Fitch Affirms PacifiCorp's Senior Unsecured at 'A-'; Lowers S-T To 'F2'.

NEW YORK -- Fitch Ratings has affirmed PacifiCorp (PPW) as follows:

-- Senior secured 'A';

-- Senior unsecured 'A-'.

Fitch has also lowered the following ratings for PPW:

-- Preferred to 'BBB+' from 'A-';

-- Short-term to 'F2' from 'F1'.

The Rating Outlook is Stable for all of PPW's outstanding debt and preferred securities. Fitch has also affirmed and withdrawn PacifiCorp Group Holdings Company's 'BBB+' senior unsecured and 'F2' short-term unsecured ratings.

The PPW rating affirmation and Stable Rating Outlook consider PPW's status as a low-cost provider of electricity, service territory growth, absence of non-utility operations and credit metrics that are in-line with the rating category. The ratings assume support for PPW's $3 billion capital spending program during fiscal 2005-2007 from its direct parent, PacifiCorp Holdings, Inc (PHI) and reasonable outcomes in pending and anticipated rate cases and the multi-state process (MSP).

The primary risk for PPW fixed income investors is that management may be unable to work successfully with regulators to improve its earned returns especially in light of the utility's substantial capital requirements. In this scenario, unfavorable regulatory outcomes would erode PPW's credit ratios and bring downward pressure to bear on its prospective credit ratings. However, PPW's recent Utah general rate case (GRC) settlement and progress in the MSP suggests an improving regulatory environment. Key indicators of continuing company progress, or lack thereof, should be evident in upcoming regulatory decisions in the utility's Utah general rate case filing and the MSP, both of which will be closely monitored by Fitch Ratings.

Exposure to wholesale energy price volatility in the event of an unplanned generating plant outage of significant duration and unanticipated capital cost overruns versus budget are additional areas of concern for PPW fixed income investors.

On Aug. 4, 2004, PPW filed a $111 million (9.6%) rate increase request with the Utah Public Service Commission, based on an 11.125% return on common equity. A final order in the rate case is expected by April 2005. The GRC filing incorporates the inter-jurisdictional cost allocation methodology that emerged from a collaborative effort dubbed the multi-state process that has been underway since April 2002. PPW has reached settlement agreements regarding inter-jurisdictional cost allocation issues in Utah, Oregon and Wyoming. Efforts to obtain commission ratification of the revised protocol continue in Washington, Idaho and California. Fitch anticipates a ruling in Utah MSP proceedings imminently and orders from Oregon and Wyoming regulators are expected later this month.

PPW is an indirect, wholly-owned subsidiary of Scottish Power plc, whose senior unsecured debt is rated 'BBB+' with a Stable Rating Outlook by Fitch (for more information, see related press release on Scottish Power plc from today, which is available on the Fitch Ratings web site at 'www.fitchratings.com').