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2001 Power Cost Adjustment Mechanism

2001 Power Cost Adjustment Mechanism. Nine-month mechanism because of 10/01/01 effective date for new tariffs under PGE restructuring rate case Baseline negotiated, based loosely on 1997 rates and 2001 overall forecasted test year; assumed average water All changes from baseline tracked

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2001 Power Cost Adjustment Mechanism

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  1. 2001 Power Cost Adjustment Mechanism • Nine-month mechanism because of 10/01/01 effective date for new tariffs under PGE restructuring rate case • Baseline negotiated, based loosely on 1997 rates and 2001 overall forecasted test year; assumed average water • All changes from baseline tracked • purchases • sales • fuel • Speculative wholesale trading excluded – PGE “tags” speculative trades • Ability to change base rates within the nine months if there is a significant underlying movement in the market • No earnings test because of dead-band and sharing tiers • All major parties stipulated to mechanism 56

  2. $ 232.5 $ 211.1 $ 175.9 $ 140.7 $ 119.3 Power Cost Adjustment Mechanism ($ in millions) • Power Costs $260.5PCA $(35.9) 90/10 Sharing Tier 50/50 Sharing Tier Deadband: PGE has100% of risks and rewards 50/50 Sharing Tier 90/10 Sharing Tier Budgeted9 Month Regulated Power Costs For Illustration purposes only. Not drawn to scale, 57

  3. PGE’s Restructuring Filing – UE 115 • On 10/2/00, we filed both an integrated and an unbundled case • Test year is 2002, with new rates to take effect 10/1/01(initial 15 months) • Case proceeds regardless of start date for direct access • All non-power cost issues settled with OPUC Staff except ROE • Achieved excellent settlement - 96% of filed cost of service for these areas • Some customer groups are contesting some of the settled issues but PGE is confident that the settlement will hold • Power cost issues settled as of June 12 with OPUC Staff, ICNU, and CUB. Baseline power cost to be set in late August. • ROE • PGE filed rebuttal on May 20 and early June hearings went well for PGE • Settlement remains possible 58

  4. Restructuring Filing - Power Cost Settlement • Basic mechanism is similar to 2001 mechanism • Tiers of sharing, with less sharing as the variance between forecasted power costs and actual power costs is larger, positive or negative • Mechanism runs for 15 months: from October 1, 2001 to December 31, 2002 • New Features • Quarterly amortization of any accrued balances • Forecasted power costs set using actual reservoir levels and expected rainfall, significantly reducing forecasted available hydro • Changes in energy revenues included in the equation • Catastrophic plant losses trigger a change in forecasted power costs and are outside the mechanism • PGE will file the forecasted power costs on or around August 15, reflecting trades and purchases through the end of July 60

  5. Power Cost Adjustment Mechanism ($ in millions) 95/5 Sharing Tier +$200 90/10 Sharing Tier +$100 85/15 Sharing Tier +$38 50/50 Sharing Tier +$28 Deadband: PGE has100% of risks and rewards 15-month baseline power cost* -$28 50/50 Sharing Tier -$38 85/15 Sharing Tier -$100 90/10 Sharing Tier -$200 95/5 Sharing Tier *To be determined in August/September 61

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