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): August 7, 2012
PORTLAND GENERAL ELECTRIC COMPANY | ||
(Exact name of registrant as specified in its charter) | ||
Oregon | 1-5532-99 | 93-0256820 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
121 SW Salmon Street, Portland, Oregon 97204
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (503) 464-8000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
[ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
[ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
[ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
The following information is furnished pursuant to both Item 2.02 and Item 7.01.
On August 7, 2012, Portland General Electric Company (the “Company”) issued a press release announcing its financial results for the three and six month periods ended June 30, 2012. The press release is furnished herewith as Exhibit 99.1 to this Report.
Item 7.01 Regulation FD Disclosure.
At 11:00 a.m. ET on Tuesday, August 7, 2012, the Company will hold its quarterly earnings call and webcast, and will utilize a slide presentation in conjunction with the earnings call. A copy of the slide presentation is furnished herewith as Exhibit 99.2.
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits. | |
99.1 | Press Release issued by Portland General Electric Company dated August 7, 2012. | |
99.2 | Portland General Electric Company Second Quarter 2012 Slides dated August 7, 2012. | |
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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 thereunto duly authorized.
PORTLAND GENERAL ELECTRIC COMPANY | ||||
(Registrant) | ||||
Date: | August 6, 2012 | By: | /s/ Maria M. Pope | |
Maria M. Pope | ||||
Senior Vice President, Finance, Chief Financial Officer, and Treasurer | ||||
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Exhibit 99.1
 | Portland General Electric One World Trade Center 121 SW Salmon Street Portland, Oregon 97204 News Release | |
Media Contact: | Investor Contact: | |
Steven Corson | Bill Valach | |
Corporate Communications | Director, Investor Relations | |
Phone: 503-464-8444 | Phone: 503-464-7395 | |
Portland General Electric Reports
Second Quarter 2012 Financial Results
Earnings of $0.34 per diluted share for the second quarter of 2012
Earnings guidance for 2012 reaffirmed ranging between $1.85 to $2.00 per diluted share
Portland, Ore, August 7, 2012 — Portland General Electric Company (NYSE: POR) today reported net income of $26 million, or $0.34 per diluted share, for the second quarter of 2012, compared with $22 million, or $0.29 per diluted share, for the second quarter of 2011. The increase in net income was primarily the result of favorable power supply operations, partially offset by a decline in the volume of retail energy deliveries. For the six months ended June 30, 2012, net income was $75 million, or $0.99 per diluted share, compared with $91 million, or $1.21 per diluted share for the six months ended June 30, 2011. The decrease in net income was primarily driven by a 3% decrease in residential energy deliveries as a result of warmer weather in 2012, partially offset by favorable power supply operations.
Total revenues for the second quarter of 2012 were up slightly compared with the second quarter of 2011. A 5.5% decline in residential energy deliveries due to warmer weather in 2012 and an overall decrease in average retail prices, driven by a decrease in projected power costs for 2012, were offset by refunds to customers recorded in the second quarter of 2011, with no comparable refunds recorded in the second quarter of 2012.
Purchased power and fuel expense decreased $13 million, or 8%, in the second quarter of 2012 compared with the second quarter of 2011, primarily driven by a 19% decline in the average variable cost of purchased power. During the second quarter of 2012, a substantial amount of lower-cost purchased power economically displaced thermal generation, with thermal generation representing 5% of the total retail requirement compared to 10% for the comparable period of 2011. The average variable power cost decreased to $30.53 per MWh in the second quarter of 2012 from $33.28 per MWh in the second quarter of 2011.
“I’m pleased with PGE’s performance this quarter,” said Jim Piro, President and Chief Executive Officer. “Our operating performance remains strong, keeping us on track to meet our financial and operating objectives for the year. In addition, we issued a request for proposals for capacity and energy resources and submitted a final draft renewable RFP to the OPUC for approval.”
