SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1996
Registrant; State of Incorporation; IRS Employer
COMMISSION FILE NUMBER ADDRESS; AND TELEPHONE NUMBER IDENTIFICATION NO.
1-5532 PORTLAND GENERAL CORPORATION 93-0909442
(an Oregon Corporation)
121 SW Salmon Street
Portland, Oregon 97204
(503) 464-8820
1-5532-99 PORTLAND GENERAL ELECTRIC COMPANY 93-0256820
(an Oregon Corporation)
121 SW Salmon Street
Portland, Oregon 97204
(503) 464-8000
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes X . No .
The number of shares outstanding of the registrants' common stocks as of
September 30, 1996 are:
Portland General Corporation 51,203,763
Portland General Electric Company 42,758,877
(owned by Portland General Corporation)
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TABLE OF CONTENTS
PAGE
NUMBER
DEFINITIONS ......................................................2
PART I. PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
FINANCIAL INFORMATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations ..... 3
Consolidated Statements of Income ..................12
Consolidated Statements of Retained Earnings .......12
Consolidated Balance Sheets ........................13
Consolidated Statements of Cash Flow ...............14
Notes to Consolidated Financial Statements .........15
Portland General Electric Company and
Subsidiaries Financial Information ................18
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings .........................21
Item 6 - Exhibits and Reports on Form 8-K ..........21
Signature Page .....................................23
DEFINITIONS
AFDC .................Allowance For Funds Used During Construction
Bonneville Pacific .................Bonneville Pacific Corporation
BPA ...............................Bonneville Power Administration
Coyote Springs ....................Coyote Springs Generation Plant
Enron .................................................Enron Corp.
FERC .........................Federal Energy Regulatory Commission
Holdings ..........................Portland General Holdings, Inc.
kWh .................................................Kilowatt-Hour
MWa .............................................Average megawatts
MWh .................................................Megawatt-hour
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
PUHCA ..................Public Utility Holding Company Act of 1935
Trojan .......................................Trojan Nuclear Plant
USDOE ..........................United States Department of Energy
WAPA .................................Western Area Power Authority
WNP-3 ................Washington Public Power Supply Systen Unit 3
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PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL AND OPERATING OUTLOOK
PORTLAND GENERAL CORPORATION - HOLDING COMPANY
Portland General Corporation (Portland General or PGC), an electric utility
holding company, was organized in December 1985. Portland General Electric
Company (PGE or the Company), an electric utility company and Portland
General's principal operating subsidiary, accounts for substantially all of
Portland General's assets, revenues and net income.
PROPOSED MERGER
On July 20, 1996, Portland General entered into an Agreement and Plan of
Merger with Enron, a Delaware corporation, to merge in a tax-free, stock-for-
stock transaction. The transaction which has been approved by both companies'
boards of directors, will entitle Portland General shareholders to receive one
share of Enron common stock for each share of Portland General common stock
held by them.
Under the terms of the merger agreement, Enron will reincorporate in Oregon to
allow it to qualify as an intrastate holding company that is exempt from the
registration requirements of PUHCA. In the event that PUHCA is amended or
repealed in a manner that would make this reincorporation no longer necessary,
PGC will merge directly into the present Enron. PGE,
Portland General's utility subsidiary, will retain its name, most of its
functions and maintain its principal corporate offices in Portland, Oregon.
The merger is subject to the approval of each company's shareholders. Both
Enron and PGC have scheduled special shareholder meetings each of which will
take place on November 12, 1996 in which shareholders of record for each
corporation as of September 23, 1996 will vote upon a proposal to approve the
Merger Agreement. The affirmative vote of holders of a majority of the shares
of both the PGC Common Stock and Enron Voting Stock outstanding is required
for merger approval under the state laws where each company is incorporated.
In addition the merger is conditioned upon, among other things, regulatory
approvals including those already initiated at the OPUC and the FERC. It is
anticipated that the regulatory procedures can be completed in less than 12
months from the date of the merger agreement.
The merger agreement may be terminated by Enron if the average of the closing
prices of Enron Common Stock during the 20 consecutive trading day period
ending five trading days prior to the date of the special meeting of the
shareholders of Portland General is more than $47.25 per share, and may be
terminated by PGC if the average of the closing prices of Enron Common Stock
during such period is less than $36.25 per share.
APPROVALS AND CONSENTS
OPUC - Upon completion of the merger, Enron will be the owner of the PGE common
stock. PGE is subject to the jurisdiction of the OPUC with respect to
its electric utility operations. The approval of the OPUC is required for any
transaction in which a person acquires the power to exercise any substantial
influence over the policies and actions of a public utility subject to its
jurisdiction. On August 30, 1996, Enron filed an application with the
Commission seeking approval of the merger. The OPUC must approve the merger
if they find that it will serve the customers of PGE in the public interest.
In making that finding the OPUC may consider whether the change in ownership
of the public utility will impair the ability of the
utility to provide adequate service at just and reasonable rates. Enron has
requested OPUC action on its application by early 1997. There is no
assurance, however, that the OPUC will have taken any action by such time.
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PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
In addition to Enron's application for approval of the merger, PGE has filed
an application seeking the OPUC's approval to change certain provisions of
PGE's tariffs. PGE will also seek OPUC approval for the separation from PGE
of certain nonutility business and activities (see the PGE, Rate
Proposal discussion below).
FERC - The approval of the FERC is required to consummate the merger under the
Federal Power Act, which provides that no public utility may sell or otherwise
dispose of its jurisdictional facilities or, directly or indirectly, merge or
consolidate such facilities with those of any other person or acquire any
security of any other public utility without first having obtained
authorization from the FERC. Under the Federal Power Act, the FERC will
approve a merger if it finds such merger "consistent with the public
interest". On September 20, 1996, Enron and PGC filed an application with the
FERC seeking approval of the merger under the Federal Power Act. It is
expected that the FERC will not take action on the application until sometime
in 1997.
OTHER - The merger will require the consent and approval of various other
regulatory agencies. PGC and Enron will seek to obtain all necessary consents
and approvals in order to consummate the merger. It is anticipated that
regulatory procedures can be completed in less than 12 months from the date of
the merger agreement.
PORTLAND GENERAL ELECTRIC COMPANY - ELECTRIC UTILITY
REGULATORY MATTERS
RATE PROPOSAL - On August 6, 1996 PGE submitted a proposed rate plan to the
OPUC which included approximately $25 million in proposed rate reductions for
1997 and acceleration of the recovery of PGE's Trojan investment. Trojan
ceased commercial operations in early 1993 and in March 1995, the OPUC
authorized the recovery in rates of PGE's remaining investment in Trojan. The
price and earnings reductions in PGE's proposal stem primarily from
savings in variable power costs representing, in part, benefits from PGE's
decision to close Trojan. PGE believes it appropriate to apply a portion of
such savings to offset the accelerated amortization of the Trojan investment.
PGE believes acceleration of the amortization of the Trojan investment would
benefit PGE customers by reducing their total payment over time and is
consistent with PGE's objective of reducing its level of regulatory assets in
anticipation of an increasingly competitive market. PGE's proposed
amortization would result in an additional $18 million of
before tax expense for calendar year 1997 and, based on current forecasts,
would reduce the total amortization period by as much as nine years. PGE's
proposed plan, if adopted, would result in a $43 million before tax ($28
million after tax) reduction to PGE's 1997 earnings, consisting of a $25
million before tax ($15 million after tax) decrease due to the rate reductions
and an $18 million before tax ($13 million after tax) decrease due to
accelerated amortization of its Trojan investment. As part of the plan,
PGE proposed acceleration of eligibility for PGE's market-based retail
rates for certain customers; reductions in the rate charged to PGE's
residential customers; a direct access experiment for certain large industrial
customers; development of tariffs for time of day and direct access
experiments for residential and small commercial customers.
In response to PGE's plan, the OPUC staff proposed to recommend
adoption of the proposals included in PGE's plan but with a
modification of the rate consequences of the Trojan accelerated amortization,
plus an additional $51 million in rate reductions for 1997. The OPUC
staff's proposal, if adopted, would result in a $93 million before tax ($57
million after tax) reduction to PGE's 1997 earnings. Formal settlement
discussions with the OPUC staff are currently scheduled for November 1996.
