25,545 937 2,812
Frederick D. Miller - - 7,020 24,310 781 2,344
</TABLE>

Estimated annual retirement benefits payable upon normal retirement at age 65
for the named executive officers are shown in the table below. Amounts in the
table reflect payments from the Portland General
Holdings, Inc. Pension Plan and Supplemental Executive Retirement Plan ("SERP")
combined.

<TABLE>
<CAPTION>
Pension Plan Table
Estimated Annual Retirement Benefit
Straight-Life Annuity, Age 65

Years of Service
Final Average
EARNINGS OF: 15 20 25
<S> <C> <C> <C>

175,000 78,750 91,875 105,000
200,000 90,000 105,000 120,000
225,000 101,250 118,125 135,000
250,000 112,500 131,250 150,000
300,000 135,000 157,500 180,000
400,000 180,000 210,000 240,000
500,000 225,000 262,500 300,000
600,000 270,000 315,000 360,000
1,000,000 450,000 525,000 600,000
</TABLE>

51
<PAGE>

Compensation used to calculate benefits under the combined Pension Plan and
SERP is based on a three-year average of base salary and bonus amounts earned
(the highest 36 consecutive months within the last 10 years), as reported in
the Summary Compensation Table. SERP participants may retire without age-based
reductions in benefits when their age plus years of service equals 85.
Surviving spouses receive one half the participant's retirement benefit from
the SERP, plus the joint and survivor benefit, if any, Social Security
Supplement is paid until the participant is eligible for Social Security
retirement benefits. Retirement benefits are not subject to any deduction for
Social Security.

The executive officers named in the table have had the following number of
service years with the Company: Ken L. Harrison, 22; Peggy Y. Fowler, 23;
Richard E. Dyer, 30; Joseph M. Hirko, 17; Frederick D. Miller, 5. Under the
Company's SERP, the named executives are eligible to retire without a reduction
in benefits upon attainment of the following ages: Ken L. Harrison, 59; Peggy
Y. Fowler, 55; Richard E. Dyer, 55; Joseph M. Hirko, 55; Frederick D. Miller,
62.

EMPLOYMENT CONTRACTS
Mr. Harrison entered into an employment agreement with Enron on July 1, 1997,
the effective date of the merger between Enron Corp. and Portland General Corp.
(PGC), the former parent of PGE, pursuant to which he will serve as Vice
Chairman of Enron and Chairman and Chief Executive Officer of PGE. The
agreement is for a period of five years and expires on June 30, 2002. Per
the terms of the agreement, Mr. Harrison will receive an annual base salary of
not less than $525,000 and was granted 120,000 stock options which have a
10-year term and which vest 20% on the date of grant and 20% on each of the
first five anniversaries of the date of grant and in accordance with the
terms of his agreement. Mr. Harrison also received 12,670 shares of
restricted stock which vest 20%
on each of the four anniversaries of the date of grant. Also,
Mr. Harrison will receive an annual bonus of not less than $525,000, of which
20% will be paid in stock options and 80% will be paid in cash. In the event
of his involuntary termination, Mr. Harrison will receive amounts prescribed
in the agreement through the term of the agreement. If Mr. Harrison terminates
his employment voluntarily during a Window Period (defined as one of the
30-day periods beginning on the second, third, or fourth anniversaries of
the effective date of the merger between Enron Corp. and PGE), he will be
entitled to the insurance coverage equivalent to that under certain of
Enron's insurance plans for active employees and to all payments of his
annual base salary and bonus at such time and in such manner as if his
employment had continued for the balance of the initial term, provided that,
if the initial term would have continued beyond the second anniversary of
the termination date, then Enron will pay Mr. Harrison a lump sum amount
on such second anniversary date equal to the amount which would have been paid
to Mr. Harrison during the balance of the initial term if his employment had
continued during such period. In the event that the severance or other
payments payable under the agreement constitute "excess parachute
payments" within the meaning of Section 280G of the Code, and Mr. Harrison
becomes liable for any excise tax or penalties or interest thereon, Enron
will make a cash payment to him in an amount equal to the tax penalties plus
an amount equal to any additional tax for which he will be liable as a
result of receipt of the payment for such tax penalties and payment for
such reimbursement for additional tax. The employment agreement contains
noncompete provisions in the event of Mr. Harrison's termination of
employment.

Mr. Hirko's employment agreement is similar in structure to Mr. Harrison's
agreement. Under his agreement, Mr. Hirko will serve as a Senior Vice
President of Enron and as a senior executive officer of PGE for a period of
five years, subject to certain termination provisions similar to those in Mr.
Harrison's agreement, and thereafter as Mr. Hirko and Enron may agree. Mr.
Hirko will receive an annual base salary of not less than $250,000 and was
granted 50,000 stock options which have a 10-year term and will vest 20% on
the date of grant and 20% on each succeeding anniversary of the Effective Date,
except in the case of Mr. Hirko's Involuntary Termination (as defined in the
agreement), but not including a voluntary termination during a Window Period or
a Change in Control (as defined in the agreement) of Enron or PGE, in which
case the option will vest immediately. Mr. Hirko also received 6,035 shares of
Restricted Stock which vest in 20% increments on each of the first five
anniversaries of the date of grant and are subject to forfeiture upon
termination of Mr. Hirko's employment. Mr. Hirko will receive an annual bonus
of not less than $250,000, of which 20% will be paid in immediately vested
stock options and 80% will be paid in cash. Following termination of Mr.
Hirko's employment for any reason, he or his surviving spouse will be entitled
to a Supplemental Retirement Benefit (as defined in the agreement) to ensure
that the aggregate pension benefits he or his spouse receives, taking account
of all pension benefits from PGC and Enron, are at least equal to the aggregate
pension benefits he or his spouse would have received under PGC's Pension Plan
and the SERP had he continued to participate in such pension plan and the SERP
through the date of termination of employment.

52
<PAGE>

Mr. Hirko's Supplemental Retirement Benefit thus differs from Mr. Harrison's
Supplemental Retirement Benefit described above.

The other terms of Mr. Hirko's employment agreement are substantially similar
to those of Mr. Harrison's, except that, in the event of an Involuntary
Termination prior to the expiration of the Initial Term, Mr. Hirko will be
entitled to receive a cash amount equal to the single sum actuarial equivalent
of the incremental amount that would be paid as the Supplemental Retirement
Benefit if that amount were computed assuming that Mr. Hirko has attained an
additional three years of age and an additional three years of service under
the SERP.

Ms. Fowler, Messrs. Dyer and Miller entered into employment agreements on July
1, 1997, the effective date of the merger between Enron and PGC, the
former parent of PGE. The employment agreements generally provide as
follows: (i) each agreement will have a term of three years and expire on
June 30, 2000; (ii) each agreement provides for severance pay in the event of
involuntary termination by PGE based on the greater of two years or the
remainder of the term; (iii) Mr. Dyer's agreement provides that he will
be treated as having been involuntarily terminated and entitled to receive
three years severance pay if he terminates his employment for any reason
during a 30-day period beginning on the first anniversary of the Effective
Time; (iv) the aggregate minimum base salaries per year under such
agreements equal $620,000 per year and the aggregate minimum guaranteed
annual cash incentives per year under such agreements equal $328,750;
(v) each agreement provides for the grant of 30,000 options to purchase
shares of Enron Common Stock, except for Mr. Miller's which provides for
25,000 options; (vi) each agreement, other than Mr. Miller's, provides for the
grant of a number of restricted shares of Enron Common Stock having a market
value equal to such employee's annual base salary which will vest over a
five-year period; (vii) Mr. Dyer's agreement provides that the failure of
PGE and Mr. Dyer to extend or enter into a new agreement in either case for
one year will be treated as involuntary termination, while Ms. Fowler's and
Mr. Miller's agreement provide that the failure of PGE and the employee to
extend or enter into a new agreement in either case for two years
will be treated as involuntary termination;
(viii) each agreement provides for a supplemental retirement benefit; (ix)
each agreement provides that in the event that the severance or other
payments payable under the agreement for involuntary termination
(except for an involuntary termination of the type described in clause
(vii) above) constitute "excess parachute payments" within the meaning
of Section 280G of the Code and the employee becomes liable for any Tax
Penalties, PGE will pay in cash to the employee an amount equal to such Tax
Penalties and any incremental income tax liability arising from such payments,
grossing up such employee on such gross ups until the amount of the last
gross up is less than one hundred dollars; and (x) each agreement includes a
noncompetition covenant.

COMPENSATIONS OF DIRECTORS
There are no compensation arrangements for or fees paid to Directors of PGE.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None

53
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

PGE is a wholly owned subsidiary of Enron Corp. (Enron). As of December 31,
1997 Enron owned 100% of the outstanding shares of common stock of PGE.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

There are no relationships or transactions involving PGE's directors and
executive officers.

54
<PAGE>

Part IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K

(A) INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

FINANCIAL STATEMENTS
Report of Independent Public Accountants
Consolidated Statements of Income for each of the three years
in the period ended December 31, 1997
Consolidated Statements of Retained Earnings for each of
the three years in the period ended December 31, 1997
Consolidated Balance Sheets at December 31, 1997 and 1996
Consolidated Statement of Cash Flows for each of the three
years in the period ended December 31, 1997
Notes to Financial Statements

FINANCIAL STATEMENT SCHEDULES
Schedules are omitted because of the absence of conditions under which they
are required or because the required information is given in the financial
statements or notes thereto.

EXHIBITS
See Exhibit Index on Page 58 of this report.

(B) REPORT ON FORM 8-K
December 1, 1997 - Item 5. Other Events:
Customer Choice Implementation Proposal

Residential Exchange Program

WNP-3 Settlement Exchange Agreement

55
<PAGE>

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.

Portland General Electric Company

March 27, 1998 By /S/ KEN L. HARRISON
Ken L. Harrison

Chairman of the Board and
Chief Executive Officer

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.

Chairman of the Board and
/S/ KEN L. HARRISON Chief Executive Officer March 27, 1998
Ken L. Harrison

Vice President
Chief Financial Officer
/S/ STEVEN N. ELLIOTT and Treasurer March 27, 1998
Steven N. Elliott

Controller and
/S/ JOSEPH E. FELTZ Chief Accounting Officer March 27, 1998
Joseph E. Feltz

*James Y. Derrick
*Ken L. Harrison
*Joseph M. Hirko Directors March 27, 1998
*Kenneth L. Lay
*Jeffrey K Skilling

*By /S/ JOSEPH E. FELTZ
(Joseph E. Feltz, Attorney-in-Fact)

56
<PAGE>

PORTLAND GENERAL ELECTRIC COMPANY AND
SUBSIDIARIES

EXHIBIT INDEX

NUMBER EXHIBIT

(2) PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR SUCCESSION

* Amended and Restated Agreement and Plan of Merger, dated as of July
20, 1996 and amended and restated as of September 24, 1996 among Enron
Corp, Enron Oregon Corp and Portland General Corporation [Amendment 1
to S4 Registration Nos. 333-13791 and 333-13791-1, dated October 10,
1996, Exhibit No. 2.1].

(3) ARTICLES OF INCORPORATION AND BYLAWS

* Copy of Articles of Incorporation of Portland General Electric Company
[Registration No. 2-85001, Exhibit (4)].

* Certificate of Amendment, dated July 2, 1987, to the Articles of
Incorporation limiting the personal liability of directors of Portland
General Electric Company [Form 10-K for the fiscal year ended December
31, 1987, Exhibit (3)].

* Form of Articles of Amendment of the New Preferred Stock of Portland
General Electric Company [Registration No. 33-21257, Exhibit (4)].

* Bylaws of Portland General Electric Company as amended on October 1,
1991 [Form 10-K for the fiscal year ended December 31, 1991, Exhibit
(3)].

(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES

* Portland General Electric Company Indenture of Mortgage and Deed of
Trust dated July 1, 1945;

* Fortieth Supplemental Indenture, dated October 1, 1990 [Form 10-K for
the fiscal year ended December 31, 1990, Exhibit (4)].

* Forty-First Supplemental Indenture dated December 1, 1991 [Form 10-K
for the fiscal year ended December 31, 1991, Exhibit (4)].

* Forty-Second Supplemental Indenture dated April 1, 1993 [Form 10-Q for
the quarter ended March 31,1993, Exhibit (4)].

* Forty-Third Supplemental Indenture dated July 1, 1993 [Form 10-Q for
the quarter ended September 30, 1993, Exhibit (4)].

* Forty-Fourth Supplemental Indenture dated August 1, 1994 [Form 10-Q
for the quarter ended September 30, 1994, Exhibit (4)].

* Forty-Fifth Supplemental Indenture dated May 1, 1995 [Form 10-Q for
the quarter ended June 30, 1995, Exhibit (4)].

* Forty-Sixth Supplemental Indenture dated August 1, 1996 [Form 10-K for
the fiscal year ended December 31, 1997, Exhibit (4)].

Other instruments which define the rights of holders of long-term debt
not required to be filed herein will be furnished upon written
request.

57
<PAGE>

PORTLAND GENERAL ELECTRIC COMPANY AND
SUBSIDIARIES

EXHIBIT INDEX

NUMBER EXHIBIT

(10) MATERIAL CONTRACTS

* Residential Purchase and Sale Agreement with the Bonneville Power
Administration [Form 10-K for the fiscal year ended December 31, 1981,
Exhibit (10)].

* Power Sales Contract and Amendatory Agreement Nos. 1 and 2 with
Bonneville Power Administration [Form 10-K for the fiscal year ended
December 31, 1982, Exhibit (10)].

The following 12 exhibits were filed in conjunction with the 1985
Boardman/Intertie Sale:

* Long-term Power Sale Agreement, dated November 5, 1985 [Form 10-K for
the fiscal year ended December 31, 1985, Exhibit (10)].

* Long-term Transmission Service Agreement, dated November 5, 1985 [Form
10-K for the fiscal year ended December 31, 1985, Exhibit (10)].

* Participation Agreement, dated December 30, 1985 [Form 10-K for the
fiscal year ended December 31, 1985, Exhibit (10)].

* Lease Agreement, dated December 30, 1985 [Form 10-K for the fiscal
year ended December 31,1985, Exhibit (10)].

* PGE-Lessee Agreement, dated December 30, 1985 [Form 10-K for the
fiscal year ended December 31, 1985, Exhibit (10)].

* Asset Sales Agreement, dated December 30, 1985 [Form 10-K for the
fiscal year ended December 31, 1985, Exhibit (10)].

* Bargain and Sale Deed, Bill of Sale and Grant of Easements and
Licenses, dated December 30, 1985 [Form 10-K for the fiscal year ended
December 31, 1985, Exhibit (10)].

* Supplemental Bill of Sale, dated December 30, 1985 [Form 10-K for the
fiscal year ended December 31, 1985, Exhibit (10)].

* Trust Agreement, dated December 30, 1985 [Form 10-K for the fiscal
year ended December 31, 1985, Exhibit (10)].

* Tax Indemnification Agreement, dated December 30, 1985 [Form 10-K for
the fiscal year ended December 31, 1985, Exhibit (10)].

* Trust Indenture, Mortgage and Security Agreement, dated December 30,
1985 [Form 10-K for the fiscal year ended December 31, 1985, Exhibit
(10)].

* Restated and Amended Trust Indenture, Mortgage and Security Agreement,
dated February 27, 1986 [Form 10-K for the fiscal year ended December
31, 1985, Exhibit (10)].

Portland General Holdings, Inc. Outside Directors' Deferred
Compensation Plan, 1997 Restatement dated June 25, 1997 (Filed
herewith).

Portland General Holdings, Inc. Retirement Plan for Outside Directors,
1997 Restatement dated June 25, 1997 (Filed herewith).

58
<PAGE>

PORTLAND GENERAL ELECTRIC COMPANY AND
SUBSIDIARIES

EXHIBIT INDEX

NUMBER EXHIBIT

(10) Portland General Holdings, Inc. Outside Directors' Life Insurance
CONT. Benefit Plan, 1997 Restatement dated June 25, 1997 (Filed herewith).

EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS

Portland General Holdings, Inc. Management Deferred Compensation Plan,
1997 Restatement dated June 25, 1997 (Filed herewith).

Portland General Holdings, Inc. Senior Officers Life Insurance Benefit
Plan, 1997 Restatement Amendment No. 1 dated June 25, 1997 (Filed
herewith).

* Portland General Electric Company Annual Incentive MasterPlan [Form
10-K for the fiscal year ended December 31, 1987, Exhibit (10)].

* Portland General Electric Company Annual Incentive Master Plan,
Amendments No. 1 and No. 2 dated March 5, 1990 [Form 10-K for the
fiscal year ended December 31, 1989, Exhibit (10)].

Portland General Holdings, Inc. Supplemental Executive Retirement
Plan, 1997 Restatement dated June 25, 1997 (Filed herewith).

(23) CONSENTS OF EXPERTS AND COUNSEL

Portland General Electric Company Consent of Independent Public
Accountants (filed herewith).

(24) POWER OF ATTORNEY

Portland General Electric Company Power of Attorney (filed herewith).

* Incorporated by reference as indicated.

Note: Although the Exhibits furnished to the Securities and Exchange
Commission with the Form 10-K have been omitted herein, they will be
supplied upon written request and payment of a reasonable fee for
reproduction costs. Requests should be sent to:

Joseph E. Feltz
Controller
Chief Accounting Officer

Portland General Electric Company
121 SW Salmon Street
Portland, OR 97204

59
<PAGE>

PORTLAND GENERAL HOLDINGS, INC.

OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN

1997 RESTATEMENT

<PAGE>

Table of Contents
Page

ARTICLE 1 PURPOSE 1

1.1 Purpose 1
1.2 Effective Date 1

ARTICLE 2 DEFINITIONS 1

2.1 Board 1
2.2 Cash Value 1
2.3 Cause 1
2.4 Change in Control 1
2.5 Committee 2
2.6 Company 2
2.7 Date of Participation 2
2.8 Direct Subsidiary 2
2.9 Indirect Subsidiary 2
2.10 Insurer 2
2.11 Merger Agreement 2
2.12 Net Single Premium 2
2.13 Outside Director 3
2.14 PGC Board 3
2.12 Participant 3
2.13 Participant's Share 3
2.14 Participating Company 3
2.15 Participating Company's Share of Premium 3
2.16 Plan 3
2.17 Policy 3
2.18 Retirement 3
2.19 Senior Administrative Officer 4

ARTICLE 3 PARTICIPATION 4

3.1 Eligibility 4
3.2 Election to Participate 4

ARTICLE 4 POLICY TITLE AND OWNERSHIP 4

4.1 Policy Title 4
4.2 Participating Company's Security Interest 4

ii
<PAGE>

ARTICLE 5 PREMIUM PAYMENT 4

5.1 Participating Company's Premium Payment 4
5.2 Payment of the Participant's Share 4

ARTICLE 6 PARTICIPATING COMPANY'S INTEREST IN THE POLICY 5

6.1 Collateral Assignment 5
6.2 Limitations 5

ARTICLE 7 PARTICIPANT'S INTEREST IN THE POLICY 5

7.1 Upon Surrender or Cancellation 5
7.2 Upon Death 5
7.3 Ownership of Cash Surrender Value 6

ARTICLE 8 PLAN BENEFITS 6

8.1 Upon Termination of Participation in the Plan 6
8.2 Upon Termination of Service 6
8.3 Upon Change in Control 7
8.4 Upon retirement 7

ARTICLE 9 DURATION OF THE PLAN 7

9.1 Plan Continuation 7
9.2 Termination of Arrangement 8

ARTICLE 10 AMENDMENT AND TERMINATION OF PLAN 8

10.1 Amendment 8
10.2 Termination 8

ARTICLE 11 INSURER NOT A PARTY TO PLAN 8

ARTICLE 12 NAMED FIDUCIARY 9

12.1 Senior Administrative Officer; Committee 9
12.2 Indemnity of Senior Administrative Officer; Committee 9
12.3 Availability of Plan Documents 9
12.4 Cost of Plan Administration 9

iii
<PAGE>

ARTICLE 13 CLAIMS PROCEDURE 9

13.1 Claim 9
13.2 Denial of Claim 9
13.3 Review of Claim 10
13.4 Final Decision 10

ARTICLE 14 MISCELLANEOUS 10

14.1 Liabilities for Benefits 10
14.2 Allocation of Asset 10
14.3 Protective Provisions 11
14.4 Transfer of Participant's Interest in the Policy 11
14.5 Terms 11
14.6 Governing Law 11
14.7 Validity 11
14.8 Notice 11
14.9 Successors 11
14.10 Not a Contract of Service 12

SCHEDULE I 13

Death Benefits Payable Under Portland General Holdings, Inc.
Outside Directors' Life Insurance Benefit Plan

EXHIBIT A COLLATERAL ASSIGNMENT 14

iv
<PAGE>

PORTLAND GENERAL HOLDINGS, INC.

OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN

ARTICLE 1

PURPOSE

1.1 PURPOSE. This Plan has been established to provide Outside
Directors of Portland General Corporation and Participating Companies with
supplemental life insurance protection for their families in the event of
death under a spit dollar arrangement. This Plan became effective on
January 1, 1987 and was restated effective December 1, 1988, and January 1,
1996.

1.2 EFFECTIVE DATE. This 1997 Restatement is adopted to make
amendments to the Plan effective June 25, 1997.

ARTICLE 2

DEFINITIONS

2.1 BOARD. "Board shall mean the Board of Directors of Portland
General Holdings, Inc.

2.2 CASH VALUE. "Cash Value" shall mean the Policy's cash value as
that term is defined in the Policy.

2.3 CAUSE. "Cause" shall mean a breach of fiduciary duty while a
member of the Board.

2.4 CHANGE IN CONTROL. "Change in Control" shall mean an occurrence
in which:

(a) Any "person," as such term is used in Section 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (other than Portland General Holdings, Inc. ("PGH"), any trustee
or other fiduciary holding securities under an employee benefit plan
of PGH, or any Employer owned, directly or indirectly, by the
stockholders of PGH in substantially the same proportions as their
ownership of stock of PGH), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities representing thirty percent (30%) or more of the
combined voting power of PGH's then outstanding voting securities; or

PAGE 1 - OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN

<PAGE>

(b) During any period of two (2) consecutive years (not including
any period prior to the execution of this Agreement), individuals who at
the beginning of such period constitute the Board, and any new
director whose election by the Board or nomination for election by
PGH's stockholders was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors as of
the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute at least a majority thereof.

(c) Notwithstanding anything to the contrary in the foregoing, no
"Change in Control" shall be deemed to have occurred upon the
consummation of the Amended and Restated Agreement and Plan of Merger
by and among Enron Corp., Portland General Corporation and Enron
Oregon Corp., dated as of July 20, 1996, or amended and restated from
time to time.

2.5 COMMITTEE. "Committee" shall mean the Non-qualified Benefits
Committee of the Board.

2.6 COMPANY. "Company" shall mean Portland General Holdings, Inc.,
an Oregon corporation.

2.7 DATE OF PARTICIPATION. "Date of Participation" shall mean the
earlier of the date on which the Policy is issued or the date on which the
Insurer agrees to bind coverage.

2.8 DIRECT SUBSIDIARY. "Direct Subsidiary" means any corporation of
which a Participating Company owns at least eighty percent (80%) of the
total combined voting power of all classes of its stock entitled to vote.

2.9 INDIRECT SUBSIDIARY. "Indirect Subsidiary" shall mean any
corporation of which a Participating Company directly and constructively
owns at least eighty percent (80%) of the total combined voting power of
all classes of its stock entitled to vote. In determining the amount of
stock of a corporation that is constructively owned by a Participating
Company, stock owned, directly or constructively, by a corporation shall be
considered as being owned proportionately by its shareholders according to
such shareholders' share of voting power of all classes of its stock
entitled to vote.

2.10 INSURER. "Insurer" shall mean any insurance company issuing a
Policy under this Plan.

2.11 MERGER AGREEMENT "Merger Agreement" shall mean the Amended and
Restated Agreement and Plan of Merger by and among Enron Corp., Portland
General Corporation and Enron Oregon Corp., dated as of July 20, 1996, as
that Agreement may be amended or restated from time to time.

PAGE 2 - OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN

<PAGE>

2.12 NET SINGLE PREMIUM. "Net Single Premium" shall mean the amount
calculated by an enrolled actuary selected by the Senior Administrative
Officer, required to obtain the level death benefit promised in Table I,
calculated using the 1983 Group Annuity Table male rates and employing
continuous functions.

2.13 OUTSIDE DIRECTOR. "Outside Director" shall mean a member of the
PGC Board who is not an employee of Portland General Holdings, Inc. or any
Direct Subsidiary or affiliate of Portland General Holdings, Inc..

2.14 PGC BOARD. "PGC Board" shall mean the Board of Directors of
Portland General Corporation, or the Board of Directors of the successor
corporation established pursuant to the Merger Agreement, or any Advisory
Committee to the Portland General Electric Company or the board or officers
of a corporation qualifying as a Participating Company of the Plan,
including subsidiaries and joint venture partners, the status of which
shall be determined at the discretion of the Senior Administrative Office.

2.15 PARTICIPANT. "Participant" shall mean an Outside Director
elected to the Board prior to January 1, 1996, who has elected to
participate in the Plan.

2.16 PARTICIPANT'S SHARE. "Participant's Share shall mean the
aggregate portion of premiums contributed by the Participant.

2.17 PARTICIPATING COMPANY. "Participating Company" shall mean the
Company or any affiliated or subsidiary company designated by the Board as
a Participating Company under the Plan, as long as such designation has
become effective and continues to be in effect. The designation as a
Participating Company shall become effective only upon the acceptance of
such designation and the formal adoption of the Plan by a Participating
Company. A Participating Company may revoke its acceptance of designation
as a Participating Company at any time, but until it makes such revocation,
all of the provisions of this Plan and any amendments thereto shall apply
to the Participants and their beneficiaries of the Participating Company.

2.18 PARTICIPATING COMPANY'S SHARE OF PREMIUM. "Company's Share of
Premium" shall mean the aggregate amount of insurance premium paid by the
Participating Company less the Participant's Share.

2.19 PLAN. "Plan" shall mean the Portland General Holdings, Inc.
Outside Directors' Life Insurance Benefit Plan, as amended from time to
time.

2.20 POLICY. "Policy" shall mean each life insurance policy which is
issued by an insurer on the life of the Participant.

PAGE 3 - OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN

<PAGE>

2.21 RETIREMENT. "Retirement" shall mean separation from service on
the PGC Board as an Outside Director, at the earlier of age seventy (70) or
ten (10) years of Benefit Service, as defined in the Company's Retirement
Plan for Outside Directors.

2.22 SENIOR ADMINISTRATIVE OFFICER. "Senior Administrative Officer"
shall mean the employee in the management position designated by the
Committee to administer the Plan.

