20050118Rosborough Exhibit No. 13.pdf

Hewitt
Preparation of this Actuarial Valuation
As of January 1, 2004 for PacifiCorp Retirement Plan
This report has been prepared for PacifiCorp and summarizes the results of the funding valuation for the
plan year and the accounting and reporting requirements for the 2005 fiscal year for pension benefits as
set forth in FASB Statement of Financial Accounting Standard No. 87 as amended ("SFAS No. 87'') and
No. 88 as amended ("SFAS No. 88"). In addition, this material is intended to serve as a source document
for information to meet certain accounting or government filing requirements. Determinations for
purposes other than the funding valuation and financial accounting requirements may be significantly
different from the results reported herein. Thus, the use of this report for purposes other than those
expressed here may not be appropriate.
In conducting the valuation, we have relied on personnel, plan design, and asset information supplied by
PacifiCorp as of the valuation date. While we cannot verify the accuracy of all this information, the
supplied information was reviewed for consistency and reasonableness. As a result of this review, we
have no reason to doubt the substantial accuracy or completeness of the information and believe that it
has produced appropriate results.
This valuation has been conducted in accordance with generally accepted actuarial principles and
practices, including the applicable Actuarial Standards of Practice as issued by the Actuarial Standards
Board. In addition, the valuation results are based on our understanding of the applicable laws and
regulations under IRC sections 404 and 412, and our understanding of the requirements of SFAS Nos.
87 and 88. The accounting information in this report is not intended to supersede or supplant the advice
and interpretations of the Company's auditors.
The actuarial assumptions and methods used in this valuation are described in the Actuarial
Assumptions section of this report.
• For the funding valuation, the interest rate and mortality table used to measure current liability
are prescribed by IRC section 412. It is our belief that all other actuarial assumptions used for
the funding valuation represent reasonable expectations of anticipated plan experience.
• PacifiCorp selected the economic assumptions and prescribed them for use for purposes of
compliance with SFAS No. 87 and SFAS No. 88. While the demographic assumptions were also
prescribed by PacifiCorp, Hewitt Associates provided guidance with respect to these
assumptions and it is our belief that they represent reasonable expectations of anticipated plan
experience.
The undersigned are familiar with the near-term and long-term aspects of pension valuations and meet
the Qualification Standards of the American Academy of Actuaries necessary to render the actuarial
opinions contained herein. All of the sections of this report are considered an integral part of the
actuarial opinions.
Hewitt Associates LLC
Albert A. Kopec Jr., Enrolled Actuary
Fellow of the Society of Actuaries
December 2004
Hewitt Associates
Daniel S. Watts, Enrolled Actuary
Member of the American Academy of Actuaries
2004_PRPV AL.DOCXP/03A 12/2004
Table of Contents
Page
Summary 1
Assets and Liabilities 3
Contributions 10
Experience 21
Accounting Requirements 23
Personnel Information 27
Plan Provisions 35
Actuarial Assumptions 42
Hewitt Associates 2004_PRPV AL.DOCXP/03A 12/2004
Summary
The following summary presents a comparison of liabilities, assets, and contributions from the 2003
actuarial valuation with the results of the January 1, 2004 valuation:
Before After
Amendments Amendments
January 1, 2003 January 1, 2004 January 1, 2004
Funding Requirements
Actuarial Accrued Liability
Actives and Transfers $ 344,032,026 $ 378,388,669 $ 3 79, 168,308
Vested Terminations 70,069,212 71,461,235 71,461,235
Retirees and Beneficiaries 594,872,666 551,651,223 551,651,223
Total $ 1,008,973,904 $ 1,001,501,127 $ 1,002,280,766
Valuation Assets $ 853,551,122 $ 889,398,489 $ 889,398,489
Unfunded Actuarial Liability $ 155,422,782 $ 112,102,638 $ 112,882,277
Annual Normal Cost $ 16,124,685 $ 17,131,150 $ 17,194,723
Actuarial Loss (Gain) $ NIA $ (11,613,476) NIA
Contributions as of 12131
Minimum Required $ 11,500,133 NIA $ 6,163,492
Maximum Deductible $ 174,277,373 NIA $ 145,915,674
Funding Policy $ 61,555,151 NIA $ 59,997,387
Interest Rate 8.0% 8.0% 8.0%
Salary Scale 5.0% 5.0% 5.0%
Mortality 83GAM 83GAM 83GAM
Value of Accrued Benefits
Value of All Accrued Benefits $ 887 ,587, 739 $ 878,984,332 $ 879,005,493
Value of All Vested Accrued Benefits $ 871,865,711 $ 862,241,921 $ 862,260,640
Market Value of Assets $ 711,292,602 $ 800,645,958 $ 800,645,958
Interest Rate 8.0% 8.0% 8.0%
Personnel Summary
Number of:
Actives 4,325 4,521 4,521
Vested Terminations 1,224 1,344 1,344
Retirees and Beneficiaries 4,407 4,254 4,254
Total 9,956 10,119 10,119
Characteristics of Active Participants
Average Age 45.9 46.4 46.4
Average Service 15.5 15.7 15.7
Compensation
Total $ 284,667,452 $ 314,691,126 $ 314,691,126
Average $ 65,819 $ 69,607 $ 69,607
Hewitt Associates 2004_PRPV AL.DOCXP/03A 12/2004
Summary (continued)
Disclosure Disclosure
Results as of Results as of
March 31, 2003 March 31, 2004
Accounting Requirements I
Disclosure for Fiscal Year 2003 2004
Accumulated Benefit Obligation $ 1,020,323,000 $ 1,047,900,000
Projected Benefit Obligation $ 1,107,611,000 $ 1,181,706,000
Market Value of Assets $ 681,241,000 $ 733,243,000
Funded Status $ (426,370,000) $ (448,463,000)
Expense for Fiscal Year 2004 2005
Service Cost $ 19,300,000 $ 24,900,000
FAS 87 Expense $ 18,906,000 $ 35,775,000
Discount Rate Assumption
Salary Increase Rate
Expected Long-Term Rate of Return
6.75%
4.00%
8.75%
6.25%
4.00%
8.75%
1 The Accounting Requirements Section provides detailed information relative to the disclosure requirements under FASB
Statement Nos. 87 and 132.
2 Excludes contributions accrued but not yet paid.
Hewitt Associates 2 2004_PRPV AL.DOCXP/03A 12/2004
Assets and Liabilities
The results of the January 1, 2004 actuarial valuation are set forth below. For your reference, results
of the January 1, 2003 actuarial valuation are also shown.
January 1, 2004
Before After
January 1, 2003 Amendments Amendments'
Funding Basis
Actuarial Accrued Liability
Actives and Transfers $ 344,032,026 $ 378,388,669 $ 379,168,308
Vested Terminations 70,069,212 71,461,235 71,461,235
Retirees and Beneficiaries 594,872,666 551,651,223 551,651,223
Total $ 1,008,973,904 $ 1,001,501,127 $ 1,002,280,766
Valuation Assets 853,551,122 889,398,489 889,398,489
Unfunded Actuarial Liability $ 155,422,782 $ 112,102,638 $ 112,882,277
Annual Normal Cost $ 16,124,685 $ 17,131,150 $ 17,194,723
As a Percent of Compensation 5.43% 5.35% 5.37%
Interest Rate 8.00% 8.00% 8.00%
Salary Scale 5.00% 5.00% 5.00%
Mortality 83GAM 83GAM 83GAM
Personnel Information
Number of:
Actives 4,325 4,521 4,521
Vested Terminations 1,224 1,344 1,344
Retirees and Beneficiaries 4,407 4,254 4,254
Total 9,956 10,119 10,119
Valuation Compensation $ 296,988,646 $ 320,041,673 $ 320,201,382
I Liabilities for active participants increased because the IRC section 401(a)(l 7) pay limit increased from $200,000 to $205,000.
Hewitt Associates 3 2004_PRPV AL.DOCXP/03A 12/2004
Assets and Liabilities c continued)
Determination of Valuation Assets, 1/1/2004
(1) Market Value, 1/1/2003 $ 711,292,602
(2) Contribution Made for 2003 Plan Year 61,555,151
(3) Benefit Payments During 2003 Plan Year (107,794,803)
(4) Asset transfer to the PacifiCorp/IBEW Local Union 57
Retirement Trust Fund, 10/31 /2003 (470,285)
(5) Interest at 8.0% to 12/31/2003 on:
(a) Market Value of Assets (Item 1) $ 56,903,408
(b) Company Contributions (Item 2) 0
(c) Benefit Payments (Item 3) (3,952,476)
( d) Asset transfer (Item 4) (6)70}
(e) Total, (a)+ (b) + (c) + (d) $ 52,944,662
(6) Expected Market Value, 1/1/2004 $ 717,527,327
(1) + (2) + (3) + (4) + (5)
(7) Actual Market Value With Accrued Contributions, 1/1/2004 800,645,958
(8) Asset Gain/(Loss), (7)- (6) $ 83,118,631
(9) Amount of Asset Gain/(Loss) Deferred
(a) 20% of2000 Gain/(Loss) of $(97,709,791) $ (19,541,958)
(b) 40% of2001 Gain/(Loss) of$(155,938,814) (62,375,526)
(c) 60% of2002 Gain/(Loss) of $(122,216,587) (73,329,952)
( d) 80% of 2003 Gain/(Loss) of $83, 118,631 66,494,905
( e) Total $ (88, 752,531)
(10) Actuarial Value of Assets Before Corridor Test, 1/1/2004, (7)- (9) $ 889,398,489
(11) Corridor Test
(a) 80% of Market Value $ 640,516,766
(b) 120% of Market Value $ 960,775,150
(12) Actuarial Value of Assets After Corridor Test, 1/1/2004 $ 889,398,489
Hewitt Associates 4 2004_PRPV AL.DOCXP/03A 12/2004
Assets and Liabilities c continued)
Statement of Change in Fund Assets
Market Value of Assets, 1/1/2003 $ 711,292,602
Contribution Made for 2003 Plan Year 61,555,151
Benefit Payments (107,794,803)
Trustee and Administrative Expenses (3,206,560)
Asset Transfer to Another Pension Plan (470,285)
Net Investment Income 139,269,853
Market Value of Assets, 1/1/2004 $ 800,645,958
Coml!onents of Market Value of Assets
January 1, 2003 January 1, 2004
Investment in Master Retirement Trust $ 677,844,021 $ 739,090,807
Accrued Contributions 33,448,581 61,555,151
Market Value of Assets $ 711,292,602 $ 800,645,958
Hewitt Associates 5 2004_PRPV AL.DOCXP/03A 12/2004
Assets and Liabilities c continued)
Current Liability
Current liability equals the present value of all accrued benefits, measured using an interest rate that
satisfies two requirements:
• The interest rate lies within the permissible range, and
• The interest rate reflects annuity purchase rates that would be used by insurance companies to
satisfy the liabilities of the plan upon termination.