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Second Quarter Highlights
• | Issued a request for proposals (“RFP”) seeking 300 to 500 megawatts of baseload electric power generating resources, approximately 200 megawatts of year-round flexible and peaking resources, and two seasonal peaking resources to help meet PGE’s capacity and its customers’ energy requirements. PGE plans to submit self-build proposals and will own and operate any resources developed by third parties on the Company’s sites. |
• | Submitted a draft of a renewable energy RFP to the Public Utility Commission of Oregon for approval to proceed with the issuance of the RFP to the public. The RFP is expected to be issued later this year and will seek renewable generating resources, consisting of approximately 100 average megawatts, to help PGE comply with Oregon’s renewable energy standard. The Company is targeting 2015 to bring this renewable resource online. |
• | Declared a quarterly dividend of $0.27 per share, an increase of approximately 2% from the preceding quarter. Since becoming a public company in early 2006, PGE has annually increased its dividend in the approximate range of 2% to 4%. |
• | Moody’s Investors Service (Moody’s) affirmed the ratings of PGE (Baa2 for senior unsecured debt and Prime-2 for commercial paper) and changed the Company’s rating outlook to ‘positive’ from ‘stable.’ The change in the outlook reflects Moody’s expectation that, over the intermediate term, PGE’s financial metrics will improve to levels more commensurate with the Baa1 rating category. |
Second Quarter Operating Results
Net income for the second quarter of 2012 was $26 million, up 18% from $22 million for the comparable period of 2011, primarily due to favorable power supply operations, including an 8% decline in average variable power cost, partially offset by a decline in the volume of retail energy deliveries.
Total revenues for the second quarter of 2012 were $413 million compared with $411 million for the comparable period of 2011.
Retail revenues were $394 million for the second quarter of 2012, an increase of $4 million from the comparable period of 2011. The increase was primarily due to the net effect of: an $8 million increase related to an estimated refund to customers recorded in 2011 pursuant to the Company’s Power Cost Adjustment Mechanism (“PCAM”), while no collection or refund was recorded in 2012; a $5 million increase due to changes from various other items, including the decoupling mechanism; a $4 million increase related to the refund to customers of the PGE’s Independent Spent Fuel Storage Installation (“ISFSI”) tax credits in the second quarter of 2011; a $9 million net decrease resulting from changes in the volume of energy deliveries to retail customers; and a $5 million decrease resulting from an overall decline in the average retail price, primarily driven by a decrease in projected power costs for 2012.
Wholesale revenues in the second quarter of 2012 declined 25%, compared with the second quarter of 2011, due to a 34% decrease in average price, partially offset by a 19% increase in sales volume. Lower wholesale power prices were driven by low natural gas prices.
Purchased power and fuel expense for the second quarter of 2012 was $156 million, a decrease of $13 million, or 8%, compared with the second quarter of 2011, primarily driven by a 19% decrease in the average variable cost of purchased power, partially offset by reductions in hydro and wind generation of 10% and 12%, respectively. During the second quarter of 2012, a substantial amount of lower-cost purchased power economically displaced thermal generation. Despite declines in energy received from both hydroelectric and wind resources during the second quarter of 2012, the average variable power cost declined 8% from the second quarter of 2011 primarily driven by lower natural gas prices.
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Energy received from hydroelectric resources, including that purchased from mid-Columbia projects, in the second quarter of 2012 decreased 30% from the second quarter of 2011, and was 16% above the levels projected in PGE’s 2012 annual power cost update tariff (“AUT”) for the current quarter, compared with 19% above the levels projected in the 2011 AUT for the second quarter of 2011. Energy received from the Company’s Biglow Canyon wind farm decreased 12%, from less favorable wind conditions during the second quarter of 2012 relative to the second quarter of 2011.
For the second quarter of 2012, actual net variable power costs (“NVPC”) were approximately $5 million below baseline NVPC. NVPC for the year ending December 31, 2012 is currently estimated to be slightly below the lower deadband of the PCAM. As the Company’s 2012 earnings are not expected to exceed the regulated earnings test, no estimated refund to customers was recorded as of June 30, 2012. For the second quarter of 2011, actual NVPC was approximately $9 million below baseline NVPC. For the second quarter of 2011, PGE recorded an estimated refund to customers of $8 million for a total refund of $12 million as of June 30, 2011, as a $4 million refund was recorded in the first quarter of 2011.