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PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
PGE's rate plan is based on a forecast that assumes regulatory approval of the
merger between Portland General and Enron. The Company has included
in the plan a request to accelerate certain of the rate reductions upon the
OPUC's approval of the merger application.
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 November 1994 ruling, by a different judge of the same court, upheld the
Commission's 1993 Declaratory Ruling (DR-10). In DR-10 the OPUC ruled that
PGE could recover and earn a return on its undepreciated Trojan investment,
provided certain conditions were met. The Commission relied on a 1992 Oregon
Department of Justice opinion issued by the Attorney General's office stating
that the Commission had the authority to set prices including recovery of and
on investment in plant that is no longer in service.
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 were combined with
the appeal of the November 1994 ruling at the Oregon Court of Appeals.
For further information regarding the legal challenges to the OPUC's authority
to grant recovery of PGE's Trojan investment see Item 3, Legal proceedings, of
Portland General's and PGE's Forms 10-K for the year ended December 31, 1995.
LEAST COST ENERGY PLANNING - On August 26, 1996 the OPUC acknowledged PGE's
1995-1997 Integrated Resource Plan (IRP). The OPUC adopted Least Cost Energy
Planning for all energy utilities in Oregon with the goal of selecting the mix
of options that yields an adequate and reliable supply of energy at the least
cost to the utilities and customers. The IRP reflects: a recognition that
the geographic area we presently serve no longer defines our customer base;
the accelerated pace of technological change; transition of a key fuel, natural
gas, to a market commodity; and the development of a vibrant electricity
marketplace. The IRP outlines a strategy which emphasizes: (1) the purchase
of energy in the marketplace at competitive prices, (2) acquisition of energy
efficiency at reduced levels while maintaining market presence and capability
for possible future increases when justified, (3) economical use of our
existing assets and (4) the use of other supply-side actions, including
acquisition of renewable resources.
BONDABLE CONSERVATION INVESTMENT - The OPUC designated $81 million of PGE's
energy efficiency investment as Bondable Conservation Investment,
pursuant to recent Oregon legislation, and approved PGE's request
to issue conservation bonds collateralized by the future revenue stream
assured by the OPUC designation. Subsequently, PGE issued a 10 year
conservation bond which is expected to provide an estimated $21 million in
present value savings to customers while granting PGE immediate
recovery of its energy efficiency program expenditures. Future revenues
collected from customers will pay debt service obligations. Once the
Commission designates a Bondable Conservation Investment it may not
revalue or affect the timing of the revenue stream. Therefore, the OPUC
may not remove the debt service obligation from rates.
COMPETITION
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
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PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
restrictions on
independent power production and granted authority to the FERC to mandate open
access for the wholesale transmission of electricity.
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 new rules became effective July 1996 and are expected to result in
increased competition, lower prices and more choices to wholesale energy
customers.
The FERC action applies only to the wholesale transmission of electricity and
does not proscribe terms and conditions of retail transmission service which
is subject to individual state regulation. 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 presently operating in a cost-based
regulated environment, PGE expects increasing competition from other forms of
energy and other suppliers of electricity. While the Company is unable to
determine the future impact of increased competition, it believes that
ultimately it will result in reduced retail as well as wholesale prices.
RETAIL CUSTOMER GROWTH AND ENERGY SALES
Weather adjusted retail energy sales grew 0.5% for the nine months ended
September 30, 1996 compared to the same period last year. Residential sales
grew 1.7% while commercial sales increased 2.3%. High-tech and
transportation industrial sales were strong as well; however, continued
production cutbacks by paper and metal manufacturers caused total industrial
sales to decline approximately 4.4% for the year. Year-to-date energy sales
also reflect the impact of the winter windstorms and flooding which
interrupted service for extended periods. As a result, the Company has
revised its projected weather adjusted retail energy load growth to be less
than 1 percent for 1996. Actual sales growth (non-weather adjusted) is
projected to be approximately 3.5%.
<GRAPH>
Graph Descripton:
Quarterly Increase in Retail Customers
Quarter/Year Residential Commercial/Industrial
2Q 94 2476 550
3Q 94 2219 454
4Q 94 4247 379
1Q 95 3010 270
2Q 95 2194 509
3Q 95 2145 435
4Q 95 5566 554
1Q 96 3633 539
2Q 96 3664 76
3Q 96 3021 594
</GRAPH>
WHOLESALE MARKETING
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 will contribute to increasing pressure
on the price of power. In addition the development of financial markets and
the NYMEX futures trading have led to increased information available to
market participants, further adding to the competitive pressure on wholesale
prices.
Company wholesale revenues continue to make a growing contribution providing
nearly 22% of total
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PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
operating revenues for the quarter and 16% year to date,
representing a significant increase over the same periods in 1995. The
growth in wholesale sales is in part attributed to PGE's aggressive sales
efforts as part of the Company's plan to expand its existing marketing
capabilities and activities throughout the Western U.S.
POWER SUPPLY
Hydro conditions for the year have been extremely favorable. 1996 January-to-
July runoff on the Columbia River was the fourth largest since 1930 and totaled
132% of normal. As a result, the Company has benefited from lower variable
power costs due to the abundance of hydro generation throughout the region.
However, hydro conditions for the remainder of the year are highly dependent
upon levels of precipitation. The runoff season has left the region with
reservoir levels in the region at approximately 97% of capacity compared to
91% in 1995. Nearly full reservoirs will allow the region to use
rainfall for generation of electricity rather than to fill reservoirs for
electric generation during the winter months.
RESULTS OF OPERATIONS
The following discussion focuses on utility operations, unless otherwise
noted. Due to seasonal fluctuations in electricity sales, as well as the
price of wholesale energy and fuel costs, quarterly operating earnings are not
necessarily indicative of results to be expected for calendar year 1996.
1996 COMPARED TO 1995 FOR THE THREE MONTHS ENDED SEPTEMBER 30
Portland General earned $21 million or $0.40 per share for the third quarter
of 1996 compared to earnings of $14 million or $0.28 per share in 1995.
Earnings for 1996 include $10 million in after tax charges for
Enron/PGC merger related costs and revenue refund provisions. Earnings for
1995 include a $13 million, after tax, regulatory disallowance related to
unrecoverable deferred power costs. Operating earnings improved over 1995 due
to decreases in wholesale power prices driven by favorable hydro conditions
coupled with a competitive wholesale market, continued growth of residential
and high-tech industrial demand and the success of Company wholesale marketing
efforts. Decreased demand from paper and wood products customers adversely
impacted revenues and earnings.
Operating revenues of $260 million increased 17% compared to the same period
last year. Retail revenues of $199 million were comparable to the third
quarter last year, while wholesale revenues of $58 million, increased 177%.
Continued robust sales to high-tech customers as well as
residential and commercial classes, along with positive effects of higher
average sales prices, contributed to revenue increases from these customers.
However, production cutbacks by paper manufacturers, PGE's largest
manufacturing customer group
coupled with $10 million in revenue refund provisions related to energy
efficiency programs kept total retail revenues comparable to 1995.
Residential and Commercial sales benefited from warm summer weather,
increasing 3.4% and 2.3%
respectively. Mean temperatures for July and August
exceeded those of last year, with a resultant increase in air conditioning
loads for the residential and commercial customer classes. Additionally,
there was a 17,600 increase in total retail customers compared
to the end of the quarter last year.
The number of residential customers grew 2.8% over the past twelve
months, exceeding the Company's 10 year annual growth rate of 2.2%. High
tech, construction and services industries together represented growth of
7.2%,
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PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
high tech was 11.8%, for the quarter which helped compensate for
weakness in lumber and paper industries.
Wholesale revenues jumped $37 million from 1995, despite a 44% drop in average
sale prices. Company marketing efforts increased the level of sales as PGE
was able to profitably broker much of the surplus NW hydro-generated power.
For the quarter, wholesale sales comprised 42% of total kWh sales.