The Internal Revenue Service has stated in IRS Notice 90-11 that the second requirement will be
deemed to be satisfied (until the Service provides further guidance) if the interest rate lies within the
permissible range.
The Pension Funding Equity Act of 2004 changed the permissible range for 2004 and 2005 so it is
now expressed in terms of a percentage of the four-year weighted average of corporate bond rates.
The permissible range for RP A '94 current liability calculations (the Retirement Protection Act of
1994) is shown below:
RPA '94
Applicable 4-Y ear Weighted Average Rate
Permissible Corridor
Percentages
6.55%
5.89% to 6.55%
(90% to 100%)
Interest Rate Used 6.55%
(1) Current Liability, as of January 1, 2004
Actives and Transfers $ 298,049,429
Retirees and Beneficiaries 609,939,324
Vested Terminations 67,747,360
Total $ 975,736,113
(2) Current Year Accrual $ 25,958,902
Hewitt Associates 6 2004_PRPV AL.DOCXP/03A 12/2004
Assets and Liabilities c continued)
Accrued Benefit Values
This section presents the results of a separate valuation of the plan's obligations based only on
benefits accrued as of the valuation date of January 1, 2004. The focus of this valuation differs from
the calculation of ongoing funding requirements which anticipates benefits to be earned by future
service and salary increases. This accrued benefit valuation assumes an ongoing plan and, therefore,
differs from a calculation of PBGC termination liabilities which would be based on the benefits and
assumptions appropriate for a terminating plan.
The American Academy of Actuaries, in Appendix I of the Actuarial Standards of Practice
Number 4, has provided recommended procedures for the calculation of the present value of vested
accrued benefits (Illustration 1) and the present value of accrued benefits (Illustration 2). The results
under both Illustrations include the sum of the present value of:
• All benefits expected to be paid to former participants and their beneficiaries; and
• Benefits expected to be paid at future dates to present active participants, based only on service and
pay prior to the date of calculation.
The present value of vested accrued benefits using Illustration 1 recognizes only the benefits in
which an active participant retains a right, independent of continuation of employment beyond the
calculation date. It does not include any additional benefits which might arise because of future death
or disability that would not become payable if the participant had terminated employment before the
occurrence of the death or disability.
The present value of all accrued benefits using Illustration 2 recognizes all accrued benefits expected
to become payable at future dates, including the accrued portion of disability and preretirement death
benefits. Thus, the accrued benefit of a nonvested participant is included in this calculation to the
extent it will become payable (i.e., vested) upon the occurrence of a future event such as termination,
death, disability, or retirement.
The accrued benefit used in these calculations is based on the personnel data supplied by the
company.
Hewitt Associates 7 2004_PRPV AL.DOCXP/03A 12/2004
Assets and Liabilities c continued)
Comparison of Vested Accrued and All Accrued Benefits With Assets
January 1, 2004
January 1, 2003 January 1, 2004 Current Liability
Assumed Interest Rate 8.0% 8.0% 6.55%
Mortality Table 83GAM 83GAM 83GAM
Present Value of Vested Accrued Benefits
Actives and Transfers $ 206,923,833 $ 239,148,182 $ 268,922,377
Vested Terminations 70,069,212 71,461,235 67,747,360
Retirees and Beneficiaries 594,872,666 551,651,223 609,939,324
Total $ 871,865,711 $ 862,260,640 $ 946,609,061
Present Value of All Accrued Benefits
Actives and Transfers $ 222,645,861 $ 255,893,035 $ 298,049,429
Vested Terminations 70,069,212 71,461,235 67,747,360
Retirees and Beneficiaries 594,872,666 551,651,223 609,939,324
Total $ 887,587,739 $ 879,005,493 $ 975,736,113
Market Value of Assets 1 $ 711,292,602 $ 800,645,958 $ 800,645,958
Funded Ratio (Market to All Accrued) 80.1% 91.1% 82.1%
1 Includes contributions accrued but not yet paid as of the calculation date.
Hewitt Associates 8 2004_PRPV AL.DOCXP/03A 12/2004
Assets and Liabilities c continued)
Analysis of Change in Present Value of All Accrued Benefits
Present Value of Accrued Benefits, 1/1/2003
Change Due to Benefits Paid
Increase Due to Plan Experience, Including Population Changes
Increase Due to Additional Benefit Accrual
Increase Due to Interest
Increase Due to Assumption Changes 1
Increase Due to Plan Amendments"
Present Value of Accrued Benefits, 1/1/2004
1 There were no changes in assumptions since the previous valuation.
$ 887,587,739
(107,794,803)
11,518,945
20,977,224
66,695,227
0
21,161
$ 879,005,493
2 Liabilities for active participants increased because the IRC section 401(a)(l 7) pay limit increased from $200,000 to $205,000.
Hewitt Associates 9 2004_PRPV AL.DOCXP/03A 12/2004
Contributions
Funding Standard Account
The minimum contribution is determined under Section 412 of the Internal Revenue Code (IRC) by
maintaining a Funding Standard Account (FSA). The minimum contribution required is the amount
necessary to make the FSA credits for the plan year equal to the FSA charges for the plan year.
Contributions in excess of the minimum create a credit balance, which serves to reduce the minimum
contribution requirement for the subsequent plan year.
The FSA charges for the plan year are the sum of:
( 1) Normal cost;
(2) Amortization payments, representing amortization over 30-year periods for the initial unfunded
actuarial liability, and for increases in the unfunded actuarial liability caused by plan
amendments or the addition of new employee groups; over 10-year periods for the increases in
the unfunded actuarial liability due to changes in actuarial assumptions; and over 5-year
periods for increases in the unfunded actuarial liability resulting from actuarial losses;
(3) Interest on the above items; and
( 4) An additional charge is applied for plans that are not sufficiently well-funded.
The FSA credits for the plan year are the sum of:
( 5) Credit balance at the end of the prior plan year;
( 6) Contributions made;
(7) Amortization payments, representing amortization over 10-year periods for decreases in the
unfunded actuarial liability due to changes in actuarial assumptions and over 5-year periods for
decreases in the unfunded actuarial liability resulting from actuarial gains; and
(8) Interest on the above items.
If the FSA credits are less than the FSA charges, a funding deficiency exists which is subject to an
initial nondeductible tax of 10% with additional penalties if not corrected within a specified time
frame.
Hewitt Associates 10 2004_PRPV AL.DOCXP/03A 12/2004
Contributions (continued)
Funding Standard Account for Plan Year Ended December 31, 2003
Shown below is the calculation of the balance in the Funding Standard Account as of
December 31, 2003:
(1) Charges
(a) Normal Cost, 1/1/2003
(b) Amortization Payment ( on $483,498,005)
(c) Interest as Applicable to End of Plan Year on (a)+ (b)
( d) Additional Funding Charge
( e) Total
(2) Credits
(a) Credit Balance on 12/31/2002
(b) Amortization Payment (on $157,678,785)
( c) 2003 Plan Year Contribution Made on April 15, 2004
(d) Interest as Applicable to End of Plan Year on (a)+ (b) + (c)
( e) Full Funding Limit Credit
(f) Total
(3) Credit Balance, 12/31/2003, 2(f)- l(e)
$ 16,124,685
76,198,253
7,385,835
0
$ 99,708,773
$ 45,002,030
36,672,637
61,555,151
6,533,973
0
$ 149,763,791
$ 50,055,018
Hewitt Associates 11 2004_PRPV AL.DOCXP/03A 12/2004
Contributions (continued)
Minimum Contribution (Funding Standard Account) for 2004 Plan Year
The minimum contribution required for the plan year ending December 31, 2004 is developed below:
(1) Charges
(a) Normal Cost, 1/1/2004
(b) Amortization Payment (on $440,663,372)
(c) Interest as Applicable to End of Plan Year on (a)+ (b)
( d) Additional Funding Charge
(e) Total
(2) Credits
(a) Credit Balance on 12/31/2003
(b) Amortization Payment (on $142,300,116)
(c) Interest as Applicable to End of Plan Year on (a)+ (b)
( d) Full Funding Limit Credit
( e) Total
(3) Contribution Needed to Avoid Funding Deficiency,
12/31/2004, (l)(e)-(2)(e), But Not Less Than Zero
( 4) 2004 Plan Year Contributions,
Expected to be Paid on April 15, 2005
(5) Expected Credit Balance, 12/31/2004, (2)(e)- (l)(e) + (4)
$ 17,194,723
75,039,432
7,378,732
0
$ 99,612,887
$ 50,055,018
36,472,200
6,922,177
0
$ 93,449,395
$ 6,163,492
$ 59,997,387
$ 53,833,895
Hewitt Associates 12 2004_PRPV AL.DOCXP/03A 12/2004
Contributions (continued)
Additional Funding Requirement for 2004 Plan Year
Beginning with the 1995 plan year, the Retirement Protection Act of 1994 modified the additional
funding charge that was introduced by the Pension Protection Act of 1987. This additional funding
charge applies only to underfunded plans. In general, this charge can vary from a 4 to a 12-year
amortization of the unfunded current liability, reduced by certain charges and credits in the funding
standard account. If applicable, the additional funding charge results in an increased minimum
required contribution.