ARTICLE 3

PARTICIPATION

3.1 ELIGIBILITY. Eligibility shall be limited to Outside Directors
who served on the PGC Board on or before January 1, 1996.

3.2 ELECTION TO PARTICIPATE. An Outside Director may elect to
participate in the Plan by completing such documents as may be prescribed
by the Senior Administrative Office.

ARTICLE 4

POLICY TITLE AND OWNERSHIP

4.1 POLICY TITLE. The Participant, or his transferee, shall be the
owner of the Policy and may exercise all ownership rights granted to the
owner by the terms of the Policy, except as herein provided. These shall
include, but are not limited to, the right to assign his interest in the
Policy, the right to change the beneficiary of that portion of the proceeds
to which he is entitled under Article 7, and the right to exercise
settlement options.

4.2 PARTICIPATING COMPANY'S SECURITY INTEREST. The only rights in
and to the Policy granted to a Participating Company shall be limited to
its security interest in the cash value of the Policy, as defined in the
collateral assignment attached as Exhibit A, and a portion of the death
benefit, as hereinafter provided under Article 6.

ARTICLE 5

PREMIUM PAYMENT

5.1 PARTICIPATING COMPANY'S PREMIUM PAYMENT. Each premium on the
Policy shall be paid by the Participating Company as it becomes due.

5.2 PAYMENT OF THE PARTICIPANT'S SHARE. At the time of each premium
payment by the Participating Company, the Participant shall pay to the
Participating Company an amount equal to the economic benefit of said
Policy enjoyed by the Participant. The economic benefit shall be equal to
the lesser of the Insurer's one-year term cost or the PS-58 rate.

PAGE 4 - OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN

<PAGE>

ARTICLE 6

PARTICIPATING COMPANY'S INTEREST IN THE POLICY

6.1 COLLATERAL ASSIGNMENT. Each Participant shall assign the Policy
to the Participating Company as collateral, under the form of collateral
assignment attached as Exhibit A. The assignment gives the Participating
Company the limited power to enforce its right to recover the Participating
Company's Share of Premium on the Policy and on a portion of the death
benefit thereof.

6.2 LIMITATIONS. The interest of the Participating Company in and to
the Policy shall be specifically limited to the following rights in and to
the Cash Value and a portion of the death benefit:

6.2.1 the right to recover the Participating Company's Share of
Premium, in the event the Policy is surrendered or canceled by the
Participant, as provided in Section 7.1;

6.2.2 the right to recover, upon the death of the Participant,
all of the Policy proceeds, in excess of that portion of the Policy
proceeds payable to the Participant's beneficiary or beneficiaries as
provided in Paragraph 7.2;

6.2.3 the right to recover the Participating Company's Share of
Premium, or to receive ownership of the Policy, in the event of
termination by the Participant in the Plan, or in the event of
termination of service in the Board of a Participating Company as
provided in Sections 8.1 and 8.2.

ARTICLE 7

PARTICIPANT'S INTEREST IN THE POLICY

7.1 UPON SURRENDER OR CANCELLATION. Upon surrender or cancellation
of the Policy, the Participating Company shall be entitled to receive a
portion of the cash surrender value equal to the Participating Company's
Share of Premium. The balance of the cash surrender value, if any, shall
belong to the Participant.

7.2 UPON DEATH. Upon the death of the Participant, the beneficiary
or beneficiaries designated by the Participant shall be entitled to receive
that portion of the Policy proceeds equal to the amount set forth in
Schedule I of this Plan.

PAGE 5 - OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN

<PAGE>

7.3 OWNERSHIP OF CASH SURRENDER VALUE. Notwithstanding any other
provision in the Plan to the contrary, the Participant shall at all times
own a portion of the cash surrender value of the Policy equal to the
Participant's Share to the extent said cash surrender value exceeds the
Participating Company's Share of Premium.

ARTICLE 8

PLAN BENEFITS

8.1 UPON TERMINATION OF PARTICIPATION IN THE PLAN. In the event the
Participant terminates participation in the Plan prior to leaving service
on the PGC Board, the Participant shall execute any and all instruments
that may be required to vest ownership of said Policy in the Participating
Company. Participating Employer shall purchase from the Participant the
Participant's interest in the cash surrender value set forth in Section 7.3
above for an amount equal to the Participant's Share. Thereafter, the
Participant shall have no further interest in the Policy or this Plan.

8.2 UPON TERMINATION OF SERVICE.

8.2.1 In the event of termination of service on the PGC Board for
Cause (as determined by Committee) before Retirement, the Participant
shall execute any and all instruments that may be required to vest
ownership of said Policy in the Participating Company. Participating
Employer shall purchase from the Participant the participant's
interest in the cash surrender value set forth in Section 7.3 above
for an amount equal to the Participant's Share. Thereafter, the
Participant shall have no further interest in the Policy or this Plan.

8.2.2 In the event of termination of service on the PGC Board of
any Participating Company because of accepting a position of public
service, or other reason not considered for Cause before Retirement,
the Participant may elect either to:

8.2.2.1 reimburse the Participating Company an amount equal
to the Participating Company's Share of Premium, whereupon
receipt of payment from the Participant, the Company shall
release the collateral assignment and thereafter shall have no
further interest in the Policy, or

8.2.2.2 execute any and all instruments that may be
required to vest ownership of said Policy in the Participating
Company. Thereafter, the Participant shall have no further
interest in the Policy or this Plan.

8.2.3 In the event of termination of service on the PGC Board,
occurring at least one (1) year from the Effective Time, as defined in
the Merger Agreement, the Participant

PAGE 6 - OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN

<PAGE>

shall be deemed to have retired
for purposes of this Plan and shall be eligible to make the election
specified in Section 8.4

8.2.4 In the event of involuntary termination of service on the
PGC Board, without Cause, occurring during the one (1) year period
beginning with the date the stockholders of PGC approve the Merger
Agreement, the Participant shall be entitled to the Change in Control
benefit specified in Section 8.3.

8.3 UPON CHANGE IN CONTROL. In the event of a Change in Control,
within sixty (60) days of such Change in Control, the Participating Company
shall:

8.3.1 determine to what extent the cash value exceeds the Net
Single Premium and recover the excess, if any; and

8.3.2 upon recovery of the excess, release the collateral
assignment and thereafter have no further interest in the Policy; and

8.3.3 pay to each Participant an amount equal to the excess, if
any, of the Net Single Premium over the cash value released to the
participant in 8.3.2 above.

8.4 UPON RETIREMENT. In the event of termination from service on the
PGC Board at or after Retirement, the Participant may elect either to:

8.4.1 reimburse the Participating Company an amount equal to the
Participating Company's Share of Premium, whereupon receipt of payment
from the Participant, the Company shall release the collateral
assignment and thereafter shall have no further interest in the
Policy, or

8.4.2 continue participation in the Plan with the Company
continuing to pay premiums pursuant to Article 5.

ARTICLE 9

DURATION OF THE PLAN

9.1 PLAN CONTINUATION. Subject to the provisions of Article 8, this
Plan shall continue with respect to each Participant until such time as the
Cash Value of the Policy on a Participant is sufficient to permit:

9.1.1 the Participating Company to recover the Participating
Company's Share of Premium; and

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<PAGE>

9.1.2 the Participant to recover an amount equal to the federal
and state income tax he will incur as a result of termination of the
split dollar arrangement; and

9.1.3 the death benefit to continue to the Participant's age
ninety-five (95) with no further premium outlay based upon then
current interest assumptions.

9.2 TERMINATION OF ARRANGEMENT. When the standard required by
Paragraph 6 is achieve and upon the Participating Company's receiving the
Participating Company's Share of Premium, the split dollar arrangement with
that Participant shall terminate. The Participating Company shall release
the collateral assignment and thereafter, shall have no further interest in
the Policy.

ARTICLE 10

AMENDMENT AND TERMINATION OF PLAN

10.1 AMENDMENT. The Senior Administrative Officer may amend the Plan
from time to time as may be necessary for administrative purposes and legal
compliance, provided, however, that no such amendment shall affect the
benefit rights of Participants or Beneficiaries in the Plan. Prior to
achieving the standard required by Section 9.1, the Committee may not
amend, modify or revoke this Plan in a manner that reduces the rights of
the Participant under this Plan.

10.2 TERMINATION. The Board of each Participating Company may at any
time, in its sole discretion, terminate the Plan in whole or in part for
that Participating Company, such that no future Participants will be
allowed into the Plan. However, no such termination shall adversely affect
the benefits of Participants which have accrued prior to such action, the
benefits of any Participant who has previously retired, the benefits of any
beneficiary of a Participant who has previously died, or already accrued
Plan liabilities between Participating Companies.

ARTICLE 11

INSURER NOT A PARTY TO PLAN

An Insurer shall be bound only by the provisions of and endorsements
on the Policy, and any payments made or action taken by an Insurer in
accordance therewith shall fully discharge it from all claims, suits and
demands of all persons whatsoever. Except as specifically provided by
endorsement on the Policy, it shall in no way be bound by the provisions of
this Plan.

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<PAGE>

ARTICLE 12

NAMED FIDUCIARY

12.1 SENIOR ADMINISTRATIVE OFFICER; COMMITTEE. The Senior
Administrative Officer is hereby designated the "Named Fiduciary" until
removal by the Committee. As Named Fiduciary, the Senior Administrative
Officer shall be responsible for the management, control and administration
of the Plan established herein. The Senior Administrative Officer may
allocate to others certain aspects of the management and operation
responsibilities of the Plan, including the employment of advisors and the
delegation of any ministerial duties to qualified individuals.

12.2 INDEMNITY OF SENIOR ADMINISTRATIVE OFFICER; COMMITTEE. Each
participating Company shall indemnify and hold harmless the Senior
Administrative Officer and the Committee and its individual members against
any and all claims, loss, damage, expense or liability arising from any
action or failure to act with respect to this Plan, except in the case of
gross negligence or willful misconduct.

12.3 AVAILABILITY OF PLAN DOCUMENTS. Each Participant shall receive a
copy of this Plan, and the Senior Administrative Officer shall make
available for inspection by an Participant a copy of the rules and
regulations used in administering the Plan.

12.4 COST OF PLAN ADMINISTRATION. The Company shall bear all expenses
of administration. However, a ratable portion of the expense shall be
charged back to each Participating Company.

ARTICLE 13

CLAIMS PROCEDURE

13.1 CLAIM. Claims for any benefits due under the Plan or upon
surrender of the Policy shall be made in writing by the Participating
Company, and the Participant or his designated beneficiary or
beneficiaries, as the case may be, to the Named Fiduciary or his delegatee
who shall respond in writing as soon as practicable.

13.2 DENIAL OF CLAIM. In the event a claim is denied or disputed, the
Named Fiduciary shall, within a reasonable period of time after receipt of
the claim, notify the Participating Company, and the Participant or his
designated beneficiary or beneficiaries, as the case may be, of such denial
or dispute listing:

13.2.1 The reasons for the denial or dispute; with specific
reference to the Plan provisions upon which the denial or dispute is
based;

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<PAGE>

13.2.2 A description of any additional material or information
necessary and an explanation of why it is necessary; and

13.2.3 An explanation of the Plan's claim review procedure.

13.3 REVIEW OF CLAIM. Within sixty (60) days of denial or notice of
claim under the Plan, a claimant may request that the claim be reviewed by
the Named Fiduciary. The claim or request shall be reviewed by the Named
Fiduciary, who may, but shall not be required to, grant the claimant a
hearing. On review, the claimant may have representation, examine
pertinent documents and submit issues and comments in writing.

13.4 FINAL DECISION. The decision of the Senior Administrative
Officer on review shall normally be made within sixty (60) days. If an
extension of time is required for a hearing or other special circumstances,
the claimant shall be notified and the time limit shall be one hundred
twenty (120) days. The decision shall be in writing and shall state the
reasons and the relevant plan provisions. All decisions on review shall be
final and bind all parties concerned.

ARTICLE 14

MISCELLANEOUS

14.1 LIABILITIES FOR BENEFITS. Except as otherwise provided in this
Section, liability for the payment of a Participant's benefit pursuant to
this Plan shall be borne solely by the Participating Company for which the
Participant serves during the accrual or increase of the Plan benefit, and
no liability for the payment of any Plan benefit shall be incurred by
reason of Plan sponsorship or participation except for the Plan benefits of
a Participating Company's own advisors or Board members. Provided,
however, that each Participating Company, by accepting the Board's
designation as a Participating Company under the Plan and formally adopting
the Plan, agrees to assume secondary liability for the payment of any
benefit accrued or increased while a Participant serves on the board of
directors of a Participating Company that is a Direct Subsidiary or
Indirect Subsidiary of the Participating Company at the time such benefit
is accrued or increased. Such liability shall survive any revocation of
designation as a Participating Employer with respect to any liabilities
accrued at the time of such revocation. Nothing in this paragraph shall be
interpreted as prohibiting any Participating Company or any other person
from expressly agreeing to assumption of liability for a Plan Participant's
payment of any benefits under the Plan.

14.2 ALLOCATION OF ASSET. The interests of each Participating Company
in and to the Policy as described in Section 6.2 shall be allocated, if
applicable, pro rata among those Participating Companies who employed the
Participant and reported the Participant as being on their payroll during
the accrual or increase of the Plan benefit. Such allocation of asset
shall survive any revocation of designation as a Participating Company or
termination of the Plan with respect to any asset accrued at the time of
such revocation or termination.

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<PAGE>

14.3 PROTECTIVE PROVISIONS. A Participant will cooperate with the
Participating Company by furnishing any and all information requested by
the Participating Company, in order to facilitate the payment of benefits
hereunder, and by taking such physical examination as the Participating
Company may deem necessary and taking such other action as may be requested
by the Participating Company.

14.4 TRANSFER OF PARTICIPANT'S INTEREST IN THE POLICY. In the event a
Participant shall transfer all of his interest in the Policy, then all of a
Participant's interest in the Policy shall be vested in his transferee, who
shall be substituted as a party hereunder, and a Participant shall have no
further interest in the Policy.

14.5 TERMS. In this Plan document, unless the context clearly
indicates the contrary, the masculine gender will be deemed to include the
feminine gender, and the singular shall include the plural.

14.6 GOVERNING LAW. The provisions of this Plan shall be construed
and interpreted according to the laws of the State of Oregon, except as
preempted by federal law.

14.7 VALIDITY. In case any provision of this Plan shall be held
illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining parts hereof, but this Plan shall be construed and
enforced as if such illegal and invalid provisions had never been inserted
herein.

14.8 NOTICE. Any notice or filing required or permitted to be given
to the Senior Administrative Officer under the Plan shall be sufficient if
in writing and hand delivered, or sent by registered or certified mail to
the Senior Administrative Officer or to Secretary of Company. Notice to
the Senior Administrative Officer, if mailed, shall be addressed to the
principal executive offices of the Participating Company. Notice mailed to
the Participant shall be at such address as is given in the records of the
Participating Company. Notices shall be deemed given as of the date of
delivery or, if delivery is made by mail, as of the date shown on the
postmark on the receipt for registration or certification.

14.9 SUCCESSORS. The provisions of this Plan shall bind and inure to
the benefit of each Participating Company and its successors and assigns.
The term successors as used herein shall include any corporate or other
business entity which shall, whether by merger, consolidation, purchase or
otherwise, acquire all or substantially all of the business and assets of
the Participating Company, and successors of any such corporation or other
business entity.

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<PAGE>

14.10 NOT A CONTRACT OF SERVICE. The terms and conditions of this
Plan shall not be deemed to constitute a contract of service between a
Participating Company and a Participant, and neither a Participant nor a
Participant's Spouse or Dependent shall have any rights against a
Participating Company except as may otherwise be specifically provided
herein. Moreover, nothing in this Plan shall be deemed to give a
Participant the right to be retained on the Board of a Participating
Company nor shall it interfere with the Participant's right to terminate
his directorship at any time.

IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its officers thereunto duly authorized this 19th day of
November, 1997.

PORTLAND GENERAL HOLDINGS, INC.

By: /s/ Don F. Kielblock

Its: Vice President

PAGE 12 - OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN

<PAGE>

SCHEDULE I

DEATH BENEFITS PAYABLE UNDER

PORTLAND GENERAL HOLDINGS, INC.

OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN

1997 RESTATEMENT

EFFECTIVE JUNE ___, 1997

Outside Directors $200,000

PAGE 13 - OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN

<PAGE>

EXHIBIT A

COLLATERAL ASSIGNMENT

THIS ASSIGNMENT, made and entered into and effective this day
of , 19 , by the
undersigned as owner (the Owner) of that certain Life Insurance Policy
No. issued by ____________________________
(Insurer) and any supplementary contracts issued in connection therewith
(said policy and contracts being herein called the
Policy), upon the life of
_________________________________________ (Insured), to Portland General
Corporation, an Oregon corporation (the Assignee).

WITNESSETH:

WHEREAS, the Insured is a Director of the Assignee; and

WHEREAS, said Assignee desires to provide the Insured with
supplemental life insurance protection by contributing a portion of the
annual premium due on the Policy, as more specifically provided for in the
split dollar arrangement set forth in the Outside Directors' Life Insurance
Benefit Plan (the Plan); and adopted as restated by the Assignee on January
1, 1996, a copy of which is attached hereto, incorporated by reference and
made a part hereof; and

WHEREAS, in consideration of the Assignee agreeing to pay a portion of
the premium, the Owner agrees to grant the Assignee an interest in the
policy as security for the recovery of the Assignee's premium outlay.

NOW THEREFORE, for value received, the undersigned hereby assigns,
transfers and sets over to the Assignee, its successors and assigns, the
following specific rights in the Policy, subject to the following terms and
conditions:

1. This Assignment is made, and the Policy is to be held, as
collateral security for the premium payments made by Assignee, pursuant to
the terms of the Plan.

2. The Assignee's interest in the Policy shall further be limited
to:

a. the right to recover the aggregate amount of insurance premium
paid by the Assignee less the aggregate portion contributed by the
Participant (the Assignee's Share of Premium) in the event the Policy
is surrendered or canceled by the Owner as provided in Section 7.1 of
the Plan,

b. the right to recover, upon the death of the Participant, all
proceeds in excess of the death benefit promised in Schedule I of the
Outside Directors' Life Insurance Benefit Plan,

PAGE 14 - OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN

<PAGE>

c. the right to recover the Assignee's Share of Premium, the
right to recover the excess of cash value over the Net Single Premium,
or the right to receive ownership of the Policy in the event of
termination of the split dollar arrangement as provided in Article 8
of the Plan.

3. Except as specifically herein granted to the Assignee, the Owner
shall retain all incidents of ownership in the Policy including, but not
limited to, the right to assign his interest in the Policy, the right to
change the beneficiary of that portion of the proceeds to which he is
entitled under Article 6 of the Plan, and the right to exercise all
settlement options permitted by the terms of the Policy. Provided,
however, that all rights retained by the Owner shall be subject to the
terms and conditions of the Plan.

4. The Assignee shall, upon request, forward the Policy to the
Insurer, without unreasonable delay, for endorsement of any designation of
change of beneficiary, any election of optional mode of settlement, or the
exercise of any other right reserved by the Owner hereunder.

5. The Insurer is hereby authorized to recognize the Assignee's
claims to rights hereunder without investigating the reason for any action
taken by the Assignee, the amount of its Share of Premium, the existence of
any default therein, the giving of any notice required herein, or the
application to be made by the Assignee of any amounts to be paid to the
Assignee.

The signature of the Assignee shall be sufficient for the
exercise of any rights under the Policy assigned hereby to the Assignee,
and the receipt of the Assignee for any sums received by it shall be a full
discharge and release therefore to the Insurer.

6. The insurer shall be fully protected in recognizing the requests
made by the Owner for surrender of the Policy with or without the consent
of the Assignee, and, upon such surrender, the Policy shall be terminated
and shall be of no further force or effect.

7. Upon the full payment to the Assignee of its Share of Premium, or
in the event of a Change in Control upon recovery of the excess of cash
value over the Net Single Premium the Assignee shall release the Collateral
Assignment and reassign to the Owner all specific rights included in this
Collateral Assignment.

IN WITNESS WHEREOF, the undersigned Owner has executed this Assignment
the date and year first above written.

Witness Owner

PAGE 15 - OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN

<PAGE>

PORTLAND GENERAL HOLDINGS, INC.

RETIREMENT PLAN FOR OUTSIDE DIRECTORS

1997 RESTATEMENT

<PAGE>

TABLE OF CONTENTS

ARTICLE I-PURPOSE......................................... 1

1.1 Purpose 1
1.2 Effective Date 1
1.3 Plan Sponsor 1

ARTICLE II-DEFINITIONS.................................... 1

2.1 Actuarially Equivalent 1
2.2 Benefit Service 1
2.3 Board 1
2.4 Change in Control 2
2.5 Committee 2
2.6 Company 2
2.7 Compensation 2
2.8 Dependent 3
2.9 Direct Subsidiary 3
2.10 Effective Date 3
2.11 Indirect Subsidiary 3
2.12 Marriage 3
2.13 Outside Director 3
2.14 PGC Board.......................................... 3
2.15 Participant 4
2.16 Participating Company 4
2.17 Plan 4
2.18 Retirement Date 4
2.19 Senior Administrative Officer 4
2.20 Spouse 4
2.21 Suspension Date 4
2.22 Termination 4

ARTICLE III-RETIREMENT BENEFITS........................... 5

3.1 Eligibility 5
3.2 Benefit Upon Retirement 5
3.3 Form of Benefit Payment 5
3.4 Commencement of Payment 6

ARTICLE IV-BENEFITS AFTER CHANGE IN CONTROL .............. 6

4.1 Benefit Upon a Change in Control 6
4.2 Form of Payment 6
4.3 Commencement of Payment 7

i
<PAGE>

ARTICLE V-SURVIVOR BENEFITS............................... 7

5.1 Survivor Benefit 7
5.2 Cessation of Benefit Upon Remarriage 7

ARTICLE VI-ADMINISTRATION................................. 7

6.1 Senior Administrative Officer; Duties 7
6.2 Agents 7
6.3 Binding Effect of Decisions 8
6.4 Indemnity of Senior Administrative Officer; Committee 8
6.5 Availability of Plan Documents 8
6.6 Cost of Plan Administration 8

ARTICLE VII-CLAIMS PROCEDURE.............................. 8

7.1 Claim 8
7.2 Denial of Claim 8
7.3 Review of Claim 9
7.4 Final Decision 9

ARTICLE VIII-AMENDMENT AND TERMINATION OF PLAN............ 9

8.1 Amendment 9
8.2 Termination 9

ARTICLE IX-MISCELLANEOUS................................. 9

9.1 Unfunded Plan 9
9.2 Liability 10
9.3 Trust Fund 10
9.4 Nonassignability 10
9.5 Payment to Guardian 11
9.6 Terms 11
9.7 Protective Provisions 11
9.8 Governing Law 11
9.9 Validity 11
9.10 Notice 11
9.11 Successors 12
9.12 Not a Contract of Service 12

ii
<PAGE>

INDEX OF TERMS

TERM AND PROVISION NUMBER
PAGE
A

Actuarial
Equivalent: 2.1 1

Benefit Service: 2.2. 1
Board: 2.3 1

C
Change in Control: 2.4 2
Committee: 2.5 3
Company: 2.6 3
Compensation: 2.7. 3

D
Dependent: 2.8 3
Direct Subsidiary: 2.9 3

E
Effective Date: 2.10 3
Exchange Act: 2.4(a) 2

I
Indirect Subsidiary: 2.11 3

M
Marriage: 2.12 3

O
Outside Director: 2.13 3

P
Participant: 2.14 4
Participating Company: 2.15 4
PGC: 2.4(a) 2
PGE: 2.4(a) 2
Plan: 2.16 4

R
Retirement Date: 2.17 4

iii
<PAGE>

S
Senior Administrative Officer: 2.18 4
Spouse: 2.19 4
Suspension Date: 2.20 4

T
Termination: 2.21 4

iv
<PAGE>

PORTLAND GENERAL HOLDINGS, INC.

RETIREMENT PLAN FOR OUTSIDE DIRECTORS

1997 RESTATEMENT

ARTICLE I-PURPOSE

1.1 Purpose

The Portland General Holdings, Inc. Retirement Plan for Outside
Directors is designed to enhance the Participating Companies' ability to
attract and retain competent and experienced Directors by providing
retirement benefits for certain Directors who retire after the Effective
Date. The Plan first became effective on January 1, 1985 and was amended by
the 1990 and 1996 Restatements.

1.2 Effective Date

This 1997 Restatement is effective June 25, 1997.

1.3 Plan Sponsor

The Plan is maintained for the benefit of previous Outside Directors of
Portland General Corporation, an Oregon corporation, and Outside Directors
of any corporations or other entities affiliated with or subsidiary to it,
if such corporations or entities are selected by the Board.

ARTICLE II-DEFINITIONS

2.1 Actuarially Equivalent

"Actuarially Equivalent" shall mean the equivalence in value between two
(2) or more forms and/or times of payment based upon a determination by an
actuary chosen by the Senior Administrative Officer using a discount rate
equal to the 30-year Treasury Bill rate on the January 1st of the year in
which the determination occurs plus one percent (1%) and the unisex
mortality table chosen by the actuary, which choice shall be binding on all
parties.

2.2 Benefit Service

"Benefit Service" shall mean the continuous amount of time, in completed
months, as an Outside Director. Benefit Service shall commence on the
Outside Director's first election to the Board as an Outside Director and
shall end at the last Board or committee meeting the Outside Director
attends. Concurrent service on more than one Participating Company's Board
shall be counted only once as actual months of service.

PAGE 1 - RETIREMENT PLAN FOR OUTSIDE DIRECTORS

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2.3 Board

"Board" shall mean the Board of Directors of Portland General Holdings,
Inc.

2.4 Change in Control

A "Change in Control" shall mean:

(a) Any "person," as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than Portland General Holdings, Inc. ("PGH"), any trustee or
other fiduciary holding securities under an employee benefit plan of
PGH, or any Employer owned, directly or indirectly, by the stockholders
of PGH in substantially the same proportions as their ownership of stock
of PGH), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities
representing thirty percent (30%) or more of the combined voting power
of PGH's then outstanding voting securities; or

(b) During any period of two (2) consecutive years (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board, and any new director
whose election by the Board or nomination for election by PGH's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors as of the
beginning of the period of whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a
majority thereof.

(c) Notwithstanding anything to the contrary in the foregoing, no
"Change in Control" shall be deemed to have occurred upon the
consummation of the Amended and Restated Agreement and Plan of Merger by
and among Enron Corp., Portland General Corporation and Enron Oregon
Corp., dated as of July 20, 1996, or amended and restated from time to
time (the "Merger Agreement").

2.5 Committee

"Committee" shall mean the Non-Qualified Benefits Committee of the
Board.