Continued decline in the price per kWh of variable power was reflected in
earnings as total costs increased only $19 million or 29% to support a 50%
increase in total Company sales. An abundant supply of wholesale
power, much of it hydro-generated, kept more expensive thermal generation
below 1995 levels throughout the region. PGE took advantage of competitive
wholesale prices and purchased 67% of its power requirements. However, PGE
had good performance from its generating facilities which provided 33% of
total Company loads at an average cost of 7.4 mills (10 mills = 1 cent)
compared to 8.4 mills in 1995. Coyote Springs provided nearly 6% of total
energy requirements at 5.7 mills. Hydro plant generation
also provided 6% of total loads, with increased production reflecting improved
water conditions on the Clackamas River system. Energy purchases were up 84%
providing nearly all of the incremental energy to support the demand created
by wholesale sales. Increased mid-Columbia generation helped reduce the
average cost of firm purchases.
RESOURCE MIX/VARIABLE POWER COSTS
Average Variable
Resource Mix Power Cost (Mills/kWh)
1996 1995 1996 1995
Generation 33% 46% 7.4 8.4
Firm Purchases 54 35 14.7 24.5
Spot Purchases 13 19 8.7 11.4
Total Resources 100% 100% Average 12.9 16.0
PGE does not have a fuel adjustment clause as part of its retail rate
structure; therefore, changes in fuel and purchased power expenses are
reflected currently in earnings.
Operating expenses (excluding variable power, depreciation and income
taxes) increased $10 million or 16% compared to 1995 primarily due to
additional firm natural gas transportation capacity and operating costs
related to Coyote Springs. Additionally, efforts to complete distribution
projects deferred as a result of the winter storms and increased customer
marketing and service costs also contributed to this increase. Lower
operating costs at Company coal generating plants as well as a decrease in
general administration costs helped partially offset the increases for the
quarter.
Other Income decreased $11 million, excluding the 1995 $13 million
regulatory disallowance, due to Enron/PGC merger costs, lower interest
income on regulatory asset balances and decreased AFDC.
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PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
1996 COMPARED TO 1995 FOR THE NINE MONTHS ENDED SEPTEMBER 30
Portland General earned $103 million or $2.03 per share for the nine
months ended September 30, 1996 compared to $45 million or $0.88 per share
in 1995. 1995 earnings include regulatory disallowances of $50 million
after tax. Excluding the disallowances, 1995 earnings would have been $94
million. Improved earnings for the year include the benefits of plentiful
water conditions, favorable weather conditions, a growing residential
customer base
and the Company's aggressive wholesale marketing
efforts. These factors also contributed to the Company achieving record
sales during the year as well as establishing new record peak loads for both
the summer and winter seasons.
Operating revenues of $794 million increased $92 million compared to the
same period last year driven by a $69 million increase in wholesale
revenues combined with $23 million of retail revenue increases. Retail
revenue gains were largely due to 1995 rate increases accompanied by 2%
higher energy sales. These gains were partially offset by a $16 million
revenue refund provision related to energy efficiency programs and Oregon
excise tax "kicker" benefits.
Favorable weather conditions contributed to higher energy sales in both
residential and commercial classes with significantly colder mean
temperatures in January and February by 2.6 and 4.5 degrees respectively,
and warmer mean summer weather in July and August by 1.4 and 3.1 degrees
respectively. Industrial loads have benefited from the growth
in high-tech industries; however, weak demand from paper and metals
manufacturers has led to a 6.8% decline in sales for the year. Wholesale
revenues comprised 36% of PGE loads and an additional 5.5 million in MWh
sales. The average sales price was 49% below last year.
The price per kWh of variable power dropped 24% keeping total variable
power costs
to a $13 million increase despite a 39% rise in total Company energy
requirements. Optimal hydro conditions brought steep reductions in the
cost of wholesale power in general as well as the cost of firm power
purchased from the mid-Columbia projects. PGE hydro projects generated 9%
of the Company's energy needs, with an 11% increase in production levels.
PGE's thermal plants operated efficiently, however, excluding Coyote
Springs, thermal plant generation was down 50% due to economic
displacement early in the year as power purchases provided 79% of total
PGE loads.
RESOURCE MIX/VARIABLE POWER COSTS
Average Variable
Resource Mix Power Cost (Mills/KWh)
1996 1995 1996 1995
Generation 21% 37% 5.9 7.5
Firm Purchases 64 36 13.2 24.7
Spot Purchases 15 27 9.0 10.7
Total Resources 100% 100% Average 12.1 16.0
PGE does not have a fuel adjustment clause as part of its retail
rate structure; therefore, changes in fuel and purchased power
expenses are reflected currently in earnings.
Operating expenses (excluding variable power, depreciation and
income taxes) were $28 million or 14% higher than last year. The
increase is primarily due to additional operating costs related
to Coyote Springs including fixed natural gas
transportation costs, increased costs for transmission and
distribution most of
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PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
which is related to storm related repair costs and maintenance projects
deferred during winter storms, and an
increase in planned customer marketing and support costs to meet
1996 marketing objectives. PGE realized decreased costs at its
coal generating facilities due to lower levels of operation.
Depreciation, Decommissioning and Amortization increased $15
million, or 15%, due to depreciation taken on Coyote Springs and
other 1995 plant additions. Excluding regulatory disallowances of
$50 million, other income and deductions declined $15 million due
to merger costs, the absence of carrying costs on regulatory assets
for the current year and decreased AFDC.
CASH FLOW
PORTLAND GENERAL CORPORATION
Portland General requires cash to pay dividends to its common
shareholders, to provide funds to its subsidiaries, to meet debt
service obligations and for day to day operations. Sources of cash
are dividends from PGE, leasing rentals, short- and intermediate-
term borrowings and the sale of its common stock. During the third
quarter of 1996 Portland General received $56 million in cash
dividends from PGE. Portland General used a portion of these
proceeds to retire $30 million in medium term notes which matured
in September 1996.
Portland General has agreed, as to itself, PGE and other
subsidiaries, to certain limitations on its ability to declare or
pay dividends on or repurchase or redeem its securities, issue
securities, or incur indebtedness pending consummation of the
merger with Enron. This is not expected to interfere
with the ability of Portland General or PGE to declare dividends,
obtain financing or conduct its business operations in a manner
consistent with past practice. For further information regarding
these limitations please see the Merger Agreement included with
Portland General's Form 8-K dated July 20, 1996.
PORTLAND GENERAL ELECTRIC COMPANY
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. A significant portion of cash from
operations comes from depreciation and amortization of utility
plant, charges which are recovered in customer revenues but require
no current cash outlay. Changes in accounts receivable and
accounts payable can also be significant contributors or users of
cash. Improved cash flow for the current year reflects a higher
percentage of cash revenues combined with lower variable power
costs.
INVESTING ACTIVITIES include improvements to generation,
transmission and distribution facilities and continued investment
in energy efficiency programs. Capital expenditures for 1996 of
approximately $170 million are expected to be fully funded by
operating cash flows. Through September 30, 1996 nearly $144
million has been expended for capital projects, including energy
efficiency programs, primarily for improvements to the Company's
distribution system to support the addition of new customers to
PGE's service territory.
PGE funds an external trust for Trojan decommissioning costs
through customer collections at a rate of $14 million annually.
The trust invests in investment-grade tax-exempt and U.S. Treasury
bonds. The Company makes withdrawals from the trust, as necessary,
for reimbursement of decommissioning expenditures.
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PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCING ACTIVITIES - In August 1996 PGE issued $50 million in
additional medium-term notes due September 1999. The proceeds were
used to pay down outstanding short-term debt. The Company has
entered into an interest rate swap agreement for the same period
which effectively puts PGE in a floating rate position on the
additional $50 million of long term debt.
In early October 1996 the Company issued a 10 year $81 million
energy conservation bond with a coupon rate of 6.91%. The
bond is collateralized by the OPUC's designation of a portion of the
Company's energy efficiency investments as Bondable
Conservation Investment.
The issuance of additional preferred stock and First Mortgage Bonds
requires PGE to meet earnings coverage and security provisions set
forth in the Articles of Incorporation and Indenture securing its
First Mortgage Bonds. As of September 30, 1996, PGE has the
capability to issue preferred stock and additional First Mortgage
Bonds in amounts sufficient to meet capital requirements.