The additional funding requirement eligibility test (Gateway Test) determines if the plan's minimum
contribution is subject to the additional charge for the plan year. For the 2004 plan year, the test
compares current liability to the actuarial value of assets on January 1, 2004. The gateway current
liability must be calculated using the 1983 Group Annuity Mortality table and the maximum
permissible interest rate, which is 6.55% for 2004.
If the gateway percentage (the ratio of assets to liabilities) is greater than 90%, then the plan is
exempt from the additional funding charge. If the gateway percentage is greater than 80% but less
than 90%, then the plan may qualify for the "volatility rule exemption." To qualify, the plan must
have gateway percentages greater than 90% in two consecutive years out of the immediately prior
three years. For 2004, the gateway percentage is greater than 90%, and thus the plan is exempt from
the additional funding charge.
Additional Funding Requirement Eligibility Test
(1) Gateway Current Liability, 1/1/2004
Based on Interest Rate of 6.55%
(2) Actuarial Value of Assets, 1/1/2004
(3) Gateway Percentage, (2) + (1)
Prior Gateway Percentages
Gateway Percentage, January 1, 2003
Gateway Percentage, January 1, 2002
Gateway Percentage, January 1, 2001
$ 975,736,113
$ 889,398,489
91.2%
88.4%
100.1%
90.2%
Hewitt Associates 13 2004_PRPV AL.DOCXP/03A 12/2004
Contributions (continued)
Amortization Schedule for Minimum Required Contribution
Source, Remaining Date of 2004
Date Began Initial Balance on Final Payment
Amortization Amount 1/1/2004 Payment Amount
Charges
Bases Combined, 1/1/1992 $ 122,190,098 $ 67,215,236 1/1/2010 $ 11,953,881
Plan Amendment, 1/1/1993 $ 49,391,031 42,446,506 1/1/2022 4,092,457
Plan Amendment, 1/1/1993 $ 1,041,966 895,464 1/1/2022 86,335
Plan Amendment, 1/1/1995 $ 4,303,956 3,847,299 1/1/2024 355,634
Assumption Change, 1/1/1995 $ 10,256,554 1,430,576 1/1/2004 1,430,576
Plan Amendment, 1/1/1996 $ 598,470 544,094 1/1/2025 49,387
Assumption Change, 1/1/1996 $ 11,120,033 2,977,909 1/1/2005 1,546,222
Change in Limits, 1/1/1997 $ 2,079,812 1,920,042 1/1/2026 171,421
Assumption Change, 1/1/1997 $ 37,583,735 14,503,025 1/1/2006 5,210,796
Plan Amendment, 1/1/1997 $ 1,384,224 1,277,888 1/1/2026 114,090
Change in Limits, 1/1/1998 $ 12,712 11,903 1/1/2027 1,047
Plan Amendment, 1/1/1998 $ 15,555,513 14,566,860 1/1/2027 1,281,047
Plan Amendment, 1/1/1998 $ 109,091,542 102,158,067 1/1/2027 8,984,042
Assumption Change, 1/1/1999 $ 63,616,718 37,890,215 1/1/2008 8,786,897
Plan Amendment, 1 I 1 /2000 $ 2,702,426 2,596,201 1/1/2029 222,377
Plan Amendment, 1/1/2000 $ 481,417 462,494 1/1/2029 39,615
Actuarial Loss, 1/1/2000 $ 7,777,840 1,806,743 1/1/2004 1,806,743
Plan Amendment, 1/1/2001 $ 33,858,303 32,903,982 1/1/2030 2,786,117
Plan Amendment, 1/1/2002 $ 4,964,860 4,873,700 1/1/2031 408,348
Plan Amendment, 1/1/2002 $ 15,792,646 15,502,675 1/1/2031 1,298,908
Actuarial Loss, 1/1/2002 $ 5,064,838 3,269,103 1/1/2006 1,174,557
Plan Amendment, 1/1/2003 $ 5,574,458 5,525,250 1/1/2032 458,486
Actuarial Loss, 1 I 1 /2003 $ 97,955,679 81,258,501 1/1/2007 22,716,326
Plan Amendment, 1/1/2004 $ 779,639 779,639 1/1/2033 64,123
Total $ 440,663,372 $ 75,039,432
Credits
Plan Amendment, 1/1/1994 $ 2,413,393 $ 2,117,404 1/1/2023 $ 199,687
Asset Method Change, 1/1/1997 $ 66,556,163 25,683,070 1/1/2006 9,227,678
De Minimus Merger of PFS, 1/1/1998 $ 1,964,832 972,567 1/1/2007 271,888
Method Change, 1/1/1999 $ 141,826,250 84,471,931 1/1/2008 19,589,390
Plan Amendment, 1 I 1 /2000 $ 10,961,683 10,530,811 1/1/2029 902,014
Actuarial Gain, 1/1/2001 $ 15,451,891 6,910,857 1/1/2005 3,588,330
Actuarial Gain, 1/1/2004 $ 11,613,476 11,613,476 1/1/2008 2,693,213
Total $ 142,300,116 $ 36,472,200
Hewitt Associates 14 2004_PRPV AL.DOCXP/03A 12/2004
Contributions (continued)
Amortization Schedule for Minimum Required Contribution ( continued)
Equation of Balance, 1/1/2004
(1) Net Remaining Balance
(2) Credit Balance
(3) Reconciliation Account
(Due to Prior Deficit Reduction Contribution)
(4) Unfunded Actuarial Liability,
(1) - (2) - (3), but not less than $0
Hewitt Associates 15
$ 298,363,256
50,055,018
135,425,961
$ 112,882,277
2004_PRPV AL.DOCXP/03A 12/2004
Contributions (continued)
Maximum Deductible Contribution
The determination of the maximum deductible contribution for the tax year ending March 31, 2004,
is based upon the plan year beginning January 1, 2004, as shown below:
(1) Normal Cost $ 17,194,723
(2) Net Amortization Payment (on $146,330,858) 20,192,234
(3) Interest to 3/31/2004 747,739
(4) Ten-year Maximum for 12 Months $ 38,134,696
(5) Full Funding Limit $ 269,784,474
(6) Lesser of ( 4) or (5) $ 38,134,696
(7) Minimum Required Contribution as of 12/31/2004 $ 6,163,492
(8) Greater of ( 6) and (7) $ 38,134,696
(9) Projected Unfunded Current Liability, 3/31/2004, for
Maximum Purposes $ 145,915,674
(10) Maximum Deductible Contribution, Greater of (8) and (9) $ 145,915,674
It is our understanding that all contributions reported on the Form 5500 for years prior to 2003 have
been fully deducted. This calculation does not reflect the 25% of covered compensation limitation on
deduction for contributions to overlapping plans.
Hewitt Associates 16 2004_PRPV AL.DOCXP/03A 12/2004
Contributions (continued)
Funding Policy Contribution
Effective January 1, 2001, the company adopted a new funding policy. The policy defines the
contribution as of January 1, 2001 to be the normal cost plus a five year amortization of the unfunded
actuarial liability.
In subsequent years, the difference between the actual unfunded actuarial liability and the expected
unfunded liability is amortized over five years. In addition, increases or decreases in the unfunded
actuarial liability as a result of changes in plan benefits, population coverages, assumptions, or
actuarial methods are amortized over five years. Finally, the funding policy contribution will be no
less than the minimum required contribution nor greater than the maximum deductible contribution.
