In an effort to get lean and mean for the coming competitive marketplace for electricity sales, PacifiCorp said it will cut its U.S. work force by 7% this year in its domestic electric operations and general administrative groups, trimming about 600 jobs through early retirement and special severance.

The cuts are expected to yield annual savings of about $45 million pre-tax. The job cuts are estimated to create a charge to earnings of about $97 million pre-tax, which will be recorded the first quarter of 1998 when early retirement and severance offers are completed.

Also, PacifiCorp said it will cease operations at its Glenrock coal mine in Wyoming in mid- to late 1999. The mine closure will create a charge to earnings in the fourth quarter of 1997 of $64 million pre-tax. The company also announced a series of other non-cash charges totaling about $150 million pre-tax, driven by changes in the market and regulatory environments. These charges will be recorded in the fourth quarter of 1997.

“The decisions we are announcing today are part of an ongoing process to reshape PacifiCorp for the increasingly competitive U.S. electricity market,” said Fred Buckman, CEO. “Our customers, employees and shareholders will be best served by a company that can maintain its low-cost advantage going into this market.” Continuing cost pressures are expected to adversely affect the 1997 earnings contribution of its domestic electric operations, the company said. A report of 1997 earnings is expected later this month.

PacifiCorp is said to be preparing to make a new offer for Britain’s The Energy Group following approval of the planned acquisition by the British government. U.S. regulators also must approve the deal.

The job cuts are expected to be completed by mid-year, and non-voluntary reductions may be required if acceptance of early retirement and severance is not high enough, the company said. In conjunction with the workforce reductions, PacifiCorp will write off all deferred pension costs. The write-off of $86 million (pre-tax) will be recorded in Q4 1997.

Joe Fisher, Houston

©Copyright 1998 Intelligence Press. All rights reserved. Thepreceding news report may Not be republished Or redistributed, in wholeOr in part, without prior written consent of Intelligence Press.