2.6 Company

"Company" shall mean Portland General Holdings, Inc., an Oregon
Corporation.

2.7 Compensation

"Compensation" shall mean the greater of actual annual retainer and fees
for attendance at PGC Board and various committee meetings that the Outside
Director earned in the last 12 months of Benefit Service, or one-third
(1/3) of the total annual retainer and fees earned in the last thirty-six
(36) months of Benefit Service.

PAGE 2 - RETIREMENT PLAN FOR OUTSIDE DIRECTORS

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2.8 Dependent

"Dependent" shall mean an unmarried child of the Outside Director until
the age of nineteen (19) (age twenty-six (26) if a full-time student). An
unmarried child shall also qualify as a Dependent by reason of mental
retardation or physical handicap for as long as the condition exists, if
such child qualifies as a dependent under regulations set forth by the
Internal Revenue Service by reason of such mental retardation or physical
handicap.

2.9 Direct Subsidiary

"Direct Subsidiary" means any corporation of which a Participating
Company owns at least eighty percent (80%) of the total combined voting
power of all classes of its stock entitled to vote.

2.10 Effective Date

"Effective Date" shall mean June 25, 1997.

2.11 Indirect Subsidiary

"Indirect Subsidiary" means any corporation of which a Participating
Company directly and constructively owns at least eighty percent (80%) of
the total combined voting power of all classes of its stock entitled to
vote. In determining the amount of stock of a corporation that is
constructively owned by a Participating Company, stock owned, directly or
constructively, by a corporation shall be considered as being owned
proportionately by its shareholders according to such shareholders' share
of voting power of all classes of its stock entitled to vote.

2.12 Marriage

"Marriage" shall mean the Marriage or Remarriage of a Participant prior
to their separation from service on the Board.

2.13 Outside Director

"Outside Director" shall mean a member of the PGC Board who is not an
employee of Portland General Holdings, Inc. or any Direct Subsidiary or
Indirect Subsidiary or affiliate of Portland General Holdings, Inc..

2.14 PGC Board

"PGC Board" shall mean the Board of Directors of Portland General
Corporation, or the Board of Directors of the successor corporation
established pursuant to the Merger Agreement as defined in Section 2.4(c),
or any Advisory Committee to the Portland General Electric Company or the
board or officers of a corporation qualifying as a Participating Company of
the Plan, including subsidiaries and joint venture partners, the status of
which shall be determined at the discretion of the Senior Administrative
Office.

PAGE 3 - RETIREMENT PLAN FOR OUTSIDE DIRECTORS

<PAGE>

2.15 Participant

"Participant" shall mean any eligible Outside Director elected to the
PGC Board prior to the Suspension Date.

2.16 Participating Company

"Participating Company" shall mean the Company or any affiliated or
subsidiary company designated by the Board as a Participating Company under
the Plan, as long as such designation has become effective and continues to
be in effect. The designation as a Participating Company shall become
effective only upon acceptance of such designation and the formal adoption
of the Plan by a Participating Company. A Participating Company may revoke
its acceptance of designation as a Participating Company at any time, but
until it makes such revocation, all of the provisions of this Plan and any
amendments thereto shall apply to the Outside Directors of the
Participating Company and their Beneficiaries.

2.17 Plan

"Plan" shall mean the Portland General Holdings, Inc. Retirement Plan
for Outside Directors.

2.18 Retirement Date

"Retirement Date" shall mean the first day of the month coincident with
or next following the date of separation from service as an Outside
Director, other than by death, after the earlier of age seventy (70) or ten
(10) years of Benefit Service.

2.19 Senior Administrative Officer

"Senior Administrative Officer" shall mean the employee in the
management position designated by the Committee to administer the Plan.

2.20 Spouse

"Spouse" shall mean the person to whom the Outside Director was legally
married at the Outside Director's date of death.

2.21 Suspension Date

"Suspension Date" shall mean January 1, 1996.

2.22 Termination

"Termination" shall mean removal from the PGC Board by shareholders
during a current term of office.

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ARTICLE III-RETIREMENT BENEFITS

3.1 Eligibility

Each Participant who reaches a Retirement Date on or after the Effective
Date shall be eligible for retirement benefits under this Plan. Benefits
shall be payable to such Participant under this Plan when the Participant
no longer serves on the PGC Board.

3.2 Benefit Upon Retirement

(a) The annual benefit payable under this Plan shall equal five
percent (5%) of Compensation for each of the first ten (10) years of
Benefit Service plus two and one-half percent (2.5%) of Compensation for
each of the next ten (10) years of Benefit Service up to a maximum
benefit of seventy-five percent (75%) of Compensation for years of
Benefit Service completed prior to the Suspension Date. No further
accruals shall be made following the Suspension Date.

(b) All Participants shall be vested in their accrued benefit as of
the Suspension Date.

3.3 Form of Benefit Payment

The benefits shall be paid in the form elected by the Participant at the
time the Outside Director becomes a Participant in the Plan. Except in the
case of Marriage of a Participant (in which case a Participant may
reelect), this election shall be made one time and shall be irrevocable.
The election shall be in the form prescribed by the Company and filed with
the Senior Administrative Officer. The following options shall be
available:

(a) If the Participant is unmarried as of the Retirement Date, the
benefit shall be paid:

(i) As a straight life annuity; or

(ii) Over a length of time equal to the lesser of the Outside
Director's Benefit Service or the Outside Director's lifetime.

(b) If the Participant is married as of the Retirement Date, the
benefit may be paid:

(i) As a straight life annuity; or

(ii) As a fifty percent (50%) joint and survivor annuity; or

(iii) As a one hundred percent (100%) joint and survivor annuity;
or

(iv) Over a period of time equal to the Outside Director's
Benefit Service so long as the Outside Director or Spouse is living;
or

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(v) Over a length of time equal to the lesser of the Outside
Director's Benefit Service or the Outside Director's lifetime, or
upon death, survivor benefit payable for the lesser of Spouse's life,
twelve (12) months, or Outside Director's Benefit Service.

Benefits paid in a form other than pursuant to Section 3.3(a)(ii) or
(b)(v) shall be calculated on an Actuarially Equivalent basis. In the event
an election is not on file at the time benefit payments commence, benefits
shall be paid as a straight life annuity if the Participant is unmarried or
a fifty percent (50%) joint and survivor annuity if the Participant is
married. One-twelfth (1/12) of the annual benefit shall be payable monthly
on the first day of each month.

(c) If the benefit to be paid is less than ten thousand dollars
($10,000) as of the Suspension Date, a lump-sum payment shall be paid
notwithstanding the form elected.

3.4 Commencement of Payment

Benefit payments shall commence within thirty (30) days following
separation from service on the Board.

ARTICLE IV-BENEFITS AFTER CHANGE IN CONTROL

4.1 Benefit Upon a Change in Control

Upon the Termination of a Participant within three (3) years following a
Change in Control, the following shall apply to the benefits for each
Participant who is an Outside Director at the time such Change in Control
occurs:

(a) A benefit shall be payable regardless of the Outside Director's
Benefit Service, Retirement Date, or age.

(b) The annual benefit payable shall equal five percent (5%) of
Compensation for each of the first ten (10) years of Benefit Service
plus two and one-half percent (2.5%) of Compensation for each of the
remaining years of Benefit Service, up to ten (10) years of Benefit
Service, for years of Benefit Service completed prior to the Suspension
Date, except that the Participant's total benefit shall not exceed
seventy-five percent (75%) of Compensation.

4.2 Form of Payment

A benefit, Actuarially Equivalent to the benefit payable over the lesser
of twenty (20) years or years of service on the Board as computed under
4.1(c), shall be paid in a lump sum.

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4.3 Commencement of Payment

Benefit payment shall be made within sixty (60) days following
Termination of the Outside Director.

ARTICLE V-SURVIVOR BENEFITS

5.1 Survivor Benefit

If an Outside Director, who is eligible for a retirement benefit, dies
while serving on the PGC Board, a survivor's benefit equal to the
Participant's monthly Retirement benefit shall be paid to the Spouse of the
Outside Director. Such benefit shall be the Actuarially Equivalent amount
payable under this Plan, as of the Suspension Date, as if the Outside
Director had retired on the first day of the month in which he or she died
and had been receiving the benefit as elected under Section 3.3 (b) (ii),
(iii), (iv), or (v).

5.2 Cessation of Benefit Upon Remarriage

In the event a Spouse receiving benefits under this Plan remarries, such
Spouse will stop receiving, as of the date of remarriage, any further
monthly benefits from this Plan . However, in lieu of any further monthly
benefits from this Plan, a Spouse will receive the lesser of the remaining
monthly benefits or six (6) months of benefits in a lump sum within forty-
five (45) days from the date of such remarriage. In the event the Senior
Administrative Officer is not notified of such remarriage within six (6)
months, no benefit shall be payable under this Section.

ARTICLE VI-ADMINISTRATION

6.1 Senior Administrative Officer; Duties

This Plan shall be administered by the Senior Administrative Officer, as
designated by the Committee. Members of the Committee may be Participants
under this Plan. The Senior Administrative Officer shall have the authority
to make, amend, interpret and enforce all appropriate rules and regulations
for the administration of this Plan and decide or resolve any and all
questions including interpretations of this Plan as may arise in connection
with the Plan. The Senior Administrative Officer shall report to the
Committee on an annual basis regarding Plan activity and at such other
times as may be requested by the Committee.

6.2 Agents

In the administration of the Plan, the Senior Administrative Officer
may, from time to time, employ agents and delegate to such agents,
including employees of any Participating Company, such administrative
duties as it sees fit, and may, from time to time, consult with counsel,
who may be counsel to any Participating Company.

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6.3 Binding Effect of Decisions

The decision or action of the Senior Administrative Officer with respect
to any question arising out of or in connection with the administration,
interpretation and application of the Plan and the rules and regulations
promulgated hereunder shall be final and conclusive and binding upon all
persons having any interest in the Plan.

6.4 Indemnity of Senior Administrative Officer; Committee

Each Participating Company shall indemnify and hold harmless the Senior
Administrative Officer and the Committee and its individual members against
any and all claims, loss, damage, expense or liability arising from any
action or failure to act with respect to this Plan, except in the case of
gross negligence or willful misconduct.

6.5 Availability of Plan Documents

Each Participant shall receive a copy of this Plan, and the Senior
Administrative Officer shall make available for inspection by any
Participant a copy of the rules and regulations used in administering the
Plan.

6.6 Cost of Plan Administration

The Company shall bear all expenses of administration. However, a
ratable portion of the expense shall be charged back to each Participating
Company.

ARTICLE VII-CLAIMS PROCEDURE

7.1 Claim

Any person claiming a benefit, requesting an interpretation or ruling
under the Plan or requesting information under the Plan shall present the
request in writing to the Senior Administrative Officer or his delegatee
who shall respond in writing as soon as practicable.

7.2 Denial of Claim

If the claim or request is denied, the written notice of denial shall
state:

(a) The reasons for denial, with specific reference to the Plan
provisions on which the denial is based.

(b) A description of any additional material or information required
and an explanation of why it is necessary.

PAGE 8 - RETIREMENT PLAN FOR OUTSIDE DIRECTORS

<PAGE>

7.3 Review of Claim

Any person whose claim or request is denied or who has not received a
response within thirty (30) days may request review by notice given in
writing to the Senior Administrative Officer. The claim or request shall be
reviewed by the Senior Administrative Officer, who may, but shall not be
required to, grant the claimant a hearing. On review, the claimant may have
representation, examine pertinent documents and submit issues and comments
in writing.

7.4 Final Decision

The decision of the Senior Administrative Officer on review shall
normally be made within sixty (60) days. If an extension of time is
required for a hearing or other special circumstances, the claimant shall
be notified and the time limit shall be one hundred twenty (120) days. The
decision shall be in writing and shall state the reasons and relevant Plan
provisions. All decisions on review shall be final and bind all parties
concerned.

ARTICLE VIII-AMENDMENT AND TERMINATION OF PLAN

8.1 Amendment

The Senior Administrative Officer may amend the Plan from time to time
as may be necessary for administrative purposes and legal compliance,
provided, however, that no such amendment shall affect the benefit rights
of Participants or Beneficiaries in the Plan. The Committee may amend the
Plan at any time, provided, however, that no amendment shall be effective
to decrease or restrict the rights of Participants and Beneficiaries to the
benefit accrued at the time of the amendment.

8.2 Termination

The board of directors of each Participating Employer may at any time,
in its sole discretion, terminate or suspend the Plan in whole or in part
for that Participating Employer. However, no such termination or suspension
shall adversely affect the benefits of Participants which have accrued
prior to such action, the benefits of any Participant who has previously
retired, the benefits of any Beneficiary of a Participant who has
previously died, or already accrued Plan liabilities between Participating
Employers.

ARTICLE IX-MISCELLANEOUS

9.1 Unfunded Plan

This Plan is intended to be an unfunded plan maintained primarily to
provide deferred compensation benefits for a select group of Outside
Directors.

PAGE 9 - RETIREMENT PLAN FOR OUTSIDE DIRECTORS

<PAGE>

9.2 Liability

(a) Liability of Benefits. Except as otherwise provided in this
paragraph, liability for the payment of a Participant's benefit
pursuant to this Plan shall be borne solely by the Participating
Company for which the Participant serves during the accrual or
increase of the Plan benefit, and no liability for the payment of any
Plan benefit shall be incurred by reason of Plan sponsorship or
participation except for the Plan benefits of a Participating
Company's own Outside Directors. Provided, however, that each
Participating Company, by accepting the Board's designation as a
Participating Company under the Plan and formally adopting the Plan,
agrees to assume secondary liability for the payment of any benefit
accrued or increased while a Participant serves on the board of
directors of a Participating Company that is a Direct Subsidiary or
Indirect Subsidiary of the Participating Company at the time such
benefit is accrued or increased. Such liability shall survive any
revocation of designation as a Participating Employer with respect to
any liabilities accrued at the time of such revocation. Nothing in
this paragraph shall be interpreted as prohibiting any Participating
Company or any other person from expressly agreeing to the liability
for a Plan Participants' payment of any benefits under the Plan.

(b) Unsecured General Creditor. Participants of this Plan, and
any Spouse, Dependents, heirs, successors, and assigns shall have no
secured legal or equitable rights, interest or claims in any property
or assets of Participating Company, nor shall they be beneficiaries
of, or have any rights, claims or interests in any life insurance
policies, annuity contracts or the proceeds therefrom owned or which
may be acquired by Participating Company. Except as provided in
Section 9.3, such policies, annuity contracts or other assets of
Participating Company shall not be held under any trust for the
benefit of any Participant, Spouse, Dependents, heirs, successors or
assigns, or held in any way as collateral security for the fulfilling
of the obligations of Participating Company under this Plan. Any and
all of Participating Company's assets and policies shall be, and
remain, the general, unpledged, unrestricted assets of Participating
Company. Participating Company's obligation under the Plan shall be
that of an unfunded and unsecured promise to pay money in the future.

9.3 Trust Fund

At its discretion, each Participating Company, jointly or severally, may
establish one or more trusts, with such trustees as the Board may approve,
for the purpose of providing for the payment of such benefits. Such trust
or trusts may be irrevocable, but the assets thereof shall be subject to
the claims of Participating Company's creditors. To the extent any benefits
provided under the Plan are actually paid from any such trust,
Participating Company shall have no further obligation with respect
thereto, but to the extent not so paid, such benefits shall remain the
obligation of, and shall be paid by, Participating Company.

9.4 Nonassignability

Neither a Participant of this Plan nor any other person shall have any
right to sell, assign, transfer, pledge, anticipate, mortgage or otherwise
encumber, hypothecate or convey in advance of actual receipt the amounts,
if any, payable hereunder, or any part thereof, which are, and all

PAGE 10 - RETIREMENT PLAN FOR OUTSIDE DIRECTORS

<PAGE>

rights to which are, expressly declared to be nonassignable and
nontransferable.
No part of the amount payable shall, prior to actual payment, be subject to
seizure or sequestration for the payment of any debts, judgments, alimony
or separate maintenance owed by a Participant or any other person, nor be
transferable by operation of law in the event of a Participant's or any
other person's bankruptcy or insolvency.

9.5 Payment to Guardian

If a Plan benefit is payable to a minor or a person declared incompetent
or to a person incapable of handling the disposition of property, the
Senior Administrative Officer may direct payment of such Plan benefit to
the guardian, legal representative or person having the care and custody of
such minor or incompetent person. The Senior Administrative Officer may
require proof of incompetency, minority, incapacity or guardianship as he
may deem appropriate prior to distribution of the Plan benefit. Such
distribution shall completely discharge the Senior Administrative Officer,
the Committee and the Company from all liability with respect to such
benefit.

9.6 Terms

In this Plan document, unless the context clearly indicates the
contrary, the masculine gender will be deemed to include the feminine
gender, and the singular shall include the plural.

9.7 Protective Provisions

A Participant shall cooperate with Participating Company by furnishing
any and all information requested by Participating Company, in order to
facilitate the payment of benefits hereunder, and by taking such physical
examinations as Participating Company may deem necessary and taking such
other action as may be requested by Participating Company.

9.8 Governing Law

The provisions of this Plan shall be construed and interpreted according
to the laws of the State of Oregon, except as preempted by federal law.

9.9 Validity

If any provision of this Plan shall be held illegal or invalid for any
reason, said illegality or invalidity shall not affect the remaining parts
hereof, but this Plan shall be construed and enforced as if such illegal
and invalid provision had never been inserted herein.

9.10 Notice

PAGE 11 - RETIREMENT PLAN FOR OUTSIDE DIRECTORS

<PAGE>

be deemed given as of the date of
delivery or, if delivery is made by mail, as of the date shown on the
postmark on the receipt for registration or certification.

9.11 Successors

The provisions of this Plan shall bind and inure to the benefit of
Participating Company and its successors and assigns. The term successors
as used herein shall include any corporate or other business entity which
shall, whether by merger, consolidation, purchase or otherwise, acquire all
or substantially all of the business and assets of Participating Company,
and successors of any such corporation or other business entity.

9.12 Not a Contract of Service

The terms and conditions of this Plan shall not be deemed to constitute
a contract of service between a Participating Company and a Participant,
and neither a Participant nor a Participant's Spouse or Dependent shall
have any rights against a Participating Company except as may otherwise be
specifically provided herein. Moreover, nothing in this Plan shall be
deemed to give a Participant the right to be retained on the Board of a
Participating Company nor shall it interfere with the Participant's right
to terminate his directorship at any time.

IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its officers thereunto duly recognized, this 5th day of
September, 1997.

PORTLAND GENERAL HOLDINGS, INC.

By: /s/ Don F. Kielblock

Its: Vice President

PAGE 12 - RETIREMENT PLAN FOR OUTSIDE DIRECTORS

<PAGE>

PORTLAND GENERAL HOLDINGS, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

1997 RESTATEMENT

<PAGE>

TABLE OF CONTENTS

Page

ARTICLE 1 PURPOSE ..................................................... 1

1.1 Purpose ................................................. 1
1.2 Effective Date .......................................... 1

ARTICLE 2 DEFINITIONS ................................................. 1

2.1 Actuarially Equivalent .................................. 1
2.2 Basic Plan .............................................. 1
2.3 Basic Plan Offset ....................................... 1
2.4 Board ................................................... 2
2.5 Cause ................................................... 2
2.6 Change in Control ....................................... 2
2.7 Committee ............................................... 2
2.8 Company ................................................. 2
2.9 Credited Service ........................................ 3
2.10 Dependent .............................................. 3
2.11 Direct Subsidiary ...................................... 3
2.12 Disability ............................................. 3
2.13 Earnings ............................................... 3
2.14 Employment ............................................. 3
2.15 Final Average Earnings ................................. 3
2.16 Final Earnings ......................................... 4
2.17 Indirect Subsidiary .................................... 4
2.18 Other Retirement Income ................................ 4
2.19 Participant ............................................ 4
2.20 Participating Employer ................................. 4
2.21 Plan ................................................... 4
2.22 Retirement ............................................. 4
2.23 Senior Administrative Officer .......................... 4
2.24 Senior Office .......................................... 5
2.25 Spouse ................................................. 5

i
<PAGE>

ARTICLE 3 ELIGIBILITY ................................................. 5

3.1 Eligibility ............................................. 5
3.2 Retirement .............................................. 5
3.3 Forfeitures ............................................. 5

ARTICLE 4 AMOUNT, FORM AND PAYMENT OF SUPPLEMENTAL BENEFIT ............ 6

4.1 Normal Retirement Benefit ............................... 6
4.2 Early Retirement Benefit ................................ 6
4.3 Separation from Service Benefit ......................... 7
4.4 Postponed Retirement Benefit ............................ 7
4.5 Retention of Accrued Benefit ............................ 7
4.6 Reduction of Benefits ................................... 7
4.7 Unreduced Benefit Date .................................. 7
4.8 Commencement of Benefits ................................ 8
4.9 Form of Benefit ......................................... 8
4.10 Benefit Increases for Retirees ......................... 8

ARTICLE 5 PRE-RETIREMENT SURVIVOR BENEFITS ............................ 8

5.1 Survivor Benefit ........................................ 8
5.2 Benefit Payment ......................................... 8
5.3 Dependent Benefit ....................................... 9
5.4 Cessation of Benefit Upon Remarriage .................... 9

ARTICLE 6 DISABILITY BENEFITS ......................................... 9

6.1 Disability Retirement ................................... 9
6.2 Disability Benefit ...................................... 9
6.3 Form and Commencement of Benefits ....................... 9
6.4 Survivor and Dependent Benefits ......................... 9
6.5 Evidence of Continue Disability ......................... 9

ARTICLE 7 ADMINISTRATION .............................................. 10

7.1 Senior Administrative Officer; Duties ................... 10
7.2 Agents .................................................. 10
7.3 Binding Effect of Decisions ............................. 10
7.4 Indemnity of Senior Administrative Officer; Committee ... 10
7.5 Availability of Plan Documents .......................... 10
7.6 Cost of Plan Administration ............................. 10

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ARTICLE 8 CLAIMS PROCEDURE ............................................ 10

8.1 Claim ................................................... 10
8.2 Denial of Claim ......................................... 11
8.3 Review of Claim ......................................... 11
8.4 Final Decision .......................................... 11

ARTICLE 9 TERMINATION OR AMENDMENT .................................... 11

9.1 Amendment ............................................... 11
9.2 Termination ............................................. 11

ARTICLE 10 MISCELLANEOUS .............................................. 12

10.1 Unfunded Plan .......................................... 12
10.2 Liability .............................................. 12
10.3 Trust Fund ............................................. 13
10.4 Nonassignability ....................................... 13
10.5 Payment to Guardian .................................... 13
10.6 Not a Contract of Employment ........................... 13
10.7 Protective Provision ................................... 14
10.8 Terms .................................................. 14
10.9 Governing Law .......................................... 14
10.10 Validity .............................................. 14
10.11 Notice ................................................ 14
10.12 Successors ............................................ 14

iii
<PAGE>

PORTLAND GENERAL HOLDINGS, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

1997 RESTATEMENT

ARTICLE 1

PURPOSE

1.1 PURPOSE. The principal objectives of this Supplemental
Executive Retirement Plan are to provide key executives with competitive
retirement benefits, protect against reductions in retirement benefits due
to tax law limitations on qualified plans and to facilitate early
retirement. The Plan is designed to provide a benefit which, when added to
other retirement income of the executive, will meet this objective. This
Plan was originally effective on July 1, 1983, and amended by the 1996
Restatement.

1.2 EFFECTIVE DATE. This 1997 Restatement is adopted to make
amendments to the Plan effective June 25, 1997.

ARTICLE 2

DEFINITIONS

2.1 ACTUARIALLY EQUIVALENT. "Actuarially Equivalent" shall mean
the equivalence in value between two or more forms and/or times of payment
based upon a determination by an actuary chosen by the Senior
Administrative Officer using sound actuarial assumptions at the time of
such determination and applied on a uniform and consistent basis for all
Participants.

2.2 BASIC PLAN. "Basic Plan" shall mean the Participating
Employers' Pension Plan or Plans, as may be amended from time to time, and
any successor defined benefit retirement income plan or plans maintained by
the Participating Employers which qualify under Section 401(a) of the
Internal Revenue Code.

2.3 BASIC PLAN OFFSET. "Basic Plan Offset" shall mean the amount
of benefit that would be paid from the Basic Plan to a Participant,
assuming eligible compensation used to calculate such benefit includes
amounts deferred under any Participating Employer sponsored non-qualified
deferred compensation plan, in the form of a straight life annuity from the
Early, Normal, Disability or Postponed Retirement Date, regardless of the
amount actually paid or the actual method of payment under the Basic Plan.

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2.4 BOARD. "Board" shall mean the Board of Directors of Portland
General Holdings, Inc.

2.5 CAUSE. "Cause" shall mean:

2.5.1 The final conviction (or, without limitation,
confession, plea bargain, plea of nolo contendere or similar
disposition in a court of law) of a Participant of a felony connected
with or related to or which affects the performance of Participant's
obligations as an employee of a Participating Employer;

2.5.2 Perpetration of fraud against or affecting a
Participating Employer; or

2.5.3 Misfeasance or malfeasance in connection with a
Participant's employment with a Participating Employer.

2.6 CHANGE IN CONTROL. A "Change in Control" shall mean:

(a) Any "person," as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than Portland General Holdings, Inc. ("PGH"),
any trustee or other fiduciary holding securities under an employee
benefit plan of PGH, or any Employer owned, directly or indirectly, by
the stockholders of PGH in substantially the same proportions as their
ownership of stock of PGH), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities representing thirty percent (30%) or more of the
combined voting power of PGH's then outstanding voting securities; or

(b) During any period of two (2) consecutive years (not including
any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board, and any new
director whose election by the Board or nomination for election by
PGH's stockholders was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors as of
the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute at least a majority thereof.

2.7 COMMITTEE. "Committee" shall mean the Non-qualified Benefits
Committee of the Board.

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2.8 COMPANY. "Company" shall mean Portland General Holdings, Inc.,
an Oregon corporation.

2.9 CREDITED SERVICE. "Credited Service" shall mean a Participant's
Years of Credited Service or Benefit Service as defined in the Basic Plan.
A Participant may, at the option of the Committee, be credited with
additional Years of Credited Service. Such additional Years of Service may
be for calculation of the benefit under Section 4.1 or Section 4.2 or
calculation of the unreduced Benefit Date under Section 4.7 and may be in
different amounts for each purpose.

2.10 DEPENDENT. "Dependent" shall mean an unmarried child of the
Participant until the age of nineteen (19) (age twenty-six (26) if a full
time student). An unmarried child may also qualify as a Dependent by
reason of mental retardation or physical handicap for as long as the
condition exists, if such child qualifies as a dependent under regulations
set forth by the Internal Revenue Service by reason of such mental
retardation or physical handicap.