The calculation of the Funding Policy Contribution for the 2004 plan year is as follows:
(1) Normal Cost, 1/1/2004 $ 17,194,723
(2) Amortization Payment (on $112,882,275) 38,358,413
(3) Interest on (1) + (2) to 12/31/2004 4,444,251
(4) Five-Year Contribution, (1) + (2) + (3) $ 59,997,387
(5) Minimum Contribution $ 6,163,492
(6) Maximum Deductible Contribution $ 145,915,674
(7) Funding Policy Contribution, $ 59,997,387
greater of ( 4) and ( 5), but not to exceed ( 6)
Hewitt Associates 17 2004_PRPV AL.DOCXP/03A 12/2004
Contributions (continued)
Amortization Schedule for Funding Polici Contribution
Remaining
Source, Date Began Balance on Date of Annual Payment
Amortization Initial Amount 1/1/2004 Final Payment Amount
Initial Unfunded
Actuarial Liability, 1/1/2001 $ 34,398,502 $ 15,363,410 1/1/2005 $ 7,977,154
Spinoff, 1/31/2001 $ 12,489,202 5,802,900 1/1/2006 2,896,297
Actuarial Loss, 1/1/2002 $ 5,064,838 3,269,102 1/1/2006 1,174,557
Plan Amendments, 1/1/2002 $ 20,757,506 13,397,944 1/1/2006 4,813,751
Actuarial Loss, 1/1/2003 $ 97,955,679 81,258,501 1/1/2007 22,716,326
Plan Amendments, 1/1/2003 $ 5,574,458 4,624,255 1/1/2007 1,292,740
Actuarial Gain, 1/1/2004 $ (11,613,476) (11,613,476) 1/1/2008 (2,693,213)
Plan Amendments, 1/1/2004 $ 779,639 779,639 1/1/2008 180,801
$ 112,882,275 $ 38,358,413
Hewitt Associates 18 2004_PRPV AL.DOCXP/03A 12/2004
Contributions (continued)
Full Funding Limitation
The Full Funding Limitation (FFL) is defined in IRC Section 412( c )(7) as the ERISA full funding
limitation with a minimum equal to the RP A '94 full funding limitation.
The ERISA FFL is the excess, if any, of the actuarial accrued liability (projected to the end of the
year) over the lesser of the fair market value of assets and the actuarial value of assets. RP A '94
requires the full funding limitation to be no smaller than the excess, if any, of 90% of the RP A '94
current liability over the actuarial value of assets.
For determining the ERISA full funding limitation for the minimum required contribution, an
adjustment is made to reflect the Funding Standard Account Credit Balance, with interest to the end
of the year at the funding interest rate.
Projected Liability, 12131/2004
Applicable Percentage
Adjusted Liability
Projected Assets for Maximum Purposes
ERIS A
FFL
$ 1,001,193,528
100%
$ 1,001,193,528
RPA '94
Override
$ 974,358,538
90%
$ 876,922,684
Lesser of Market Value and
Actuarial Value
Actuarial Value
For Determining Maximum
Deductible Contribution
Carryover Contributions for
Maximum
Credit Balance, 12131/2004
For Determining Minimum
Required Contribution
731,409,054 NIA
NIA 827,261,787
$ 269,784,474 $ 49,660,897
(33,448,581) (33,448,581)
54,059,419 NIA
$ 290,395,312 $ 16,212,316
Full Funding Limitation, 12131/2004
Hewitt Associates 19
For Maximum
Deductible
Contribution
$ 269,784,474
For Minimum
Required
Contribution
$ 290,395,312
2004_PRPV AL.DOCXP/03A 12/2004
Contributions (continued)
Full Funding Limitation
This page develops the end of year liabilities and assets for the determination of the full funding
limitation.
Actuarial Current
Liability Liability
Liabilities (ERISA) (RPA '94)
Interest Rate 8.0% 6.55%
Liability, 1/1/2004 $ 1,002,280,766 $ 975,736,113
Expected Benefit Accrual for 2004 17,194,723 25,958,902
Expected Benefit Payments (96,000,000) (90,000,000)
Interest to 12/31 /2004 77,718,039 62,663,523
Projected Liability, 12/31/2004 $ 1,001,193,528 $ 876,922,684
Assets Market Value Actuarial Value
Interest Rate 8.0% 8.0%
Assets, 1/1/2004 $ 800,645,958 $ 889,398,489
Expected Benefit Payments for 2004 (96,000,000) (96,000,000)
Interest to 12/31 /2004 60,211,677 67,311,879
Projected Assets, 12/31/2004 $ 764,857,635 $ 860,710,368
Carryover Contributions (33,448,581 ) (33,448,581)
Projected Assets for Maximum, $ 731,409,054 $ 827,261,787
12/31/2004
Hewitt Associates 20 2004_PRPV AL.DOCXP/03A 12/2004
Experience
Determination of the Actuarial Loss (Gain) for Funding Purposes
If the experience of the plan had corresponded to that expected under the actuarial assumptions, the
plan would have had no actuarial loss (gain). However, for the plan year just ended, the actual
experience did vary from the assumptions used for the plan and the resulting actuarial loss (gain) is
determined as follows:
(1) Unfunded Actuarial Liability, 1/1/2003 $ 155,422,782
(2) Normal Cost, 1/1/2003 16,124,685
(3) 2003 Plan Year Contributions 61,555,151
(4) Interest at 8.00% on:
(a) Unfunded Actuarial Liability $ 12,433,823
(b) Normal Cost 1,289,975
(c) Contributions 0
(d) Total, (a)+ (b)- (c) $ 13,723,798
(5) Expected Unfunded Actuarial Liability, $ 123,716,114
(1) + (2)- (3) + (4)(d)
(6) Actual Unfunded Actuarial Liability $ 112,102,638
Before Changes, 1/1/2004
(7) Actuarial Loss (Gain), (6) - (5) $ (11,613,476)
Analysis of Experience
There are two main sources of actuarial gain or loss during any year: liability experience and
investment experience. During 2003, the experience from all sources created a net actuarial gain of
$11,613,476. This gain was the result ofan investment gain of $17,755,407 offset by a liability loss
of $6, 141,931.
The return during the 2003 plan year on the actuarial value of assets was 10.3%. The return during
the 2003 plan year on the market value of assets was 21.2%. The history of return on market value of
assets is shown on the following page.
Hewitt Associates 21 2004_PRPV AL.DOCXP/03A 12/2004
Experience c continued)
Asset Return
The table below shows the actual and assumed rates of return on the market value of assets over the
past several years.
The rates of return have been developed by assuming benefits and expenses are paid uniformly
throughout the year and contributions made after the plan year are paid at the end of the year. The
rate should be used in analyzing trends in actuarial experience, but is not appropriate for comparisons
external to the actuarial report.
The rates of return prior to 1996 are taken from the January 1, 1996 valuation report by the previous
actuary.
Actual
Cumulative Assumed
Year Annual Average Return
2003 21.2% 10.2% 8.00%
2002 -7.5% 9.6% 8.00%
2001 -7.9% 10.8% 8.00%
2000 -0.4% 12.1% 8.00%
1999 28.4% 13.1% 8.00%
1998 17.3% 12.0% 8.50%
1997 15.9%1 11.5% 8.50%
1996 16.7% 11.1% 8.75%
1995 21.8% 10.6% 8.75%
1994 -0.6% 9.5% 8.75%
1993 14.4% 10.8% 8.75%
1992 6.0% 10.3% 9.00%
1991 19.6% 11.0% 9.00%
1990 -1.6% 9.3% 9.00%
1989 21.0% 12.2% 9.00%
1988 14.7% 9.5% 8.3%
1987 3.2% 7.0% 8.3%
1986 10.9% 10.9% 8.3%
I The method for determining the annual rate of return changed effective January 1, 1997, and the return under the new method is
shown for all subsequent years.
Hewitt Associates 22 2004_PRPV AL.DOCXP/03A 12/2004
Accounting Requirements
Accounting Information Under SFAS No. 87
The Financial Accounting Standards Board issued Statement No. 87 (Employers' Accounting for
Pensions) and Statement No. 88 (Employers' Accounting for Settlements and Curtailments of
Defined Benefit Pension Plans and for Termination Benefits) in December 1985.
The expense and disclosure portions of Statement No. 87 are effective for fiscal years beginning after
December 15, 1986. The balance sheet and non-U.S. plans portion of Statement No. 87 are effective
for fiscal years beginning after December 15, 1988. Statement No. 88 is effective upon adoption of
Statement No. 87.
Statement of Financial Accounting Standards No. 132 (Employers' Disclosures about Pensions and
Other Postretirement Benefits) was published in February 1998. Statement No. 132 amended the
disclosure requirements of FAS Statements No. 87 and 88. The disclosure requirements under
Statement No. 132 first became effective for fiscal years beginning after December 15, 1997.
Statement No. 132 was subsequently revised in December 2003. All but one of the new disclosure
requirements under Statement No. 132 (revised 2003) are effective for fiscal years ending after
December 15, 2003. Disclosure of estimated future benefit payments is effective for fiscal years
ending after June 15, 2004.
PacifiCorp adopted the expense and disclosure portions of Statement No. 87 in 1987 based on a
December 31 measurement date. The next several pages contain the results determined under
Statement No. 87, as amended by Statement No. 132, for footnote disclosure in the 2004 financial
statements and net periodic pension cost determination for fiscal year 2005.
