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«Commission Exact name of registrant as specified in its charter; IRS Employer File Number State or other jurisdiction of incorporation or ...»

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Item 4. Mine Safety Disclosures Information regarding PacifiCorp's mine safety violations and other legal matters disclosed in accordance with Section 1503(a) of the Dodd-Frank Reform Act is included in Exhibit 95 to this Form 10-K.

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Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities MEHC indirectly owns all of the shares of PacifiCorp's outstanding common stock.

Therefore, there is no public market for PacifiCorp's common stock.

In February 2014, PacifiCorp declared a dividend of $500 million payable to PPW Holdings in March 2014.

In 2013 and 2012, PacifiCorp declared and paid dividends of $500 million and $200 million to PPW Holdings, respectively.

For a discussion of regulatory restrictions that limit PacifiCorp's ability to pay dividends on common stock, refer to "Limitations" in Item 7 and Note 15 of Notes to Consolidated Financial Statements in Item 8 of this Form 10-K.

Item 6. Selected Financial Data The following table sets forth PacifiCorp's selected consolidated historical financial data, which should be read in conjunction with the information in Item 7 of this Form 10-K and with PacifiCorp's historical Consolidated Financial Statements and notes thereto in Item 8 of this Form 10-K.

The selected consolidated historical financial data has been derived from PacifiCorp's audited historical Consolidated Financial Statements and notes thereto (in millions).

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following is management's discussion and analysis of certain significant factors that have affected the consolidated financial condition and results of operations of PacifiCorp during the periods included herein.

Explanations include management's best estimate of the impact of weather, customer growth and other factors. This discussion should be read in conjunction with Item 6 of this Form 10-K and with PacifiCorp's historical Consolidated Financial Statements and Notes to Consolidated Financial Statements in Item 8 of this Form 10-K. PacifiCorp's actual results in the future could differ significantly from the historical results.

Results of Operations Overview Net income for the year ended December 31, 2013 was $682 million, an increase of $145 million, or 27%, as compared to 2012.

Net income increased largely due to $87 million of lower net after-tax charges related to the USA Power litigation and certain fire and other damage claims. Excluding these charges, net income increased $58 million as compared to 2012 primarily due to higher retail prices approved by regulators, higher retail customer load and lower natural gas costs, partially offset by higher purchased electricity, lower REC revenue, higher coal costs, higher income tax expense and higher depreciation and amortization expense.

Retail customer load increased 2% for 2013 compared to 2012 primarily due to the impacts of hotter weather in the third quarter and colder weather in the first and fourth quarters, higher industrial customer usage and an increase in the average number of residential customers, partially offset by lower residential customer usage. Energy generated increased 2% for 2013 compared to 2012 due to higher coal- and natural gas-fueled generation, partially offset by lower hydroelectric generation from reduced inflows.

Net income for the year ended December 31, 2012 was $537 million, a decrease of $18 million, or 3%, as compared to 2011. Net income decreased largely due to after-tax charges totaling $102 million in 2012 related to the USA Power litigation and certain fire and other damage claims. Excluding these charges, net income increased $84 million compared to 2011 primarily due to higher retail prices approved by regulators across most of PacifiCorp's jurisdictions and higher retail customer load, partially offset by higher fuel and purchased electricity, the settlement of the Utah general rate case in 2011, higher depreciation expense due to higher plant in-service and lower wholesale electricity revenue. Energy generated increased 3% for 2012 compared to 2011 due to higher coal- and natural gas-fueled generation, partially offset by lower hydroelectric and wind-powered generation.

Operating revenue and energy costs are the key drivers of PacifiCorp's results of operations as they encompass retail and wholesale electricity revenue and the direct costs associated with providing electricity to customers. PacifiCorp believes that a discussion of gross margin, representing operating revenue less energy costs, is therefore meaningful.

A comparison of PacifiCorp's key operating results is as follows for the years ended December 31:

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(1) GWh amounts are net of energy used by the related generating facilities.