2.11 DIRECT SUBSIDIARY. "Direct Subsidiary" shall mean any
corporation of which a Participating Employer owns at least eighty percent
(80%) of the total combined voting power of all classes of its stock
entitled to vote.

2.12 DISABILITY. "Disability" shall mean the inability of a
Participant to perform with reasonable continuity the material duties of
any gainful occupation for which the Participant is reasonably fitted by
education, training and experience.

2.13 EARNINGS. "Earnings" shall mean total annual base salary, before
any reductions pursuant to voluntary deferrals by the employee under
Participating Employer-sponsored plans; plus any cash annual incentive
compensation awards; plus any cash long-term incentive awards earned prior
to January 1, 1987, but excluding any other long-term incentive awards.
For purposes of determining Earnings for any particular year, Earnings for
the year shall consist of base salary, cash annual incentive compensation
awards, and cash long-term incentive awards earned prior to January 1,
1987, earned during that year.

2.14 EMPLOYMENT. "Employment" shall mean the period or periods during
which an individual is an employee of one or more Participating Employers.

2.15 FINAL AVERAGE EARNINGS. "Final Average Earnings" shall mean a
Participant's highest average of any three consecutive years' Earnings
during the final ten (10) years of Employment. If the Participant has
fewer than three (3) years of Employment, then his Final Average Earnings
shall be determined based on the average of the actual Employment period.

2.16 FINAL EARNINGS. "Final Earnings" shall mean the Participant's
Earnings for the year ending on the date a Change in Control under Section
** occurs.

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2.17 INDIRECT SUBSIDIARY. "Indirect Subsidiary" shall mean any
corporation of which a Participating Employer directly and constructively
owns at least eighty percent (80%) of the total combined voting power of
all classes of its stock entitled to vote. In determining the amount of
stock of a corporation that is constructively owned by a Participating
Employer, stock owned, directly or constructively, by a corporation shall
be considered as being owned proportionately by its shareholders according
to such shareholders' share of voting power of all classes of its stock
entitled to vote.

2.18 OTHER RETIREMENT INCOME. "Other Retirement Income" shall mean
retirement income payable to a Participant as set forth below:

2.18.1 FOR OTHER THAN DISABILITY RETIREMENT: Any periodic
income continuance, severance payments or other defined benefit
retirement payments from a Participating Employer.

2.18.2 FOR DISABILITY RETIREMENT: Income from the
Portland General Holdings, Inc. Long-Term Disability Plan or any other
long-term disability plan sponsored by a Participating Employer.

2.19 PARTICIPANT. "Participant" shall mean an employee of a
Participating Employer, who is also a Senior Officer as defined in Section
2.23 and designated in writing as a Participant by the Senior
Administrative Officer prior to June 25, 1997.

2.20 PARTICIPATING EMPLOYER. "Participating Employer" shall mean
Company or any affiliated or subsidiary company designated by the Board as
a Participating Employer under the Plan, as long as such designation has
become effective and continues to be in effect. The designation as a
Participating Employer shall become effective only upon the acceptance of
such designation and the formal adoption of the Plan by a Participating
Employer. A Participating Employer may revoke its acceptance of
designation as a Participating Employer at any time, but until it makes
such revocation, all of the provisions of this Plan and any amendments
thereto shall apply to the Participants and their Beneficiaries of the
Participating Employer.

2.21 PLAN. "Plan" shall mean the Portland General Holdings, Inc.
Supplemental Executive Retirement Plan, as may be amended from time to
time.

2.22 RETIREMENT. "Retirement" and "Retire" shall mean the termination
of a Participant's Employment with Portland General Holdings, Inc. and any
and all Direct or Indirect Subsidiaries or affiliates of Portland General
Holdings, Inc. on one of the Retirement dates specified in Section 3.2.

2.23 SENIOR ADMINISTRATIVE OFFICER. "Senior Administrative Officer"
shall mean the employee in the management position designated by the
Committee to administer the Plan.

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<PAGE>

2.24 SENIOR OFFICE. "Senior Officer" shall mean the Chief Executive
Officer, the President, Division Presidents, all Senior Vice Presidents,
all Vice Presidents, the Treasurer and the Controller of the Participating
Employer, all as elected or appointed by the board of directors of the
Participating Employer.

2.25 SPOUSE. "Spouse" shall mean an individual who is a spouse as
defined under the Basic Plan.

ARTICLE 3

ELIGIBILITY

3.1 ELIGIBILITY. Eligibility to participate shall be limited to
those employees who have attained the position of Senior Officer and are
designated in writing as a Participant by the Senior Administrative Officer
prior to June 25, 1997, or those employees who have previously been
selected as Participants.

3.2 RETIREMENT. Each Participant is eligible to Retire and receive a
benefit under this Plan beginning on one of the following dates:

3.2.1 NORMAL RETIREMENT DATE, which is the first day of
the month following the month in which the Participant reaches age
sixty-five (65);

3.2.2 EARLY RETIREMENT DATE, which is the first day of
any month following the month in which the Participant reaches age
fifty-five (55) and has completed five (5) years of Employment with
Portland General Holdings, Inc. and any Direct and Indirect
Subsidiaries or affiliates of Portland General Holdings, Inc.;

3.2.3 POSTPONED RETIREMENT DATE, which is the first day
of the month following the Participant's Normal Retirement Date in
which the Participant terminates Employment with Portland General
Holdings, Inc. and any and all Direct and Indirect Subsidiaries or
affiliates of Portland General Holdings, Inc.; or

3.2.4 DISABILITY RETIREMENT DATE, which is the first day
of the month following six (6) months of Disability as certified by
the Senior Administrative Officer.

3.3 FORFEITURES. A Participant who is receiving, or may be entitled
to receive, a benefit shall forfeit any right to receive benefits if one of
the following occurs:

3.3.1 The Participant is discharged for Cause, as
determined by the Committee;

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<PAGE>

3.3.2 The Participant performs services for an
organization where there is a conflict of interest which is adverse to
the Company's interest, as determined by the Committee; or

3.3.3 The Participant voluntarily terminates employment
without providing for transition in disregard of the Company's best
interests, as determined by the Committee.

ARTICLE 4

AMOUNT, FORM AND PAYMENT OF SUPPLEMENTAL BENEFIT

4.1 NORMAL RETIREMENT BENEFIT. The annual benefit payable at a
Normal Retirement Date under the Plan shall equal:

4.1.1 Three percent (3%) of Final Average Earnings for
each of the first fifteen (15) years of Credited Service, plus one and
one half percent (1 1/2 %) of Final Average Earnings for each of the
next ten (10) years of Credited Service, plus, for service accrued
prior to March 1, 1988, three-quarters of one percent ( 3/4 %) for
each year of Credited Service in excess of twenty-five (25) (Annual
Supplemental Benefit);

4.1.1.1 less any Basic Plan Offset;

4.1.1.2 less any Other Retirement Income.

4.2 EARLY RETIREMENT BENEFIT.

4.2.1 The annual benefit payable at an Early retirement Date
shall equal the Annual Supplemental Benefit based on Credited Service
to the Early Retirement Date, reduced in accordance with Section 4.6
as appropriate;

4.2.1.1 less any Basic Plan Offset;

4.2.1.2 less any Other Retirement Income.

4.2.2 An additional benefit ("Temporary Social Security
Supplement") shall be payable to a Participant who commences benefits
on an Early Retirement Date which is prior to the earliest date the
Participant is eligible for retirement benefits under the Social
Security Act. Such Temporary Social Security Supplement shall not be
payable during any period when the Participant is eligible to collect
Social Security disability benefits. Such Temporary Social Security
Supplement shall equal the Social Security benefit payable at such
earliest date based on calculation procedures in the Basic Plan. Such
amount shall be payable until the earlier of:

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<PAGE>

4.2.2.1 the earliest date the Participant is
eligible for Social Security retirement benefits; or

4.2.2.2 the Participant's date of death.

4.3 SEPARATION FROM SERVICE BENEFIT. The annual benefit payable at a
date of separation from service other than as a result of Retirement,
Disability, or Termination upon a Change in Control shall equal:

4.3.1 Annual Supplemental Benefit based on Credited Service
and Final Average Earnings as of the Participant's date of separation
from service, reduced in accordance with Section 4.6 as appropriate;

4.3.1.1 less any Basic Plan Offsets;

4.3.1.2 less any Other Retirement Income.

4.3.2 The benefit shall commence on the first day of the
month following such date that would have constituted an Early
Retirement Date had the Participant remained employed.

4.4 POSTPONED RETIREMENT BENEFIT. The annual benefit payable at a
Postponed Retirement Date shall be equal to the benefit determined in
accordance with Section 4.1 based on Credited Service and Final Average
Earnings as of the Participant's Postponed Retirement Date.

4.5 RETENTION OF ACCRUED BENEFIT. In the event a Participant is
transferred to an employer who is not a Participating Employer, the benefit
payable at Retirement Date shall be calculated based on Credit Service and
Final Average Earnings with all Participating Employers and as of the last
date of Employment with a Participating Employer. In the event a
Participant is transferred to a position other than that of Senior Officer,
the benefit payable at Retirement Date shall be calculated based on
Credited Service and Final Average Earnings as a Senior Officer as of the
last day such Senior Officer status was held with all Participating
Employers.

4.6 REDUCTION OF BENEFITS. In the event that a benefit calculated
under Sections 4.2 or 4.3 is to commence prior to the Unreduced Benefit
Date such benefit shall be reduced by seven-twelfths of one percent (7/12%)
for each month by which the date of benefit commencement precedes the
Unreduced Benefit Date.

4.7 UNREDUCED BENEFIT DATE. "Unreduced Benefit Date" shall mean the
earlier of:

4.7.1 The first of the month following the date the
Participant attains age sixty-two (62), or

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<PAGE>

4.7.2 The earliest date when the sum of the Participant's age
and Credited Service would total eighty-five (85) years.

4.8 COMMENCEMENT OF BENEFITS. Benefits payable in accordance with
Sections 4.1, 4.2 and 4.4 shall commence on the first day of the month
following the Participant's Retirement and shall continue to be paid on the
first day of each succeeding month until the first day of the month
following the later of the death of the Participant or the death of the
Participant's Spouse.

4.9 FORM OF BENEFIT. The benefits under this Plan shall be payable
as follows:

4.9.1 If the Participant is unmarried when benefits begin, a
straight life annuity; or

4.9.2 If the Participant is married when benefits begin, an
annuity in the same amount as 4.9.1 for the life of the Participant
and an annuity of fifty percent (50%) of that mount continuing to the
Participant's Spouse for the life of Participant's Spouse, if the
Participant predeceases the Spouse.

4.10 BENEFIT INCREASES FOR RETIREES. Benefits payable to retirees
receiving benefits under this Plan shall be increased in the same manner
and at the same time as benefits are increased for retirees under the Basic
Plan.

ARTICLE 5

PRE-RETIREMENT SURVIVOR BENEFITS

5.1 SURVIVOR BENEFIT. If a Participant should die before actual
Retirement, the Spouse will receive a benefit equal to:

5.1.1 Fifty percent (50%) of the amount of the Participant's
Annual Supplemental Benefit determined in accordance with Section 4.1,
based on the Final Average Earnings at death but assuming Credited
Service continued to accrue until Normal Retirement Date;

5.1.2 Less any benefits to such Spouse actually payable from
the Basic Plan.

5.2 BENEFIT PAYMENT. Spouse benefits will be payable monthly, and
will commence on the first day of the month following the month in which
the Participant dies. The last payment will be on the first day of the
month in which the Spouse dies, or such other date pursuant to the
provisions of Section 5.4. Payments may commence to eligible Dependents
pursuant to Section 5.3.

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<PAGE>

5.3 DEPENDENT BENEFIT. If no eligible Spouse survives the
Participant, or if the surviving Spouse who was eligible for payment under
this Section dies with eligible Dependents remaining, the benefit
determined in Section 5.1 above shall be payable to any eligible Dependents
in equal shares. Such monthly benefit shall be paid each Dependent until
such person fails to qualify as a Dependent.

5.4 CESSATION OF BENEFIT UPON REMARRIAGE. In the event a Spouse
receiving benefits under this Plan remarries, such Spouse will stop
receiving, as of the date of remarriage, any further monthly benefits from
this Plan (including future benefits to any Dependents). However, in lieu
of any further monthly benefits from this Plan, a Spouse will receive six
(6) months of benefits in a lump sum within forty-five (45) days after the
Senior Administrative Officer is notified of such remarriage.

ARTICLE 6

DISABILITY BENEFITS

6.1 DISABILITY RETIREMENT. In the event a Participant suffers a
Disability after completing two (2) years of Employment, the Participant
shall be entitled to Retire on a Disability Retirement Date.

6.2 DISABILITY BENEFIT. The annual Disability benefit shall be equal
to the benefit determined in accordance with Section 4.1, based on
projected years of Credit Service to Normal Retirement and based on Final
Average Earnings determined as of the last day of Employment with
Participating Employer before commencement of Disability.

6.3 FORM AND COMMENCEMENT OF BENEFITS. Disability benefits will be
payable monthly and will commence on the Participant's Disability
Retirement Date. The last Disability payment will be as of the first day
of the month during which a disabled Participant either recovers, dies or
retires under the Basic Plan. In the case of a disabled Participant,
recovery will be determined by the Senior Administrative Officer. If the
Participant retires under the Basic Plan, retirement benefits shall be
payable pursuant to Sections 4.1, 4.2 or 4.4 of this Plan based on years of
Credited Service at Retirement date and Final Average Earnings assuming no
change in Earnings at his Disability Retirement Date.

6.4 SURVIVOR AND DEPENDENT BENEFITS. In the event a disabled
Participant dies, the Participant's Spouse and Dependents shall be eligible
for Pre-Retirement Survivor Benefits as set out in Article 5.

6.5 EVIDENCE OF CONTINUE DISABILITY. The Senior Administrative
Officer may require, no more frequently than once per calendar year, that a
disabled Participant submit medical evidence of continued Disability
satisfactory to the Senior Administrative Officer. The Disability benefit
may be discontinued based on a consideration of such evidence or lack
thereof.

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<PAGE>

ARTICLE 7

ADMINISTRATION

7.1 SENIOR ADMINISTRATIVE OFFICER; DUTIES. This Plan shall be
administered by the Senior Administrative Officer appointed by the
Committee. The Senior Administrative Officer may be a Participant under
the Plan. The Senior Administrative Officer shall have the authority to
make, amend, interpret, and enforce all appropriate rules and regulations
for the administration of the Plan and decide or resolve any and all
questions, including interpretations of the Plan, as may arise in
connection with the Plan. The Senior Administrative Officer shall report
to the Committee on an annual basis regarding Plan activity and at such
other times as may be requested by the Committee.

7.2 AGENTS. In the administration of this Plan, the Senior
Administrative Officer may, from time to time, employ agents and delegate
to such agents, including employees of any Participating Employer, such
administrative duties as he sees fit, and may from time to time consult
with counsel who may be counsel to any Participating employer.

7.3 BINDING EFFECT OF DECISIONS. The decision or action of the
Senior Administrative Officer with respect to any question arising out of
or in connection with the administration, interpretation and application of
the Plan and the rules and regulations promulgated hereunder shall be
final, conclusive and binding upon all persons having any interest in the
Plan.

7.4 INDEMNITY OF SENIOR ADMINISTRATIVE OFFICER; COMMITTEE. Each
Participating Employer shall indemnify and hold harmless the Senior
Administrative Officer, the Committee, and its individual members against
any and all claims, loss, damage, expense or liability arising from any
action or failure to act with respect to this Plan, except in the case of
gross negligence or willful misconduct.

7.5 AVAILABILITY OF PLAN DOCUMENTS. Each Participant shall receive a
copy of this Plan, and the Senior Administrative Officer shall make
available for inspection by any Participant a copy of the rules and
regulations used in administering the Plan.

7.6 COST OF PLAN ADMINISTRATION. The Company shall bear all expenses
of administration of this Plan. However, a ratable portion of the expense
shall be charged back to each Participating Employer.

ARTICLE 8

CLAIMS PROCEDURE

8.1 CLAIM. Any person claiming a benefit, requesting an
interpretation or ruling under the Plan or requesting information under the
Plan shall present the request in writing to the

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<PAGE>

Senior Administrative
Officer or his delegatee who shall respond in writing as soon as
practicable.

8.2 DENIAL OF CLAIM. If the claim or request is denied, the written
notice of denial shall state:

8.2.1 The reasons for denial, with specific reference to the
Plan provisions on which the denial is based.

8.2.2 A description of any additional material or information
required and an explanation of why it is necessary.

8.2.3 An explanation of the Plan's claim review procedure.

8.3 REVIEW OF CLAIM. Any person whose claim or request is denied or
who has not received a response within thirty (30) days may request review
by notice given in writing to the Senior Administrative Officer. The claim
or request shall be reviewed by the Senior Administrative Officer, who may,
but shall not be required to, grant the claimant a hearing. On review, the
claimant may have representation, examine pertinent documents and submit
issues and comments in writing.

8.4 FINAL DECISION. The decision by the Senior Administrative Office
on review shall normally be made within sixty (60) days. If an extension
of time is required for a hearing or other special circumstances, the
claimant shall be notified and the time limit shall be one hundred twenty
(120) days. The decision shall be in writing and shall state the reasons
and relevant plan provisions. All decisions on review shall be final and
bind all parties concerned.

ARTICLE 9

TERMINATION OR AMENDMENT

9.1 AMENDMENT. The Senior Administrative Officer may amend the Plan
from time to time as may be necessary for administrative purposes and legal
compliance of the Plan, provided, however, that no such amendment shall
affect the benefit rights of Participants or Beneficiaries in the Plan.
The Committee may amend the Plan at any time, provided, however, that no
amendment shall be effective to decrease or restrict the rights of
Participants and Beneficiaries to the benefit accrued at the time of the
amendment.

9.2 TERMINATION. The board of directors of each Participating
Employer may at any time, in its sole discretion, terminate or suspend the
Plan in whole or in part for that Participating Employer. However, no such
termination or suspension shall adversely affect the benefits of
Participants which have accrued prior to such action, the benefits of any
Participant who has

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<PAGE>

previously retired, the benefits of any Beneficiary of
a Participant who has previously died, or already accrued Plan liabilities
between Participating employers.

ARTICLE 10

MISCELLANEOUS

10.1 UNFUNDED PLAN. This Plan is intended to be an unfunded plan
maintained primarily to provide deferred compensation benefits for a select
group of "management or highly-compensated employees" within the meaning of
Sections 201, 301, and 401 of the Employee Retirement Income Security Act
of 1974, as amended (ERISA), and therefore to be exempt from the provisions
of Parts 2, 3, and 4 of Title I of ERISA. Accordingly, the Board may
terminate the Plan, subject to Section 9.2 of this Plan, or remove certain
employees as Participants if it is determined by the United States
Department of Labor or a court of competent jurisdiction that the Plan
constitutes an employee pension benefit plan within the meaning of Section
3(2) of ERISA (as currently in effect or hereafter amended) which is not so
exempt.

10.2 LIABILITY.

10.2.1 LIABILITY FOR BENEFITS. Except as otherwise provided
in this section, liability for the payment of a Participant's benefit
pursuant to this Plan shall be borne solely by the Participating
Employer that employs the Participant and reports the Participant as
being on its payroll during the accrual or increase of the Plan
benefit, and no liability for the payment of any Plan benefit shall be
incurred by reason of Plan sponsorship or participation except for the
Plan benefits of a Participating Employer's own employees. Provided,
however, that each Participating Employer, by accepting the Board's
designation as a Participating Employer under the Plan and formally
adopting the Plan, agrees to assume secondary liability for the
payment of any benefit accrued or increased while a Participant is
employed and on the payroll of a Participating Employer that is a
Direct Subsidiary or Indirect Subsidiary of the Participating Employer
at the time such benefit is accrued or increased. Such liability
shall survive any revocation of designation as a Participating
Employer with respect to any liabilities as accrued at the time of
such revocation. Nothing in this section shall be interpreted as
prohibiting any Participating Employer or any other person from
expressly agreeing to assumption of liability for a Plan Participant's
payment of any benefits under the Plan.

10.2.2 UNSECURED GENERAL CREDITOR. Participants and their
Beneficiaries, heirs, successors, and assigns shall have no secured
legal or equitable rights, interest or claims in any property or
assets of Participating Employer, nor shall they be Beneficiaries of,
or have any rights, claims or interests in any life insurance
policies, annuity contracts or the proceeds therefrom owned or which
may be acquired by Participating Employer. Except as provided in
Section 10.3, such policies, annuity contracts or other assets of
Participating Employer shall not be held under any trust for the
benefit of Participants,

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<PAGE>

their Beneficiaries, heirs, successors or
assigns, or held in any way as collateral security for the fulfilling
of the obligations of Participating Employer under this Plan. Any and
all of Participating Employer's assets and policies shall be, and
remain, the general, unpledged, unrestricted assets of Participating
Employer. Participating Employer's obligation under the Plan shall be
that of an unfunded and unsecured promise to pay money in the future.

10.3 TRUST FUND. At its discretion, each Participating Employer,
jointly or severally, may establish one or more trusts, with such trustees
as the Board may approve, for the purpose of providing for the payment of
such benefits. Such trust or trusts may be irrevocable, but the assets
thereof shall be subject to the claims of Participating Employer's
creditors. To the extent any benefits provided under the Plan are actually
paid from any such trust, Participating Employer shall have no further
obligation with respect thereto, but to the extent not so paid, such
benefits shall remain the obligation of, and shall be paid by a
Participating Employer.

10.4 NONASSIGNABILITY. Neither a Participant nor any other person
shall have any right to sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, hypothecate or convey in advance of actual
receipt the amounts, if any payable hereunder, or any part thereof, which
are, and all rights to which are, expressly declared to be nonassignable
and nontransferable. No part of the amount payable shall, prior to actual
payment, be subject to seizure or sequestration for the payment of any
debts, judgements, alimony or separate maintenance owed by a Participant or
any other person, nor be transferable by operation of law in the event of a
Participant's or any other person's bankruptcy or insolvency.

10.5 PAYMENT TO GUARDIAN. If a Plan benefit is payable to a minor or
a person declared incompetent or to a person incapable of handling the
disposition of property, the Senior Administrative Officer may direct
payment of such Plan benefit to the guardian, legal representative or
person having the care and custody of such minor or incompetent person.
The Senior Administrative Officer may direct payment of such Plan benefit
to the guardian, legal representative or person having the care and custody
of such minor or incompetent person. The Senior Administrative Officer may
require proof of incompetency, minority, incapacity or guardianship as he
may deem appropriate prior to distribution of the Plan benefit. Such
distribution shall completely discharge the Senior Administrative Officer,
the Participating Employer and the Company from all liability with respect
to such benefit.

10.6 NOT A CONTRACT OF EMPLOYMENT. The terms and conditions of this
Plan shall not be deemed to constitute a contract of employment between
Participating Employer and the Participant, and the Participant (or the
Participant's Beneficiary) shall have no rights against Participating
Employer except as may otherwise be specifically provided herein.
Moreover, nothing in this Plan shall be deemed to give a Participant the
right to be retained in the service of Participating Employer or to
interfere with the right of Participating Employer to discipline or
discharge a Participant at any time.

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10.7 PROTECTIVE PROVISION. A Participant shall cooperate with
Participating Employer by furnishing any and all information requested by
Participating Employer, in order to facilitate the payment of benefits
hereunder, and by taking such physical examinations as Participating
Employer may deem necessary and taking such other action as may be
requested by Participating Employer.

10.8 TERMS. In this Plan document, unless the context clearly
indicates the contrary, the masculine gender will be deemed to include the
feminine gender, and the singular shall include the plural.

10.9 GOVERNING LAW. The provisions of this Plan shall be construed
and interpreted according to the laws of the State of Oregon, except as
preempted by federal law.

10.10 VALIDITY. If any provision of this Plan shall be held illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but this Plan shall be construed and enforced as if
such illegal and invalid provision had never been inserted herein.

10.11 NOTICE. Any notice or filing required or permitted to be given
to the Senior Administrative Officer under the Plan shall be sufficient if
in writing and hand delivered, or sent by registered or certified mail, to
the Senior Administrative Officer or the Secretary of the Participating
Employer. Notice mailed to the Participant shall be at such address as is
given in the records of the Participating Employer. Such notice shall be
deemed given as of the date of delivery or, if delivery is made by mail, as
of the date shown on the postmark on the receipt for registration or
certification.

10.12 SUCCESSORS. The provisions of this Plan shall bind and inure to
the benefit of Participating Employer and its successors and assigns. The
term successors as used herein shall include any corporate or other
business entity which shall, whether by merger, consolidation, purchase or
otherwise, acquire all or substantially all of the business and assets of
Participating Employer, and successors of any such corporation or other
business entity.

IN WITNESS WHEREOF, and pursuant to the resolution of the board, the
Company has caused this instrument to be executed by its officers thereunto
duly authorized this 19th day of November, 1997.

PORTLAND GENERAL HOLDINGS, INC.

By: /s/ Don F. Kielblock

Its: Vice President

PAGE 14 - SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

PORTLAND GENERAL HOLDINGS, INC.