Hewitt Associates 23 2004_PRPV AL.DOCXP/03A 12/2004
Accounting Requirements (continued)
Financial Position During 2004 U oder SF AS No. 87
Disclosed
March 31, 2004
Projected Benefit Obligation $ (1, 181, 706,000)
Plan Assets at Fair Value 733,243,000
Funded Status $ (448,463,000)
Unrecognized Net (Gain) Loss 369,209,000
Unrecognized Prior Service Cost 8,815,000
Unrecognized Net Transition 24,361,000
(Asset) Obligation
Prepaid (Accrued) Pension Cost $ ( 46,078,000)
Net Periodic Pension Cost
4/1/2004-
3/31/2005
Service Cost Component $ 24,900,000
Interest Cost Component 70,857,000
Expected Return on Assets (77,670,000)
Amortization of:
Unrecognized Net (Gain) Loss 8,384,000
Unrecognized Prior Service Cost 897,000
Unrecognized Net (Asset) Obligation 8,407,000
Net Periodic Pension Cost (Income) $ 35,775,000
Expected Employer Contributions $ 61,555,000
Expected Benefit Payments $ 96,000,000
Hewitt Associates 2004_PRPV AL.DOCXP/03A 12/2004
Accounting Requirements (continued)
Determination of Market Related Value of Assets
Market Related Value of Assets have been determined as the market value of assets adjusted to
spread asset gains and losses after January 1, 2000 over five measurement periods. This method of
determining assets is an acceptable method under current FAS 87 and is designed to reflect a
relatively stable, long-term growth of assets.
January 1, 2004
(1) Market value of assets, January 1, 2004
(2) Amount of Asset Gain/(Loss) Deferred
(a) 20% of Gain/(Loss) from April 1, 2000 to
December 31, 2000 of $(30,862,971)
(b) 40% of Gain/(Loss) from January 1, 2001 to
December 31, 2001 of $(247,483,829)
(c) 60% of Gain/(Loss) from January 1, 2002 to
December 31, 2002 of $(152,823,874)
(d) 80% of Gain/(Loss) from January 1, 2003 to
December 31, 2003 of$47,559,993
(e) Total
(3) Market related value of assets, January 1, 2004
(l)-(2)(e)
$ 733,243,461
$ (6,172,594)
(98,993,532)
(91,694,324)
38,047,994
$ (158,812,456)
$ 892,055,917
(Gain)/Loss Subject to Amortization for 4/1/2004 - 3/31/2005
Corridor Test
(a) Total (Gain)/Loss
(b) Nonamortizable Portion of Asset (Gain)/Loss
(c) (Gain)/Loss Subject to Corridor, (a)-(b)
Corridor Limit
(d) 10% of the Greater of Projected Benefit Obligation and Market-
Related Value of Assets
(e) (Gain)/Loss Subject to Amortization, Excess of (c) Over (d)
( f) Average Remaining Service (Years)
(g) Amortization Payment ( e) 7 ( f)
$ 369,209,000
158,812,456
$ 210,396,544
$ 118,170,600
$ 92,225,944
11
$ 8,384,177
Hewitt Associates 25 2004_PRPV AL.DOCXP/03A 12/2004
Accounting Requirements (continued)
Alternative Amortization Method
As permitted under Paragraph 26 of Statement No. 87, the amortization of any prior service cost is
determined using a straight-line amortization of the cost over the average remaining service period of
employees expected to receive benefits under the Plan.
Initial
Date
Balance
4/1/2004
Remaining Annual Net
Period Amortization Payment
Transition Obligation/Assets
UP &L Transition 1/1/1987 $ 12,622,108
DCP Transition 1/1/1987 11,738,806
$ 24,360,914
Prior Service Costs
Plan Change Local 57 4/1/2000 $ (5,912,751)
COLA 4/1/2002 14,727,272
$ 8,814,521
(Gain)/Loss
2004 Loss 4/1/2004 $ 92,225,944
4.83
2.02
8.00
9.00
11.00
$ 2,611,470
5,795,397
$ 8,406,867
$ (739,094)
1,636,364
$ 897,270
$ 8,384,177
Hewitt Associates 26 2004_PRPV AL.DOCXP/03A 12/2004
Personnel Information
This section contains data on personnel submitted for the actuarial valuation. The information is
organized to be useful for a variety of purposes:
• Counts of plan participants and averages of age and service provide quick comparisons of the
differences from year to year in the employee group.
• The detailed information on personnel by age and service isolates the number of participants
eligible for specific employee benefits. For example, if participants with 15 or more years of
service are to receive additional vacation, this distribution indicates the number of participants
currently eligible for additional vacation and the number potentially becoming eligible for
additional vacation in each of the next several years.
The actuarial valuation was based on personnel information from company records. The following
table shows the number of participants by category and the number of vested active participants:
Personnel Summary
January 1, 2003 January 1, 2004
Active Participants
Vested 3,429 3,593
Nonvested 896 928
Subtotal 4,325 4,521
Vested Terminations 1,224 1,344
Retirees and Beneficiaries 4,407 4,254
Total Number of Participants 9,956 10,119
Hewitt Associates 27 2004_PRPV AL.DOCXP/03A 12/2004
Personnel Information (continued)
Personnel Characteristics of Active Participants
The following characteristics of active participants, both male and female, are presented: number of
employees, average age, and average service.
Number of Active Participants
Males
Females
Total
Average Present Age
Males
Females
Total
Average Years of Service
Males
Females
Total
January 1, 2003
3,249
1,076
4,325
46.9
42.9
45.9
17.0
10.9
15.5
January 1, 2004
3,403
1,118
4,521
47.3
43.4
46.4
17.2
11.1
15.7
Compensation
Total
Average $ 65,819
$
$
314,691,126
69,607
$ 284,667 ,452
Valuation Compensation
Total
Average
$ 296,988,646
$ 68,668
$
$
320,201,382
70,825
Hewitt Associates 28 2004_PRPV AL.DOCXP/03A 12/2004
Personnel Information (continued)
Personnel Characteristics of Inactive Participants
January 1, 2003 January 1, 2004
Terminated Vested Participants
Number
Average Age
Average Monthly Benefit
Retirees and Beneficiaries
Number
Average Age
Average Monthly Benefit1
' Includes DCP Benefit.
Hewitt Associates 29
1,224
50.1
$ 1,067
4,407
70.5
$ 1,294
1,344
50.9
$ 942
4,254
71.4
$ 1,292
2004_PRPV AL.DOCXP/03A 12/2004
3S 2S 15 10 sa,viCE
YE,\RS f'.;.: Sc:R. ,; l('E 0 -- � 10 ts Zll 2� JO l.� 4b� i\1 r T F ! I � DISTRIBUTION OF PF.RSONNEl, • 5
BY AGE AND YEARS OF SER\llCF. I
i ?j-;>,,, '.Li :.:, r',.·;.-:- <:
,.N?. l:'ACL.Fll'.ORP R�TJREMENT PLAN l
! 1. ACTlVh l'ARTICJPAl'fl'S l - --· 0 ' 2 (",{,· 2 t � ! i �'<� a 1 1 l .. This distribution shows personnel by age last 4 2 & ;....!� I 7 ) ' � ' birthday and completed years of service as of g 7 11 i"'-.".I 9 7 1 4 2 1 t 0110112004. For instance, the cell at age 2 t and I 13 1.2 25 ,,;,. 10 1, 1 4 s (,",(, I year of service contains I employee. 19 tR 35; 1
&? �>'- ·" 10 131 1 4 e g . Individual careers progress along a diagonal 25' 17 42! 1t� F.'":� : 1 4 8 4 4 (stair-step) line; e.g., all employees hired al age 22 17 :n .:,,, .::.� lB 10 l s 8 6 1 25 appear on the diagonal which starts at age 2!I 26 SS
12 1-4 i""a .. '.:!� :22 E s 4 1 1• 25 with 0 service and runs through 26 and 1, 36 511 �-,.:. "'-4 •s � 8 10 3 5 5 6 2 z 3. 1 27 and 2. etc. v 18
11 16 2 4 3� I 1l l 2 , 2 !"'"' .,., 26 SJ
;�� ! sz:� . The average age of this group is 46.4 and the 13 16 3 � 2 6 6 • 2 1 ' 1 1 :!!I 25 64 � ! .;· . .,.,,. average service is 15.7. 11 2i) 4 tn 6 10 8 • 2 � 1 1· I 1 56 30 � � .... � 11 17 2 5 s 9 T 2 3 B 2 1 A 2 "3:! 11 �"-'' ,,1 18 ;,r. rc>:-!"I 87 � I 6 5 5 5 2 3 1( a 2 � 3 l t 57 30 !'-� • .., -� :;r.;.:.. · w s 1 �- 4 4 3 � a 1 l I • q ? I • 43 19 82
g -·� s'� 3 ;,:-;,, u � 4 .I s 4 2 � 4 I 2& 70 �". 1 3 6-� I I· � !,:·�<; 10 11 E 11 s 3 4 s I 2 3 I 56 30 "" sf'� 10! IC 2: 5 ,4 ""-, I 3l ·!.� .57 . 11 H 2 3 ' • 2 6 2 2 1 32 8<.l ;.,.._,.';,_ . 8 :,,r �;;� l7 9S � ? IS 4 10 5 5 3 3 5 5 2 5 3 2 ' 5 :, 4 1 2 61
&-: . ,r� �:<>,_ s 13 • 3 10 ' 3 ' 2 .I .1! � 7 1 3 9 3 2 1 8 � 1n :w '°' ��1 !!-� ,i �' 3 s 4 3 1.2 4 ' I. 5 s 7 3 1 1 1 10 9 5 8 g a 79 <l2 121
! 3�1 2 �� 31 -:.�.,-.· u 12 a 12 11 8 • 7 5 4, 3 2 s 3 7 3 15 T 1, 5 121 :II ID
! ,s-.z., 91 3�
.,.,-;
9 11 8 4 8 4 1 1 1 6 5 3 2 t 2 7 7 5 17 13 12 ;o 4 119 se 1&9 �� 21'-"g_ 64 �<:!; 2081 - ! I 4 5 6 s 5 4 6 7 7 2 l 3 4 16 10 1S 18 "" 16 10 1 ,,�, D
"<"';· l ff .... ,Ii'.•·� -� " 11: 4 2 7 3 3 s 2 5 5 ! 3 2 6 3 3 9 2 24 2S ?? e 8 8 2 '158 '.IO """
1. ····j1 l 1 7 g e s 2 5 1"'\ s 1 3 6 s 4 e 15 9� ,1 ' Z6 , •. 11 e' 4 2 r-=< 176 ,(7 I?"'
