DEFINITIONS
The following abbreviations or acronyms used throughout this Form 10-K are defined below:
Abbreviation orAcronym
Definition
AFDC
Allowance for funds used during construction
BART
Best Available Retrofit Technology
Beaver
Beaver natural gas-fired generating plant
Biglow Canyon
Biglow Canyon Wind Farm
Boardman
Boardman coal-fired generating plant
BPA
Bonneville Power Administration
CAA
Clean Air Act
Colstrip
Colstrip Units 3 and 4 coal-fired generating plant
Coyote Springs
Coyote Springs Unit 1 natural gas-fired generating plant
CUB
Citizens’ Utility Board
Dth
Decatherm = 10 therms = 1,000 cubic feet of natural gas
DEQ
Oregon Department of Environmental Quality
EPA
United States Environmental Protection Agency
ESA
Endangered Species Act
ESS
Electricity Service Supplier
FERC
Federal Energy Regulatory Commission
IRP
Integrated Resource Plan
ISFSI
;
Independent Spent Fuel Storage Installation
kV
K
ilovolt = one thousand volts of electricity
kW
Kilowatt = one thousand watts of electricity
kWh
Kilowatt hours
Moody’s
Moody’s Investors Service
MW
Megawatts
MWa
Average megawatts
MWh
Megawatt hours
NRC
NVPC
Net Variable Power Costs
OATT
Open Access Transmission Tariff
OEQC
ITEM 1. BUSINESS.
General
Portland General Electric Company (PGE or the Company) was incorporated in 1930 and is a vertically integrated electric utility engaged in the generation, purchase, transmission, distribution, and retail sale of electricity in the state of Oregon. PGE operates as a cost-based, regulated electric utility, with revenue requirements and customer prices determined based upon the forecast cost to serve retail customers, including an opportunity to earn a reasonable rate of return. The Company’s energy requirement is met with both company-owned generation and power purchased in the wholesale market. The Company also participates in the wholesale market by purchasing and selling electricity and natural gas in order to manage its net variable power costs (NVPC). PGE is publicly-owned, with its common stock listed on the New York Stock Exchange, and operates as a single segment, with revenues and costs related to its business activities maintained and analyzed on a total el
ectric operations basis.
In 1997, Portland General Corporation, the former parent of PGE, merged with Enron Corporation (Enron), with Enron continuing in existence as the surviving corporation and PGE operating as a wholly-owned subsidiary of Enron through April 3, 2006. In December 2001, Enron, along with certain of its subsidiaries (collectively “Debtors”), filed for bankruptcy under Chapter 11 of the federal Bankruptcy Code. PGE was not included in the filing. On April 3, 2006, in accordance with Enron’s Chapter 11 plan, PGE’s 42.8 million shares of common stock held by Enron were canceled, PGE issued 62.5 million of new shares of common stock, with 27 million shares issued to the Debtors’ creditors holding allowed claims and 35.5 million shares i
ssued to a Disputed Claims Reserve, and PGE and Enron entered into a separation agreement. Following issuance of the new PGE common stock, PGE ceased to be a subsidiary of Enron. On June 18, 2007, the Disputed Claims Reserve sold substantially all of its remaining holdings of PGE stock in a public offering.
PGE’s state-approved service area allocation of approximately 4,000 square miles is located entirely within Oregon and includes 52 incorporated cities, of which Portland and Salem are the largest. The Company estimates that at the end of 2010 its service area population was 1.7 million, comprising approximately 44% of the state’s population. The Company added 4,937 customers during 2010 and served a total of 820,676 retail customers as of December 31, 2010.
As of December 31, 2010, PGE had 2,671 employees, with 872 employees covered under two separate agreements with Local Union No. 125 of the International Brotherhood of Electrical Workers. Such agreements cover 837 and 35 employees and expire on February 28, 2012 and August 1, 2011, respectively.
Available Information
PGE’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available and may be accessed free of char
ge through the Investors section of the Company’s Internet website at www.portlandgeneral.com as soon as reasonably practicable after the reports are electronically filed with, or furnished to, the United States Securities and Exchange Commission (SEC). It is not intended that PGE’s website and the information contained therein or connected thereto be incorporated into this Annual Report on Form 10-K. Information may also be obtained via the SEC Internet website at www.sec.gov.
4
Regulation and Rates
PGE is subject to both federal and state regulation, which can have a significant impact
on the operations of the Company. In addition to those agencies and activities discussed below, the Company is subject to regulation by certain environmental agencies, as described in the Environmental Matters section in this Item 1.
Federal Regulation
PGE is subject to regulation by several federal agencies, including the Federal Energy Regulatory Commission (FERC) and the Nuclear Regulatory Commission (NRC).
FERC Regulation
The Company is a “licensee” and a “public utility,” as defined in the Federal Power Act, and is subject to regulation by the FERC in matters related to wholesale energy activities, transmission services, reliability standards, natural gas pipelines, hydroelectric projects, accounting policies and practices, short-term debt issuances, and certain other matters. The Energy Policy Act of 2005 (EPAct 2005) granted the FERC statutory authority to implement mandatory reliability standards and also authorized monetary penalties for non-compliance with such standards and other FERC regulations. EPAct
2005 also provides for enhanced oversight of power and transmission markets, including protection against market manipulation.
Wholesale Energy—PGE has authority under its FERC Market-Based Rates tariff to charge market-based rates for wholesale energy sales. Re-authorization for continued use of such rates requires the filing of triennial market power studies with the FERC. The Company’s next triennial market power study is due in June 2013.
Transmission—PGE offers transmission service pursuant to its Open Access Transmission Tariff (OATT), which is filed with the FERC. As required by the OATT, PGE provides information regarding its transmission business on its Open Access Same-time Information System. As of December 31, 2010, PGE owned approximately 1,100 miles of transmission lines. For additional information, see the Transmission and Distribution section in this Item 1. and in Item 2.—“Properties.”
Reliability and Cyber Security Standards—Pursuant to EPAct 2005, the FERC has adopted mandatory reliability standards for owners, users and operators of the bulk electric system. Such standards, which are applicable to PGE, were developed by the North American Electric Reliability Corporation (NERC) and the Western Electricity Coordinating Council (WECC), which has responsibility for compliance and enforcement of these standards. These standards include Critical Infrastructure Protection standards, a set of cyber security standards that provide a framework to identify and protect critical cyber assets to support reliable operation of the bulk electric system.
Pipeline—The Natural Gas Act of 1938 and the Natural Gas Policy Act of 1978 provide FERC au
thority in matters related to the extension, enlargement, safety, and abandonment of jurisdictional pipeline facilities, as well as transportation rates and accounting for interstate natural gas commerce. PGE is subject to such authority as the Company has a 79% ownership interest in the 17-mile interstate pipeline that provides natural gas to its Port Westward and Beaver plants.
Hydroelectric Licensing—Under the Federal Power Act, PGE’s hydroelectric generating plants are subject to FERC licensing requirements. These include an extensive public review process that involves the consideration of numerous natural resource issues and environmental conditions. PGE holds FERC licenses for the Company’
s projects on the Deschutes, Clackamas, and Willamette Rivers. For additional information, see the Environmental Matters section in this Item 1.