OUTSIDE DIRECTORS' DEFERRED COMPENSATION PLAN

1997 RESTATEMENT

<PAGE>

TABLE OF CONTENTS

ARTICLE I-PURPOSE........................................... 1

1.1 Restatement 1
1.2 Purpose 1
1.3 Effective Date 1
1.4 Plan Sponsor 1

ARTICLE II-DEFINITIONS...................................... 1

2.1 Account 1
2.2 Beneficiary 1
2.3 Board 2
2.4 Change in Control 2
2.5 Committee 2
2.6 Company 2
2.7 Compensation 2
2.8 Deferral Election 3
2.9 Determination Date 3
2.10 Direct Subsidiary 3
2.11 Financial Emergency 3
2.12 Indirect Subsidiary 3
2.13 Interest 3
2.14 Merger Agreement 3
2.15 Outside Director...................................... 4
2.16 PGC Board ............................................ 4
2.17 Participant 4
2.18 Participating Company 4
2.19 Plan 4
2.20 Policies 4
2.21 President 4
2.22 Senior Administrative Officer 5

ARTICLE III-ELIGIBILITY AND DEFERRALS....................... 5

3.1 Eligibility 5
3.2 Deferral Elections 5
3.3 Limits on Elective Deferrals 5

ARTICLE IV-DEFERRED COMPENSATION ACCOUNT.................... 6

4.1 Crediting to Account 6
4.2 Determination of Accounts 6
4.3 Vesting of Accounts 6
4.4 Statement of Accounts 6

i
<PAGE>

TABLE OF CONTENTS

ARTICLE V-PLAN BENEFITS..................................... 6

5.1 Benefits 6
5.2 Withdrawals for Financial Emergency 7
5.3 Form of Benefit Payment 7
5.4 Accelerated Distribution 8
5.5 Taxes 9
5.6 Commencement of Payments 9
5.7 Full Payment of Benefits 9
5.8 Payment to Guardian 9

ARTICLE VI-BENEFICIARY DESIGNATION.......................... 9

6.1 Beneficiary Designation 9
6.2 Amendments 9
6.3 No Beneficiary Designation 10
6.4 Effect of Payment 10

ARTICLE VII-ADMINISTRATION................................. 10

7.1 Senior Administrative Officer; Duties 10
7.2 Agents 10
7.3 Binding Effect of Decisions 10
7.4 Indemnity of Senior Administrative Officer; Committee 10
7.5 Availability of Plan Documents 11
7.6 Cost of Plan Administration 11

ARTICLE VIII-CLAIMS PROCEDURE.............................. 11

8.1 Claim 11
8.2 Denial of Claim 11
8.3 Review of Claim 11
8.4 Final Decision 11

ARTICLE IX-AMENDMENT AND TERMINATION OF PLAN............... 12

9.1 Amendment 12
9.2 Termination 12
9.3 Payment at Termination 12

ii
<PAGE>

TABLE OF CONTENTS

ARTICLE X-MISCELLANEOUS.................................... 12

10.1 Unfunded Plan 12
10.2 Liability 13
10.3 Trust Fund 13
10.4 Nonassignability 13
10.5 Protective Provisions 14
10.6 Governing Law 14
10.7 Terms 14
10.8 Validity 14
10.9 Notice 14
10.10 Successors 14
10.11 Not a Contract of Service 15

iii
<PAGE>

INDEX OF TERMS

Account: 2.1 1

Beneficiary: 2.2 1
Board: 2.3 1

Change in Control: 2.4 2
Committee: 2.5 3
Company: 2.6 3
Compensation: 2.7 3

Deferral Election: 2.8 3
Determination Date: 2.9 3
Direct Subsidiary: 2.10 3

Exchange Act: 2.4(a) 2

Financial Emergency: 2.11 3

Indirect Subsidiary: 2.12 3
Interest: 2.13 3

Merger Agreement: 2.14..................................... 3

Outside Director: 2.15 4

Participant: 2.17 4
Participating Company: 2.18 4
PGC Board: 2.16............................................ 4
PGC: 2.4(a) 2
Plan: 2.19 4
Policies: 2.20 4
President: 2.21............................................ 3

iv
<PAGE>

Senior Administrative Officer: 2.22 4

v
<PAGE>

PORTLAND GENERAL HOLDINGS, INC.

OUTSIDE DIRECTORS' DEFERRED COMPENSATION PLAN

1997 RESTATEMENT

ARTICLE I-PURPOSE

1.1 Restatement

Portland General Corporation adopted a Deferred Compensation Plan
effective January 1, 1983 to cover Directors, officers and certain key
employees. The Plan was renamed and amended by the 1987 Restatement and
further amended by the 1988, 1990, 1994 and 1996 Restatements.

1.2 Purpose

The purpose of this Outside Directors' Deferred Compensation Plan is
to provide elective deferred compensation to Outside Directors. It is
intended that the Plan will aid in attracting and retaining Outside
Directors of exceptional ability.

1.3 Effective Date

This Restatement shall be effective as of June 25, 1997.

1.4 Plan Sponsor

The Plan is maintained for the benefit of previous Outside Directors
of Portland General Corporation, an Oregon Corporation, and Outside
Directors of any corporations or other entities affiliated with or
subsidiary to it, if such corporations or entities have been selected by
the Board.

ARTICLE II-DEFINITIONS

2.1 Account

"Account" means the account, maintained by the Participating Company
in accordance with Article IV with respect to any deferral of Compensation
pursuant to this Plan.

2.2 Beneficiary

"Beneficiary" means the person, persons or entity entitled under
Article VI to receive any Plan benefits payable after Participant's death.

2.3 Board

"Board" means the Board of Directors of Portland General Holdings,
Inc.

PAGE 1 - OUTSIDE DIRECTOR'S DEFERRED COMPENSATION PLAN

<PAGE>

2.4 Change in Control

"Change in Control" means an occurrence in which:

(a) Any "person," as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (other than Portland General Holdings, Inc. ("PGH"), any trustee
or other fiduciary holding securities under an employee benefit plan
of PGH, or any Employer owned, directly or indirectly, by the
stockholders of PGH in substantially the same proportions as their
ownership of stock of PGH), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities representing thirty percent (30%) or more of the
combined voting power of PGH's then outstanding voting securities; or

(b) During any period of two (2) consecutive years (not including
any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board, and any new
director whose election by the Board or nomination for election by
PGH's stockholders was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors as of
the beginning of the period of whose election or nomination for
election was previously so approved, cease for any reason to
constitute at least a majority thereof.

2.5 Committee

"Committee" means the Non-Qualified Benefits Committee of the Board.

2.6 Company

"Company" means Portland General Holdings, Inc., an Oregon
Corporation.

2.7 Compensation

"Compensation" means annual retainer and fees for attendance at board
and various committee meetings paid to an Outside Director by the
Participating Company during the calendar year with respect to duties
performed as a member of the board. Compensation, for purposes of this
Plan, may include any new form of cash remuneration paid by the
Participating Company to an Outside Director which is explicitly designated
as deferrable pursuant to this Plan by the Deferral Election form approved
by the Senior Administrative Officer. Compensation does not include expense
reimbursements, imputed compensation, or any form of noncash compensation
or benefits.

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2.8 Deferral Election

"Deferral Election" means the election completed by the Participant in
a form approved by the Senior Administrative Officer which indicates the
Participant's irrevocable election to defer Compensation as designated in
the Deferral Election, pursuant to Article III.

2.9 Determination Date

"Determination Date" means the last day of each calendar month.

2.10 Direct Subsidiary

"Direct Subsidiary" means any corporation of which a Participating
Company owns at least eighty percent (80%) of the total combined voting
power of all classes of its stock entitled to vote.

2.11 Financial Emergency

"Financial Emergency" means a financial need resulting from a serious
unforeseen personal or family emergency, such as an act of God, an adverse
business or financial transaction, divorce, serious illness or accident, or
death in the family.

2.12 Indirect Subsidiary

"Indirect Subsidiary" means any corporation of which a Participating
Company directly and constructively owns at least eighty percent (80%) of
the total combined voting power of all classes of its stock entitled to
vote. In determining the amount of stock of a corporation that is
constructively owned by a Participating Company stock owned, directly or
constructively, by a corporation shall be considered as being owned
proportionately by its shareholders according to such shareholder's share
of voting power of all classes of its stock entitled to vote.

2.13 Interest

"Interest" means the interest yield computed at the monthly equivalent
of an annual yield that is three (3) percentage points higher than the
annual yield on Moody's Average Corporate Bond Yield Index for the three
(3) calendar months preceding the immediately prior month as published by
Moody's Investors Service, Inc. (or any successor thereto), or, if such
index is no longer published, a substantially similar index selected by the
Board.

2.14 Merger Agreement

"Merger Agreement" shall mean the Agreement and Plan of Merger by and
between Enron Corporation, Portland General Corporation and New Falcon
Corp., dated as of July 20, 1996, as that Agreement may be amended or
restated from time to time.

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2.15 Outside Director

"Outside Director" means a member of the PGC Board who is not an
employee of Portland General Holdings, Inc. or any Direct Subsidiary or
Indirect Subsidiary or affiliate of Portland General Holdings, Inc.

2.16 PGC Board

"PGC Board" shall mean the Board of Directors of Portland General
Corporation, or the Board of Directors of the successor corporation
established pursuant to the Merger Agreement, or any Advisory Committee to
Portland General Electric Company or the board or officers of a corporation
qualifying as a Participating Company of the Plan, including subsidiaries
and joint venture partners, the status of which shall be determined at the
discretion of the Senior Administrative Office.

2.17 Participant

"Participant" means any eligible Outside Director who has elected to
make deferrals under this Plan.

2.18 Participating Company

"Participating Company" means the Company or any affiliated or
subsidiary company designated by the Board as a Participating Company under
the Plan, as long as such designation has become effective and continues to
be in effect. The designation as a Participating Company shall become
effective only upon the acceptance of such designation and the formal
adoption of the Plan by a Participating Company. A Participating Company
may revoke its acceptance of designation as a Participating Company at any
time, but until it makes such revocation, all of the provisions of this
Plan and any amendments thereto shall apply to the Outside Directors of the
Participating Company and their Beneficiaries.

2.19 Plan

"Plan" means the Portland General Holdings, Inc. Outside Directors'
Deferred Compensation Plan, as may be amended from time to time.

2.20 Policies

"Policies" means any life insurance policies, annuity contracts or the
proceeds therefrom owned or which may be acquired by the Participating
Company.

2.21 President

"President" means the President of the Company.

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<PAGE>

2.22 Senior Administrative Officer

"Senior Administrative Officer" means the employee in the management
position designated by the Committee to administer the Plan.

ARTICLE III-ELIGIBILITY AND DEFERRALS

3.1 Eligibility

(a) Eligibility. An Outside Director shall be eligible to participate
by making Deferral Elections under paragraph 3.2 below. The Senior
Administrative Officer shall notify eligible Outside Directors about the
Plan and the benefits provided under it.

(b) Cessation of Eligibility. An Eligible Outside Director who ceases
to serve on the PGC Board shall cease participating as to new deferrals
immediately.

3.2 Deferral Elections

(a) Time of Elections. An eligible Outside Director may elect to
participate in the Plan with respect to any calendar year by making an
election to defer Compensation in a Deferral Election in a form
approved by the Senior Administrative Officer. The Deferral Election
must be filed with the Senior Administrative Officer no later than
December 15, or such shorter period as designated in the Deferral
Election form.

(b) Mid-Year Eligibility. If an individual first becomes eligible
to participate during a calendar year and wishes to defer Compensation
during the remainder of that year, a Deferral Election may be filed no
later than thirty (30) days following notification to the Outside
Director by the Senior Administrative Officer of eligibility to
participate. Such Deferral Election shall be effective only with
regard to Compensation earned after it is filed with the Senior
Administrative Officer.

(c) Irrevocability. A Deferral Election for the following calendar
year shall become irrevocable on the December 15 by which it is due
under paragraph 3.2(a) and a Deferral Election for the current
calendar year shall become irrevocable upon filing with the Senior
Administrative Officer under paragraph 3.2(b).

3.3 Limits on Elective Deferrals

An eligible Outside Director may elect to defer up to one hundred
percent (100%) of Compensation. The level elected must be in one percent
(1%) increments.

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<PAGE>

ARTICLE IV-DEFERRED COMPENSATION ACCOUNT

4.1 Crediting to Account

The amount of the elective deferrals for a Participant under this Plan
shall be credited to an Account for the Participant on the books of the
Participating Company at the time the Compensation would have been paid in
cash. Any taxes or other amounts due from a Participant with respect to the
deferred Compensation under federal, state or local law, shall be withheld
from nondeferred Compensation payable to the Participant at the time the
deferred amounts are credited to the Account to the extent possible. To the
extent not possible, such amounts shall be withheld from deferred
Compensation with the balance to be credited to the Participant's Account.

4.2 Determination of Accounts

The last day of each calendar month shall be a Determination Date.
Each Participant's Account as of each Determination Date shall consist of
the balance of the Account as of the immediately preceding Determination
Date, plus the Participant's elective deferrals, and Interest credited
under this Plan, minus the amount of any distributions made from this Plan
since the immediately preceding Determination Date. Interest credited shall
be calculated as of each Determination Date based upon the average daily
balance of the Account since the preceding Determination Date.

4.3 Vesting of Accounts

Account balances in this Plan shall be fully vested at all times.

4.4 Statement of Accounts

The Senior Administrative Officer shall submit to each Participant,
after the close of each calendar quarter and at such other times as
determined by the Senior Administrative Officer, a statement setting forth
the balance of the Account maintained for the Participant.

ARTICLE V-PLAN BENEFITS

5.1 Benefits

(a) Entitlement to Benefits at Termination. Benefits under
this Plan shall be payable to a Participant on termination of
membership on all boards of Participating Companies. The amount of the
benefit shall be the balance of the Participant's Account including
Interest to the date of payment, in the form elected under Paragraph
5.3 below.

Notwithstanding the above, if a Participant terminates Board
membership with a Participating Company but, within sixty (60) days
thereafter, becomes a Board member of an affiliate of the Company or
Portland General Electric Company, including subsidiaries and joint
venture partners, the status of which shall be determined at the
discretion of the Senior Administrative Officer, the Participating
Company shall continue to maintain the Participant's Account pursuant
to Section IV. Benefits shall be payable to

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<PAGE>

such Participant under this paragraph or Paragraph 5.1(b) below when
the Participant is no
longer a member of the Board of any affiliated company, as determined
at the discretion of the Senior Administrative Officer.

(b) Entitlement to Benefits at Death. Upon the death of a
Participant for whom an Account is held under this Plan, a death
benefit shall be payable to the Participant's Beneficiary in the same
form as the Participant elected for payments at termination of service
on the Board, under paragraph 5.3 below. The amount of the benefit
shall be the balance of the Participant's Account including Interest
to the date of payment.

5.2 Withdrawals for Financial Emergency

A Participant may withdraw part or all of the Participant's Account
for a Financial Emergency as follows:

(a) Determination. The existence of a Financial Emergency and the
amount to be withdrawn shall be determined by the Senior
Administrative Officer.

(b) Suspension. A Participant who makes a withdrawal for Financial
Emergency shall be suspended from participation for twelve (12) months
from the date of withdrawal. Compensation payable during such
suspension that would have been deferred under this Plan shall instead
be paid to the Participant.

5.3 Form of Benefit Payment

(a) The Plan benefits attributable to the elective deferrals for
any calendar year shall be paid in one (1) of the forms set out below,
as elected by the Participant in the form of payment designation filed
with the Deferral Election for that year. The forms of benefit payment
are:

(i) A lump sum payment; or

(ii) Monthly installment payments in substantially equal
payments of principal and Interest over a period of up to one
hundred eighty (180) months. The amount of the installment payment
shall be redetermined on the first day of the month coincidental
with or next following the anniversary of the date of termination
each year, based upon the then current rate of Interest, the
remaining Account balance, and the remaining number of payment
periods.

(iii) For Participants designated by the President to the
Senior Administrative Officer, monthly installment payments over a
period of up to one hundred eighty (180) months, consisting of
interest only payments for up to one hundred twenty (120) months
and principal and interest payments of the remaining Account
balance over the remaining period. The amount of the installment
payment shall be redetermined on the first day of the month
coincidental with or next following the anniversary of the date of
termination each year, based upon the then current rate of
Interest, the remaining Account balance, and the remaining number
of payment periods.

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<PAGE>

(iv) In the event the account balance is ten thousand ($10,000)
or less, that benefit will be paid out in a lump sum
notwithstanding the form of benefit payment elected by the
Participant.

(b) A Participant may elect to file a change of payment designation
which shall supersede all prior form of payment designations with
respect to the Participant's entire Account. The Participant may
redesignate a combination of lump sum and monthly installments if
approved by the Senior Administrative Officer. If, upon termination,
the Participant's most recent change of payment designation has not
been in effect for twelve (12) full months prior to such termination,
then the prior election shall be used to determine the form of
payment. The Senior Administrative Officer may, in his sole
discretion, direct that plan benefits be paid pursuant to the change
of payment designation, notwithstanding the twelve (12) month
requirement.

(c) Participants designated by the President to the Senior
Administrative Officer may elect to file a change of payment
designation which shall supersede all prior form of payment
designations with respect to the Participant's entire Account. The
Participant may redesignate monthly installment payments over a period
of up to one hundred eighty (180) months, consisting of interest only
payments for up to one hundred twenty (120) months and principal and
interest payments of the remaining Account balance over the remaining
period. To be effective, such designation must be approved by the
President and the Senior Administrative Officer. If, upon termination,
the Participant's most recent change of payment designation has not
been in effect for twelve (12) full months prior to such termination,
then the prior election shall be used to determine the form of
payment. The Senior Administrative Officer may, in his sole
discretion, direct that Plan benefits be paid pursuant to the change
of payment designation, notwithstanding the twelve (12) month
requirement.

5.4 Accelerated Distribution

Notwithstanding any other provision of the Plan, a Participant shall
be entitled to receive, upon written request to the Senior Administrative
Officer, a lump sum distribution of all or a portion of the vested Account
balance, subject to the following:

(a) Penalty.

(i) If the distribution is requested within thirty-six (36)
months following a Change in Control, six percent (6%) of the
account shall be forfeited and ninety-four percent (94%) of the
account paid to the Participant.

(ii) If the distribution is requested at any time other than
that in (i) above, ten percent (10%) of the account shall be
forfeited and ninety percent (90%) of the account paid to the
Participant.

(b) Suspension. A Participant who receives a distribution under
this section shall be suspended from participation in this Plan for
twelve (12) calendar months from the date of such distribution. The
account balance shall be as of the Determination Date immediately
preceding the date on which the Senior Administrative Officer receives
the written request. The amount payable under this section shall be
paid in a lump sum within

PAGE 8 - OUTSIDE DIRECTOR'S DEFERRED COMPENSATION PLAN

<PAGE>

sixty-five (65) days following the receipt
of the Participant's written request by the Senior Administrative
Officer.

5.5 Taxes

Each Participating Company shall withhold from payments made hereunder
any taxes required to be withheld from a Participant's Compensation for the
federal or any state or local government. Withholding shall also apply to
Beneficiary, unless an election against withholding is made under Section
3405(a)(2) of the Internal Revenue Code.

5.6 Commencement of Payments

Payment shall commence at the discretion of the Senior Administrative
Officer, but not later than sixty-five (65) days after the end of the month
in which a Participant retires, dies or otherwise terminates membership on
the Board of Portland General Corporation. All payments shall be made as of
the first day of the month.

5.7 Full Payment of Benefits

Notwithstanding any other provision of this Plan, all benefits shall
be paid no later than one hundred eighty (180) months following the date
payment to Participant commences.

5.8 Payment to Guardian

If a Plan benefit is payable to a minor or a person declared
incompetent or to a person incapable of handling the disposition of
property, the Senior Administrative Officer may direct payment of such Plan
benefit to the guardian, legal representative or person having the care and
custody of such minor or incompetent person. The Senior Administrative
Officer may require proof of incompetency, minority, incapacity or
guardianship as he may deem appropriate prior to distribution of the Plan
benefit. Such distribution shall completely discharge the Senior
Administrative Officer, the Participating Company and the Company from all
liability with respect to such benefit.

ARTICLE VI-BENEFICIARY DESIGNATION

6.1 Beneficiary Designation

Each Participant shall have the right, at any time, to designate one
(1) or more persons or entities as the Participant's Beneficiary, primary
as well as secondary, to whom benefits under this Plan shall be paid in the
event of the Participant's death prior to complete distribution to the
Participant of the benefits due under the Plan. Each Beneficiary
designation shall be in a written form prescribed by the Senior
Administrative Officer and will be effective only when filed with the
Senior Administrative Officer during the Participant's lifetime.

6.2 Amendments

Any Beneficiary designation may be changed by a Participant without
the consent of any Beneficiary by the filing of a new Beneficiary
designation with the Senior Administrative

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<PAGE>

Officer. If a Participant's
Compensation is community property, any Beneficiary designation shall be
valid or effective only as permitted under applicable law.

6.3 No Beneficiary Designation

In the absence of an effective Beneficiary designation, or if all
Beneficiaries predecease a Participant, the Participant's estate shall be
the Beneficiary. If a Beneficiary dies after a Participant and before
payment of benefits under this Plan has been completed, the remaining
benefits shall be payable to the Beneficiary's estate.

6.4 Effect of Payment

Payment to the Beneficiary shall completely discharge the
Participating Company's obligations under this Plan.

ARTICLE VII-ADMINISTRATION

7.1 Senior Administrative Officer; Duties

This Plan shall be administered by a Senior Administrative Officer as
designated by the Committee. Members of the Committee may be participants
under this Plan. The Senior Administrative Officer shall have the authority
to make, amend, interpret and enforce all appropriate rules and regulations
for the administration of this Plan and decide or resolve any and all
questions including interpretations of this Plan as may arise in connection
with the Plan. The Senior Administrative Officer shall report to the
Committee on an annual basis regarding Plan activity, and at such other
times as may be requested by the Committee.

7.2 Agents

In the administration of the Plan, the Senior Administrative Officer
may, from time to time, employ agents and delegate to such agents,
including employees of any Participating Company, such administrative
duties as he sees fit, and may from time to time consult with counsel, who
may be counsel to any Participating Company.

7.3 Binding Effect of Decisions

The decision or action of the Senior Administrative Officer with
respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan and the rules
and regulations promulgated hereunder shall be final and conclusive and
binding upon all persons having any interest in the Plan.

7.4 Indemnity of Senior Administrative Officer; Committee

Each Participating Company shall indemnify and hold harmless the
Senior Administrative Officer, the Committee and its individual members,
against any and all claims, loss, damage, expense or liability arising from
any action or failure to act with respect to this Plan, except in the case
of gross negligence or willful misconduct.

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7.5 Availability of Plan Documents

7.6 Cost of Plan Administration

The Company shall bear all expenses of administration. However, a
ratable portion of the expense shall be charged back to each Participating
Company.

ARTICLE VIII-CLAIMS PROCEDURE

8.1 Claim

8.2 Denial of Claim

If the claim or request is denied, the written notice of denial shall
state:

(a) The reasons for denial, with specific reference to the Plan
provisions on which the denial is based.

(b) A description of any additional material or information
required and an explanation of why it is necessary.

8.3 Review of Claim

8.4 Final Decision

The decision by the Senior Administrative Officer on review shall
normally be made within sixty (60) days. If an extension of time is
required for a hearing or other special circumstances, the claimant shall
be notified and the time limit shall be one hundred twenty (120) days. The
decision shall be in writing and shall state the reasons and the relevant
Plan provisions. All decisions on review shall be final and bind all
parties concerned.

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<PAGE>

ARTICLE IX-AMENDMENT AND TERMINATION OF PLAN

9.1 Amendment

The Senior Administrative Officer may amend the Plan from time to time
as may be necessary for administrative purposes and legal compliance of the
Plan, provided, however, that no such amendment shall affect the benefit
rights of Participants or Beneficiaries in the Plan. The Committee may
amend the Plan at any time, provided, however, that no amendment shall be
effective to decrease or restrict the accrued rights of Participants and
Beneficiaries to the amounts in their Accounts at the time of the
amendment. Such amendments shall be subject to the following:

(a) Preservation of Account Balance. No amendment shall reduce the
amount accrued in any Account to the date such notice of the amendment
is given.

(b) Changes in Interest Rate. No amendment shall reduce the rate
of Interest to be credited, after the date of the amendment, on the
amount already accrued in any Account or on the deferred Compensation
credited to any Account under Deferral Elections already in effect on
the date of the amendment.

9.2 Termination

The board of directors of each Participating Company may at any time,
in its sole discretion, terminate or suspend the Plan in whole or in part.
However, no such termination or suspension shall adversely affect the
benefits of Participants which have accrued prior to such action, the
benefits of any Participant who has previously retired, the benefits of any
Beneficiary of a Participant who has previously died, or already accrued
Plan liabilities between Participating Companies.

9.3 Payment at Termination

If the Plan is terminated, payment of each Account to a Participant or
a Beneficiary for whom it is held shall commence pursuant to Paragraph 5.6,
and shall be paid in the form designated by the Participant.

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<PAGE>

ARTICLE X-MISCELLANEOUS

10.1 Unfunded Plan

This Plan is intended to be an unfunded plan maintained primarily to
provide deferred compensation benefits for Outside Directors. This Plan is
not intended to create an investment contract, but to provide retirement
benefits to eligible individuals who have elected to participate in the
Plan. Eligible individuals are directors of the Participating Company, who
by virtue of their position with the Participating Company, are uniquely
informed as to the Participating Company's operations and have the ability
to materially affect the Participating Company's profitability and
operations.

10.2 Liability

(a) Liability for Benefits. Except as otherwise provided in this
paragraph, liability for the payment of a Participant's benefit
pursuant to this Plan shall be borne solely by the Participating
Company for which the Participant serves during the accrual or
increase of the Plan benefit, and no liability for the payment of any
Plan benefit shall be incurred by reason of Plan sponsorship or
participation except for the Plan benefits of a Participating
Company's own Outside Directors. Provided, however, that each
Participating Company, by accepting the Board's designation as a
Participating Company under the Plan and formally adopting the Plan,
agrees to assume secondary liability for the payment of any benefit
accrued or increased while a Participant serves on the board of
directors of a Participating Company that is a Direct Subsidiary or
Indirect Subsidiary of the Participating Company at the time such
benefit is accrued or increased. Such liability shall survive any
revocation of designation as a Participating Company with respect to
any liabilities accrued at the time of such revocation. Nothing in
this paragraph shall be interpreted as prohibiting any Participating
Company or any other person from expressly agreeing to the assumption
of liability for a Plan Participant's payment of any benefits under
the Plan.

(b) Unsecured General Creditor. Participants and their
Beneficiaries, heirs, successors and assigns shall have no secured
legal or equitable rights, interest or claims in any property or
assets of the Participating Company, nor shall they be beneficiaries
of, or have any rights, claims or interests in any Policies or the
proceeds therefrom owned or which may be acquired by the Participating
Company. Except as provided in paragraph 10.3, such Policies or other
assets of the Participating Company shall not be held under any trust
for the benefit of Participants, their Beneficiaries, heirs,
successors or assigns, or held in any way as collateral security for
the fulfilling of the obligations of the Participating Company under
this Plan. Any and all of the Participating Company's assets and
Policies shall be, and remain, the general, unpledged, unrestricted
assets of the Participating Company. Participating Company's
obligation under the Plan shall be that of an unfunded and unsecured
promise to pay money in the future.

10.3 Trust Fund

At its discretion, each Participating Company, jointly or severally,
may establish one (1) or more trusts, with such trustee as the Board may
approve, for the purpose of providing for the payment of such benefits.
Such trust or trusts may be irrevocable, but the assets thereof shall be

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<PAGE>

subject to the claims of the Participating Company's creditors. To the
extent any benefits provided under the Plan are actually paid from any such
trust, the Participating Company shall have no further obligation with
respect thereto, but to the extent not so paid, such benefits shall remain
the obligation of, and shall be paid by the Participating Company.

10.4 Nonassignability

Neither a Participant nor any other person shall have any right to
sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber,
hypothecate or convey in advance of actual receipt the amounts, if any,
payable hereunder, or any part thereof, which are, and all rights to which
are, expressly declared to be nonassignable and nontransferable. No part of
the amounts payable shall, prior to actual payment, be subject to seizure
or sequestration for the payment of any debts, judgments, alimony or
separate maintenance owed by a Participant or any other person, nor be
transferable by operation of law in the event of a Participant's or any
other person's bankruptcy or insolvency.

