COMMITMENTS AND GUARANTEES

Commitments

As of December 31, 2012, PGE’s future minimum payments pursuant to purchase obligations for the following five years and thereafter are as follows (in millions):



	Payments Due
	2013		2014		2015		2016		2017		Thereafter		Total
Capital and other purchase commitments	$	81	$	10	$	11	$	9	$	2	$	72	$	185
Purchased power and fuel:
Electricity purchases	154		83		82		64		36		440		859
Capacity contracts	21		21		20		19		—		—		81
Public Utility Districts	8		8		8		7		5		25		61
Natural gas	55		26		21		12		10		6		130
Coal and transportation	22		9		—		—		—		—		31
Operating leases	9		9		9		10		11		186		234
Total	$	350	$	166	$	151	$	121	$	64	$	729	$	1,581

Capital and other purchase commitments—Certain commitments have been made for capital and other purchases for 2013 and beyond. Such commitments include those related to hydro licenses, upgrades to production, distribution and transmission facilities, decommissioning activities, information systems, and system maintenance work. Termination of these agreements could result in cancellation charges.

Electricity purchases and Capacity contracts—PGE has power purchase contracts with counterparties, which expire at varying dates through 2037, and power capacity contracts through 2016. As of December 31, 2012, PGE has power sale contracts with counterparties of approximately $7 million in 2013 and $2 million in 2014.

Public Utility Districts—PGE has long-term power purchase contracts with certain public utility districts in the state of Washington and with the City of Portland, Oregon. The Company is required to pay its proportionate share of the operating and debt service costs of the hydroelectric projects whether or not they are operable. The future minimum payments for the Public Utility Districts in the preceding table reflect the principal payment only and do not include interest, operation, or maintenance expenses. Selected information regarding these projects is summarized as follows (dollars in millions):



	Revenue Bonds as of December 31, 2012		PGE Share			Contract Expiration	PGE Cost, including Debt Service
	Revenue Bonds as of December 31, 2012		Output		Capacity	Contract Expiration	2012		2011		2010
					(in MW)
Priest Rapids and Wanapum	$	928	9.0	%	181	2052	$	14	$	14	$	10
Wells	238		19.4		159	2018	10		10		7
Portland Hydro	9		100.0		36	2017	4		4		4

Under contracts with the public utility districts, PGE has acquired a percentage of the output (Allocation) of Priest Rapids and Wanapum and Wells. The contracts provide that, should any other purchaser of output default on payments as a result of bankruptcy or insolvency, PGE would be allocated a pro rata share of the output and operating and debt service costs of the defaulting purchaser. For Wells, PGE would be allocated up to a cumulative maximum of 25% of the defaulting purchaser’s percentage Allocation. For Priest Rapids and Wanapum, PGE would be allocated up to a cumulative maximum that would not adversely affect the tax exempt status of any outstanding debt.

Natural gas—PGE has agreements for the purchase and transportation of natural gas from domestic and Canadian sources for its natural gas-fired generating facilities. The Company also has a natural gas storage agreement, which expires in April 2017, for the purpose of fueling the Company’s Port Westward and Beaver generating plants.

Coal and transportation—PGE has coal and related rail transportation agreements with take-or-pay provisions related to Boardman, which expire at various dates through 2014.

Operating leases—PGE has various operating leases associated with its headquarters and certain of its production, transmission, and support facilities. The majority of the future minimum operating lease payments presented in the table above consist of (i) the corporate headquarters lease, which expires in 2018, but includes renewal period options through 2043, and (ii) the Port of St. Helens land lease, where PGE’s Beaver and Port Westward generating plants operate, which expires in 2096. Rent expense was $10 million in 2012 and $9 million in 2011 and 2010.

The future minimum operating lease payments presented is net of sublease income of: $3 million in 2013, 2014 and 2015; $2 million in 2016; and $1 million in 2017. Sublease income was $3 million in each of 2012, 2011, and 2010.

Guarantees

PGE entered into a sale transaction in 1985 in which it sold an undivided 15% interest in Boardman and a 10.714% undivided interest in the Pacific Northwest Intertie (Intertie) transmission line (jointly the Boardman Assets) to an unrelated third party (Purchaser). The Purchaser leased the Boardman Assets to a lessee (Lessee) unrelated to PGE or the Purchaser. Concurrently, PGE assigned to the Lessee certain agreements for the sale of power and transmission services from Boardman and the Intertie (P&T Agreements) to a regulated electric utility (Utility) unrelated to PGE, the Purchaser, or the Lessee. The payments by the Utility under the P&T Agreements exceed the payments to be made by the Lessee to the Purchaser under the lease. In exchange for PGE undertaking certain obligations of the Lessee under the lease, the Lessee reassigned to PGE certain rights, including the excess payments, under the P&T Agreements. However, in the event that the Utility defaults on the payments it owes under the P&T Agreements, PGE may be required to pay the damages owed by the Lessee to the Purchaser under the lease. Assuming no recovery from the Utility and no reduction in damages from mitigating sales or leases related to the Boardman Assets and P&T Agreements, the maximum amount that would be owed by PGE in 2013 is approximately $47 million. Management believes that circumstances that could result in such amount, or any lesser amount, being owed by the Company are remote. The P&T Agreements expire on December 31, 2013, and PGE’s obligation to pay damages owed by the Lessee to the Purchaser under the lease will terminate.

PGE enters into financial agreements and power and natural gas purchase and sale agreements that include indemnification provisions relating to certain claims or liabilities that may arise relating to the transactions contemplated by these agreements. Generally, a maximum obligation is not explicitly stated in the indemnification provisions and, therefore, the overall maximum amount of the obligation under such indemnifications cannot be reasonably estimated. PGE periodically evaluates the likelihood of incurring costs under such indemnities based on the Company’s historical experience and the evaluation of the specific indemnities. As of December 31, 2012, management believes the likelihood is remote that PGE would be required to perform under such indemnification provisions or otherwise incur any significant losses with respect to such indemnities. The Company has not recorded any liability on the consolidated balance sheets with respect to these indemnities.