9 ;.1 2 ·� 8 IO 11 . 11 .,, 9! ! = ; .9 3 4 2 ' 3 4 1 6 2 S• i 9 25' 211 15 l4 3 2 11111 49 1?'111 "�--� 3 si 4 . ,w., � 2i 8 ' 10 18 15 .::{§ 18. 121 ,:.,:-;: «: rTI') � g .a 6 9 1. 6 7 -4 1 16 c s 4 2 192 � ��a.:< :ii 8 2 2 ,...,5 3! q 10 te '}�19 15 10 5 .. ·, 161! 43 m·� s 11) 4 1 5 1 9 2 5 T 4 7 6 7 6 s 7 I
3 3 J 3 ""�i � � -� 17 �� 16 4 �<!.� ! 'l!IO 51124; 3 2 " 3 5 4 5 3 ' 6 2 7 6 9 19 14 16 IS . 13 II g 6 I � I 2�1 g"fi !<"',�· i I � 2 2 1 ! " � ,: 1 3 3 1 :t 91 ' :t 14 1� ts 7 3 9 15 8 � 3 2 I 1>7 35 jll,
6 4 !I 3 "l;S:� 1 2 2 • ' 1 2 3 � .,.-;ii s 7 4 13 t2 IS 10 12 1, ""1 11 11 s ' 1 1 �� I 171 3' 5 14 2:10
6 g 1 � 10 � :it"'-'; s 1 4 1 2 R 4 ..,r·� s g l7 7 11 .,., R ta eF-ii u 16 u g 7 1 , 7.-", f'>'YT .all 1 ..... ,l
3;:%2°> w.� I fl�· R� :�. -'� s: , 1 ] ] 5 � 4 1 � ! 4 2 3 1 2 a• 12 6 � 16 17 18 11 n 1] 11 13 u 12 8 . 4 2 4 ,.,.... .... f'� �, �� � :,
1 ] 4 3 3 3 1 I 3 2 4 4 2 2 3 3 4 2 " 6 6 13 6 n 7 ii 2 5 6 4 2 ] '.I 2 1 '"" ?O 1«t!
60.:3 � 2 1 2 2 2 3 1 -� ' 8 2 1 1 -,,:,«, s.s: 11 i;s' z 3 3 2 3 2 2 1 4 3 1 2 1
i .,,,..,,,. 2 -:-..-� 1: 2�i 2 l"1 11 l2i 1 ' I I 1 l ' 4 2 3 1 1 4 :,g
.i.t::-:; 2 F�� ,x,:,; 3 �>� 11 I I ' 2 2 3 1 2 3 2 1 2 2 1 I j 3 5 3 I 2 l : 319 so " --�µ �!? 2 I 1 ·'"''1 ' ' 6,.,,.,2 �,,.a. I 2 21i 7 35 i 0-- -- . ..l I 2 2 1 2 I I
.. ""' ,! lf-7.1 ·� Ir.;.,-;, 3 2 I 1 1 2 2 I 1 ! 1 t 1111 7 25 :��"; : ··- �'<- :?7,.i-: ;&I 19i I 1 3 I I 1 I, ' I I 1 1 I �
1 2 2 :"'· .. · 1 1 '} ·�-:� ,l 2 , ;:-·�· i ":.i._.:.:: ,sl 1 13 2
1 "-"i 1 ""'7; ! l(c7 l �,· 1 1 3 2 1 1 1 1 1 , .. 13 & 171 ' . '"', .-�� r.,.;.,...., ! p;;,-", §!� ' 2' 1 1 '.1 ' $ . .;7u �� �'"4 ·:,,
' . ,! . . I 1
1 i l . ps!><i W- .-.� I 3 3 ' I ! JX, f""' � ... � 1 1 l . �:{(. ··� f,x:,; i ! 7 11 �:,:,; ...,.., �- 2li • t I 1 , • a! S9 . ..
1,-.. 1\_)Q � 64 M 122 109 52 ti! BS 88 18 41) st 41 51 12tl !1 90 82 199!11l8 m 131 1'2 l23 83 87 77 73 '8 28 20 " 1 • I I 2 ·- l .. 90 144 41 78 K1 79 ui 24 '" 28 Z1 38 28 25 20 23 25 30 34 2t 19 .u! .& "" 2, 1!! 11 �� 4 7 s 1 2 I 1 I 111!
1' •290 '.U.'I 108 171 :!QI 111& �:J7 SS 88 t.r\ ""' 116 106 G5 71 � 15 156 121 111 101 2.a!m 248 1S1 151 ™ 94 et 84 78 4!I 28 22 t� 7 5 1 2 3 B21
4 II
3 0
I $
:! 5
30
Distribution of Personnel by Age PACIFlCORP RETIREMENT PLAN
ACTIVE PARTICJPANTS
Age:
20%
15%
10%
5%
i5-19 20-24 25-29 3.S-39 40-44 45-49 50-54 SS-59 60-64 65+ Total
..... -···· ··-··-· ·-. - -·--·-- ·--·-·· ·- .. -·---· ...... --- -·-··--·-·---. - --
Numb et" 0 50 229 .,25 .196 649 1,!)!!9 1.131 529 111 12 4,521 ···- ··--··- ..... A,e1� 0 39.273 49,766 60,3-!9 68,656 72!223 75/J78 72.943 66,il3 57,536 52,413 69,607 Pav ..... . ···-· ···-·-·-··- ----··--- Average 0.0 Z.8 3.7 " " 7.4 12.6 18.2 21.1 22.0 17.0 ?.3 15.7 s.�Ic; ________ .,.4
Detail Of Employees :55 & Over
A� 5.'i 56 57 58 59 6C 6i 62 63 64 65 664- ... - -·· - ......... ·-· .. .. .. ··------·--- -----·--------··
Number 235 142 66 36 50 35 ZS 19 15 17 5 7 ···--· ·-··- .. ·- ·····-·· ·-··----·- • Average 69.594 til.084 67.119 71.748 69.749 59.690 57.685 60.999 47.685 57,702 54,843 50,676 pay ------- Averaae 23.8 21.7 17.6 24.8 18.0 19.8 16.? rz.s l"� 12.2 7.1 7.3 Sen·ice �-I
}l
Distribution Of Personnel
By Expected Service At Age 65
(Based t Jpon Personnel Age SS And Over)
l'AClFICORP RETIREMENT ¥LAN
ACTIVE PARTICIPANTS
Service:
10% ···-
5%
5-9 10..14 15-19 20-24 25-29 J()..34 35-39 40-44 45+ Total
Number 4 39 67 59 62 79 134 118 77 13 652 ------------·-·-·--·---· - ·--·-·-·---- .... - . -· ·-----··· .. -········-····---·-· -···· - ···-·-
282 46.0 37.2 321 27.9 22.3 17.4 12.6 r.s 2.9
Average Pa. 47,4�4 60,938 71,:'iB 62,?43 61,W> 61,187 67,54:1 67,9'.!8 74,495 69,706 f.6;i.% �<---------------·-·-····· --·-············"····· - . ·-··· -- - ---- . ···- ···--··-·-··--······- ·-··· ·---·····--·-·---· ----··-··- ··-···· Average Service A� Ar.eC.5 ..
� Or Current l\ge If Oldt.'T
32
Average Compensation By Age PAClFICORP RETIREl\fENT PLAN
ACTIVE PARTICJPA.i.'ffS
STi,000 ---·-·· . ······ T ... ····-··· _
I
I
-�
/ ' / '\ T �� . \ I \ I \
J ··-···-·---1---····· I .
i \ I \ I \ I \ I ' t \ I
�----. ----·
556,0"JO
$63,000
$70,()0lJ
$49.000
I I i I ------'""�-----I'-------··· -··· ·- - .. ·-···--·-·· -- .. ···- -· ······- -·. ··-·· ·- -···. ·-··· ·-·--··---·
$42,000
I I I f f ---------·-·-··· ························ ._ ·- ············-· . . . - ·-····- - ·····-···. -·· --
: ; =1 ;/ " 'i
40-44 45-49 >---------· -y-···- ·-. . . . ··: .... 25�29 30-34 35.39 A"�· J:':\...
$35,000 ----· 20-24
33
A vcrage Comperusation Ry Service
581,000 -- ·-,··--- -·--- ··-· - ..... . . . - ...... _ ..... -·- ·- ·-· -----
PA CIFICORP RETlRE.l.\-iENT PLAi"'I
AC1'IVR PARTICIPANTS
i
$75.000 I ---- ------�---··--·· .. -·--· -·--· ---·· ...
