UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 8-K

 

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported) March 1, 2007

 

PORTLAND GENERAL ELECTRIC COMPANY

(Exact name of registrant as specified in its charter)

 

 

 

 

 

121 SW Salmon Street, Portland, Oregon 97204

(Address of principal executive offices) (zip code)

 

Registrant's telephone number, including area code: (503) 464-8000

 

 

 

 

 

 

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This current report and its exhibit include forward-looking statements. Portland General Electric Company based these forward-looking statements on its current expectations and projections about future events in light of its knowledge of facts as of the date of this current report and its assumptions about future circumstances. These forward-looking statements are subject to various risks and uncertainties that may be outside the control of Portland General Electric Company. Any forward-looking statement speaks only as of the date on which such statement is made and, except as required by law, Portland General Electric Company undertakes no obligation to publicly update or revise any forward-looking statements, whether due to new information, future events, or otherwise. This current report should be read in conjunction with Portland General Electric Company’s Annual Report on Form 10-K for the year ended December 31, 2006 (to be filed on or about March 2, 2007) and previously filed 2006 Quarterly Reports on Form 10-Q.

 

Section 2 - Financial Information

 

Item 2.02 Results of Operations and Financial Condition.

 

On March 1, 2007, Portland General Electric Company issued a press release announcing its earnings results for the quarter and year ended December 31, 2006. A copy of the press release is furnished as Exhibit 99.1.

 

Section 9 - Financial Statements and Exhibits

 

Item 9.01 Financial Statements and Exhibits.

 

 

 

 

 

 

 

 

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

 

 

 

 

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EXHIBIT 99.1

 

                                                                                                                                                                                                                        

 

Portland General Electric reports fourth quarter

and 2006 earnings results

Announces dividend and increases 2007 guidance

 

Portland, Ore. — Portland General Electric Company (NYSE: POR) today reported net income of 40 million, or $0.64 per diluted share, for the fourth quarter ending December 31, 2006, compared to a net loss of $9 million, or $(0.15) per diluted share, for the fourth quarter 2005. Results were primarily driven by higher energy deliveries and by lower power costs due to improved hydro conditions and the availability of the Boardman power plant.

For twelve months ending December 31, 2006, the company reported net income of $71 million, or $1.14 per diluted share, compared to net income of $64 million, or $1.02 per diluted share for 2005.

"2006 was an exciting year for Portland General Electric as we once again became a publicly traded company headquartered in Oregon," said Peggy Fowler, CEO and president of Portland General Electric (PGE). "In 2007, we look forward to bringing our new 400-megawatt Port Westward plant online, completing Phase I of the Biglow Canyon Wind Farm project and continuing to provide our customers with safe, reliable power.”

 

Fourth Quarter 2006 Summary

 

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Full Year 2006

For the twelve months ending December 31, 2006, net income was $71 million, or $1.14 per diluted share, compared to $64 million, or $1.02 per diluted share, for the same period in 2005. Annual results were driven by increased revenues, partially offset by a reserve for SB 408, and increased purchased power and fuel costs due to increased loads and higher average power costs. Additionally, the Company had increased production and distribution expenses and higher miscellaneous income.

 

Full Year 2006 Summary

 

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at Boardman of approximately $52 million in 2006 compared to $40 million in 2005, and higher wholesale prices. Partially offsetting incremental replacement power costs in 2006 was a deferral, for later ratemaking treatment, of $6 million related to the Boardman outage.

 

Capital Expenditures

PGE’s capital expenditures for 2006 were $371 million compared to 2005 expenditures of $255 million. Capital expenditures for 2006 included $144 million for ongoing production, transmission and distribution facilities, $48 million for the Biglow Canyon Wind Farm, $24 million for hydro relicensing projects and $155 million for Port Westward, the Company’s new natural gas-fired plant, currently under construction in Clatskanie, Ore., which is expected to go into service in late April of 2007.