2012 Earnings Guidance
PGE’s 2012 earnings are expected to be within the guidance range of $1.85 to $2.00 per diluted share. Guidance is based on the following assumptions:
• | Retail energy deliveries approximately 1% higher than weather adjusted 2011 levels, excluding certain paper customers that do not significantly impact the Company’s gross margin; |
• | Improved hydro generation and power supply operations; |
• | Wind estimates based on wind studies completed in connection with the permitting of the Biglow Canyon wind farm; |
• | Operating and maintenance costs in line with budget and estimated from $105 million to $110 million per quarter; and |
• | Capital deferrals of $17 million for the current year, with $8 million reported in the first half of 2012. |
Second Quarter 2012 Earnings Call and Webcast — August 7, 2012
PGE will host a conference call with financial analysts and investors on Tuesday, August 7, 2012, at 11 a.m. EDT. The conference call will be webcast live on the PGE website at www.PortlandGeneral.com. A replay of the call will be available beginning at 2 p.m. EDT on Tuesday, August 7, 2012 through Tuesday, August 14, 2012.
Jim Piro, President and CEO; Maria Pope, Senior Vice President, Finance, CFO, and Treasurer; and Bill Valach, Director, Investor Relations, will participate in the call. Management will respond to questions following formal comments.
The attached condensed consolidated statements of income, condensed consolidated balance sheets, and condensed consolidated statements of cash flows, as well as the supplemental operating statistics, are an integral part of this earnings release.
# # # # #
About Portland General Electric Company
Portland General Electric Company is a vertically integrated electric utility that serves approximately 828,000 residential, commercial and industrial customers in the Portland/Salem metropolitan area of Oregon. The Company’s headquarters are located at 121 SW Salmon Street, Portland, Oregon, 97204. Visit PGE’s website at www.PortlandGeneral.com.
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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 include statements regarding earnings guidance; statements regarding future load, hydro conditions and operating and maintenance costs; statements concerning implementation of the Company’s Integrated Resource Plan; statements concerning future compliance with regulations limiting emissions from generation facilities and the costs to achieve such compliance; as well as other statements containing words such as “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 reductions in demand for electricity and the sale of excess energy during periods of low wholesale market prices; operational risks relating to the Company’s generation facilities, including hydro conditions, wind conditions, disruption of fuel supply, and unscheduled plant outages, which may result in unanticipated operating, maintenance and repair costs, as well as replacement power costs; the costs of compliance with environmental laws and regulations, including those that govern emissions from thermal power plants; changes in weather, hydroelectric and energy market conditions, which could affect the availability and cost of purchased power and fuel; changes in capital market conditions, which could affect the availability and cost of capital and result in delay or cancellation of capital projects; problems or delays in completing capital projects, resulting in the abandonment of such projects or the failure to complete such projects on schedule or within budget, which could result in the Company’s inability to recover project costs; the outcome of various legal and regulatory proceedings; and general economic and financial market conditions. 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 of 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
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in millions, except per share amounts)
(Unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Revenues, net | $ | 413 | $ | 411 | $ | 892 | $ | 895 | |||||||
Operating expenses: | |||||||||||||||
Purchased power and fuel | 156 | 169 | 351 | 363 | |||||||||||
Production and distribution | 51 | 55 | 104 | 97 | |||||||||||
Administrative and other | 56 | 51 | 110 | 103 | |||||||||||
Depreciation and amortization | 63 | 55 | 125 | 111 | |||||||||||
Taxes other than income taxes | 26 | 24 | 53 | 49 | |||||||||||
Total operating expenses | 352 | 354 | 743 | 723 | |||||||||||
Income from operations | 61 | 57 | 149 | 172 | |||||||||||
Other income (expense): | |||||||||||||||
Allowance for equity funds used during construction | 2 | 1 | 3 | 2 | |||||||||||
Miscellaneous income (expense), net | (1 | ) | 1 | 2 | 3 | ||||||||||
Other income, net | 1 | 2 | 5 | 5 | |||||||||||
Interest expense | 27 | 28 | 55 | 55 | |||||||||||
