Regulatory Affairs
- The Oregon Public Utility Commission today hosted a public hearing in
Portland to discuss the impacts of PGE's Oct. 1 price increase. The hearing
was conducted in response to a request by consumer and business interest
groups, even though the 11-month long rate case proceedings are officially
closed and the OPUC approved PGE's request. 

Pamela Lesh, PGE's vice president of Public Policy and Regulatory Affairs,
represented the company at the hearing. Representatives and members of the
interest groups - Industrial Customers of Northwest Utilities, Associated
Oregon Industries, and Citizens Utility Board - also offered their comments. 

Today's hearing is part of a larger campaign by these groups asking for
reconsideration of PGE's rate case. Several weeks ago, the OPUC denied their
request to block the implementation of new rates on October 1, 2001. A second
proposal by these groups is a request for reconsideration, in which the OPUC
could decide to create a plan to mitigate or defer the price increases over
time. This matter has yet to be decided by the OPUC, but we expect them do
deny the reconsideration request. PGE has stated that a price deferral or
"phase-in" approach would not be wise, because it would create millions of
dollars in debt that would ultimately cost PGE customers more in the long
term.  Beginning this week, all residential and business customers will
receive a special mailing from PGE that provides details on how customers can
use energy wisely and efficiently.

Retail Loads
We're roughly 145 MW behind (Authorized) UE-115 forecast in the last 7 days
and 135 MW behind (120 MW behind when adjusted for weather) in the last 30
days, due to significantly weak demand by manufacturing customers (though
high-tech held up well) and likely commercial (non-manufacturing) customers. 
You may have heard this morning that the U.S. Industrial Production (Index)
fell for 12 months in a row, worse since WWII.

Power Supply
- This past week we have seen the market continue to creep up slowly.  The
daily electric has strengthened mostly off-peak with a slight strengthening
on-peak, on-peak has traded mostly around $24 to $25 and off-peak has steadily
moved up from $18 to $21.  In the cash electric we have been selling about
100MW on-peak and have stayed out of the off-peak market due to the gas price
following the electric for Beaver's dispatch price.  Daily gas we have seen
the prices move up to $2.45 Sumas and settled around $2.06 for tomorrow.  This
has been moving all around with weather forecasts being part of the driver and
threats of storms.  Term electric had climbed slowly this past week with the
feeling that we reached the bottom, but has settled back down to last week
prices.  Term gas has followed the electric with the prices rising slightly
throughout the week then settling down to last week prices.

Overall everything has been very quiet with everything running full out when
the dispatch is below the market.  We aren't anticipating any major
fluctuation in the coming week that would cause either gas or electric to move
dramatically.  All the plants are available and running smoothly.

- El Paso Seasonal Exchange - Negotiations are in process with El Paso on a
seasonal exchange in which PGE may take up to 50 MW of Dec01 and Jan02 power
in four-hour blocks.  Total energy taken by PGE must be returned in Sep02 in
four-hour blocks of El Paso's choice.  El Paso would like to embed a provision
for "lending" - commercial terms are being negotiated.

- Intel Blend and Extend - Initial contact with customer has been made and
terms are being revised, as requested by Intel.  At Intel's first
availability, PGE will meet with them to discuss two products: (1) an "extend
and blend" financing of a reduced rate increase and (2) an extend and blend
product with financed rate reduction embedded in a collar.

Human Resources
- With ? day's negotiations, Company and IBEW successfully wrapped up
negotiations for a 5-year agreement for the 15 employees at our Coyote Plant.
This unusual agreement which is IPP-like in its wording was unchanged through
the negotiations process, with a cost-of-living adjustment added plus an
increase in the incentive plan of up to 4%. 

- In PGE's main agreement covering 900 bargaining-unit employees, a third vote
was held Wed., 10/17, with the result 631 employee in favor of the new 3-yr
agreement and 174 opposed.  This is a good contract and it brings our
negotiation process to a conclusion.

Finance
A draft 8-K for PGE is out for final review and approval.  Once this is filed
PGE will be able to move forward on a $250 million bond deal structured as a
fall away first mortgage.   Current issuance date for these bonds is scheduled
for October 31 or November 1.

Enron / Northwest Natural Transaction
- Officers of NWN and PGE will meet next week for 2 days to discuss how we
work together during the approval process and the plan for the integration
activity.

- The regulatory and business people will meet next week (evening meeting
while we are at the management meeting)  to discuss regulatory strategy for
the OPUC filing that will request approval for the transaction.  Paul Kaufman
will be included in the discussion along with Dick Reiten, Mark Dodson, Bruce
Debolt, Peggy Fowler, Jim Piro, and Pamela Lesh.

- Final draft of the offering memo on the senior credit facility for the
financing of the transaction is being circulated for review.  Presentations on
the transaction with the potential lead underwriting banks is being scheduled
for October 29 and 30th.

- Beginning information exchange and planning for integration with NW
Natural's Human Resources department, planning for Day One.