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PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME FOR THE
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
SEPTEMBER 30 September 30
1996 1995 1996 1995
(Thousands of Dollars)
OPERATING REVENUES $ 260,091 $ 222,612 $ 794,097 $ 701,681
OPERATING EXPENSES
Purchased power and fuel 83,073 64,428 211,632 198,740
Production and distribution 22,698 15,963 64,668 47,404
Maintenance and repairs 12,016 10,563 37,110 31,880
Administrative and other 27,653 25,346 82,904 76,895
Depreciation and amortization 38,889 33,340 114,972 99,583
Taxes other than income taxes 12,336 11,889 39,995 38,672
196,665 161,529 551,281 493,174
OPERATING INCOME BEFORE INCOME TAXES 63,426 61,083 242,816 208,507
INCOME TAXES 18,684 20,817 79,655 71,509
NET OPERATING INCOME 44,742 40,266 163,161 136,998
OTHER INCOME (DEDUCTIONS)
Regulatory disallowances - net of income
taxes of $8,441 and $25,542 - (12,859) - (49,567)
Interest expense (20,894) (19,592) (60,497) (58,921)
Allowance for funds used during construction 609 3,608 1,351 8,682
Preferred dividend requirement - PGE (581) (2,380) (2,212) (7,380)
Other - net of income taxes (3,335) 5,138 1,779 14,818
NET INCOME $ 20,541 $ 14,181 $ 103,582 $ 44,630
COMMON STOCK
Average shares outstanding 51,158,923 50,798,082 51,110,760 50,696,185
Earnings per average share $0.40 $0.28 $2.03 $0.88
Dividends declared per share $0.32 $0.30 $0.96 $0.90
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS FOR THE
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
Three Months Ended Nine Months Ended
SEPTEMBER 30 September 30
1996 1995 1996 1995
(Thousands of Dollars)
BALANCE AT BEGINNING OF PERIOD $ 185,081 $ 117,777 $ 135,885 $ 118,676
NET INCOME 20,541 14,181 103,582 44,630
ESOP TAX BENEFIT AND OTHER (530) (470) (1,665) (1,418)
205,092 131,488 237,802 161,888
DIVIDENDS DECLARED ON COMMON STOCK 16,384 15,247 49,094 45,647
BALANCE AT END OF PERIOD $ 188,708 $ 116,241 $ 188,708 $ 116,241
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
12
<PAGE>
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
(Unaudited)
September 30 December 31
1996 1995
(Thousands of Dollars)
ASSETS
ELECTRIC UTILITY PLANT - ORIGINAL COST
Utility plant (includes Construction Work in Progress of
$50,616 and $33,382) $2,856,770 $2,754,280
Accumulated depreciation (1,104,274) (1,040,014)
1,752,496 1,714,266
Capital leases - less amortization of $29,953 and $27,966 7,365 9,353
1,759,861 1,723,619
OTHER PROPERTY AND INVESTMENTS
Leveraged leases 150,721 152,666
Trojan decommissioning trust, at market value 77,726 68,774
Corporate owned life insurance, less loans of $27,763 and $26,432 77,639 74,574
Other investments 40,463 28,603
346,549 324,617
CURRENT ASSETS
Cash and cash equivalents 17,114 11,919
Accounts and notes receivable 113,356 104,815
Unbilled and accrued revenues 25,527 64,516
Inventories, at average cost 34,832 38,338
Prepayments and other 25,629 16,953
216,458 236,541
DEFERRED CHARGES
Unamortized regulatory assets
Trojan investment 283,888 301,023
Trojan decommissioning 294,077 311,403
Income taxes recoverable 206,794 217,366
Debt reacquisition costs 28,682 29,576
Energy efficiency programs 83,222 77,945
Other 26,153 27,611
WNP-3 settlement exchange agreement 164,512 168,399
Miscellaneous 29,051 29,917
1,116,379 1,163,240
$3,439,247 $3,448,017
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common stock equity
Common stock, $3.75 par value per share, 100,000,000 shares authorized,
51,203,763 and 51,013,549 shares outstanding $ 192,010 $ 191,301
Other paid-in capital - net 579,346 574,468
Unearned compensation (6,275) (8,506)
Retained earnings 188,708 135,885
953,789 893,148
Cumulative preferred stock of subsidiary
Subject to mandatory redemption 30,000 40,000
Long-term debt 869,059 890,556
1,852,848 1,823,704
CURRENT LIABILITIES
Long-term debt and preferred stock due within one year 81,582 105,114
Short-term borrowings 174,893 170,248
Accounts payable and other accruals 96,781 133,405
Accrued interest 17,385 16,247
Dividends payable 17,347 16,668
Accrued taxes 51,364 15,151
439,352 456,833
OTHER
Deferred income taxes 631,608 652,846
Deferred investment tax credits 48,031 51,211
Trojan decommissioning and transition obligation 368,036 379,179
Miscellaneous 99,372 84,244
1,147,047 1,167,480
$3,439,247 $3,448,017
The accompanying notes are an integral part of these consolidated balance sheets.
</TABLE>
13
<PAGE>
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
SEPTEMBER 30 September 30
1996 1995 1996 1995
(Thousands of Dollars)
CASH PROVIDED (USED) BY -
OPERATIONS:
Net income $ 20,541 $ 14,181 $ 103,582 $ 44,630
Adjustments to reconcile net income to net
cash provided by operations:
Depreciation and amortization 30,212 24,695 89,828 75,540
Amortization of WNP-3 exchange agreement 1,727 1,227 3,887 3,682
Amortization of Trojan investment 6,358 6,456 18,118 18,865
Amortization of Trojan decommissioning 3,510 3,511 10,531 9,826
Amortization of deferred charges - other 472 (30) 354 (208)
Deferred income taxes - net (1,663) 2,221 (13,522) (1,651)
Other noncash revenues (419) (2,282) (1,218) (3,969)
Regulatory disallowance - 12,859 - 49,567
Changes in working capital:
(Increase) Decrease in receivables 7,177 8,175 29,902 18,976
(Increase) Decrease in inventories 3,437 5,228 3,506 (2,363)
Increase (Decrease) in payables 39,946 16,931 7,401 (176)
Other working capital items - net (8,959) (12,132) (8,676) (11,347)
Trojan decommissioning expenditures (2,697) (2,343) (4,836) (6,214)
Deferred items - other 1,215 (1,122) 12,841 (6,991)
Miscellaneous - net 2,679 6,670 5,826 11,713
103,536 84,245 257,524 199,880
INVESTING ACTIVITIES:
Utility construction - new resources 156 (8,386) 141 (37,797)
Utility construction - other (43,289) (43,056) (133,485) (108,219)
Energy efficiency programs (2,838) (4,439) (10,243) (13,391)
Rentals received from leveraged leases 11,165 8,050 27,257 19,735
Nuclear decommissioning trust deposits (3,742) (3,046) (11,692) (13,553)
Nuclear decommissioning trust withdrawals 1,782 1,805 3,229 8,413
Other (674) 1,638 (11,276) 3,885
(37,440) (47,434) (136,069) (140,927)
FINANCING ACTIVITIES:
Short-term borrowings - net (51,639) (25,856) 4,645 (74,381)
Borrowings from Corporate Owned Life Insurance - - 1,312 2,589
Long-term debt issued 50,000 - 85,000 75,000
Long-term debt retired (30,000) - (117,661) (3,045)
Repayment of nonrecourse borrowings for
leveraged leases (9,321) (6,815) (23,711) (17,443)
Preferred stock retired - - (20,000) (10,000)
Common stock issued 784 2,303 2,570 6,865
Dividends paid (16,355) (15,218) (48,415) (45,757)
(56,531) (45,586) (116,260) (66,172)
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 9,565 (8,775) 5,195 (7,219)
CASH AND CASH EQUIVALENTS AT THE BEGINNING
OF PERIOD 7,549 19,098 11,919 17,542
CASH AND CASH EQUIVALENTS AT THE END
OF PERIOD $ 17,114 $ 10,323 $ 17,114 $ 10,323
Supplemental disclosures of cash flow
information
Cash paid during the period:
Interest, net of amounts capitalized $ 19,738 $ 12,589 $ 55,912 $ 44,212
Income taxes 11,460 26,220 79,130 67,610
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
14
<PAGE>
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - PRINCIPLES OF INTERIM STATEMENTS
The interim financial statements have been prepared by Portland General and,
in the opinion of management, reflect all material adjustments which are
necessary to a fair statement of results for the interim period presented.