10.5 Protective Provisions

A Participant will cooperate with the Participating Company by
furnishing any and all information requested by the Participating Company,
in order to facilitate the payment of benefits hereunder, and by taking
such physical examination as the Participating Company may deem necessary
and taking such other action as may be requested by the Participating
Company.

10.6 Governing Law

The provisions of this Plan shall be construed and interpreted
according to the laws of the State of Oregon, except as preempted by
federal law.

10.7 Terms

In this Plan document, unless the context clearly indicates the
contrary, the masculine gender will be deemed to include the feminine
gender, and the singular shall include the plural.

10.8 Validity

In case any provision of this Plan shall be held illegal or invalid
for any reason, such illegality or invalidity shall not affect the
remaining parts hereof, but this Plan shall be construed and enforced as if
such illegal and invalid provision had never been inserted herein.

10.9 Notice

Any notice or filing required or permitted to be given to the Senior
Administrative Officer under the Plan shall be sufficient if in writing and
hand delivered, or sent by registered or certified mail to the Senior
Administrative Officer, or to Secretary of the Participating Company.
Notice mailed to the Participant shall be at such address as is given in
the records of the Participating Company. Notice to the Senior
Administrative Officer, if mailed, shall be addressed to the principal
executive offices of the Company. Notices shall be deemed given as of the
date of delivery or, if delivery is made by mail, as of the date shown on
the postmark on the receipt for registration or certification.

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10.10 Successors

The provisions of this Plan shall bind and inure to the benefit of
each Participating Company and its successors and assigns. The term
successors as used herein shall include any corporate or other business
entity which shall, whether by merger, consolidation, purchase or
otherwise, acquire all or substantially all of the business and assets of a
Participating Company, and successors of any such corporation or other
business entity.

10.11 Not a Contract of Service

The terms and conditions of this Plan shall not be deemed to
constitute a contract of service between a Participating Company and a
Participant and neither a Participant nor a Participant's Beneficiary shall
have any rights against a Participating Company except as may otherwise be
specifically provided herein. Moreover, nothing in this Plan shall be
deemed to give a Participant the right to be retained on the Board of a
Participating Company nor shall it interfere with the Participant's right
to terminate his directorship at any time.

IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its officers thereunto duly authorized, this 5th day of
September, 1997.

PORTLAND GENERAL HOLDINGS, INC.

By: /s/ Don F. Kielblock

Its: Vice President

PAGE 15 - OUTSIDE DIRECTORS' DEFERRED COMPENSATION PLAN

PORTLAND GENERAL HOLDINGS, INC.

MANAGEMENT DEFERRED COMPENSATION PLAN

1997 RESTATEMENT

<PAGE>

TABLE OF CONTENTS

PAGE

ARTICLE I-PURPOSE ......................................... 1

1.1 Restatement ......................................... 1
1.2 Purpose ............................................. 1
1.3 Effective Date ...................................... 1
1.4 Plan Sponsor ........................................ 1

ARTICLE II-DEFINITIONS .................................... 1

2.1 Account ............................................. 1
2.2 Base Salary ......................................... 2
2.3 Beneficiary ......................................... 2
2.4 Board ............................................... 2
2.5 Bonuses ............................................. 2
2.6 Change in Control ................................... 2
2.7 Committee ........................................... 3
2.8 Company ............................................. 3
2.9 Compensation ........................................ 3
2.10 Deferral Election .................................. 3
2.11 Determination Date ................................. 3
2.12 Direct Subsidiary .................................. 3
2.13 Eligible Employee .................................. 4
2.14 Financial Emergency ................................ 4
2.15 Incentive Compensation ............................. 4
2.16 Indirect Subsidiary ................................ 4
2.17 Interest ........................................... 5
2.18 Paid Time Off ...................................... 5
2.19 Paid Time Off Cancellation ......................... 5
2.20 Participant ........................................ 5
2.21 Participating Employer ............................. 5
2.22 Pension Plan ....................................... 5
2.23 Plan ............................................... 5
2.24 Policies ........................................... 6
2.25 President .......................................... 6
2.26 Senior Administrative Officer ...................... 6

ARTICLE III-ELIGIBILITY AND DEFERRALS ..................... 6

3.1 Eligibility ......................................... 6
3.2 Deferral Elections .................................. 6
3.3 Limits on Elective Deferrals ........................ 7
3.4 Matching Contributions .............................. 7
3.5 Welfare Benefits .................................... 7

i
<PAGE>

TABLE OF CONTENTS

PAGE

ARTICLE IV-DEFERRED COMPENSATION ACCOUNT .................. 7

4.1 Crediting to Account ................................ 7
4.2 Determination of Accounts ........................... 8
4.3 Vesting of Accounts ................................. 8
4.4 Statement of Accounts ............................... 8

ARTICLE V-PLAN BENEFITS ................................... 8

5.1 Benefits ............................................ 8
5.2 Withdrawals for Financial Emergency ................. 9
5.3 Form of Benefit Payment ............................. 9
5.4 Accelerated Distribution ............................ 10
5.5 Withholding; Payroll Taxes .......................... 11
5.6 Commencement of Payments ............................ 11
5.7 Full Payment of Benefits ............................ 11
5.8 Payment to Guardian ................................. 11

ARTICLE VI-RESTORATION OF PENSION PLAN BENEFITS ........... 11

6.1 Pension Plan ........................................ 11
6.2 Restoration of Pension Plan Benefits ................ 11
6.3 Restoration of Pension Plan Benefits in Event of
Change in Control ................................... 12

ARTICLE VII-BENEFICIARY DESIGNATION ....................... 12

7.1 Beneficiary Designation ............................. 12
7.2 Amendments .......................................... 12
7.3 No Beneficiary Designation .......................... 13
7.4 Effect of Payment ................................... 13

ARTICLE VIII-ADMINISTRATION ............................... 13

8.1 Senior Administrative Officer; Duties ............... 13
8.2 Agents .............................................. 13
8.3 Binding Effect of Decisions ......................... 13
8.4 Indemnity of Senior Administrative Officer;
Committee ........................................... 13
8.5 Availability of Plan Documents ...................... 14
8.6 Cost of Plan Administration ......................... 14

<PAGE>

TABLE OF CONTENTS

PAGE

ARTICLE IX-CLAIMS PROCEDURE ............................... 14

9.1 Claim ............................................... 14
9.2 Denial of Claim ..................................... 14
9.3 Review of Claim ..................................... 14
9.4 Final Decision ...................................... 14

ARTICLE X-AMENDMENT AND TERMINATION OF PLAN ............... 15

10.1 Amendment .......................................... 15
10.2 Termination ........................................ 15
10.3 Payment at Termination ............................. 15

ARTICLE XI-MISCELLANEOUS .................................. 15

11.1 Unfunded Plan ...................................... 15
11.2 Liability .......................................... 16
11.3 Trust Fund ......................................... 16
11.4 Nonassignability ................................... 17
11.5 Not a Contract of Employment ....................... 17
11.6 Protective Provisions .............................. 17
11.7 Governing Law ...................................... 17
11.8 Terms .............................................. 17
11.9 Validity ........................................... 17
11.10 Notice ............................................ 18
11.11 Successors ........................................ 18

iii
<PAGE>

INDEX OF TERMS

TERM AND PROVISION NUMBER PAGE

Account: 2.1 ............................................. 1

Base Salary: 2.2 ......................................... 2
Beneficiary: 2.3 ......................................... 2
Board: 2.4 ............................................... 2
Bonuses: 2.5 ............................................. 2

Change in Control: 2.6 ................................... 2
Committee: 2.7 ........................................... 3
Company: 2.8 ............................................. 3
Compensation: 2.9 ........................................ 3

Deferral Election: 2.10 .................................. 3
Determination Date: 2.11 ................................. 3
Direct Subsidiary: 2.12 .................................. 3

Eligible Employee: 2.13 .................................. 4
ERISA: 3.5 ............................................... 7
Exchange Act: 2.6(a) ..................................... 2

Financial Emergency: 2.14 ................................ 4

Incentive Compensation: 2.15 ............................. 4
Indirect Subsidiary: 2.16 ................................ 4
Interest: 2.17 ........................................... 5

iv
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INDEX OF TERMS

TERM AND PROVISION NUMBER PAGE

Paid Time Off: 2.18 ....................................... 5
Paid Time Off Cancellation: 2.19 .......................... 5
Participant: 2.20 ......................................... 5
Participating Employer: 2.21 .............................. 5
Pension Plan: 2.22 ........................................ 5
PGC: 2.6(a) ............................................... 2
Plan: 2.23 ................................................ 5
President: 2.25 ........................................... 6
Policies: 2.24 ............................................ 6

Senior Administrative Officer: 2.26 ....................... 6

<PAGE>

PORTLAND GENERAL HOLDINGS, INC.

MANAGEMENT DEFERRED COMPENSATION PLAN

1997 RESTATEMENT

ARTICLE I-PURPOSE

1.1 Restatement

Portland General Corporation adopted a Management Deferred
Compensation Plan effective January 1, 1987 to cover qualified
management employees. Portland General Corporation also restated its
Directors' and Senior Officers' Deferred Compensation Plan on January
1, 1987. Pursuant to Article 8.1 of the Management Deferred
Compensation Plan and Article 9.1 of the Directors' and Senior
Officers' Deferred Compensation Plan, 1987 Restatement, the Company has
amended both plans in order to merge the plans for all employees of
Participating Employers. The existing plans were merged, renamed and
amended for all management employees of Participating Employers by the
December 1, 1988 Restatement. The Plan was further amended by the 1990,
1994 and 1996 Restatements.

1.2 Purpose

The purpose of this Management Deferred Compensation Plan is to
provide elective deferred compensation in excess of the limits on
elective deferrals under qualified cash or deferred arrangements. It is
intended that the Plan will aid in attracting and retaining personnel
of exceptional ability.

1.3 Effective Date

This 1997 Restatement shall be effective as of June 25, 1997.

1.4 Plan Sponsor

The Plan is adopted for the benefit of selected employees of
Portland General Holdings, Inc., an Oregon corporation, and selected
employees of any corporations or other entities affiliated with or
subsidiary to it, if such corporations or entities are selected by the
Board.

ARTICLE II-DEFINITIONS

2.1 Account

"Account" means the account maintained by a Participating Employer
in accordance with Article IV with respect to any deferral of
Compensation pursuant to this Plan.

PAGE 1 - MANAGEMENT DEFERRED COMPENSATION PLAN

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2.2 Base Salary

"Base Salary" means the Eligible Employee's actual base pay in the
pay period and, except as provided herein, excluding any bonuses and/or
overtime pay.

2.3 Beneficiary

"Beneficiary" means the person, persons or entity entitled under
Article VII to receive any Plan benefits payable after a Participant's
death.

2.4 Board

"Board" means the Board of Directors of Portland General Holdings,
Inc..

2.5 Bonuses

"Bonuses" means Our Teamworks Awards, Notable Achievement Awards,
and any other form of cash Incentive Compensation explicitly designated
as deferrable pursuant to this Plan by the Deferral Election form
approved by the Senior Administrative Officer.

2.6 Change in Control

"Change in Control" means an occurrence in which:

(a) Any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than Portland General Holdings, Inc. ("PGH"),
any trustee or other fiduciary holding securities under the employee
benefit plan of PGH, or any Employer owned, directly or indirectly,
by the stockholders of PGH in substantially the same proportions as
their ownership of stock of PGH), is or becomes the "beneficial
owner" (as defined in Rule 13d-3) under the Exchange Act), directly
or indirectly, of securities representing thirty percent (30%) or
more of the combined voting power of PGH's then outstanding voting
securities; or

(b) During any period or two (2) consecutive years (not including
any period prior to the execution of this Agreement), individuals
who at the beginning of such period constitute the Board, and any
new director whose election by the Board or nomination for election
by PGC's stockholders was approval by a vote of at least two-thirds
(2/3) of the directors then still in office who either were
directors as of the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute at least a majority thereof.

(c) Notwithstanding anything to the contrary in the foregoing, no
"Change in Control" shall be deemed to have occurred upon the
consummation of the Amended and Restated Agreement and Plan of
Merger by and among Enron Corp., Portland General Corporation and
Enron Oregon Corp., dated as of July 20, 1996, or amended and
restated from time to time.

PAGE 2 - MANAGEMENT DEFERRED COMPENSATION PLAN

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2.7 Committee

"Committee" means the Non-Qualified Benefits Committee of the Board.

2.8 Company

"Company" means Portland General Holdings, Inc., an Oregon
Corporation.

2.9 Compensation

"Compensation" means the total of the following, before reduction
for elective deferrals under this Plan or a Participating Employer's
tax qualified Retirement Savings Plan or any other flexible benefit
plan:

(a) Base Salary;

(b) Bonuses;

(c) Any interest on the above payments credited by a
Participating Employer for the benefit of an Eligible Employee prior
to the date of payment, without respect to any deferral of
Compensation made pursuant to this Plan, by a Participating
Employer.

Compensation, for purposes of this Plan, may include any new form of
cash remuneration paid by a Participating Employer to any Eligible
Employee which is explicitly designated as deferrable pursuant to this
Plan by the Deferral Election form approved by the Senior
Administrative Officer. Compensation for purposes of this Plan, does
not include expense reimbursements, imputed income, or any form of
noncash compensation or benefits.

2.10 Deferral Election

"Deferral Election" means the election completed by Participant in a
form approved by the Senior Administrative Officer which indicates
Participant's irrevocable election to defer Compensation as designated
in the Deferral Election, pursuant to Article III.

2.11 Determination Date

"Determination Date" means the last day of each calendar month.

2.12 Direct Subsidiary

"Direct Subsidiary" means any corporation of which a Participating
Employer owns at least eighty percent (80%) of the total combined
voting power of all classes of its stock entitled to vote.

PAGE 3 - MANAGEMENT DEFERRED COMPENSATION PLAN

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2.13 Eligible Employee

"Eligible Employee" means an employee of a Participating Employer who:

(a) Is exempt;

(b) Is not covered by a collective bargaining agreement; and

(c) If employed for the entire calendar year, receives or, based on
current levels of base pay is expected to receive, Compensation from one
(1) or more Participating Employers in the calendar year, in an amount
equal to or in excess of the threshold amount described in 2.13(e) below,
or

(d) If employed for a part of the calendar year, receives or, based on
an annualized level of base pay would have received, Compensation from one
(1) or more Participating Employers in the calendar year, in an amount
equal to or in excess of the threshold amount described in 2.13(e) below.
Notwithstanding the above, eligibility is at the discretion of the Senior
Administrative Officer.

(e) The threshold amount in calendar year 1996 and any subsequent year
shall be eighty-five thousand dollars ($85,000). Such amount may be
adjusted by the Senior Administrative Officer each subsequent calendar
year at the same time and in not less than the percentage ratio as the
cost of living adjustment in the dollar limit on defined benefits under
Section 415(d) of the Internal Revenue Code.

2.14 Financial Emergency

"Financial Emergency" means a financial need resulting from a
serious unforeseen personal or family emergency, such as an act of God,
an adverse business or financial transaction, divorce, serious illness
or accident, or death in the family.

2.15 Incentive Compensation

"Incentive Compensation" means payments made to a Participant in
recognition of meritorious work performance but shall not include,
without limitation, any payment received as moving expense, mortgage
expense or mortgage interest reimbursement.

2.16 Indirect Subsidiary

"Indirect Subsidiary" means any corporation of which a Participating
Employer directly and constructively owns at least eighty percent (80%)
of the total combined voting power of all classes of its stock entitled
to vote. In determining the amount of stock of a corporation that is
constructively owned by a Participating Employer, stock owned, directly
or constructively, by a corporation shall be considered as being owned
proportionately by its shareholders according to such shareholders'
share of voting power of all classes of its stock entitled to vote.

PAGE 4 - MANAGEMENT DEFERRED COMPENSATION PLAN

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2.17 Interest

"Interest" means the interest yield computed at the monthly
equivalent of an annual yield that is three (3) percentage points
higher than the annual yield on Moody's Average Corporate Bond Yield
Index for the three (3) calendar months preceding the immediately
prior month as published by Moody's Investors Service, Inc. (or any
successor thereto), or, if such index is no longer published, a
substantially similar index selected by the Board.

2.18 Paid Time Off

"Paid Time Off" means those vacation and holiday days for which the
Employer pays employees for time not worked.

2.19 Paid Time Off Cancellation

"Paid Time Off Cancellation" means cash payments made in lieu of
Paid Time Off earned by an Eligible Employee.

2.20 Participant

"Participant" means any Eligible Employee who has elected to make
deferrals under this Plan.

2.21 Participating Employer

"Participating Employer" means the Company or any affiliated or
subsidiary company designated by the Board as a Participating Employer
under the Plan, as long as such designation has become effective and
continues to be in effect. The designation as a Participating Employer
shall become effective only upon the acceptance of such designation and
the formal adoption of the Plan by a Participating Employer. A
Participating Employer may revoke its acceptance of designation as a
Participating Employer at any time, but until it makes such revocation,
all of the provisions of this Plan and any amendments thereto shall
apply to the Eligible Employees of the Participating Employer and their
Beneficiaries.

2.22 Pension Plan

"Pension Plan" means the Participating Employer's Pension Plan, as
may be amended from time to time, and any successor defined benefit
retirement income plan or plans maintained by the Participating
Employer which qualify under Section 401(a) of the Internal Revenue
Code.

2.23 Plan

"Plan" means the Portland General Holdings, Inc. Management Deferred
Compensation Plan, as may be amended from time to time.

PAGE 5 - MANAGEMENT DEFERRED COMPENSATION PLAN

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2.24 Policies

"Policies" means any life insurance policies, annuity contracts or
the proceeds therefrom owned or which may be acquired by Participating
Employer.

2.25 President

"President" means the President of the Company.

2.26 Senior Administrative Officer

"Senior Administrative Officer" means the employee in the management
position designated by the Committee to administer the Plan.

ARTICLE III-ELIGIBILITY AND DEFERRALS

3.1 Eligibility

(a) General. An Eligible Employee who has completed one (1) year
of continuous employment with one (1) or more Participating
Employers shall be eligible to participate by making a Deferral
Election under Paragraph 3.2 below. The Senior Administrative
Officer shall notify Eligible Employees about the Plan and the
benefits provided under it. The requirement of one (1) year of
continuous employment may be waived by the Senior Administrative
Officer.

(b) Cessation of Eligibility. An Eligible Employee who ceases to
be an employee of a Participating Employer or to satisfy condition
2.13(a) or 2.13(b) of the definition of Eligible Employee shall
cease participating as to new deferrals immediately. An Eligible
Employee who ceases to satisfy condition 2.13(c) of the definition
of Eligible Employee may continue to participate in the Plan if such
individual has a current election to defer under the Plan at the
time the Employee ceases to satisfy condition 2.13(c).

3.2 Deferral Elections

(a) Time of Elections. An Eligible Employee may elect to
participate in the Plan with respect to any Compensation and/or Paid
Time Off Cancellation designated in a Deferral Election in a form
approved by the Senior Administrative Officer. The Deferral Election
must be filed with the Senior Administrative Officer no later than
December 15, or such shorter period as is designated in the Deferral
Election form.

(b) Mid-Year Eligibility. If an individual first becomes
eligible to participate during a calendar year and wishes to defer
Compensation and/or Paid Time Off Cancellation during the remainder
of the year, a Deferral Election may be filed no later than thirty
(30) days following notification of eligibility to participate to
the individual by the Senior Administrative Officer. Such Deferral
Election shall

PAGE 6 - MANAGEMENT DEFERRED COMPENSATION PLAN

<PAGE>

be effective only with regard to Compensation and/or
Paid Time Off Cancellation earned after it is filed with the Senior
Administrative Officer.

(c) Irrevocability. A Deferral Election for the following
calendar year shall become irrevocable on the December 15 by which
it is due under Paragraph 3.2(a) and a Deferral Election for the
current calendar year shall become irrevocable upon filing with the
Senior Administrative Officer under Paragraph 3.2(b).

(d) Transfer to a Participating Employer. If a Participant
transfers employment from one (1) Participating Employer to another
Participating Employer, the Participant's Deferral Election shall
remain in effect for the remainder of the calendar year with respect
to Compensation earned by the individual after the transfer to the
new Participating Employer.

3.3 Limits on Elective Deferrals

A Participant may elect to defer up to eighty percent (80%) of Base
Salary and up to one hundred percent (100%) of Bonuses. The level of
deferral elected in either case must be in one percent (1%) increments.
A Participant may elect to defer up to one hundred twenty (120) hours
per year of Paid Time Off in one-tenth (1/10) hour increments, but may
not defer any Paid Time Off earned in prior calendar years, or the
first two hundred (200) hours of Paid Time Off earned in the calendar
year to which the Deferral Election relates.

3.4 Matching Contributions

The Participating Employer shall provide a matching contribution for
each Participant who is making deferrals of Base Salary under this
Plan. The matching contribution shall be six percent (6%) of the
Participant's annual elective Base Salary deferral under this Plan. For
purposes of this provision, Base Salary shall not include amounts
received as a Nuclear Regulatory Commission licensing bonus.

3.5 Welfare Benefits

Compensation deferred under this Plan shall constitute compensation
for purposes of any welfare plans, (as defined by the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")),
sponsored by the Participating Employer.

ARTICLE IV-DEFERRED COMPENSATION ACCOUNT

4.1 Crediting to Account

The amount of the elective deferrals and matching contributions for
a Participant under this Plan shall be credited to an Account for the
Participant on the books of the Participating Employer at the time the
Compensation would have been paid in cash. Any taxes or other amounts
due from the Participant with respect to the deferred Compensation
under federal, state or local law, such as a Participant's share of
FICA, shall be withheld from nondeferred Compensation payable to the
Participant at the time the deferred amounts are credited to the
Account.

PAGE 7 - MANAGEMENT DEFERRED COMPENSATION PLAN

<PAGE>

4.2 Determination of Accounts

The last day of each calendar month shall be a Determination Date.
Each Participant's Account as of each Determination Date shall consist
of the balance of the Account as of the immediately preceding
Determination Date, plus the Participant's elective deferrals, matching
contributions, and Interest credited under this Plan, minus the amount
of any distributions made from this Plan since the immediately
preceding Determination Date. Interest credited shall be calculated as
of each Determination Date based upon the average daily balance of the
Account since the preceding Determination Date.

4.3 Vesting of Accounts

Account balances in this Plan shall be fully vested at all times.

4.4 Statement of Accounts

The Senior Administrative Officer shall submit to each Participant,
after the close of each calendar quarter and at such other times as
determined by the Senior Administrative Officer a statement setting
forth the balance of the Account maintained for the Participant.

ARTICLE V-PLAN BENEFITS

5.1 Benefits

(a) Entitlement to Benefits at Termination. Benefits under this
Plan shall be payable to a Participant on termination of employment
with all Participating Employers. The amount of the benefit shall be
the balance of the Participant's Account including Interest to the
date of payment, in the form elected under Paragraph 5.3 below.

Notwithstanding the above, if a Participant transfers employment
from a Participating Employer to an affiliate of the Company or
Portland General Electric Company, including subsidiaries and joint
venture partners, the status of which shall be determined at the
discretion of the Senior Administrative Officer, the Participating
Employer shall continue to maintain the Participant's Account
pursuant to Section IV. Benefits shall be payable to such
Participant under this paragraph or Paragraph 5.1(b) below when the
Participant is no longer employed by any affiliated company, as
determined at the discretion of the Senior Administrative Officer.

(b) Entitlement to Benefits at Death. Upon the death of a
Participant for whom an Account is held under this Plan, a death
benefit shall be payable to the Participant's Beneficiary in the
same form as the Participant elected for payments at termination of
employment, under Paragraph 5.3 below. The amount of the benefit
shall be the balance of the Participant's Account including Interest
to the date of payment.

PAGE 8 - MANAGEMENT DEFERRED COMPENSATION PLAN

<PAGE>

5.2 Withdrawals for Financial Emergency

A Participant may withdraw part or all of the Participant's Account
for a Financial Emergency as follows:

(a) Determination. The existence of a Financial Emergency and
the amount to be withdrawn shall be determined by the Senior
Administrative Officer.

(b) Suspension. A Participant who makes a withdrawal for
Financial Emergency from any company-sponsored deferral plan,
whether qualified or nonqualified, shall be suspended from
participation in this Plan for twelve (12) months from the date of
such withdrawal. Compensation and/or Paid Time Off Cancellation
payable during such suspension that would have been deferred under
this Plan shall instead be paid to the Participant. No matching
contribution shall be credited to a Participant's Account under this
Plan during any period of suspension.

5.3 Form of Benefit Payment

(a) The Plan benefits attributable to the elective deferrals for
any calendar year shall be paid in one (1) of the forms set out
below, as elected by the Participant in the form of payment
designation filed with the Deferral Election for that year. The
forms of benefit payment are:

(i) A lump-sum payment;

(ii) Monthly installment payments in substantially equal
payments of principal and Interest over a period of up to one
hundred eighty (180) months. The amount of the installment
payment shall be redetermined on the first day of the month
coincidental with or next following the anniversary of the date
of termination each year, based upon the then current rate of
Interest, the remaining Account balance, and the remaining number
of payment periods; or

(iii) For Participants designated by the President to the
Senior Administrative Officer, monthly installment payments over
a period of up to one hundred eighty (180) months, consisting of
interest only payments for up to one hundred twenty (120) months
and principal and interest payments of the remaining Account
balance over the remaining period. The amount of the installment
payment shall be redetermined on the first day of the month
coincidental with or next following the anniversary of the date
of termination each year, based upon the then current rate of
Interest, the remaining Account balance, and the remaining number
of payment periods.

(iv) In the event the account balance is ten thousand dollars
($10,000) or less, that benefit will be paid out in a lump sum
notwithstanding the form of benefit payment elected by the
Participant.

PAGE 9 - MANAGEMENT DEFERRED COMPENSATION PLAN

<PAGE>

lump sum and monthly
installments if approved by the Senior Administrative Officer. If,
upon termination, the Participant's most recent change of payment
designation has not been in effect for twelve (12) full months prior
to such termination, then the prior election shall be used to
determine the form of payment. The Senior Administrative Officer
may, in his sole discretion, direct that plan benefits be paid
pursuant to the change of payment designation, notwithstanding the
twelve (12) month requirement.