(2) All or some of the renewable energy attributes associated with generation from these generating facilities may be: (a) used in future years to comply with RPS or other regulatory requirements or (b) sold to third parties in the form of RECs or other environmental commodities.

(3) The average cost per MWh of energy generated includes the cost of fuel associated with the generating facilities and does not include other costs.





Year Ended December 31, 2013 Compared to Year Ended December 31, 2012

Gross margin increased $159 million, or 5%, for 2013 compared to 2012 primarily due to:

• $259 million of increases mainly from higher retail prices approved by regulators, including a $17 million reduction in 2012 due to a one-time credit provided to Oregon customers for PacifiCorp's investments in certain emissions control equipment at its coal-fueled generating facilities;

• $78 million of increases from higher retail customer load due to the impacts of hotter weather in the third quarter of 2013 and colder weather in the first and fourth quarters of 2013 on residential and commercial customer load, higher industrial customer usage primarily in the eastern portion of PacifiCorp’s service territory and an increase in the average number of residential customers, partially offset by lower residential customer usage;

• $41 million of lower natural gas costs due to lower average unit costs, partially offset by increased generation; and • $8 million of higher net deferrals of incurred net power costs in accordance with established adjustment mechanisms.

The increase in gross margin was partially offset by:

• $98 million of higher purchased electricity due to higher average market prices and lower gains on electricity swaps, partially offset by decreased volumes;

–  –  –

• $61 million of higher coal costs due to higher unit costs and increased generation; and • $7 million of lower wholesale electricity revenue due to lower volumes, partially offset by higher average market prices.

Operations and maintenance decreased $128 million, or 10%, for 2013 compared to 2012 due to $165 million of charges in 2012 related to the USA Power litigation and certain fire and other damage claims, partially offset by $25 million of additional charges for certain fire and other damage claims in 2013. The USA Power litigation is described in Note 13 of Notes to Consolidated Financial Statements in Item 8 of this Form 10-K.

Depreciation and amortization increased $35 million, or 5%, for 2013 compared to 2012 primarily due to higher plant in-service and accelerated depreciation rates for Oregon's share of the Carbon Facility expected to be retired in 2015.

Taxes, other than income taxes increased $9 million, or 6%, for 2013 compared to 2012 primarily due to increased property taxes from higher plant in-service.

Income tax expense increased $100 million, or 51%, for 2013 compared to 2012 and the effective tax rate was 30% and 27% for 2013 and 2012, respectively. The increase in PacifiCorp’s effective tax rate was primarily due to higher pre-tax book income, which reduced the effective tax rate impact of income tax benefits, primarily production tax credits.

Year Ended December 31, 2012 Compared to Year Ended December 31, 2011

Gross margin increased $114 million, or 4%, for 2012 compared to 2011 primarily due to:

• $222 million of increases mainly from higher retail prices approved by regulators net of a $17 million one-time credit provided to Oregon customers as a result of the 2012 Oregon general rate case outcome pertaining to PacifiCorp's investments in certain emissions control equipment at its coal-fueled generating facilities;

• $29 million of increases from lower net deferrals and higher REC sales excluding the impacts of the Utah general rate case settlement in 2011; and • $22 million of increases from higher retail customer load due to the impacts of hot weather in Utah on residential and commercial customers, higher irrigation usage in Idaho and Utah and higher industrial usage in Utah, partially offset by lower industrial usage in Wyoming and Oregon as certain large customers elected to self-generate and lower residential load in Oregon as a result of unfavorable weather.