Income before income taxes | 35 | 31 | 99 | 122 | |||||||||||
Income taxes | 9 | 9 | 24 | 31 | |||||||||||
Net income and Net income attributable to Portland General Electric Company | $ | 26 | $ | 22 | $ | 75 | $ | 91 | |||||||
Weighted-average shares outstanding (in thousands): | |||||||||||||||
Basic | 75,507 | 75,326 | 75,465 | 75,322 | |||||||||||
Diluted | 75,517 | 75,401 | 75,479 | 75,369 | |||||||||||
Earnings per share — basic and diluted | $ | 0.34 | $ | 0.29 | $ | 0.99 | $ | 1.21 | |||||||
Dividends declared per common share | $ | 0.270 | $ | 0.265 | $ | 0.535 | $ | 0.525 | |||||||
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PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
June 30, 2012 | December 31, 2011 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 74 | $ | 6 | |||
Accounts receivable, net | 133 | 144 | |||||
Unbilled revenues | 70 | 101 | |||||
Inventories | 80 | 71 | |||||
Margin deposits | 69 | 80 | |||||
Regulatory assets — current | 197 | 216 | |||||
Deferred income tax assets | 39 | 33 | |||||
Other current assets | 66 | 65 | |||||
Total current assets | 728 | 716 | |||||
Electric utility plant, net | 4,317 | 4,285 | |||||
Regulatory assets — noncurrent | 528 | 594 | |||||
Nuclear decommissioning trust | 37 | 37 | |||||
Non-qualified benefit plan trust | 34 | 36 | |||||
Other noncurrent assets | 58 | 65 | |||||
Total assets | $ | 5,702 | $ | 5,733 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 66 | $ | 111 | |||
Liabilities from price risk management activities — current | 193 | 216 | |||||
Short-term debt | — | 30 | |||||
Current portion of long-term debt | 150 | 100 | |||||
Accrued expenses and other current liabilities | 157 | 157 | |||||
Total current liabilities | 566 | 614 | |||||
Long-term debt, net of current portion | 1,586 | 1,635 | |||||
Regulatory liabilities — noncurrent | 755 | 720 | |||||
Deferred income taxes | 573 | 529 | |||||
Liabilities from price risk management activities — noncurrent | 120 | 172 | |||||
Unfunded status of pension and postretirement plans | 199 | 195 | |||||
Non-qualified benefit plan liabilities | 102 | 101 | |||||
Other noncurrent liabilities | 100 | 101 | |||||
Total liabilities | 4,001 | 4,067 | |||||
Total equity | 1,701 | 1,666 | |||||
Total liabilities and equity | $ | 5,702 | $ | 5,733 | |||
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PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Six Months Ended June 30, | |||||||
2012 | 2011 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 75 | $ | 91 | |||
Depreciation and amortization | 125 | 111 | |||||
Other non-cash items, net, included in Net income | 72 | 77 | |||||
Changes in working capital | (4 | ) | 31 | ||||
Contribution to pension plan | — | (26 | ) | ||||
Other, net | (1 | ) | (5 | ) | |||
Net cash provided by operating activities | 267 | 279 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (137 | ) | (138 | ) | |||
Proceeds received from sale of solar power facility | 10 | — | |||||
Other, net | (1 | ) | (1 | ) | |||
Net cash used in investing activities | (128 | ) | (139 | ) | |||
Cash flows from financing activities: | |||||||
Payments on long-term debt | — | (10 | ) | ||||
Maturities of commercial paper, net | (30 | ) | (19 | ) | |||
Dividends paid | (41 | ) | (39 | ) | |||
Noncontrolling interests’ capital distributions | — | (4 | ) | ||||
Net cash used in financing activities | (71 | ) | (72 | ) | |||
Increase in cash and cash equivalents | 68 | 68 | |||||
Cash and cash equivalents, beginning of period | 6 | 4 | |||||
Cash and cash equivalents, end of period | $ | 74 | $ | 72 | |||
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PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
SUPPLEMENTAL OPERATING STATISTICS
(Unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Revenues (dollars in millions): | |||||||||||||||
Retail: | |||||||||||||||
Residential | $ | 187 | $ | 195 | $ | 443 | $ | 451 | |||||||
Commercial | 152 | 151 | 308 | 307 | |||||||||||
Industrial | 56 | 55 | 109 | 109 | |||||||||||
Subtotal | 395 | 401 | 860 | 867 | |||||||||||
Other deferred revenues, net | (1 | ) | (11 | ) | (4 | ) | (14 | ) | |||||||
Total retail revenues | 394 | 390 | 856 | 853 | |||||||||||
Wholesale revenues | 9 | 12 | 19 | 25 | |||||||||||
Other operating revenues | 10 | 9 | 17 | 17 | |||||||||||
Total revenues | $ | 413 | $ | 411 | $ | 892 | $ | 895 | |||||||
Energy sold and delivered (MWh in thousands): | |||||||||||||||
Retail energy sales: | |||||||||||||||
Residential | 1,621 | 1,715 | 3,880 | 4,006 | |||||||||||
Commercial | 1,657 | 1,671 | 3,390 | 3,418 | |||||||||||
Industrial | 877 | 892 | 1,687 | 1,736 | |||||||||||
Total retail energy sales | 4,155 | 4,278 | 8,957 | 9,160 | |||||||||||
Delivery to direct access customers: | |||||||||||||||
Commercial | 107 | 88 | 213 | 172 | |||||||||||