(c) Participants designated by the President to the Senior
Administrative Officer may elect to file a change of payment
designation which shall supersede all prior form of payment
designations with respect to the Participant's entire Account. The
Participant may redesignate monthly installment payments over a
period of up to one hundred eighty (180) months, consisting of
interest only payments for up to one hundred twenty (120) months and
principal and interest payments of the remaining Account balance
over the remaining period. To be effective, such designation must be
approved by the President and the Senior Administrative Officer. If,
upon termination, the Participant's most recent change of payment
designation has not been in effect for twelve (12) full months prior
to such termination, then the prior election shall be used to
determine the form of payment. The Senior Administrative Officer
may, in his sole discretion, direct that Plan benefits be paid
pursuant to the change of payment designation, notwithstanding the
twelve (12) month requirement.

5.4 Accelerated Distribution

Notwithstanding any other provision of the Plan, a Participant shall
be entitled to receive, upon written request to the Senior
Administrative Officer, a lump-sum distribution of all or a portion of
the vested Account balance, subject to the following:

(a) Penalty.

(ii) If the distribution is requested at any time other than
that in (i) above, ten percent (10%) of the account shall be
forfeited and ninety percent (90%) of the account paid to the
Participant.

(b) Suspension. A Participant who receives a distribution under
this section shall be suspended from participation in this Plan for
twelve (12) calendar months from the date of such distribution. All
eligibility requirements must be met to reenter the Plan. The
account balance shall be as of the Determination Date immediately
preceding the date on which the Senior Administrative Officer
receives the written request. The amount payable under this section
shall be paid in a lump sum within sixty-five (65) days following
the receipt of the Participant's written request by the Senior
Administrative Officer.

PAGE 10 - MANAGEMENT DEFERRED COMPENSATION PLAN

<PAGE>

5.5 Withholding; Payroll Taxes

Each Participating Employer shall withhold from payments made
hereunder any taxes required to be withheld from a Participant's wages
for the federal or any state or local government. Withholding shall
also apply to payments to a Beneficiary unless an election against
withholding is made under Section 3405(a)(2) of the Internal Revenue
Code.

5.6 Commencement of Payments

Payment shall commence at the discretion of the Senior
Administrative Officer, but not later than sixty-five (65) days after
the end of the month in which a Participant retires, dies or otherwise
terminates employment. All payments shall be made as of the first day
of the month.

5.7 Full Payment of Benefits

Notwithstanding any other provision of this Plan, all benefits shall
be paid no later than one hundred eighty (180) months following the
date payment to a Participant commences.

5.8 Payment to Guardian

If a Plan benefit is payable to a minor or a person declared
incompetent or to a person incapable of handling the disposition of
property, the Senior Administrative Officer may direct payment of such
Plan benefit to the guardian, legal representative or person having the
care and custody of such minor or incompetent person. The Senior
Administrative Officer may require proof of incompetency, minority,
incapacity or guardianship as he may deem appropriate prior to
distribution of the Plan benefit. Such distribution shall completely
discharge the Senior Administrative Officer, the Participating
Employer, and the Company from all liability with respect to such
benefit.

ARTICLE VI-RESTORATION OF PENSION PLAN BENEFITS

6.1 Pension Plan

If a Participating Employer maintains a tax qualified Pension Plan
for the benefit of eligible employees, and the Pension Plan provides
benefits determined under a formula that is based in part on the
employee's nondeferred compensation, a Participant in this Plan may
receive a smaller benefit under the Pension Plan as a result of
electing deferrals under this Plan.

6.2 Restoration of Pension Plan Benefits

In addition to the benefits payable under Paragraph 5.1 above,
Participating Employer shall pay to any Participant whose Pension Plan
benefit is not restored under any other employee or executive benefit
plan maintained by Participating Employer, a benefit payment equal to
the excess of (b) over (a) as follows:

PAGE 11 - MANAGEMENT DEFERRED COMPENSATION PLAN

<PAGE>

(a) The actuarial equivalent lump sum present value of the
retirement income (or death benefit) payable (either immediately or
deferred) under the Pension Plan; and

(b) the actuarial equivalent lump sum present value of the
retirement income (or death benefit) that would have been payable
under the Pension Plan if Participant had made no Deferral Elections
in any calendar year under this Plan. The actuarial equivalent lump
sum present values shall be calculated in the same manner and using
the same factors as are used to calculate lump-sum distributions
under the Pension Plan. If Participant terminates employment prior
to attaining the age of fifty-five (55), payment of the restoration
of Pension Plan benefits shall be made as if Participant had made a
lump-sum election pursuant to Paragraph 5.3(a)(i) above with respect
to the payment of the restoration of Pension Plan benefits. If
Participant terminates employment upon or after attaining the age of
fifty-five (55), payment of the restoration of Pension Plan benefits
shall be made as if Participant had made an election to receive
monthly installment payments in substantially equal payments of
principal and Interest over a period of one hundred twenty (120)
months pursuant to Paragraph 5.3(a)(ii) above with respect to the
payment of the restoration of Pension Plan benefits. In the event
the actuarial equivalent lump sum present value is ten thousand
dollars ($10,000) or less, that benefit will be paid out in a lump
sum.

6.3 Restoration of Pension Plan Benefits in Event of Change in Control

In the event of a Change in Control, and a subsequent termination of
the Pension Plan within three (3) years following a Change in Control,
all Plan Participants shall receive a restoration of Pension Plan
benefits under Paragraph 6.2.

ARTICLE VII-BENEFICIARY DESIGNATION

7.1 Beneficiary Designation

Each Participant shall have the right, at any time, to designate one
(1) or more persons or entities as the Participant's Beneficiary,
primary as well as secondary, to whom benefits under this Plan shall be
paid in the event of the Participant's death prior to complete
distribution to the Participant of the benefits due under the Plan.
Each Beneficiary designation shall be in a written form prescribed by
the Senior Administrative Officer and will be effective only when filed
with the Senior Administrative Officer during the Participant's
lifetime.

7.2 Amendments

Any Beneficiary designation may be changed by a Participant without
the consent of any Beneficiary by the filing of a new Beneficiary
designation with the Senior Administrative Officer. If a Participant's
Compensation is community property, any Beneficiary designation shall
be valid or effective only as permitted under applicable law.

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<PAGE>

7.3 No Beneficiary Designation

In the absence of an effective Beneficiary designation, or if all
Beneficiaries predecease a Participant, the Participant's estate shall
be the Beneficiary. If a Beneficiary dies after a Participant and
before payment of benefits under this Plan has been completed, the
remaining benefits shall be payable to the Beneficiary's estate.

7.4 Effect of Payment

Payment to the Beneficiary shall completely discharge the
Participating Employer's obligations under this Plan.

ARTICLE VIII-ADMINISTRATION

8.1 Senior Administrative Officer; Duties

This Plan shall be administered by a Senior Administrative Officer
appointed by the Committee. The Senior Administrative Officer may be a
Participant under this Plan. The Senior Administrative Officer shall
have the authority to make, amend, interpret and enforce all
appropriate rules and regulations for the administration of this Plan
and decide or resolve any and all questions including interpretations
of this Plan as may arise in connection with the Plan. The Senior
Administrative Officer shall report to the Committee on an annual basis
regarding Plan activity, and at such other times as may be requested by
the Committee.

8.2 Agents

In the administration of this Plan, the Senior Administrative
Officer may, from time to time, employ agents and delegate to such
agents, including employees of any Participating Employer, such
administrative duties as he sees fit, and may from time to time consult
with counsel, who may be counsel to any Participating Employer.

8.3 Binding Effect of Decisions

The decision or action of the Senior Administrative Officer in
respect of any question arising out of or in connection with the
administration, interpretation and application of the Plan and the
rules and regulations promulgated hereunder shall be final and
conclusive and binding upon all persons having any interest in the
Plan.

8.4 Indemnity of Senior Administrative Officer; Committee

Each Participating Employer shall indemnify and hold harmless the
Senior Administrative Officer, the Committee, and its individual
members against any and all claims, loss, damage, expense or liability
arising from any action or failure to act with respect to this Plan,
except in the case of gross negligence or willful misconduct.

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<PAGE>

8.5 Availability of Plan Documents

8.6 Cost of Plan Administration

The Company shall bear all expenses of administration of this Plan.
However, a ratable portion of the expense shall be charged back to each
Participating Employer.

ARTICLE IX-CLAIMS PROCEDURE

9.1 Claim

Any person claiming a benefit, requesting an interpretation or
ruling under the Plan or requesting information under the Plan shall
present the request in writing to the Senior Administrative Officer or
his delegatee who shall respond in writing as soon as practicable.

9.2 Denial of Claim

If the claim or request is denied, the written notice of denial
shall state:

(a) The reasons for denial, with specific reference to the Plan
provisions on which the denial is based.

(b) A description of any additional material or information
required and an explanation of why it is necessary.

9.3 Review of Claim

Any person whose claim or request is denied or who has not received
a response within thirty (30) days may request review by notice given
in writing to the Senior Administrative Officer. The claim or request
shall be reviewed by the Senior Administrative Officer, who may, but
shall not be required to, grant the claimant a hearing. On review, the
claimant may have representation, examine pertinent documents and
submit issues and comments in writing.

9.4 Final Decision

The decision by the Senior Administrative Officer on review shall
normally be made within sixty (60) days. If an extension of time is
required for a hearing or other special circumstances, the claimant
shall be notified and the time limit shall be one hundred twenty (120)
days. The decision shall be in writing and shall state the reasons and
the relevant Plan provisions. All decisions on review shall be final
and bind all parties concerned.

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<PAGE>

ARTICLE X-AMENDMENT AND TERMINATION OF PLAN

10.1 Amendment

The Senior Administrative Officer may amend the Plan from time to
time as may be necessary for administrative purposes and legal
compliance of the Plan, provided, however, that no such amendment shall
affect the benefit rights of Participants or Beneficiaries in the Plan.
The Committee may amend the Plan at any time, provided, however, that
no amendment shall be effective to decrease or restrict the accrued
rights of Participants and Beneficiaries to the amounts in their
Accounts at the time of the amendment. Such amendments shall be subject
to the following:

(a) Preservation of Account Balance. No amendment shall reduce
the amount accrued in any Account to the date such notice of the
amendment is given.

(b) Changes in Interest Rate. No amendment shall reduce the
rate of Interest to be credited, after the date of the amendment,
on the amount already accrued in any Account or on the deferred
Compensation credited to any Account under Deferral Elections
already in effect on the date of the amendment.

10.2 Termination

The board of directors of each Participating Employer may at any
time, in its sole discretion, terminate or suspend the Plan in whole or
in part for that Participating Employer. However, no such termination
or suspension shall adversely affect the benefits of Participants which
have accrued prior to such action, the benefits of any Participant who
has previously retired, the benefits of any Beneficiary of a
Participant who has previously died, or already accrued Plan
liabilities between Participating Employers.

10.3 Payment at Termination

If the Plan is terminated, payment of each Account to a
Participant or a Beneficiary for whom it is held shall commence
pursuant to Paragraph 5.6, and shall be paid in the form designated by
the Participant.

ARTICLE XI-MISCELLANEOUS

11.1 Unfunded Plan

This Plan is intended to be an unfunded plan maintained primarily to
provide deferred compensation benefits for a select group of
"management or highly compensated employees" within the meaning of
Sections 201, 301, and 401 of ERISA, and therefore to be exempt from
the provisions of Parts 2, 3 and 4 of Title I of ERISA. Accordingly,
the Board may terminate the Plan and commence termination payout under
10.3 above for all or certain Participants, or remove certain employees
as Participants, if it is determined by the United States Department of
Labor or a court of competent jurisdiction that the Plan constitutes an
employee pension benefit plan within the meaning of Section 3(2) of
ERISA

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<PAGE>

which is not so exempt. This Plan is not intended to create an
investment contract, but to provide retirement benefits to eligible
individuals who have elected to participate in the Plan. Eligible
individuals are select members of management who, by virtue of their
position with Participating Employer, are uniquely informed as to
Participating Employer's operations and have the ability to materially
affect Participating Employer's profitability and operations.

11.2 Liability

(a) Liability for Benefits. Except as otherwise provided in this
paragraph, liability for the payment of a Participant's benefit
pursuant to this Plan shall be borne solely by the Participating
Employer that employs the Participant and reports the Participant as
being on its payroll during the accrual or increase of the Plan
benefit, and no liability for the payment of any Plan benefit shall
be incurred by reason of Plan sponsorship or participation except
for the Plan benefits of a Participating Employer's own employees.
Provided, however, that each Participating Employer, by accepting
the Board's designation as a Participating Employer under the Plan
and formally adopting the Plan, agrees to assume secondary liability
for the payment of any benefit accrued or increased while a
Participant is employed and on the payroll of a Participating
Employer that is a Direct Subsidiary or Indirect Subsidiary of the
Participating Employer at the time such benefit is accrued or
increased. Such liability shall survive any revocation of
designation as a Participating Employer with respect to any
liabilities accrued at the time of such revocation. Nothing in this
paragraph shall be interpreted as prohibiting any Participating
Employer or any other person from expressly agreeing to the
assumption of liability for a Plan Participant's payment of any
benefits under the Plan.

(b) Unsecured General Creditor. Participants and their
Beneficiaries, heirs, successors, and assigns shall have no secured
legal or equitable rights, interest or claims in any property or
assets of a Participating Employer, nor shall they be beneficiaries
of, or have any rights, claims or interests in any Policies or the
proceeds therefrom owned or which may be acquired by a Participating
Employer. Except as provided in Section 11.3, such Policies or other
assets of a Participating Employer shall not be held under any trust
for the benefit of Participants, their Beneficiaries, heirs,
successors or assigns, or held in any way as collateral security for
the fulfilling of the obligations of a Participating Employer under
this Plan. Any and all of a Participating Employer's assets and
Policies shall be, and remain, the general, unpledged, unrestricted
assets of the Participating Employer. A Participating Employer's
obligation under the Plan shall be that of an unfunded and unsecured
promise to pay money in the future.

11.3 Trust Fund

At its discretion, each Participating Employer, jointly or
severally, may establish one (1) or more trusts, with such trustee as
the Board may approve, for the purpose of providing for the payment of
such benefits. Such trust or trusts may be irrevocable, but the assets
thereof shall be subject to the claims of the Participating Employer's
creditors. To the extent any benefits provided under the Plan are
actually paid from any such trust, the

PAGE 16 - MANAGEMENT DEFERRED COMPENSATION PLAN

<PAGE>

Participating Employer shall
have no further obligation with respect thereto, but to the extent not
so paid, such benefits shall remain the obligation of, and shall be
paid by the Participating Employer.

11.4 Nonassignability

Neither a Participant nor any other person shall have any right to
sell, assign, transfer, pledge, anticipate, mortgage or otherwise
encumber, hypothecate or convey in advance of actual receipt the
amounts, if any, payable hereunder, or any part thereof, which are, and
all rights to which are, expressly declared to be nonassignable and
nontransferable. No part of the amounts payable shall, prior to actual
payment, be subject to seizure or sequestration for the payment of any
debts, judgments, alimony or separate maintenance owed by a Participant
or any other person, nor be transferable by operation of law in the
event of a Participant's or any other person's bankruptcy or
insolvency.

11.5 Not a Contract of Employment

The terms and conditions of this Plan shall not be deemed to
constitute a contract of employment between a Participating Employer
and a Participant, and neither a Participant nor a Participant's
Beneficiary shall have any rights against a Participating Employer
except as may otherwise be specifically provided herein. Moreover,
nothing in this Plan shall be deemed to give a Participant the right to
be retained in the service of a Participating Employer or to interfere
with the right of a Participating Employer to discipline or discharge a
Participant at any time.

11.6 Protective Provisions

A Participant will cooperate with a Participating Employer by
furnishing any and all information requested by a Participating
Employer, in order to facilitate the payment of benefits hereunder, and
by taking such physical examination as a Participating Employer may
deem necessary and taking such other action as may be requested by a
Participating Employer.

11.7 Governing Law

The provisions of this Plan shall be construed and interpreted
according to the laws of the State of Oregon, except as preempted by
federal law.

11.8 Terms

In this Plan document, unless the context clearly indicates the
contrary, the masculine gender will be deemed to include the female
gender, and the singular shall include the plural.

11.9 Validity

In case any provisions of this Plan shall be held illegal or invalid
for any reason, such illegality or invalidity shall not affect the
remaining parts hereof, but this Plan shall be

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<PAGE>

construed and enforced
as if such illegal and invalid provision had never been inserted
herein.

11.10 Notice

Any notice or filing required or permitted to be given to the Senior
Administrative Officer under the Plan shall be sufficient if in writing
and hand delivered, or sent by registered or certified mail to the
Senior Administrative Officer or to Secretary of Participating
Employer. Notice to the Senior Administrative Officer, if mailed, shall
be addressed to the principal executive offices of Participating
Employer. Notice mailed to the Participant shall be at such address as
is given in the records of the Participating Employer. Notices shall be
deemed given as of the date of delivery or, if delivery is made by
mail, as of the date shown on the postmark on the receipt for
registration or certification.

11.11 Successors

The provisions of this Plan shall bind and inure to the benefit of
each Participating Employer and its successors and assigns. The term
successors as used herein shall include any corporate or other business
entity which shall, whether by merger, consolidation, purchase or
otherwise, acquire all or substantially all of the business and assets
of a Participating Employer, and successors of any such corporation or
other business entity.

IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its officers thereunto duly authorized this 5th day of
September, 1997.

PORTLAND GENERAL HOLDINGS, INC.

By: /s/ Don F. Kielblock

Its: Vice President

PAGE 18 - MANAGEMENT DEFERRED COMPENSATION PLAN

PORTLAND GENERAL HOLDINGS, INC.

SENIOR OFFICERS' LIFE INSURANCE BENEFIT PLAN

1997 RESTATEMENT

<PAGE>

TABLE OF CONTENTS

PAGE

ARTICLE I-PURPOSE ....................................................... 1

1.1 Purpose ........................................................ 1
1.2 Effective Date ................................................. 1

ARTICLE II-DEFINITIONS .................................................. 1

2.1 Board .......................................................... 1
2.2 Cash Value ..................................................... 1
2.3 Cause .......................................................... 1
2.4 Change in Control .............................................. 1
2.5 Committee ...................................................... 2
2.6 Company ........................................................ 2
2.7 Date of Participation .......................................... 2
2.8 Direct Subsidiary .............................................. 2
2.9 Indirect Subsidiary ............................................ 2
2.10 Insurer ....................................................... 3
2.11 Involuntary Termination ....................................... 3
2.12 Merger Agreement .............................................. 3
2.13 Net Single Premium ............................................ 3
2.14 Participant ................................................... 3
2.15 Participant's Share ........................................... 4
2.16 Participating Employer ........................................ 4
2.17 Participating Employer's Share of Premium ..................... 4
2.18 Plan .......................................................... 4
2.19 Policy ........................................................ 4
2.20 Retirement .................................................... 4
2.21 Senior Administrative Officer ................................. 4
2.22 Senior Officer ................................................ 4

ARTICLE III-PARTICIPATION ............................................... 5

3.1 Eligibility .................................................... 5
3.2 Election to Participate ........................................ 5

ARTICLE IV-POLICY TITLE AND OWNERSHIP ................................... 5

4.1 Policy Title ................................................... 5
4.2 Participating Employer's Security Interest ..................... 5

ARTICLE V-PREMIUM PAYMENT ............................................... 5

5.1 Participating Employer's Premium Payment ....................... 5
5.2 Payment of the Participant's Share ............................. 5

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<PAGE>

TABLE OF CONTENTS

PAGE

ARTICLE VI-PARTICIPATING EMPLOYER'S INTEREST IN THE POLICY .............. 5

6.1 Collateral Assignment .......................................... 5
6.2 Limitations .................................................... 6

ARTICLE VII-PARTICIPANT'S INTEREST IN THE POLICY ........................ 6

7.1 Upon Surrender or Cancellation ................................. 6
7.2 Upon Death ..................................................... 6
7.3 Ownership of Cash Surrender Value .............................. 6

ARTICLE VIII-PLAN BENEFITS .............................................. 6

8.1 Upon Termination of Participation in the Plan .................. 6
8.2 Upon Transfer to a Non-Participating Employer .................. 7
8.3 Upon Termination of Employment ................................. 7
8.4 Upon a Change in Control ....................................... 8
8.5 Upon Retirement ................................................ 8
8.6 Timely Transfer of Ownership ................................... 8

ARTICLE IX-DURATION OF THE PLAN ......................................... 8

9.1 Plan Continuation .............................................. 8
9.2 Termination of Arrangement ..................................... 9

ARTICLE X-AMENDMENT AND TERMINATION OF PLAN ............................. 9

10.1 Amendment ..................................................... 9
10.2 Termination ................................................... 9

ARTICLE XI-INSURER NOT A PARTY TO PLAN .................................. 9

ARTICLE XII-NAMED FIDUCIARY ............................................. 9

12.1 Senior Administrative Officer; Committee ...................... 9
12.2 Indemnity of Senior Administrative Officer; Committee ......... 9
12.3 Availability of Plan Documents ................................ 10
12.4 Cost of Plan Administration ................................... 10

ARTICLE XIII-CLAIMS PROCEDURE ........................................... 10

13.1 Claim ......................................................... 10
13.2 Denial of Claim ............................................... 10
13.3 Review of Claim ............................................... 10
13.4 Final Decision ................................................ 10

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ARTICLE XIV-MISCELLANEOUS ............................................... 11

14.1 Not a Contract of Employment .................................. 11
14.2 Liability for Benefits ........................................ 11
14.3 Allocation of Asset ........................................... 11
14.4 Protective Provisions ......................................... 11
14.5 Transfer of Participant's Interest in the Policy .............. 12
14.6 Terms ......................................................... 12
14.7 Governing Law ................................................. 12
14.8 Validity ...................................................... 12
14.9 Notice ........................................................ 12
14.10 Successors ................................................... 12

SCHEDULE I

Death Benefits Payable Under Portland General Corporation
Senior Officers' Life Insurance Benefit Plan

EXHIBIT A

Collateral Assignment

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<PAGE>

INDEX OF TERMS

TERM AND PROVISION NUMBER PAGE

Board: 2.1 ............................................................ 1

Cash Value: 2.2 ....................................................... 1
Cause: 2.3 ............................................................ 1
Change in Control: 2.4 ................................................ 2
Committee: 2.5 ........................................................ 2
Company: 2.6 .......................................................... 3

Date of Participation: 2.7 ............................................ 3
Direct Subsidiary: 2.8 ................................................ 3

Exchange Act: 2.4(a) .................................................. 2

Indirect Subsidiary: 2.9 .............................................. 3
Insurer: 2.10 ......................................................... 3

Named Fiduciary: 12.1 ................................................. 9
Net Single Premium: 2.11 .............................................. 3

Participant: 2.12 ..................................................... 3
Participant's Share: 2.13 ............................................. 3
Participating Employer: 2.14 .......................................... 3
Participating Employer's Share of Premium: 2.15 ....................... 4
PGC: 2.4(a) ........................................................... 2
Plan: 2.16 ............................................................ 4
Policy: 2.17 .......................................................... 4

Retirement: 2.18 ...................................................... 4

Senior Administrative Officer: 2.19 ................................... 4
Senior Officer: 2.20 .................................................. 4

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PORTLAND GENERAL HOLDINGS, INC.

SENIOR OFFICERS' LIFE INSURANCE BENEFIT PLAN

1997 RESTATEMENT

ARTICLE I-PURPOSE

1.1 Purpose

This Plan has been established to provide Senior Officers of Portland
General Corporation and Participating Companies with supplemental life
insurance protection for their families in the event of death under a split
dollar life insurance arrangement. This Plan became effective on January 1,
1987, and was restated effective December 1, 1988, and January 1, 1996.

1.2 Effective Date

This 1997 Restatement is adopted to make amendments to the Plan
effective June 25, 1997.

ARTICLE II-DEFINITIONS

Whenever used in this document, the following terms shall have the
meanings set forth in this Article unless a contrary or different meaning
is expressly provided:

2.1 Board

"Board" shall mean the Board of Directors of Portland General
Holdings, Inc..

2.2 Cash Value

"Cash Value" shall mean the Policy's cash value as that term is
defined in the Policy.

2.3 Cause

"Cause" shall have the meaning specified in any employment contract in
effect between the Participant and the Participating Employer; provided,
that if no such employment contract is in effect, or if such an employment
contract is in effect but does not define the term "Cause," then such term
shall mean termination of the Participant's employment by action of the
Participating Employer's Board of Directors because of the Participant's
(i) conviction of a felony (which, through lapse of time or otherwise, is
not subject to appeal); or (ii) willful refusal without proper legal cause
to perform the Participant's duties and responsibilities; or (iii)
willfully engaging in conduct which the Participant has or should have
reason to know may be materially injurious to PGC, PGE, or the
Participating Employer.

2.4 Change in Control

"Change in Control" shall mean an occurrence in which:

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<PAGE>

(b) During any period of two (2) consecutive years (not including
any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board, and any new
director whose election by the Board or nomination for election by
PGC's stockholders was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors as of
the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to
constitute at least a majority thereof;

2.5 Committee

"Committee" shall mean the Non-qualified Benefits Committee of the
Board.

2.6 Company

"Company" shall mean Portland General Holdings, Inc., an Oregon
corporation.

2.7 Date of Participation

"Date of Participation" shall mean the earlier of the date on which
the Policy is issued or the date on which the Insurer agrees to bind
coverage.

2.8 Direct Subsidiary

"Direct Subsidiary" shall mean any corporation of which a
Participating Employer owns at least eighty percent (80%) of the total
combined voting power of all classes of its stock entitled to vote.

2.9 Indirect Subsidiary

"Indirect Subsidiary" shall mean any corporation of which a
Participating Employer directly and constructively owns at least eighty
percent (80%) of the total combined voting power of all classes of its
stock entitled to vote. In determining the amount of stock of a corporation
that is constructively owned by a Participating Employer, stock owned,
directly or constructively, by a corporation shall be considered as being
owned proportionately by its shareholders according to such shareholders'
share of voting power of all classes of its stock entitled to vote.

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<PAGE>

2.10 Insurer

"Insurer" shall mean any insurance company issuing a life insurance
policy under this Plan.

2.11 Involuntary Termination

"Involuntary Termination" shall have the meaning specified in any
employment contract in effect between the Participant and the Participating
Employer; provided, that if no such employment contract is in effect, or if
such an employment contract is in effect but does not define the term
"Involuntary Termination," then such term shall mean termination of the
Participant's employment under any of the following circumstances:

(a) Termination by the Participating Employer on any grounds
whatsoever except (i) for "Cause" as defined above, or (ii) upon
Employee's death or permanent disability; or

(b) Termination by the Participant within sixty (60) days of and in
connection with or based upon any of the following:

(i) An assignment to the Participant of duties and
responsibilities inconsistent with his position or inappropriate to
a senior officer of the Participating Employer;

(ii) A reduction in the Participant's annual base salary or a
failure to continue the Participant's participation in any
compensation or employee benefit plan or program in which the
Participant was participating other than as a result of the
expiration of such plan or program or as part of a general program
to reduce employee benefits on a proportional basis relative to
other employees of the Participating Employer; or

(iii) A relocation of the Participant from Portland, Oregon
without the Participant's consent.