Certain information and footnote disclosures made in the last annual report on
Form 10-K have been condensed or omitted for the interim statements. Certain
costs are estimated for the full year and allocated to interim periods based
on the estimates of operating time expired, benefit received or activity
associated with the interim period. Accordingly, such costs are subject to
year-end adjustment. It is Portland General's opinion that, when the interim
statements are read in conjunction with the 1995 Annual Report on Form 10-K,
the disclosures are adequate to make the information presented not misleading.
RECLASSIFICATIONS - Certain amounts in prior years have been reclassified for
comparative purposes.
NOTE 2 - LEGAL MATTERS
BONNEVILLE PACIFIC LAWSUIT - On October 7, 1996 the bankruptcy court approved
the settlement entered into by Portland General and Portland General Holdings
(collectively referred to as Portland General) with the Bonneville Pacific
Corporation's (Bonneville) bankruptcy trustee (Trustee). Pursuant to the
settlement, Bonneville and its estate will release all claims and causes of
action, including those asserted in the Trustee's civil action against
Portland General and its current and former officers and directors. In
exchange, Portland General will release any and all claims against Bonneville,
its estate and related entities and individuals relating to its equity
investment in and loans to Bonneville except that Portland General will retain
ownership of 2 million shares of Bonneville common stock. The settlement will
not have a material impact on Portland General's results of operations.
Portland General will pursue recovery of certain litigation and settlement
costs from its Director and Officer liability carrier. Any such revenues
would be recognized into income during periods received.
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 November 1994 ruling, by a different judge of the same court, upheld the
Commission's 1993 Declaratory Ruling (DR-10). In DR-10 the OPUC ruled that
PGE could recover and earn a return on its undepreciated Trojan investment,
provided certain conditions were met. The Commission relied on a 1992 Oregon
Department of Justice opinion issued by the Attorney General's office stating
that the Commission had the authority to set prices including recovery of and
on investment in plant that is no longer in service.
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 were combined with
the appeal of the November 1994 ruling at the Oregon Court of Appeals.
Management believes that the authorized recovery of and 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.
15
<PAGE>
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
OTHER LEGAL MATTERS - Portland General and certain of its subsidiaries are
party to various other claims, legal actions and complaints arising in the
ordinary course of business. These claims are not considered material.
NOTE 3 - WNP-3 SETTLEMENT EXCHANGE AGREEMENT
PGE is selling energy received under a WNP-3 Settlement Exchange Agreement
(WSA) to WAPA for 25 years, which began October 1990. Revenues from the
WAPA contract are used to support the carrying value of the WSA asset. A
portion of the energy under the WSA contract is sold at market prices. In
light of reduced prices for wholesale power the Company is performing an
evaluation for potential impairment of the WSA asset. This evaluation is
expected to be completed during the fourth quarter of 1996.
NOTE 4 - PROPOSED MERGER
On July 20, 1996, Portland General entered into an Agreement and Plan of
Merger with Enron, a Delaware corporation, to merge in a tax-free, stock-for-
stock transaction. The transaction which has been approved by both companies'
boards of directors, will entitle Portland General shareholders to receive one
share of Enron common stock for each share of Portland General common stock
held by them.
Under the terms of the merger agreement, Enron will reincorporate in Oregon to
allow it to qualify as an intrastate holding company that is exempt from the
registration requirements of PUHCA. In the event that PUHCA is amended or
repealed in a manner that would make this reincorporation no longer necessary,
PGC will merge directly into the present Enron. PGE, Portland General's
utility subsidiary, will retain its name, most of its functions and
maintain its principal corporate offices in Portland, Oregon.
The merger is subject to the approval of each company's shareholders. Both
Enron and PGC have scheduled special shareholder meetings each of which will
take place on November 12, 1996 in which shareholders of record for each
corporation as of September 23, 1996 will vote upon a proposal to approve the
Merger Agreement. The affirmative vote of holders of a majority of the shares
of both the PGC Common Stock and Enron Voting Stock outstanding is required
for merger approval under the state laws where each company is incorporated.
In addition the merger is conditioned, among other things, upon and the
completion of regulatory procedures including those already initiated at the
OPUC and the FERC. The companies are hopeful that the regulatory procedures
can be completed in less than 12 months from the date of the agreement.
The merger agreement may be terminated by Enron if the average of the closing
prices of Enron Common Stock during the 20 consecutive trading day period
ending five trading days prior to the date of the special meeting of the
shareholders of Portland General is more than $47.25 per share, and may be
terminated by PGC if the average of the closing prices of Enron Common Stock
during such period is less than $36.25 per share.
<PAGE> 16
NOTE 5 - SUBSEQUENT EVENT
Bondable Conservation Investment - In early October 1996 the Company
issued a 10 year $81 million conservation bond with a coupon rate of
6.91%. The issuance was authorized by the OPUC which earlier designated
$81 million of PGE's energy efficiency investment as Bondable Conservation
Investment. The bond is collateralized by the future revenue stream assured
by the OPUC designation. The financing provides an estimated $21 million in
present value savings for customers while granting PGE immediate recovery of
its energy efficiency program expenditures. Future revenues collected from
customers will pay debt service obligations. Once the Commission designates
a Bondable Conservation Investment it may not revalue or affect the timing
of the revenue stream. Therefore, the OPUC may not remove the debt service
obligation from rates.
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
FINANCIAL STATEMENTS AND RELATED INFORMATION
TABLE OF CONTENTS
PAGE
NUMBER
Management Discussion and Analysis of
Financial Condition and Results of Operations* 3-11
Financial Statements 18-20
Notes to Financial Statements** 15-17
* The discussion is substantially the same as that disclosed by
Portland General and, therefore, is incorporated by reference
to the information on the page numbers listed above.
** The notes are substantially the same as those disclosed by
Portland General and are incorporated by reference to the
information on the page numbers shown above, excluding the
Bonneville Pacific litigation discussion contained in Note 2
which relates solely to Portland General.