Industrial | 201 | 151 | 397 | 331 | |||||||||||
308 | 239 | 610 | 503 | ||||||||||||
Total retail energy sales and deliveries | 4,463 | 4,517 | 9,567 | 9,663 | |||||||||||
Wholesale energy deliveries | 702 | 591 | 1,090 | 1,068 | |||||||||||
Total energy sold and delivered | 5,165 | 5,108 | 10,657 | 10,731 | |||||||||||
Number of retail customers at end of period: | |||||||||||||||
Residential | 723,169 | 719,888 | |||||||||||||
Commercial | 104,604 | 104,162 | |||||||||||||
Industrial | 210 | 236 | |||||||||||||
Direct access | 511 | 240 | |||||||||||||
Total retail customers | 828,494 | 824,526 | |||||||||||||
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PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
SUPPLEMENTAL OPERATING STATISTICS, continued
(Unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||
Sources of energy (MWh in thousands): | |||||||||||
Generation: | |||||||||||
Thermal: | |||||||||||
Coal | 208 | 375 | 1,285 | 1,509 | |||||||
Natural gas | 7 | 67 | 1,137 | 335 | |||||||
Total thermal | 215 | 442 | 2,422 | 1,844 | |||||||
Hydro | 547 | 609 | 1,130 | 1,180 | |||||||
Wind | 377 | 429 | 623 | 645 | |||||||
Total generation | 1,139 | 1,480 | 4,175 | 3,669 | |||||||
Purchased power: | |||||||||||
Term | 2,931 | 2,159 | 4,147 | 3,720 | |||||||
Hydro | 522 | 921 | 936 | 1,723 | |||||||
Wind | 103 | 35 | 177 | 108 | |||||||
Spot | 398 | 495 | 1,181 | 1,583 | |||||||
Total purchased power | 3,954 | 3,610 | 6,441 | 7,134 | |||||||
Total system load | 5,093 | 5,090 | 10,616 | 10,803 | |||||||
Less: wholesale sales | (702 | ) | (591 | ) | (1,090 | ) | (1,068 | ) | |||
Retail load requirement | 4,391 | 4,499 | 9,526 | 9,735 | |||||||
Heating Degree-days | Cooling Degree-days | ||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||
First Quarter | 1,967 | 1,974 | — | — | |||||||
Average | 1,848 | 1,845 | — | — | |||||||
Second Quarter | 709 | 946 | 40 | 16 | |||||||
Average | 714 | 698 | 68 | 69 | |||||||
Year-to-date | 2,676 | 2,920 | 40 | 16 | |||||||
Year-to-date average | 2,562 | 2,543 | 68 | 69 | |||||||
Note: “Average” amounts represent the 15-year rolling averages provided by the National Weather Service (Portland Airport).
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Earnings Conference Call Second Quarter 2012 1 Exhibit 99.2
Cautionary Statement 2 Information Current as of August 7, 2012 Except as expressly noted, the information in this presentation is current as of August 7, 2012 — the date on which PGE filed its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012 — and should not be relied upon as being current as of any subsequent date. PGE undertakes no duty to update the presentation, except as may be required by law. Forward-Looking Statements Statements in this presentation 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 include statements regarding earnings guidance, statements regarding future load, hydro conditions and operating and maintenance costs; statements concerning implementation of the Company’s Integrated Resource Plan; statements concerning future compliance with regulations limiting emissions from generation facilities and the costs to achieve such compliance; statements regarding the outcome of any legal or regulatory proceeding; as well as other statements containing words such as “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 the reductions in demand for electricity and the sale of excess energy during periods of low wholesale market prices; operational risks relating to the Company’s generation facilities, including hydro conditions, wind conditions, disruption of fuel supply, and unscheduled plant outages, which may result in unanticipated operating, maintenance and repair costs, as well as replacement power costs; the costs of compliance with environmental laws and regulations, including those that govern emissions from thermal power plants; changes in weather, hydroelectric and energy markets conditions, which could affect the availability and cost of purchased power and fuel; changes in capital market conditions, which could affect the availability and cost of capital and result in delay or cancellation of capital projects; problems or delays in completing capital projects, resulting in the abandonment of such projects or the failure to complete such projects on schedule or within budget, which could result in the Company’s inability to recover project costs; the outcome of various legal and regulatory proceedings; and general economic and financial market conditions. As a result, actual results may differ materially from those projected in the forward-looking statements. All forward-looking statements included in this presentation are based on information available to the Company on the date hereof and such statements speak only as of 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.