2.12 Merger Agreement

"Merger Agreement" shall mean the Amended and Restated Agreement and
Plan of Merger by and among Enron Corp., Portland General Corporation and
Enron Oregon Corp., dated as of July 20, 1996, as that Agreement may be
amended or restated from time to time.

2.13 Net Single Premium

"Net Single Premium" shall mean the amount calculated by an enrolled
actuary selected by the Senior Administrative Officer required to obtain
the level death benefit promised in Table I calculated using the 1983 group
annuity table male rates and employing continuous functions.

2.14 Participant

"Participant" shall mean a Senior Officer who has been designated in
writing as a Participant by the Committee and has elected to participate in
the Plan.

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<PAGE>

2.15 Participant's Share

"Participant's Share" shall mean the aggregate portion of premiums
contributed by the Participant.

2.16 Participating Employer

"Participating Employer" shall mean the Company or any affiliated or
subsidiary company designated by the Board as a Participating Employer
under the Plan, as long as such designation has become effective and
continues to be in effect. The designation as a Participating Employer
shall become effective only upon the acceptance of such designation and the
formal adoption of the Plan by a Participating Employer. A Participating
Employer may revoke its acceptance of designation as a Participating
Employer at any time, but until it makes such revocation, all of the
provisions of this Plan and any amendments thereto shall apply to the
Participants and their beneficiaries of the Participating Employer.

2.17 Participating Employer's Share of Premium

"Participating Employer's Share of Premium" shall mean the aggregate
amount of insurance premium paid by the Participating Employer less the
Participant's Share.

2.18 Plan

"Plan" shall mean the Portland General Holdings, Inc. Senior Officers'
Life Insurance Benefit Plan, as may be amended from time to time.

2.19 Policy

"Policy" shall mean each life insurance policy which is issued by an
insurer on the life of the Participant.

2.20 Retirement

"Retirement" shall mean termination of employment with Portland
General Holdings, Inc. and any and all Direct or Indirect Subsidiaries or
affiliates of Portland General Holdings, Inc. at or after age sixty-five
(65), or at or after age fifty-five (55) and five (5) years of employment
with Portland General Holdings, Inc. and any and all Direct or Indirect
Subsidiaries or affiliates of Portland General Holdings, Inc..

2.21 Senior Administrative Officer

"Senior Administrative Officer" shall mean the employee in the
management position by the Committee designated to administer the Plan.

2.22 Senior Officer

"Senior Officer" shall mean the Chief Executive Officer, the
President, Division Presidents, all Senior Vice Presidents, all Vice
Presidents, the Treasurer and the Controller of the Participating Employer,
all as elected or appointed by the Board of Directors of the Participating
Employer.

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<PAGE>

ARTICLE III-PARTICIPATION

3.1 Eligibility

Eligibility shall be limited to those employees of a Participating
Employer who have attained the position of Senior Officer on or before June
25, 1997.

3.2 Election to Participate

A Participant may elect to participate in the Plan by completing such
documents as may be prescribed by the Senior Administrative Officer.

ARTICLE IV-POLICY TITLE AND OWNERSHIP

4.1 Policy Title

The Participant, or his transferee, shall be the owner of the Policy
and may exercise all ownership rights granted to the owner by the terms of
the Policy, except as herein provided. These shall include, but are not
limited to, the right to assign his interest in the Policy, the right to
change the beneficiary of that portion of the proceeds to which he is
entitled under Article VII, and the right to exercise settlement options.

4.2 Participating Employer's Security Interest

The only rights in and to the Policy granted to a Participating
Employer shall be limited to its security interest in the cash value of the
Policy, as defined in the collateral assignment attached as Exhibit A, and
a portion of the death benefit, as hereinafter provided under Article VI.

ARTICLE V-PREMIUM PAYMENT

5.1 Participating Employer's Premium Payment

Each premium on the Policy shall be paid by the Participating Employer
as it becomes due.

5.2 Payment of the Participant's Share

At the time of each premium payment by the Participating Employer, the
Participant shall pay to the Participating Employer an amount equal to the
economic benefit of said Policy enjoyed by the Participant. The economic
benefit shall be equal to the lesser of the Insurer's one-year term cost or
the PS-58 rate.

ARTICLE VI-PARTICIPATING EMPLOYER'S INTEREST IN THE POLICY

6.1 Collateral Assignment

Each Participant shall assign the Policy to the Participating Employer
as collateral, under the form of collateral assignment attached as Exhibit
A. The assignment gives the Participating Employer the limited power to
enforce its right to recover the Participating Employer's Share of Premium
on the Policy and/or a portion of the death benefit thereof.

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<PAGE>

6.2 Limitations

The interest of the Participating Employer in and to the Policy shall
be specifically limited to the following rights in and to the cash value
and a portion of the death benefit:

(a) the right to recover the Participating Employer's Share of
Premium, in the event the Policy is surrendered or canceled by the
Participant, as provided in paragraph 7.1;

(b) the right to recover, upon the death of the Participant, all
of the policy proceeds, in excess of that portion of the policy
proceeds payable to the Participant's beneficiary or beneficiaries as
provided in paragraph 7.2;

(c) the right to recover the Participating Employer's Share of
Premium, or to receive ownership of the Policy, in the event of
termination by the Participant in the Plan, or in the event of
termination of employment as provided in paragraph 8.1, 8.2 and 8.3.

ARTICLE VII-PARTICIPANT'S INTEREST IN THE POLICY

7.1 Upon Surrender or Cancellation

Upon surrender or cancellation of the Policy, the Participating
Employer shall be entitled to receive a portion of the cash surrender value
equal to the Participating Employer's Share of Premium. The balance of the
cash surrender value, if any, shall belong to the Participant.

7.2 Upon Death

Upon the death of the Participant, the beneficiary or beneficiaries
designated by the Participant shall be entitled to receive that portion of
the Policy proceeds equal to the amount set forth in Schedule I of this
Plan.

7.3 Ownership of Cash Surrender Value

Notwithstanding any other provision in the Plan to the contrary, the
Participant shall at all times own a portion of the cash surrender value of
the Policy equal to the Participant's Share to the extent said cash
surrender value exceeds the Participating Employer's Share of Premium.

ARTICLE VIII-PLAN BENEFITS

8.1 Upon Termination of Participation in the Plan

In the event the Participant terminates participation in the Plan
prior to leaving the employment of the Participating Employer, the
Participant shall execute any and all instruments that may be required to
vest ownership of said Policy in the Participating Employer. The
Participating Employer shall purchase from the Participant the
Participant's interest in the cash surrender value set forth in paragraph
7.3 above for an amount equal to the Participant's Share. Thereafter, the
Participant shall have no further interest in the Policy or this Plan.

Page 6 - SENIOR OFFICERS' LIFE INSURANCE BENEFIT PLAN

<PAGE>

8.2 Upon Transfer to a Non-Participating Employer

In the event the Participant transfers employment to a Direct or
Indirect Subsidiary of Portland General Corporation that is an employer
other than a Participating Employer, the Participant may elect either to:

(a) reimburse the Participating Employer an amount equal to the
Participating Employer's Share of Premium, upon receipt of which, the
Participating Employer shall release the collateral assignment and
thereafter shall have no further interest in the Policy, or

(b) transfer his entire interest in the Policy to the
Participating Employer by executing any and all instruments that may
be required to vest ownership of said Policy in the Participating
Employer. The Participating Employer shall purchase from the
Participant the Participant's interest in the cash surrender value set
forth in paragraph 7.3 above for an amount equal to the Participant's
Share. Thereafter, the Participant shall have no further interest in
the Policy or this Plan.

8.3 Upon Termination of Employment

(a) In the event of termination of employment for Cause (as
determined by the Committee) with a Participating Employer before
Retirement, the Participant shall execute any and all instruments that
may be required to vest ownership of said Policy in the Participating
Employer. The Participating Employer shall purchase from the
Participant the Participant's interest in the cash surrender value set
forth in paragraph 7.3 above for an amount equal to the Participant's
Share. Thereafter, the Participant shall have no further interest in
the Policy or this Plan.

(b) In the event of termination of employment because of a
reduction in force, accepting a position of public service, or other
reason not considered for Cause with a Participating Employer before
Retirement, the Participant may elect either to:

(i) reimburse the Participating Employer an amount equal to
the Participating Employer's Share of Premium, whereupon receipt
of payment from the Participant, the Participating Employer shall
release the collateral assignment and thereafter shall have no
further interest in the Policy, or

(ii) execute any and all instruments that may be required to
vest ownership of said policy in the Participating Employers. The
Participating Employer shall purchase from the Participant the
Participant's interest in the cash surrender value set forth in
paragraph 7.3 above for an amount equal to the Participant's
Share. Thereafter, the Participant shall have no further interest
in the Policy or this Plan.

(c) In the event of termination of employment, occurring at least
two (2) years from the Effective Time, as defined in the Merger
Agreement, the Participant shall be deemed to have retired for
purposes of this Plan and shall be eligible to make the election
specified in Section 8.5.

(d) In the event of Involuntary Termination, occurring during the
two-year period beginning with the date the stockholders of PGC
approve the Merger Agreement, the Participant shall be entitled to the
Change in Control benefit specified in Section 8.4.

Page 7 - SENIOR OFFICERS' LIFE INSURANCE BENEFIT PLAN

<PAGE>

8.4 Upon a Change in Control

In the event of a Change in Control, within sixty (60) days of such
Change in Control, the Participating Employer shall:

(a) determine to what extent the cash value exceeds the Net
Single Premium and recover the excess, if any; and

(b) upon recovery of the excess, release the collateral
assignment and thereafter have no further interest in the Policy; and

(c) pay to each Participant an amount equal to the excess, if
any, of the Net Single Premium over the cash value released to the
Participant in (b) above.

8.5 Upon Retirement

In the event of termination of employment with Participating Employer
at or after Retirement, the Participant may elect either to:

(a) reimburse the Participating Employer an amount equal to the
Participating Employer's Share of Premium, whereupon receipt of
payment from the Participant, the Participating Employer shall release
the collateral assignment and thereafter shall have no further
interest in the Policy, or

(b) continue as a Participant in the Plan with the Participating
Employer continuing to pay premiums and the Participant continuing to
pay the Participant's Share pursuant to Article V.

8.6 Timely Transfer of Ownership

When, under the terms of Article VIII, ownership of the Policy
transfers from the Participant to the Participating Employer, the
Participant shall execute any and all instruments that may be required to
vest ownership of said Policy in the Participating Employer within ninety
(90) days following receipt of notice from the Participating Employer.

ARTICLE IX-DURATION OF THE PLAN

9.1 Plan Continuation

Subject to the provisions of Article VIII, this Plan shall continue
with respect to each Participant until such time as the Cash Value of the
Policy on a Participant is sufficient to permit:

(a) the Participating Employer to recover the Participating
Employer's Share of Premium; and

(b) the Participant to recover an amount equal to the federal and
state income tax he will incur as a result of termination of the split
dollar arrangement; and

(c) the death benefit to continue to the Participant's age
ninety-five (95) with no further premium outlay based upon then
current interest assumptions.

Page 8 - SENIOR OFFICERS' LIFE INSURANCE BENEFIT PLAN

<PAGE>

9.2 Termination of Arrangement

When the standard required by paragraph 9.1 is achieved and upon the
Participating Employer receiving the Participating Employer's Share of
Premium, the split dollar arrangement with that Participant shall
terminate. The Participating Employer shall release the collateral
assignment and thereafter, shall have no further interest in the Policy.

ARTICLE X-AMENDMENT AND TERMINATION OF PLAN

10.1 Amendment

The Senior Administrative Officer may amend the Plan from time to time
as may be necessary for administrative purposes and legal compliance,
provided, however, that no such amendment shall effect the benefit rights
or levels of Participants or beneficiaries in the Plan. Prior to achieving
the standard required by paragraph 9.1, the Committee may not amend, modify
or revoke this Plan in a manner that reduces the rights of the Participant
under this Plan.

10.2 Termination

The Board of each Participating Employer may at any time, in its sole
discretion, terminate the Plan in whole or in part for that Participating
Employer, such that no future Participants will be allowed into the Plan.
However, no such termination or suspension shall adversely affect the
benefits of Participants which have accrued prior to such action, the
benefits of any Participant who has previously retired, the benefits of any
Beneficiary of a Participant who has previously died, or already accrued
Plan liabilities between Participating Employers.

ARTICLE XI-INSURER NOT A PARTY TO PLAN

ARTICLE XII-NAMED FIDUCIARY

12.1 Senior Administrative Officer; Committee

The Senior Administration Officer is hereby designated the "Named
Fiduciary" until removal by the Committee. As Named Fiduciary, the Senior
Administrative Officer shall be responsible for the management, control and
administration of the Plan established herein. The Senior Administrative
Officer may allocate to others certain aspects of the management and
operation responsibilities of the Plan, including the employment of
advisors and the delegation of any ministerial duties to qualified
individuals.

12.2 Indemnity of Senior Administrative Officer; Committee

Each Participating Employer shall indemnify and hold harmless the
Senior Administrative Officer and the Committee and its individual members
against any and all claims,

Page 9 - SENIOR OFFICERS' LIFE INSURANCE BENEFIT PLAN

<PAGE>

loss, damage, expense or liability arising from
any action or failure to act with respect to this Plan, except in the case
of gross negligence or willful misconduct.

12.3 Availability of Plan Documents

12.4 Cost of Plan Administration

The Company shall bear all expenses of administration of this Plan.
However, a ratable portion of the expense shall be changed back to each
Participating Employer.

ARTICLE XIII-CLAIMS PROCEDURE

13.1 Claim

Claims for any benefits due under the Plan or upon surrender of the
Policy shall be made in writing by the Participating Employer, and the
Participant or his designated beneficiary or beneficiaries, as the case may
be, to the Named Fiduciary or his delegatee who shall respond in writing as
soon as practicable.

13.2 Denial of Claim

In the event a claim is denied or disputed, the Named Fiduciary shall,
within a reasonable period of time after receipt of the claim, notify the
Participating Employer, and the Participant or his designated beneficiary
or beneficiaries, as the case may be, of such denial or dispute listing:

(a) the reasons for the denial or dispute; with specific reference
to the Plan provisions upon which the denial or dispute is based;

(b) a description of any additional material or information
necessary and an explanation of why it is necessary; and

13.3 Review of Claim

Within sixty (60) days of denial or notice of claim under the Plan, a
claimant may request that the claim be reviewed by the Named Fiduciary. The
claim or request shall be reviewed by the Named Fiduciary, who may, but
shall not be required to, grant the claimant a hearing. On review, the
claimant may have representation, examine pertinent documents and submit
issues and comments in writing.

13.4 Final Decision

Page 10 - SENIOR OFFICERS' LIFE INSURANCE BENEFIT PLAN

<PAGE>

(120) days. The
decision shall be in writing and shall state the reasons and the relevant
Plan provisions. All decisions on review shall be final and bind all
parties concerned.

ARTICLE XIV-MISCELLANEOUS

14.1 Not a Contract of Employment

The terms and conditions of this Plan shall not be deemed to
constitute a contract of employment between a Participating Employer and a
Participant, and neither a Participant nor a Participant's beneficiary
shall have any rights against a Participating Employer except as may
otherwise be specifically provided herein. Moreover, nothing in this Plan
shall be deemed to give a Participant the right to be retained in the
service of the Participating Employer or to interfere with the right of the
Participating Employer to discipline or discharge him at any time.

14.2 Liability for Benefits

Except as otherwise provided in this paragraph, liability for the
payment of a Participant's benefit pursuant to this Plan shall be borne
solely by the Participating Employer that employs the Participant and
reports the Participant as being on its payroll during the accrual or
increase of the Plan benefit, and no liability for the payment of any Plan
benefit shall be incurred by reason of Plan sponsorship or participation
except for the Plan benefits of a Participating Employer's own employees.
Provided, however, that each Participating Employer, by accepting the
Board's designation as a Participating Employer under the Plan and formally
adopting the Plan, agrees to assume secondary liability for the payment of
any benefit accrued or increased while a Participant is employed and on the
payroll of a Participating Employer that is a Direct Subsidiary or Indirect
Subsidiary of the Participating Employer at the time such benefit is
accrued or increased. Such liability shall survive any revocation of
designation as a Participating Employer with respect to any liabilities
accrued at the time of such revocation. Nothing in this paragraph shall be
interpreted as prohibiting any Participating Employer or any other person
from expressly agreeing to assumption of liability for a Plan Participant's
payment of any benefits under the Plan.

14.3 Allocation of Asset

The interests of each Participating Employer in and to the Policy as
described in paragraph 6.2 shall be allocated, if applicable, pro rata
among those Participating Employers who employed the Participant and
reported the Participant as being on its payroll during the accrual or
increase of the cash value. Such allocation of asset shall survive any
revocation of designation as a Participating Employer or termination of the
Plan with respect to any asset accrued at the time of such revocation or
termination.

14.4 Protective Provisions

A Participant will cooperate with a Participating Employer by
furnishing any and all information requested by the Participating Employer,
in order to facilitate the payment of benefits hereunder, and by taking
such physical examination as the Participating Employer may deem necessary
and taking such other action as may be requested by the Participating
Employer.

Page 11 - SENIOR OFFICERS' LIFE INSURANCE BENEFIT PLAN

<PAGE>

14.5 Transfer of Participant's Interest in the Policy

In the event a Participant shall transfer all of his interest in the
Policy, then all of a Participant's interest in the Policy shall be vested
in his transferee, who shall be substituted as a party hereunder, and a
Participant shall have no further interest in the Policy.

14.6 Terms

In this Plan document, unless the context clearly indicates the
contrary, the masculine gender will be deemed to include the feminine
gender, and the singular shall include the plural.

14.7 Governing Law

The provisions of this Plan shall be construed and interpreted
according to the laws of the State of Oregon, except as preempted by
federal law.

14.8 Validity

14.9 Notice

Any notice or filing required or permitted to be given to the Senior
Administrative Officer under the Plan shall be sufficient if in writing and
hand delivered, or sent by registered or certified mail to the Senior
Administrative Officer or to Secretary of Participating Employer. Notice to
the Senior Administrative Officer, if mailed, shall be addressed to the
principal executive offices of the Participating Employer. Notice mailed to
the Participant shall be at such address as is given in the records of the
Participating Employer. Notices shall be deemed given as of the date of
delivery or, if delivery is made by mail, as of the date shown on the
postmark on the receipt for registration or certification.

14.10 Successors

The provisions of this Plan shall bind and inure to the benefit of the
Participating Employer and its successors and assigns. The term successors
as used herein shall include any corporate or other business entity which
shall, whether by merger, consolidation, purchase or otherwise, acquire all
or substantially all of the business and assets of the Participating
Employer, and successors of any such corporation or other business entity.

IN WITNESS WHEREOF, and pursuant to resolution of the board, the
Company has caused this instrument to be executed by its officers thereunto
duly authorized, as of this 19th day of November, 1997.

PORTLAND GENERAL HOLDINGS, INC.

By: /s/ D. F. Kielblock

Its: Vice President

Page 12 - SENIOR OFFICERS' LIFE INSURANCE BENEFIT PLAN

<PAGE>

SCHEDULE I

Death Benefits Payable Under

Portland General Corporation

Senior Officers' Life Insurance Benefit Plan

1996 Restatement

Effective January 1, 1996

Chief Executive Officer $1,000,000
President 750,000
Senior Vice Presidents 750,000
Division Presidents 750,000
Other Officers 500,000

<PAGE>

EXHIBIT A

Collateral Assignment

THIS ASSIGNMENT, made and entered into and effective this ____ day of
_____________, 19___, by the undersigned as owner (the "Owner") of that
certain Life Insurance Policy No. ______________ issued by ________________
("Insurer") and any supplementary contracts issued in connection therewith
(said policy and contracts being herein called the "Policy"), upon the life
of _____________ ("Insured"), to Portland General Corporation, an Oregon
corporation (the "Assignee").

WITNESSETH:

WHEREAS, the Insured is a Senior Officer of the Assignee; and

WHEREAS, said Assignee desires to provide the Insured with
supplemental life insurance protection by contributing a portion of the
annual premium due on the Policy, as more specifically provided for in the
split dollar arrangement set forth in the Senior Officers' Life Insurance
Benefit Plan (the "Plan"); and adopted as restated by the Assignee on
December 1, 1988, a copy of which is attached hereto, incorporated by
reference and made a part hereof; and

WHEREAS, in consideration of the Assignee agreeing to pay a portion of
the premiums, the Owner agrees to grant the Assignee an interest in the
policy as security for the recovery of the Assignee's premium outlay.

1. This Assignment is made, and the Policy is to be held, as
collateral security for the premium payments made by Assignee, pursuant to
the terms of the Plan.

2. The Assignee's interest in the Policy shall further be limited
to:

(a) the right to recover the aggregate amount of insurance
premium paid by the Assignee less the aggregate portion contributed by
the Participant (the "Assignee's Share of Premium") in the event the
Policy is surrendered or canceled by the Owner as provided in Section
7.1 of the Plan,

(b) the right to recover, upon the death of the Participant, all
proceeds in excess of the death benefit promised in Schedule I of the
Senior Officers' Life Insurance Benefit Plan,

(c) the right to recover the Assignee's Share of Premium, the
right to recover the excess of cash value over the Net Single Premium,
or the right to receive ownership of the Policy in the event of
termination of the split dollar arrangement as provided in Article
VIII of the Plan.

<PAGE>

EXHIBIT A

Collateral Assignment
(Continued)

3. Except as specifically herein granted to the Assignee, the Owner
shall retain all incidents of ownership in the Policy, including, but not
limited to, the right to assign his interest in the Policy, the right to
change the beneficiary of that portion of the proceeds to which he is
entitled under Article VI of the Plan, and the right to exercise all
settlement options permitted by the terms of the Policy. Provided, however,
that all rights retained by the Owner shall be subject to the terms and
conditions of the Plan.

The signature of the Assignee shall be sufficient for the exercise of
any rights under the Policy assigned hereby to the Assignee, and the
receipt of the Assignee for any sums received by it shall be a full
discharge and release therefore to the Insurer.

6. The Insurer shall be fully protected in recognizing the requests
made by the Owner for surrender of the Policy with or without the consent
of the Assignee, and, upon such surrender, the Policy shall be terminated
and shall be of no further force or effect.

IN WITNESS WHEREOF, the undersigned Owner has executed this Assignment
the date and year first above written.

__________________________________ __________________________________
Witness Owner

<PAGE>

POWER OF ATTORNEY
PORTLAND GENERAL ELECTRIC COMPANY

KNOW ALL MEN BY THESE PRESENTS, that in connection with the filing by
the Company of its Annual Report on Form 10-K for the year ended December
31, 1997, with the Securities and Exchange Commission, the undersigned
director(s) of the Company hereby constitute and appoint Alvin L.
Alexanderson, Steven N. Elliott and Joseph E. Feltz, and each of them with
full power (any one of them acting alone), as true and lawful attorneys-in-
fact and agents, for and on behalf and in the name, place, and stead of the
undersigned, in any and all capacities, to sign, execute, and file such
Annual Report on Form 10-K, together with all amendments or supplements
thereto, with all exhibits and any and all documents required to be filed
with respect thereto with any regulatory authority, granting unto each
above-mentioned individual the full power and authority to do and perform
each and every act and action requisite and necessary to be done in and
about the premises in order to effectuate the same as fully to all intents
and purposes as the undersigned might or could do if personally present,
hereby ratifying and confirming all the said attorneys-in-fact and agents,
or any of them, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereto set his hand this 20th
day of March, 1998.

\S\ KEN L. HARRISON

Ken L. Harrison

<PAGE>

POWER OF ATTORNEY
PORTLAND GENERAL ELECTRIC COMPANY

IN WITNESS WHEREOF, the undersigned has hereto set his hand this 24th
day of March, 1998.

\S\ JOSEPH M. HIRKO

Joseph M. Hirko
<PAGE>

POWER OF ATTORNEY
PORTLAND GENERAL ELECTRIC COMPANY

IN WITNESS WHEREOF, the undersigned has hereto set his hand this 25th
day of March, 1998.

\S\ KENNETH L. LAY

Kenneth L. Lay

<PAGE>

POWER OF ATTORNEY
PORTLAND GENERAL ELECTRIC COMPANY

IN WITNESS WHEREOF, the undersigned has hereto set his hand this 23rd
day of March, 1998.

\S\ JAMES V. DERRICK, JR.

James V. Derrick, Jr.

<PAGE>

POWER OF ATTORNEY
PORTLAND GENERAL ELECTRIC COMPANY

IN WITNESS WHEREOF, the undersigned has hereto set his hand this 23rd
day of March, 1998.

\S\ JEFFREY K. SKILLING

Jeffrey K. Skilling

<PAGE>

<ARTICLE> UT

<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS FILED ON FORM 10-K FOR THE TWELVE MONTHS
ENDED DECEMBER 31, 1997 FOR PORTLAND GENERAL ELECTRIC COMPANY AND
SUBSIDIARIES (PGE) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<CIK> 0000784977
<NAME> PORTLAND GENERAL ELECTRIC COMPANY

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,818
<OTHER-PROPERTY-AND-INVEST> 369
<TOTAL-CURRENT-ASSETS> 225
<TOTAL-DEFERRED-CHARGES> 844
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 3,256
<COMMON> 160
<CAPITAL-SURPLUS-PAID-IN> 480
<RETAINED-EARNINGS> 270
<TOTAL-COMMON-STOCKHOLDERS-EQ> 910
30
0
<LONG-TERM-DEBT-NET> 837
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 100
<LONG-TERM-DEBT-CURRENT-PORT> 67
0
<CAPITAL-LEASE-OBLIGATIONS> 1
<LEASES-CURRENT> 3
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,308
<TOT-CAPITALIZATION-AND-LIAB> 3,256
<GROSS-OPERATING-REVENUE> 1,416
<INCOME-TAX-EXPENSE> 83
<OTHER-OPERATING-EXPENSES> 1,125
<TOTAL-OPERATING-EXPENSES> 1,208
<OPERATING-INCOME-LOSS> 208
<OTHER-INCOME-NET> (8)
<INCOME-BEFORE-INTEREST-EXPEN> 200
<TOTAL-INTEREST-EXPENSE> 74
<NET-INCOME> 126
2
<EARNINGS-AVAILABLE-FOR-COMM> 124
<COMMON-STOCK-DIVIDENDS> 144
<TOTAL-INTEREST-ON-BONDS> 63
<CASH-FLOW-OPERATIONS> 359
<EPS-PRIMARY> 0
<EPS-DILUTED> 0

<FN>
<F1>Represents the 12 month-to-date figure ending December 31,
1997.
</FN>

<PAGE>

</TABLE>