17
<PAGE>
Portland General Electric Company and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME FOR THE
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
SEPTEMBER 30 September 30
1996 1995 1996 1995
(Thousands of Dollars)
OPERATING REVENUES $ 259,656 $ 222,240 $ 792,772 $ 699,607
OPERATING EXPENSES
Purchased power and fuel 83,074 64,428 211,633 198,740
Production and distribution 22,698 15,963 64,668 47,404
Maintenance and repairs 12,016 10,563 37,110 31,880
Administrative and other 26,726 24,943 80,862 75,904
Depreciation and amortization 38,868 33,318 114,909 99,520
Taxes other than income taxes 12,325 11,915 39,918 38,650
Income taxes 18,435 21,208 79,492 71,720
214,142 182,338 628,592 563,818
NET OPERATING INCOME 45,514 39,902 164,180 135,789
OTHER INCOME (DEDUCTIONS)
Regulatory disallowances - net of income
taxes of $8,441 and $25,542 - (12,859) - (49,567)
Allowance for equity funds used
during construction - 1,274 - 1,960
Other 2,043 5,348 5,434 14,852
Income taxes 48 (258) 476 (518)
2,091 (6,495) 5,910 (33,273)
INTEREST CHARGES
Interest on long-term debt and other 17,770 17,735 50,720 51,546
Interest on short-term borrowings 2,525 1,217 7,784 5,463
Allowance for borrowed funds used
during construction (609) (2,334) (1,351) (6,722)
19,686 16,618 57,153 50,287
NET INCOME 27,919 16,789 112,937 52,229
PREFERRED DIVIDEND REQUIREMENT 581 2,380 2,212 7,380
INCOME AVAILABLE FOR COMMON STOCK $ 27,338 $ 14,409 $ 110,725 $ 44,849
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS FOR THE
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
SEPTEMBER 30 September 30
1996 1995 1996 1995
(Thousands of Dollars)
BALANCE AT BEGINNING OF PERIOD $ 295,610 $ 222,870 $ 246,282 $ 216,468
NET INCOME 27,919 16,789 112,937 52,229
ESOP TAX BENEFIT AND OTHER (530) (470) (1,665) (1,418)
322,999 239,189 357,554 267,279
DIVIDENDS DECLARED
Common stock 56,014 13,682 88,938 36,772
Preferred stock 581 2,380 2,212 7,380
56,595 16,062 91,150 44,152
BALANCE AT END OF PERIOD $ 266,404 $ 223,127 $ 266,404 $ 223,127
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
18
<PAGE>
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
(Unaudited)
September 30 December 31
1996 1995
(Thousands of Dollars)
ASSETS
ELECTRIC UTILITY PLANT - ORIGINAL COST
Utility plant (includes Construction Work in Progress of
$50,616 and $33,382) $2,856,770 $2,754,280
Accumulated depreciation (1,104,274) (1,040,014)
1,752,496 1,714,266
Capital leases - less amortization of $29,953 and $27,966 7,365 9,353
1,759,861 1,723,619
OTHER PROPERTY AND INVESTMENTS
Trojan decommissioning trust, at market value 77,726 68,774
Corporate owned life insurance, less loans of $27,763 and $26,432 47,096 44,635
Other investments 35,096 24,943
159,918 138,352
CURRENT ASSETS
Cash and cash equivalents 4,561 2,241
Accounts and notes receivable 113,145 102,592
Unbilled and accrued revenues 25,527 64,516
Inventories, at average cost 34,832 38,338
Prepayments and other 24,316 15,619
202,381 223,306
DEFERRED CHARGES
Unamortized regulatory assets
Trojan investment 283,888 301,023
Trojan decommissioning 294,077 311,403
Income taxes recoverable 206,794 217,366
Debt reacquisition costs 28,682 29,576
Energy efficiency programs 83,222 77,945
Other 26,153 27,611
WNP-3 settlement exchange agreement 164,512 168,399
Miscellaneous 27,178 26,997
1,114,506 1,160,320
$3,236,666 $3,245,597
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 $ 160,346 160,346
Other paid-in capital - net 471,522 466,325
Retained earnings 266,404 246,282
Cumulative preferred stock
Subject to mandatory redemption 30,000 40,000
Long-term debt 869,059 890,556
1,797,331 1,803,509
CURRENT LIABILITIES
Long-term debt and preferred stock due within one year 81,582 75,114
Short-term borrowings 174,525 170,248
Accounts payable and other accruals 97,656 132,064
Accrued interest 16,015 15,442
Dividends payable 17,117 14,956
Accrued taxes 48,473 12,870
435,368 420,694
OTHER
Deferred income taxes 508,555 525,391
Deferred investment tax credits 48,031 51,211
Trojan decommissioning and transition costs 368,036 379,179
Miscellaneous 79,345 65,613
1,003,967 1,021,394
$3,236,666 $3,245,597
The accompanying notes are an integral part of these consolidated balance sheets.
</TABLE>
19
<PAGE>
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
SEPTEMBER 30 September 30
1996 1995 1996 1995
(Thousands of Dollars)
CASH PROVIDED (USED) BY -
OPERATIONS:
Net Income $ 27,919 $ 16,789 $ 112,937 $ 52,229
Adjustments to reconcile net income to net
cash provided by operations:
Depreciation and amortization 30,188 24,729 89,765 75,533
Amortization of WNP-3 exchange agreement 1,727 1,227 3,887 3,682
Amortization of Trojan investment 6,358 6,456 18,118 18,865
Amortization of Trojan decommissioning 3,510 3,511 10,531 9,826
Amortization of deferred charges - other 472 (30) 354 (208)
Deferred income taxes - net (2,180) 2,113 (8,900) 1,423
Regulatory disallowances - 12,859 - 49,567
Changes in working capital:
(Increase) Decrease in receivables 7,824 7,997 27,890 21,655
(Increase) Decrease in inventories 3,437 5,228 3,506 (2,363)
Increase (Decrease) in payables 33,337 19,678 7,896 781
Other working capital items - net (8,583) (10,946) (8,697) (11,156)
Trojan decommissioning expenditures (2,697) (2,343) (4,836) (6,214)
Deferred items - other 1,215 (1,122) 12,841 (6,991)
Miscellaneous - net 1,675 4,864 4,440 9,156
104,202 91,010 269,732 215,785
INVESTING ACTIVITIES:
Utility construction - new resources 156 (8,386) 141 (37,797)
Utility construction - other (43,289) (43,056) (133,485) (108,219)
Energy efficiency programs (2,838) (4,439) (10,243) (13,391)
Nuclear decommissioning trust deposits (3,742) (3,046) (11,692) (13,553)
Nuclear decommissioning trust withdrawals 1,782 1,805 3,229 8,413
Other investments (131) (70) (9,301) (3,048)
(48,062) (57,192) (161,351) (167,595)
FINANCING ACTIVITIES:
Short-term debt - net (49,807) (25,869) 4,277 (74,381)
Borrowings from Corporate Owned Life Insurance - - 1,312 2,589
Long-term debt issued 50,000 - 85,000 75,000
Long-term debt retired - - (87,661) (3,045)
Preferred stock retired - - (20,000) (10,000)
Dividends paid (58,305) (13,926) (88,989) (43,505)
(58,112) (39,795) (106,061) (53,342)
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (1,972) (5,977) 2,320 (5,152)
CASH AND CASH EQUIVALENTS AT THE BEGINNING
OF PERIOD 6,533 10,415 2,241 9,590
CASH AND CASH EQUIVALENTS AT THE END
OF PERIOD $ 4,561 $ 4,438 $ 4,561 $ 4,438
Supplemental disclosures of cash flow information
Cash paid during the period:
Interest, net of amounts capitalized $ 18,601 $ 11,375 $ 53,485 $ 41,768
Income taxes 19,032 27,721 75,667 72,842
The accompanying notes are an integral part of these consolidated statements.
</TABLE>
20
<PAGE>
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For further information, see Portland General's and PGE's reports on Form 10-K
for the year ended December 31, 1995.
NONUTILITY
ROGER G. SEGAL, AS THE CHAPTER 11 TRUSTEE FOR BONNEVILLE PACIFIC CORPORATION
V. PORTLAND GENERAL CORPORATION, PORTLAND GENERAL HOLDINGS, INC. ET AL, U.S.
DISTRICT COURT FOR THE DISTRICT OF UTAH
and PORTLAND GENERAL HOLDINGS, INC. V. THE BONNEVILLE GROUP AND RAYMOND L.
HIXSON, THIRD JUDICIAL DISTRICT COURT FOR SALT LAKE COUNTY
On October 7, 1996 the bankruptcy court approved the settlement entered into
by Portland General and Portland General Holdings (collectively referred to as
Portland General) with the Bonneville Pacific Corporation's (Bonneville)
bankruptcy trustee (Trustee). Pursuant to the settlement, Bonneville and its
estate will release all claims and causes of action, including those asserted
in the Trustee's civil action against Portland General and its current and
former officers and directors. In exchange, Portland General will release any
and all claims against Bonneville, its estate and related entities and
individuals relating to its equity investment in and loans to Bonneville
except that Portland General will retain ownership of 2 million shares of
common stock of Bonneville. For further information regarding the settlement
see Portland General's report on Form 8-K dated August 23, 1996.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
NUMBER EXHIBIT PGC PGE
10 Portland General Corporation Management
Deferred Compensation Plan, 1996 Restatement,
Amendment No. 1, dated October 18, 1996,
filed herewith X X
Portland General Corporation Outside Directors'
Life Insurance Benefit Plan, 1996 Restatement
Amendment No. 1, dated October 22, 1996,
filed herewith X X
21
<PAGE>
PORTLAND GENERAL CORPORATION AND SUBSIDIARIES
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
PART II. OTHER INFORMATION
NUMBER EXHIBIT PGC PGE
10 Portland General Corporation Outside Directors'
Deferred Compensation Plan, 1996 Restatement
Amendment No. 1, dated October 18, 1996,
filed herewith X X
Portland General Corporation Senior Officers'
Life Insurance Benefit Plan, 1996 Restatement,
Amendment No. 1, dated October 22, 1996,
filed herewith X X
27 Financial Data Schedule - UT X X
(Electronic Filing Only)
b. Reports on Form 8-K
August 23, 1996 - Item 5. Other Events: Litigation Settlement between
PGC and Bonneville Pacific trustee.