$63.000
557,000
$51.000
./\ .: // \ ·-·- -···-······-·------·-·---·-----·-------+--------+------ // \ / \ , \ /// \
; \
.. l i t \ \ \ l. \ \ t \ \ \
\ \ \ i
\
$45.000 ------------· ,. _
Service: 0-4 5-9 15-19 20-24 25-29 30-34 35-39 10-14
34
Plan Provisions
Effective Date
Participation
Eligibility for Benefits
Normal
Early
Deferred
Disability
Preretirement Death
Postponed
Amended and restated effective January 1, 1994; most
recently amended effective December 31, 2002.
Any employee, other than a casual or leased employee, of a
participating company shall become a participant on the
first of the month following the completion of one-year of
service and attainment of age 21.
Attainment of age 65.
• Attainment of age 55 and the completion of 5 years of
service; or
• At least 7 5 points ( age plus years of service).
Completion of 5 years of service.
Completion of 10 years of service, and disabled.
Completion of 5 years of service.
Retirement after attainment of age 65.
Hewitt Associates 35 2004_PRPV AL.DOCXP/03A 12/2004
Plan Provisions c continued)
Retirement Benefits
Normal Monthly benefit equal to the greatest of (1), (2), (3), (4), and
( 5); plus the DCP benefit.
(1) The Basic Benefit plus the Excess Benefit, plus the
Additional Service Benefit;
Basic Benefit= 1.3% of Final Average Pay times
Benefit Years up to a maximum of
30.
Excess Benefit= 0.65% of Final Average Pay in
excess of Social Security Covered
Compensation, times Benefit Years
up to a maximum of 30.
Additional 0.25% of Final Average Pay times
Service Benefit = Benefit Years in excess of 30.
(2) Monthly benefit under the Utah Power and Light
Company Retirement Income Plan on the New
Formula Date, as follows:
• 12/31/90 for union employees; or
• 12/31/89 for non-union employees; or
• the date of transfer from union to non-union status
for employees making this transfer during 1990.
(3) Short service factor (SSF) x Benefit Years up to 20,
plus the long service factor (LSF) x Benefit Years in
excess of 20, where:
Annual Salary Rate
on New Formula Date SSF LSF
Under $25,000 $35 $15
From $25,000 to $35,000 $50 $20
Over $35,000 $60 $25
(4) Monthly benefit earned under other groups that were
merged with the Plan.
Hewitt Associates 36 2004_PRPV AL.DOCXP/03A 12/2004
Plan Provisions c continued)
Retirement Benefits
( continued)
Early
(5) For members of the IBEW Local 57 who are age 50 or
older and in active status on July 1, 1999:
1.67% of Final Average Pay times Benefit Years up
to a maximum of 30 plus 0.50% of Final Average
Pay times Benefit Years in excess of 30.
The DCP benefit is the monthly benefit payable to former
participants of the Utah Power and Light Deferred
Compensation Plan.
A benefit computed in the same manner as a normal
retirement benefit based on compensation and benefit years
at the time of termination. This benefit is paid without
reduction if deferred to age 65 or reduced if payments
commence before age 65. The applicable early retirement
factors vary depending upon which benefit formula
predominates.
For Formula (1 ), the Basic Benefit is reduced under the
Higher Percentage table if the participant terminates with 75
or more points, otherwise the Lower Percentage table is
used; the Excess Benefit is reduced under the Lower
Percentage Table and the Additional Service Benefit is
reduced under the Higher Percentage table.
Age at Benefit
Starting Date Higher Percentage Lower Percentage
64 100.00% 92.00%
63 100.00% 84.00%
62 100.00% 76.00%
61 96.00% 72.00%
60 92.00% 68.00%
59 88.00% 64.00%
58 84.00% 60.00%
57 80.00% 56.00%
56 76.00% 52.00%
55 72.00% 48.00%
54 64.63% 43.09%
53 58.09% 38.73%
52 52.29% 34.86%
51 47.12% 31.42%
50 42.52% 28.35%
Hewitt Associates 37 2004_PRPV AL.DOCXP/03A 12/2004
Plan Provisions c continued)
Retirement Benefits
( continued)
Def erred Vested
Disability
For Formulas (2) and (5), the reduction factor is 4% per year
below age 65 if the participant has less than 30 years of
service; otherwise, the reduction is 4% per year below age
64. For retirement between ages 50 and 55, the reduction
factors are the same as the terminated vested factors.
For Formula (3 ), the reduction factors are based on the
factors in the Higher Percentage table listed above.
For Formula ( 4 ), the reduction is based upon the applicable
early retirement factor for the frozen benefit that was
merged with the Plan.
The DCP benefit is also reduced for early commencement
under a schedule that approximates actuarial reductions
from age 65.
A benefit computed in the same manner as a normal
retirement benefit based on final average compensation and
benefit years at the time of termination. This benefit is paid
without reduction at age 65 or actuarially reduced for early
commencement.
A benefit computed in the same manner as a normal
retirement benefit based on final average pay and benefit
years at the time of disability. This benefit is paid without
reduction if deferred to age 65 or reduced in accordance
with the early retirement table if receipt is commenced
earlier.
Hewitt Associates 38 2004_PRPV AL.DOCXP/03A 12/2004
Plan Provisions c continued)
Retirement Benefits
( continued)
Preretirement Death
Postponed Retirement
If death occurs before age 55, the vested participant's
spouse will be eligible to begin receiving a life annuity or
lump sum immediately or may defer payment until the time
the participant would have become age 55. If deferred to
age 55, the benefit amount will be equal to the amount the
spouse would have received if the participant had separated
from service on the date of death or on the actual date of
termination, if earlier, survived until age 55, and then died
with a 50% joint and survivor benefit in effect.
The spouse of a participant who dies while employed after
age 55 or after completing 30 years of service shall receive
a life annuity equal to the benefit which would have been
paid if the participant had retired on the day before his death
with a 50% joint and survivor benefit in effect. In the case
of death of a participant with 30 years of service before age
55, the participant is assumed to be age 55 in determining
the applicable early retirement reduction factors.
Preretirement death benefits of terminated vested
participants are the same as those for active participants
except that the benefit is reduced for the cost of death
protection after the date of termination of employment.
Participants may elect out of this coverage at the time of
termination with spousal consent.
A benefit computed in the same manner as a normal
retirement benefit.
Hewitt Associates 39 2004_PRPV AL.DOCXP/03A 12/2004
Plan Provisions c continued)
Definitions
Year of Service
Benefit Year
Compensation
Final Average Pay
Social Security
Covered Compensation
Plan Year
12-month period during which an employee is in continuous
employment with the company or an affiliate.
Years of service while a participant. Any participants who
complete less than a full year of service receive fractional
credit.
Compensation includes all nondeferred compensation
reportable on Form W-2 except the amounts shown below,
plus salary reduction amounts elected by the participant
under a qualified cash or deferred arrangement or a cafeteria
plan. Excluded items are:
• Bonuses in excess of 10 percent of base salary,
determined before reductions in base salary for
nonqualified deferred compensation;
• Overtime, premium pay, shift and location differentials;
• Imputed income from expense reimbursement or fringe
benefits;
• Commissions that are in lieu of participation in a bonus
program or that do not accompany a discounted salary
rate;
• Other items such as prizes and awards, severance
payments, long-term incentive pay.
As of January 1, 2004, compensation for purposes of
calculating qualified plan benefits is limited to $205,000 in
accordance with IRC section 401(a)(l 7).
Average monthly compensation in the 60 highest
consecutive calendar months of the last 120 calendar
months of employment.
The covered compensation amount for a person with the
participant's Social Security retirement age.
January 1 to December 31.
Hewitt Associates 40 2004_PRPV AL.DOCXP/03A 12/2004
Plan Provisions c continued)
Contributions
Normal Form of Benefits
Optional Annuity
Forms of Benefit
Lump Sum Benefit
Cost of Living
Adjustment
The plan is paid for by the company. No participant
contributions are allowed other than amounts previously
transferred from plans that merged with the Plan.
An unmarried member receives benefits payable as a single
life annuity. A married participant retiring from active or
disabled status receives a 50% joint and survivor benefit
which is the actuarial equivalent of a life annuity payment.
All other benefits are provided on an actuarial equivalent
basis to a life annuity.
Level income option, 100% or 50% joint and survivor
options, 10-year certain and life option. All optional forms
are actuarially equivalent to the single life annuity based
upon:
Interest: 9. 00%
Mortality: 1984 Unisex Pension Mortality Table.
The actuarially equivalent lump sum benefit is paid:
• automatically if the amount is not over $5,000; or
• upon request.
The lump sum is based upon:
Interest: 30-year Treasury Rate for the September
preceding the year in which the lump sum is
paid.
Mortality: 1994 Group Annuity Reserving Table per
Revenue Ruling 2001-62.
The amount payable to each participant with no service after
December 31, 1987 is increased each January 1 by the lesser
of:
(1) 2%; or
(2) The percentage increase in the U.S.
Consumer Price Index ( all items)
during the 12 months ending with
the September index preceding
the adjustment date.
Effective May 1, 2002, an ad hoc COLA was granted to
certain pre-1996 retirees.
Hewitt Associates 41 2004_PRPV AL.DOCXP/03A 12/2004
Actuarial Assumptions
Factor
Mortality
Withdrawal Before
Retirement
Retirement
Disability
Investment Return
Assumption
1983 Group Annuity Mortality Table.
Table A.
Table B.
Table C.