The increase in gross margin was partially offset by:

• $89 million of higher fuel and purchased electricity due to increased thermal generation, higher cost of purchased electricity and higher unit coal costs, partially offset by lower unit natural gas costs;

• $30 million related to the Utah general rate case settlement in 2011, which provided for the recovery of $60 million of previously incurred net power costs in excess of amounts included in base rates to be recovered from Utah customers over a three-year period beginning June 1, 2012 and for a $30 million credit to customers for the refund of REC sales that substantially occurred prior to 2011 and that was credited to Utah customers' bills over the period from September 2011 through May 2012;

• $22 million of lower wholesale electricity revenue as a result of lower average market prices, partially offset by increased volumes resulting from improved thermal generation availability; and • $19 million of lower net deferrals of incurred net power costs in accordance with established adjustment mechanisms aside from the 2011 Utah general rate case settlement.

Operations and maintenance increased $139 million, or 13%, for 2012 compared to 2011 primarily due to $165 million of charges in 2012 related to the USA Power litigation and certain fire and other damage claims.

Depreciation and amortization increased $29 million, or 5%, for 2012 compared to 2011 primarily due to higher plant in-service.

Taxes, other than income taxes increased $9 million, or 6%, for 2012 compared to 2011 primarily due to increased property taxes from higher plant in-service.

Interest expense decreased $12 million, or 3%, for 2012 compared to 2011 primarily due to lower average interest rates, partially offset by higher average debt outstanding.

Allowances for borrowed and equity funds increased $15 million, or 21%, for 2012 compared to 2011 primarily due to higher qualified construction work-in-progress balances.

Income tax expense decreased $16 million, or 8%, for 2012 compared to 2011 and the effective tax rate was 27% and 28% for 2012 and 2011, respectively. The decrease in income tax expense was primarily due to lower pre-tax book income and the effects of ratemaking, partially offset by lower production tax credits associated with PacifiCorp's wind-powered generating facilities.

Liquidity and Capital Resources

As of December 31, 2013, PacifiCorp's total net liquidity was $932 million as follows (in millions):

–  –  –

(1) Refer to Note 6 of Notes to Consolidated Financial Statements in Item 8 of this Form 10-K for further discussion regarding PacifiCorp's credit facilities.

Operating Activities Net cash flows from operating activities for the years ended December 31, 2013 and 2012 were $1.553 billion and $1.627 billion, respectively. The $74 million decrease was primarily due to cash paid for income taxes in the current year versus cash received for income taxes in the prior year mainly due to reduced bonus depreciation benefits, lower REC sales, higher purchased electricity and lower cash collateral inflows for derivative contracts, partially offset by higher collections from retail customers due to higher prices approved by regulators and increased retail customer load and lower fuel payments.

Net cash flows from operating activities for the years ended December 31, 2012 and 2011 were $1.627 billion and $1.636 billion, respectively. The $9 million decrease was primarily due to higher income tax receipts in 2011 mainly related to 2010 bonus depreciation and higher energy costs in 2012, partially offset by higher retail prices approved by regulators, higher cash collateral inflows for derivative contracts and lower contributions to PacifiCorp's pension and other postretirement benefit plans in 2012.

Investing Activities

Net cash flows from investing activities for the years ended December 31, 2013 and 2012 were $(1.049) billion and $(1.342) billion, respectively. Capital expenditures decreased $281 million primarily due to lower expenditures for Lake Side 2, other operating projects and transmission system investments.

Net cash flows from investing activities for the years ended December 31, 2012 and 2011 were $(1.342) billion and $(1.529) billion, respectively. Capital expenditures decreased $160 million primarily due to lower expenditures for emissions control equipment and other operating projects, partially offset by higher expenditures for transmission system investments and Lake Side 2.

–  –  –

Capital expenditures, which exclude amounts for non-cash equity AFUDC and other non-cash items, consisted of the following

during the years ended December 31:

• Transmission system investments totaling $278 million, including construction costs for the 170-mile single-circuit 345-kV Sigurd-Red Butte ("Sigurd-Red Butte") transmission line expected to be placed in-service in 2015 and the 100-mile high-voltage Mona-Oquirrh ("Mona-Oquirrh") transmission line that was placed in-service in May 2013.



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