September 6, 1996 - Item 5. Other Events: OPUC's response to PGE's rate
proposal.
September 11, 1996 - Item 5. Other Events: Postponement of settlement
discussions on rate proposal.
22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned hereunto duly authorized.
PORTLAND GENERAL CORPORATION
PORTLAND GENERAL ELECTRIC COMPANY
(Registrants)
October 24, 1996 By /S/ JOSEPH M. HIRKO
Joseph M. Hirko
Sr. Vice President and
Chief Financial Officer
23
<PAGE>
PORTLAND GENERAL CORPORATION
MANAGEMENT DEFERRED COMPENSATION PLAN
1996 RESTATEMENT
AMENDMENT NO. 1
This Amendment No. 1 to the Portland General Corporation Management
Deferred Compensation Plan, as restated effective January 1, 1996 (the "Plan")
is effective as of September 10, 1996 and has been executed as of the
18th day of October, 1996 on behalf of Portland General Corporation (the
"Company").
WHEREAS, pursuant to Section 10.1, the Human Resources Committee of the
Company's Board of Directors (the "Committee") has the authority to amend the
Plan; and
WHEREAS, the Committee wishes to protect the Participants' benefits under
the Plan at the level promised when the Participants entered into each
Deferral Election;
NOW, THEREFORE, the Plan is hereby amended as follows:
FIRST: Section 10.1 is amended in its entirety to read as follows:
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.
SECOND: Section 10.3 is amended in its entirety to read as follows:
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.
1
<PAGE>
PORTLAND GENERAL CORPORATION
MANAGEMENT DEFERRED COMPENSATION PLAN
1996 RESTATEMENT
AMENDMENT NO. 1
THIRD: Except as provided herein, all other Plan provisions shall remain
in full force and effect.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
as of the day and year first written above.
PORTLAND GENERAL CORPORATION
By: /s/ Don F. Kielblock
Its Vice President
2
<PAGE>
PORTLAND GENERAL CORPORATION
OUTSIDE DIRECTORS' DEFERRED COMPENSATION PLAN
1996 RESTATEMENT
AMENDMENT NO. 1
This Amendment No. 1 to the Portland General Corporation Outside
Directors' Deferred Compensation Plan, as restated effective January 1, 1996
(the "Plan") is effective as of September 10, 1996 and has been
executed as of the 18th day of October, 1996 on behalf of Portland General
Corporation (the "Company").
WHEREAS, pursuant to Section 9.1, the Human Resources Committee of the
Company's Board of Directors (the "Committee") has the authority to amend the
Plan; and
WHEREAS, the Committee wishes to protect the Participants' benefits under
the Plan at the level promised when the Participants entered into each
Deferral Election;
NOW, THEREFORE, the Plan is hereby amended as follows:
FIRST: Section 9.1 is amended in its entirety to read as follows:
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.
SECOND: Section 9.3 is amended in its entirety to read as follows:
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.
1
<PAGE>
PORTLAND GENERAL CORPORATION
OUTSIDE DIRECTORS' DEFERRED COMPENSATION PLAN
1996 RESTATEMENT
AMENDMENT NO. 1
THIRD: Except as provided herein, all other Plan provisions shall remain
in full force and effect.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
as of the day and year first written above.
PORTLAND GENERAL CORPORATION
By: /s/ Don F. Kielblock
Its Vice President
2
<PAGE>
PORTLAND GENERAL CORPORATION
OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN
1996 RESTATEMENT
AMENDMENT NO. 1
This Amendment No. 1 to the Portland General Corporation Outside
Directors' Life Insurance Benefit Plan, as restated effective January 1, 1996
(the "Plan") is effective as of September 10, 1996 and has been executed as of
the 22nd day of October, 1996 on behalf of Portland General Corporation
(the "Company").
WHEREAS, pursuant to Section 10.1 of the Plan, the Human Resources
Committee of the Company's Board of Directors (the "Committee") has the
authority to amend the Plan; and
WHEREAS, the Committee has determined that the proposed merger with Enron
Corporation should not trigger a change in control under Section 2.4 of the
Plan; and
WHEREAS, the Committee wishes to reward those Participants who remain with
the Company following the proposed merger with Enron Corporation;
NOW, THEREFORE, the Plan is hereby amended as follows:
FIRST: Section 2.4 is amended in its entirety to read as follows:
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 Corporation ("PGC") or Portland General
Electric ("PGE"), any trustee or other fiduciary holding securities under
an employee benefit plan of PGC or PGE, or any Employer owned, directly or
indirectly, by the stockholders of PGC or PGE in substantially the same
proportions as their ownership of stock of PGC or PGE), 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 PGC's or PGE's then outstanding
voting securities;
(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.
1
<PAGE>
PORTLAND GENERAL CORPORATION
OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN
1996 RESTATEMENT
AMENDMENT NO. 1
(c) The stockholders of PGC or PGE approve a merger or consolidation
of PGC or PGE with any other corporation other than (i) the Merger Plan,
(ii) a merger or consolidation which would result in the voting securities
of PGC or PGE outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than eighty percent (80%)
of the combined voting power of the voting securities of PGC or PGE or
such surviving entity outstanding immediately after such merger or
consolidation or (iii) a merger or consolidation effected to implement a
recapitalization of PGC or PGE (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than thirty percent (30%)
of the combined voting power of PGC's or PGE's then outstanding
securities; or
(d) The stockholders of PGC or PGE approve a plan of complete
liquidation of PGC or PGE or an agreement for the sale or disposition by
PGC or PGE of sixty percent (60%) or more of PGC's or PGE's assets
(including stock of subsidiaries) to a person or entity that is not a
subsidiary or parent corporation. For purposes of determining whether a
sale or other disposition of sixty percent (60%) of PGE's assets has
occurred, only long-term assets shall be considered. Assets shall not be
considered long-term assets if they constitute "regulatory assets,"
"stranded investments" or abandoned or nonoperational projects. Projects
in economy shutdown shall be considered long-term assets.
SECOND: A new Section 2.11 shall be added to read as follows, with the
former Section 2.11 becoming Section 2.12 and subsequent sections being
renumbered accordingly:
2.11 Merger Plan
"Merger Plan" 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.
THIRD: New subsections (c) and (d) shall be added to the end of Section
8.2 to read as follows:
(c) In the event of termination of service on the Board, or the Board
of the successor corporation established pursuant to the Merger Plan, or
any advisory committee to the Board or officers of a corporation
qualifying as both a Direct Subsidiary of Company and Participating
Company of the Plan, occurring at least one (1) year from the consummation
date of the Merger Plan, the Participant shall be deemed to have retired
for purposes of this Plan and shall be eligible to make the election
specified in Section 8.4.
(d) In the event of involuntary termination of service on the Board,
or the Board of the successor corporation established pursuant to the
Merger Plan, or any advisory committee to
2
<PAGE>
PORTLAND GENERAL CORPORATION
OUTSIDE DIRECTORS' LIFE INSURANCE BENEFIT PLAN
1996 RESTATEMENT
AMENDMENT NO. 1
the Board or officers of a
corporation qualifying as both a Direct Subsidiary of Company and
Participating Company of the Plan, without Cause, occurring during the one
(1) year period beginning with the date the stockholders of PGC or PGE
approve the Merger Plan, the Participant shall be entitled to the Change
in Control benefit specified in Section 8.3.
FOURTH: Except as provided herein, all other Plan provisions shall remain
in full force and effect.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
as of the day and year first written above.