Capital expenditures in 2007 are estimated to be $436 million. This includes $203 million for Phase I of the Biglow Canyon Wind Farm, $179 million for ongoing production, transmission and distribution facilities, $42 million for hydro relicensing projects and $12 million for Port Westward. Capital expenditures do not include the advanced metering infrastructure project, which the Company continues to pursue with the Oregon Public Utility Commission (OPUC).

 

Revised 2007 Earnings Guidance

PGE is revising its full-year 2007 earnings guidance from $1.70 - $1.80 to $1.90 - $2.00 per diluted share. Guidance is revised upward by approximately $0.30 per diluted share due to a $20.4 million pre-tax deferral related to the Boardman outage as well as the associated interest and Senate Bill 408 impacts. This increase was partially offset by a reduction of $0.11 per diluted share related to the final order on PGE’s most recent general rate case.

 

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Dividend

On February 22, 2007, the PGE board of directors approved a quarterly common stock dividend of

22.5 cents per share. The dividend is payable on April 16, 2007 to shareholders of record at the close of business on March 26, 2007.

 

Overview of Recent Developments

 

General Rate Case

On January 12, 2007, the OPUC issued a final order (Order) in a general rate case proceeding which addressed PGE's proposed revenue requirements and the inclusion of Port Westward in rates. The OPUC approved a reduction in rates of $21.6 million, which was effective January 17, 2007 and an increase in rates of $42.1 million for Port Westward to be effective with the in service date of the facility. The OPUC had previously approved an increase in annual revenues of $74.1 million for net variable power costs effective January 1, 2007, related to the 2007 Resource Valuation Mechanism (RVM) filing. The overall increase in annual revenues approved by the OPUC for 2007 for the RVM, the general rate case, and Port Westward proceedings was $94.6 million, or 6.4 percent, with an allowed return on equity of 10.1 percent and a 50 percent equity capital structure.

The Order approved an Annual Power Cost Update Tariff. This tariff, which replaces the RVM, provides for annual rate adjustments to reflect updated forecasts of net variable power costs for future calendar years. The Order also approved a new Power Cost Adjustment Mechanism (PCAM) by which PGE can adjust future rates to reflect a portion of the difference between each year’s forecasted and actual net variable power costs.

 

Port Westward

PGE is nearing completion of Port Westward, its new 400 MW, natural gas-fired plant, with generating capacity to power approximately 300,000 homes annually. PGE is presently in the testing phase and expects the facility to go into service in late April 2007.

 

Biglow Canyon Wind Farm

PGE has executed an agreement with Vestas Wind Systems, of Denmark, to acquire 76 wind turbines for the first phase of the Biglow Canyon Wind Farm, located in Sherman County, Oregon. PGE has also entered into a contract for construction of Phase I with D.H. Blattner & Sons, Inc. Completion of Phase I of the project will provide 125 MW and is expected by December 2007. Total project costs for the first phase

 

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will be approximately $260 million. PGE will file a rate application with the OPUC on March 2, 2007, seeking an increase in annual revenue requirements of approximately $13 million for full recovery of all costs related to the first phase of the Biglow Canyon Wind Farm.

 

Boardman Plant Power Cost Deferral

The Boardman Power Plant was taken out of service from late October 2005 to late May 2006 for repairs to the plant’s turbine and generator rotors. The plant was again taken out of service in early June for repairs to its low pressure turbine unit; upon completion of these repairs, the plant returned to full operation on July 1, 2006. Total incremental power costs to replace the output of the Boardman plant were approximately $92 million, including $52 million in 2006. PGE filed an application with the OPUC for recovery of excess power costs, estimated at $46 million, for the period November 18, 2005, through February 5, 2006. On February 12, 2007, the OPUC issued an order authorizing PGE to defer for future rate recovery $26.4 million of excess power costs related to Boardman’s extended outage. Recognition of this deferral includes $6 million in the fourth quarter of 2006 and $20.4 million to be recorded in 2007. Actual recovery of deferral amounts is contingent on a future ratemaking proceeding including a prudency review and an earnings test.

