ORDER NO. 99-298

ENTERED APR 27 1999

This is an electronic copy. Appendices and footnotes may not appear.

OF OREGON

UF 4165

DISPOSITION: AMENDED APPLICATION APPROVED WITH REPORTING REQUIREMENTS

On March 3, 1999, the Commission received an application from Portland General Electric Company (PGE or the Company), filed pursuant to ORS 757.415 and OAR 860-027-0030, requesting authority to engage in the above captioned financial transactions. The Company filed revisions to its application on March 25 and March 29, 1999. At its Public Meeting on April 6, 1999, the Commission approved the application with reporting requirements. Subsequently on April 9, 1999, PGE filed another revision to the application.

Based on a review of the application, the revisions, and the Commission’s records, the Commission finds that the amended application satisfies applicable statutes and administrative rules. At its Public Meeting on April 20, 1999, the Commission adopted Staff’s recommendation to approve the amended application subject to reporting requirements. Staff’s recommendation is attached as Appendix A and is incorporated by reference.

Jurisdiction

ORS 757.005 defines a "public utility" as anyone providing heat, light, water, or power service to the public in Oregon. The Company is a public utility subject to the Commission’s jurisdiction.

Applicable Law

ORS 757.415(1) provides that:

A public utility may issue [stocks and bonds, notes, and other evidences of indebtedness] for the following purposes and no others. . .:

(a) The acquisition of property, or the construction, completion, extension or improvements of its facilities.

(b) The improvement or maintenance of its service.

(c) The discharge or lawful refunding of its obligations.

(d) The reimbursement of money actually expended from income or from any other money in the treasury of the public utility not secured by or obtained from the issue of stocks or bonds, notes or other evidences of indebtedness, or securities of such public utility, for any of the purposes listed in paragraphs (a) to (c) of this subsection . . .

(e) *****

When an application involves refunding of obligations, the applicant must show that the original borrowings were made for a permissible purpose. Avion Water Company, Inc., UF 3903, Order No. 83-244 at 3; Pacific Power & Light Co., UF 3749, Order No. 81-745 at 5.

ORS 757.415(2) provides that:

[The applicant] shall secure from the commission. . .an order. . .stating:

(a) The amount of the issue and the purposes to which the proceeds are to be applied; and

(b) In the opinion of the commission, the [proceeds] reasonably [are] required for the purposes specified in the order and compatible with the public interest, which is necessary or appropriate for or consistent with the proper performance by the applicant of service as a public utility, and will not impair its ability to perform that service; and

(c) Except as otherwise permitted in the order in the case of bonds, notes, or other evidences of indebtedness, such purposes are not, in whole or in part, reasonably chargeable to operating expenses or to income.

The Commission believes that the proposed transaction is reasonably required for the purposes stated, is compatible with the public interest, and is consistent with the proper performance of the Company’s public utility service. The proposed transaction will not impair the Company’s ability to perform that service. The purposes of the proposed issuance are not, in whole or part, reasonably chargeable to operating expenses or to income.

For ratemaking purposes, the Commission reserves judgment on the reasonableness of the Company’s capital costs and capital structure. In its next rate proceeding,

the Company will be required to show that its capital costs and structure are just and reasonable. See ORS 757.210.

CONCLUSIONS

1. The Company is a public utility subject to the Commission’s jurisdiction.

2. The Company’s application meets the requirements of ORS 757.415.

3. The application should be granted.

IT IS ORDERED that the amended application of Portland General Electric Company for authority to issue and sell not more than $200 million of first mortgage bonds and/or unsecured debt is granted, subject to the conditions stated in Appendix A.

Made, entered, and effective ________________________.

A party may request rehearing or reconsideration of this order pursuant to ORS 756.561. A request for rehearing or reconsideration must be filed with the Commission within 60 days of the date of service of this order. The request must comply with the requirements of OAR 860-014-0095. A copy of any such request must also be served on each party to the proceeding as provided by OAR 860-013-0070. A party may appeal this order pursuant to ORS 756.580.

APPENDIX A

ITEM NO.

DATE: April 13, 1999

TO: Bill Warren through Marc Hellman

FROM: Bryan Conway

SUBJECT: UF 4165­Portland General Electric Co.'s Amended Application for Authority to Issue and Sell Not More Than $200 Million of Debt Securities

SUMMARY RECOMMENDATION:

I recommend approving the amended application, subject to the original four reporting requirements.

DISCUSSION:

On March 3, 1999, Portland General Electric Co. (PGE) filed an application pursuant to Oregon Revised Statutes (ORS) 757.415 & 757.480, and Oregon Administrative Rule 860-27-0030 for authority to issue and sell not more than $200,000,000 of first mortgage bonds (FMBs), medium-term notes (MTNs), or senior unsecured debt. The application was docketed UF4165, and my memo of March 31, 1999, recommended approval of the application. UF 4165 was approved by the Commission on April 6, 1999, at the Commission’s regular biweekly Public Meeting.

PGE’s legal department subsequently requested a change in their original application shortly after approval had been given. On April 9, 1999, PGE sent a letter to Janice Fulker amending its original application. PGE amended its application as follows:

The third sentence in paragraph (h)(1)(ii) on page 4, currently reads: "Debt issued by the Company will be in one or more series and will be subordinated to the Company’s existing Bonds". The sentence should be changed to read: "Debt issued by the Company will be in one or more series and will be subject to the lien of the Company’s First Mortgage Bonds".

PGE’s amendment to its application is not material to my analysis and does not change my recommendation.

My March 31, 1999, recommendation was based on PGE’s original filing and should be changed to incorporate this amendment. The first sentence under the Section titled Unsecured Debt currently reads as follows: "The unsecured debt (unsecured by assets of the company) will be issued as senior unsecured debt and will be subordinated to the Company's existing First Mortgage Bonds". This sentence should be changed to the following: "The unsecured debt (unsecured by assets of the company) will be issued as senior unsecured debt and will be subject to the lien of the Company's First Mortgage Bonds". A copy of my previous recommendation is attached.

STAFF RECOMMENDATION:

I recommend the Commission approve PGE's amended application to issue not more than $200 million of debt securities in the form of FMBs, MTNs, and/or unsecured debt, subject to the four reporting requirements discussed in the previous recommendation.

CC: John Thornton

Attachment