PORTLAND GENERAL CORPORATION
By: /s/ Don F. Kielblock
Its Vice President
3
<PAGE>
PORTLAND GENERAL CORPORATION
SENIOR OFFICERS' LIFE INSURANCE BENEFIT PLAN
1996 RESTATEMENT
AMENDMENT NO. 1
This Amendment No. 1 to the Portland General Corporation Senior Officers'
Life Insurance Benefit Plan, as restated effective January 1, 1996 (the
"Plan") is effective as of September 10, 1996 and has been executed as of the
22nd day of October, 1996 on behalf of Portland General Corporation (the
"Company").
WHEREAS, pursuant to Section 10.1 of the Plan, the Human Resources
Committee of the Company's Board of Directors (the "Committee") has the
authority to amend the Plan; and
WHEREAS, the Committee has determined that the proposed merger with Enron
Corporation should not trigger a change in control under Section 2.4 of the
Plan; and
WHEREAS, the Committee wishes to reward those Participants who remain with
the Company following the proposed merger with Enron Corporation;
NOW, THEREFORE, the Plan is hereby amended as follows:
FIRST: Section 2.3 is amended in its entirety to read as follows:
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.
SECOND: Section 2.4 is amended in its entirety to read as follows:
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 Corporation ("PGC") or Portland General
Electric ("PGE"), any trustee or other fiduciary holding securities under
an employee benefit plan of PGC or PGE, or any Employer owned, directly or
indirectly, by the stockholders of PGC or PGE in substantially the same
proportions
1
<PAGE>
PORTLAND GENERAL CORPORATION
SENIOR OFFICERS' LIFE INSURANCE BENEFIT PLAN
1996 RESTATEMENT
AMENDMENT NO. 1
as their ownership of stock of PGC or PGE), 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 PGC's or PGE's then outstanding voting
securities;
(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.
(c) The stockholders of PGC or PGE approve a merger or consolidation
of PGC or PGE with any other corporation, other than (i) the Merger Plan
(ii) a merger or consolidation which would result in the voting securities
of PGC or PGE outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than eighty percent (80%)
of the combined voting power of the voting securities of PGC or PGE or
such surviving entity outstanding immediately after such merger or
consolidation or (iii) a merger or consolidation effected to implement a
recapitalization of PGC or PGE (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than thirty percent (30%)
of the combined voting power of PGC's or PGE's then outstanding
securities; or
(d) The stockholders of PGC or PGE approve a plan of complete
liquidation of PGC or PGE or an agreement for the sale or disposition by
PGC or PGE of sixty percent (60%) or more of PGC's or PGE's assets
(including stock of subsidiaries) to a person or entity that is not a
subsidiary or parent corporation. For purposes of determining whether a
sale or other disposition of sixty percent (60%) of PGE's assets has
occurred, only long-term assets shall be considered. Assets shall not be
considered long-term assets if they constitute "regulatory assets,"
"stranded investments" or abandoned or nonoperational projects. Projects
in economy shutdown shall be considered long-term assets.
THIRD: New Sections 2.11 and 2.12 shall be added to read as follows, with
the former Sections 2.11 and 2.12 becoming Sections 2.13 and 2.14, and
subsequent sections being renumbered accordingly:
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
2
<PAGE>
PORTLAND GENERAL CORPORATION
SENIOR OFFICERS' LIFE INSURANCE BENEFIT PLAN
1996 RESTATEMENT
AMENDMENT NO. 1
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 PLAN
"Merger Plan" 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.
FOURTH: New subsections (c) and (d) shall be added to the end of Section
8.3 to read as follows:
(c) In the event of termination of employment, occurring at least two
(2) years from the consummation date of the Merger Plan, 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 or PGE
approve the Merger Plan, the Participant shall be entitled to the Change
in Control benefit specified in Section 8.4.
FIFTH: Except as provided herein, all other Plan provisions shall remain
in full force and effect.
3
<PAGE>
PORTLAND GENERAL CORPORATION
SENIOR OFFICERS' LIFE INSURANCE BENEFIT PLAN
1996 RESTATEMENT
AMENDMENT NO. 1
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
as of the day and year first written above.
PORTLAND GENERAL CORPORATION
By: /s/ Don F. Kielblock
Its Vice President
4
<PAGE>
<TABLE> <S> <C>
<CAPTION>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED FINANCIAL STATEMENTS FILED ON FORM 10-Q
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 FOR PORTLAND GENERAL
CORPORATION (PGC) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000079636
<NAME> PORTLAND GENERAL CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,759,861
<OTHER-PROPERTY-AND-INVEST> 346,549
<TOTAL-CURRENT-ASSETS> 216,458
<TOTAL-DEFERRED-CHARGES> 1,116,379
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 3,439,247
<COMMON> 192,010
<CAPITAL-SURPLUS-PAID-IN> 579,346
<RETAINED-EARNINGS> 182,433
<TOTAL-COMMON-STOCKHOLDERS-EQ> 953,789
30,000
0
<LONG-TERM-DEBT-NET> 861,694
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 174,893
<LONG-TERM-DEBT-CURRENT-PORT> 79,000
0
<CAPITAL-LEASE-OBLIGATIONS> 7,365
<LEASES-CURRENT> 2,582
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,329,924
<TOT-CAPITALIZATION-AND-LIAB> 3,439,247
<GROSS-OPERATING-REVENUE> 260,091
<INCOME-TAX-EXPENSE> 18,684
<OTHER-OPERATING-EXPENSES> 196,665
<TOTAL-OPERATING-EXPENSES> 215,349
<OPERATING-INCOME-LOSS> 44,742
<OTHER-INCOME-NET> (3,335)
<INCOME-BEFORE-INTEREST-EXPEN> 41,407
<TOTAL-INTEREST-EXPENSE> 20,285
<NET-INCOME> 21,122
581
<EARNINGS-AVAILABLE-FOR-COMM> 20,541
<COMMON-STOCK-DIVIDENDS> 16,384
<TOTAL-INTEREST-ON-BONDS> 64,190
<CASH-FLOW-OPERATIONS> 103,536
<EPS-PRIMARY> $0.40
<EPS-DILUTED> $0.40
<FN>
<F1>Represents the 12 month-to-date figure ending September 30, 1996.
</FN>
<PAGE>
</TABLE>
<TABLE> <S> <C>
<CAPTION>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED FINANCIAL STATEMENTS FILED ON FORM 10-Q
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 FOR PORTLAND GENERAL
ELECTRIC COMPANY AND SUBSIDIARIES (PGE) AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000784977
<NAME> PORTLAND GENERAL ELECTRIC COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,759,861
<OTHER-PROPERTY-AND-INVEST> 159,918
<TOTAL-CURRENT-ASSETS> 202,381
<TOTAL-DEFERRED-CHARGES> 1,114,506
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 3,236,666
<COMMON> 160,346
<CAPITAL-SURPLUS-PAID-IN> 471,522
<RETAINED-EARNINGS> 266,404
<TOTAL-COMMON-STOCKHOLDERS-EQ> 898,272
30,000
0
<LONG-TERM-DEBT-NET> 861,694
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 174,525
<LONG-TERM-DEBT-CURRENT-PORT> 79,000
0
<CAPITAL-LEASE-OBLIGATIONS> 7,365
<LEASES-CURRENT> 2,582
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,183,228
<TOT-CAPITALIZATION-AND-LIAB> 3,236,666
<GROSS-OPERATING-REVENUE> 259,656
<INCOME-TAX-EXPENSE> 18,435
<OTHER-OPERATING-EXPENSES> 195,707
<TOTAL-OPERATING-EXPENSES> 214,142
<OPERATING-INCOME-LOSS> 45,514
<OTHER-INCOME-NET> 2,091
<INCOME-BEFORE-INTEREST-EXPEN> 47,605
<TOTAL-INTEREST-EXPENSE> 19,686
<NET-INCOME> 27,919
581
<EARNINGS-AVAILABLE-FOR-COMM> 27,338
<COMMON-STOCK-DIVIDENDS> 56,014
<TOTAL-INTEREST-ON-BONDS> 61,803
<CASH-FLOW-OPERATIONS> 104,202
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Represents the 12 month-to-date figure ending September 30, 1996.
</FN>
<PAGE>
</TABLE>