 

Senate Bill 408

Senate Bill 408 (SB 408) attempts to more closely match income tax amounts forecasted to be collected in revenues with the amount of income taxes paid to governmental entities by investor-owned utilities or their consolidated group. It requires that utilities file a report with the OPUC each year regarding the amount of taxes paid by the utility or its consolidated group (with certain adjustments), as well as the amount of taxes authorized to be collected in rates, as defined by the statute. This report is to be filed by October 15^th of the year following the reporting year. If the OPUC determines that the difference between the two amounts is greater than $100,000, the utility is required to adjust its rates. The first rate adjustment under the law applies to taxes paid to units of government and amounts collected from customers on or after January 1, 2006.

Based on PGE’s assessment of permanent rules adopted by the OPUC in September 2006 to implement SB 408, the Company has estimated and recorded potential refunds to customers of approximately $42 million (including $2 million in accrued interest) for the year 2006. Any refunds to customers for the 2006 tax year would begin after June 1, 2008. PGE will continue to evaluate its options for changing or modifying the legislation and Rules.

 

 

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Stock Distribution

The Disputed Claims Reserve (DCR) continues to report distributions of PGE common stock to Enron creditors with allowed and settled claims. Most recently, approximately 350,000 and 478,000 shares were distributed on December 1, 2006, and February 1, 2007, respectively. These distributions reduced the total shares held in the DCR to approximately 51 percent of total shares outstanding. Subsequent distributions are expected to occur on a bi-monthly basis.

 

Fourth Quarter and 2006 Earnings Call and Webcast March 1, 2007

PGE will host a conference call with financial analysts on Thursday, March 1, 2007, at 5 p.m. EST. The conference call will be webcast live on the PGE Web site at www.PortlandGeneral.com. A replay of the call will be available beginning at 7 p.m. EST on Thursday, March 1 and will continue through Thursday, March 8.

Peggy Fowler, CEO and president; Jim Piro, executive vice president, CFO and treasurer; and Bill Valach, director of investor relations will participate in the call. Management will respond to questions following formal comments.

The attached consolidated income statements, balance sheets, cash flow statements and supplemental operating statistics are an integral part of this earnings release.

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About Portland General Electric Company

Portland General Electric, headquartered in Portland, Ore., is a fully integrated electric utility that serves approximately 793,000 residential, commercial and industrial customers in Oregon. Visit our Web site at www.PortlandGeneral.com.

 

Safe Harbor Statement

Statements in this news release that relate to future plans, objectives, expectations, performance, events and the like may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may be identified by words including, but not limited to, “anticipates,” “believes,” “intends,” “estimates,” “promises,” “expects,” “should,” “conditioned upon” and similar expressions. Investors are cautioned that any such forward-looking statements are subject to risks and uncertainties, including matters and events related to the deferral of excess power costs for the Boardman Plant outage; completion of the Port Westward power plant; completion and rate treatment of Phase I of the Biglow Canyon Wind Farm; changes in weather, hydroelectric, and energy market conditions, which could affect the availability and cost of fuel or purchased power; the effect of the Oregon law related to utility rate treatment of income taxes; and the outcome of various legal and regulatory proceedings. As a result, actual results may differ materially from those projected in the forward-looking statements. All forward-looking statements included in this news release are based on information available to the Company on the date hereof and such statements speak only as the date hereof. The Company assumes no obligation to update any such forward-looking statement. Prospective investors should also review the risks and uncertainties listed in the Company’s most recent Annual Report on Form 10-K and the Company’s reports on Forms 8-K and 10-Q filed with the United States Securities and Exchange Commission, including Management’s Discussion and Analysis of Financial Condition and Results of Operations and the risks described therein from time to time.

 

POR-F

Source: Portland General Electric Company

 

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Portland General Electric Company and Subsidiaries

Consolidated Statements of Income

 

 

 

 

 

 

 

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Portland General Electric Company and Subsidiaries

Consolidated Balance Sheets

 

 

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Portland General Electric Company and Subsidiaries

Consolidated Statements of Cash Flow

 

 

 

 

 

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Portland General Electric Company and Subsidiaries

Supplemental Operating Statistics

 

 

 

 

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