Cash Contribution:
8.00% per year (net of investment expenses and net of
0.25% for administrative expenses)
FAS 87 Expense for fiscal year ending March 31, 2005:
Discount Rate: 6.25%
Salary Scale
Social Security Taxable
Wage Base Increase
Maximum Benefit
Limitations
Lump Sum Interest Rate
Long-term Rate of return: 8.75% (net of investment
expenses and net of 0.25% for
administrative expenses)
Cash Contribution:
5.0% per year.
Expense:
4. 0% per year.
Cash Contribution:
4.5% per year.
Expense:
4. 0% per year.
Cash Contribution: Limit at Social Security Normal
Retirement Age for 2004 is $165,000; no increase permitted
under IRC section 412.
Expense: The 2004 IRC section 415 annual benefit limit of
$165,000 is assumed to increase at 4% per year thereafter
(preretirement and postemployment increases reflected).
Cash Contribution:
150 basis points less than the Investment Return
assumption.
Expense:
100 basis points less than the Discount Rate.
Hewitt Associates 42 2004_PRPV AL.DOCXP/03A 12/2004
Actuarial Assumptions (continued)
Factor
Lump Sum Mortality
Percent Electing Lump Sum
Compensation Limitations
Death Benefits
Valuation of Assets
Actuarial Method
Assumption
1994 GAR as modified for use in Revenue Ruling 2001-62.
50% of normal and early retirement eligible active
employees are assumed to elect a lump sum when they
retire. All pre-retirement, post-decrement benefits are
assumed to be paid as a lump sum.
Cash Contribution: Limit for 2004 is $205,000; no increase
permitted under IRC section 412.
Expense: The 2004 IRC section 40l(a)(l 7) annual
compensation limitation of $205,000 is increased 4% per
year thereafter.
80% of participants are assumed to be married. Males are
assumed to be 3 years older than their spouses.
The market value is written up at the expected return on
asset assumption (8% for Cash Contribution, 8.75% for
Expense) and 20% of each of the preceding five years' asset
gains or losses are captured. For Cash Contribution, the
asset value determined under the method will be adjusted to
be no greater than 120% and no less than 80% of the fair
market value.
Projected unit credit cost method.
Hewitt Associates 43 2004_PRPV AL.DOCXP/03A 12/2004
Actuarial Assumptions (continued)
Table A
Rates of Withdrawal
Male and Female
Age Factor Age Factor
20 0.13250 40 0.05250
21 0.12800 41 0.04900
22 0.12350 42 0.04550
23 0.11900 43 0.04200
24 0.11450 44 0.03850
25 0.11000 45 0.03500
26 0.10550 46 0.03150
27 0.10100 47 0.02800
28 0.09650 48 0.02450
29 0.09200 49 0.02100
30 0.08750 50 0.01750
31 0.08400 51 0.01400
32 0.08050 52 0.01050
33 0.07700 53 0.00700
34 0.07350 54 0.00350
35 0.07000 55 0.00000
36 0.06650 56+ 0.00000
37 0.06300
38 0.05950
39 0.05600
Hewitt Associates 44 2004_PRPV AL.DOCXP/03A 12/2004
Actuarial Assumptions (continued)
Table B
Rates of Retirement
Male and Female
Age Factor
55 25%
56 5%
57 5%
58 5%
59 5%
60 5%
61 5%
62 35%
63 10%
64 10%
65 and over 100%
Hewitt Associates 45 2004_PRPV AL.DOCXP/03A 12/2004
Actuarial Assumptions (continued)
Table C
Rates of Disability
Male and Female
Age Factor Age Factor
20 0.00060 40 0.00220
21 0.00065 41 0.00259
22 0.00070 42 0.00298
23 0.00075 43 0.00337
24 0.00080 44 0.00376
25 0.00085 45 0.00415
26 0.00090 46 0.00454
27 0.00095 47 0.00493
28 0.00100 48 0.00532
29 0.00105 49 0.00571
30 0.00110 50 0.00610
31 0.00121 51 0.00712
32 0.00132 52 0.00814
33 0.00143 53 0.00916
34 0.00154 54 0.01018
35 0.00165 55 0.01120
36 0.00176 56 0.01222
37 0.00187 57 0.01324
38 0.00198 58 0.01426
39 0.00209 59 0.01528
60 0.01630
61+ 0.00000
Hewitt Associates 46 2004_PRPV AL.DOCXP/03A 12/2004
Actuarial Assumptions (continued)
Discussion of Actuarial Assumptions and Methods
Ultimate Cost
The ultimate cost of a pension plan can be measured only when the obligation to all participants has
been fully discharged. The cost will then be:
The benefits paid from the plan
plus
administrative expenses
less
investment gains
plus
investment losses.
The actuarial process assigns pension costs to the current year by estimating, based on both current
and future service, the benefits to be paid to current plan participants. These estimates are determined
through an actuarial valuation which uses three basic elements to project payments from the plan:
• Benefit provisions of the plan.
• Data on the present work force, terminated vested, and retired employees.
• Certain predictions ( actuarial assumptions) about the future as it applies to this work force.
Actuarial Assumptions
The first step in the actuarial process is to determine the magnitude of the pension liability by
determining the benefits expected to be paid. To determine how many employees will become
eligible for benefits, what benefits will be paid, and how long benefits will be paid, it is necessary to
make some economic and demographic predictions (usually called actuarial assumptions) such as:
• An assumed retirement age predicting when employees will begin to receive retirement benefits.
• A mortality rate predicting the number of employees who will die before retirement and the
duration of benefit payments after retirement.
• A withdrawal rate predicting the number of employees who will leave the work force before
retirement. (Sometimes certain kinds of withdrawal such as disabilities are predicted separately.)
• If the benefits are based on compensation, an assumed rate of pay increases predicting employees'
compensation in future years.
Hewitt Associates 47 2004_PRPV AL.DOCXP/03A 12/2004
Actuarial Assumptions (continued)
These assumptions are applied to the data for each employee to predict the amount of benefits
expected to be paid each year in the future. The total future benefit payments in each year are then
discounted at a selected interest rate to determine the current amount which with future investment
return, will be sufficient to pay the expected benefits as they become payable. The discounted
payments are usually called the present value of future benefits.
Total Future Benefit Payments
Future Investment
Return Present Value of Future Benefits
Actuarial Method
The actuarial method is the mathematical process which determines the contributions required to pay
for the present value of future benefits, by allocating costs to the years of an employee's career.
Some costs are allocated to future years in an employee's career (future service liability) and other
costs are allocated to past years (past service liability).
Total Future Benefit Payments
Future Investment
Return Present Value of Future Benefits
Future Service
Liabilit
Past Service
Liabilit
There is a fair amount of flexibility in this allocation of costs between future and past. Some methods
assign relatively little cost to past years in an employee's career, others assign a more significant
portion to the past. All methods produce allocations of contributions which will accumulate to an
amount sufficient to provide the benefits at retirement. However, the various methods produce
widely different allocation of contributions to past and future employment.
Hewitt Associates 48 2004_PRPV AL.DOCXP/03A 12/2004
Actuarial Assumptions (continued)
Many actuarial methods are acceptable under the Employee Retirement Income Security Act of 1974
(ERISA) for calculating cash contributions. However, once an actuarial method has been selected
and filed for minimum funding purposes, a change in method may be made only if approved by the
Secretary of the Treasury or his delegate. The Secretary has granted automatic approval for some
changes in actuarial method.
Usual terminology refers to the future allocation as the present value of future normal costs and the
past allocation as the accrued liability.
The portion of the accrued liability which is not covered by the assets of the plan is called the
unfunded accrued liability. The value of the assets used in the actuarial process under ERISA must
take into account fair market value, but this may be done in a way which eliminates much of the
short-term fluctuation of market value from one valuation to the next.
Total Future Benefit Payments
Future Investment
Return Present Value of Future Benefits
Future Service
Liabilit
Present Value of Future
Normal Costs
Past Service
Liabili
Unfunded Accrued
Liabilit Assets
For the current year, the method produces a normal cost. Payment of the normal cost each year
would eventually discharge all future service liability.
Hewitt Associates 49 2004_PRPV AL.DOCXP/03A 12/2004
Actuarial Assumptions (continued)
The unfunded accrued liability must also be discharged, and this is done by an amortization payment.
The amortization payment is flexible, and may be increased or decreased within certain allowable
bounds. The sum of both the normal cost and the amortization payment is the current year's pension
cost.
Total Future Benefit Payments
Future Investment
Return Present Value of Future Benefits
Future Service
Liabilit
Present Value of Future
Normal Costs
Past Service
Liabilit
Unfunded Accrued
Liabilit Assets
Normal I I Amortization
Cost Payment �-�--�
Current Year's
Contribution
Valuations to determine contributions to the ongoing plan use the Projected Unit Credit Cost
Method.
Under this actuarial method, the cost attributed to past service (past service liability or accrued
liability) is determined on the valuation date as the present value of the benefits actually earned
( accrued) as of that date. The unfunded accrued liability is the amount by which the accrued liability
exceeds the valuation assets.
The current year's normal cost, determined on the valuation date, is the amount required to fund the
benefit expected to be earned in the current year.
Because the value of the future service liability is not used in the calculation of normal cost, it is
often omitted from the actuarial report which may show only an accrued liability.
The calculations for any disability, termination or death benefits take into consideration that the
entitlement to benefits may begin at various future times. Each age prior to retirement has associated
with it appropriate probabilities of disability, termination and death.
Hewitt Associates 50 2004_PRPV AL.DOCXP/03A 12/2004