Leadership Presenting Today 3 Maria Pope Senior Vice President, Finance, CFO & Treasurer Jim Piro President & CEO
Q2 2012 Earnings Results 4 in millions Q2 2011 Q2 2012 YTD Q2 2011 YTD Q2 2012 Net Income $22 $26 $91 $75 Q2 $0.29 Q2 $0.34 2011 2012 Earnings Per Share
On Today’s Call 5 Oregon’s Economy Operational Excellence Business Growth Financial Update Q&A Session
Capacity and Energy RFP 6 Capacity 200 MW year-round flexible resource 200 MW bi-seasonal peaker 150 MW winter-only peaker Energy 300-500 MW base load resource Bidders can submit a PPA, a build own transfer, an asset purchase agreement of an existing facility, or a project on PGE’s benchmark sites Port Westward 2 and Carty 1 submitted as PGE’s benchmark bids June 8 2012 August 1 2012 August 8 2012 Q4 2012 Q1 2013 RFP Document issued to market PGE’s benchmark resource bids submitted All capacity and energy bids due Identify initial and final short list Final decision and closing report from IE to OPUC Timeline
Renewable RFP 7 100 MWa of renewable energy Wind, biomass, solar, or other Resources available to meet PGE’s 2015 Renewable Energy Standard Bidders can submit a PPA, a build own transfer, or an asset purchase agreement of an existing facility PGE will submit a benchmark bid July 25, 2012 Q3 2012 Q3-Q4 2012 Q4 2012 Q4 2012- Q1 2013 Filed draft RFP with OPUC for review and approval Receive RFP approval from OPUC Issue RFP to bidders; final bids due two months later PGE’s benchmark resource bid submitted Final short list and decision Timeline
Cascade Crossing Transmission Project 8 Permitting Processes 1. Preliminary Site Certificate with ODOE (filed 2/29/12) 2. Environmental Impact Study from USDA Forest Service 3. Environmental Analysis & Easements from Warm Springs Tribe Ongoing Discussions 1. Bonneville Power Administration 2. PacifiCorp 3. Confederated Tribes of the Warm Springs Updated IRP Analysis PGE plans to include an updated analysis of Cascade Crossing in its next IRP – November 2013. 500kV line, approximately 215 miles Improve regional grid reliability and connect new resources Approximate capital investment ranges from $800 million to $1 billion Estimated in-service date: late 2016-2017 Next Steps
Second Quarter Financial Results 9 Quarter over Quarter Earnings Drivers Benefit from strong power supply operations Below PCAM baseline, no customer refund in 2012 Partially offset by a decrease in energy deliveries due to mild weather this spring NI in millions Q2 2011 Q2 2012 YTD Q2 2011 YTD Q2 2012 Net Income $22 $26 $91 $75 EPS $0.29 $0.34 $1.21 $0.99
Retail Revenues and Load 10 Q2 YTD Q2 Full Year Forecast 0.5% 1.0% 1.0% $390 $394 2011 2012 Q2 Retail Revenues (in millions) YTD Q2 Retail Revenues (in millions) Weather-Adjusted Load Growth: 2012 over 2011(1) $853 $856 2011 2012 (1) Excludes certain industrial customers who have little impact on margin
Purchased Power and Fuel 11 Q2 2011 Q2 2012 YTD Q2 2011 YTD Q2 2012 $169 $156 $363 $351 Net Variable Power Costs (in millions) Power Cost Adjustment Mechanism (PCAM) 10.0% 9.0% 11.0% R e tu rn o n E quit y R e tu rn o n E quit y Baseline NVPC 90/10 Sharing ($15) million(1) $30 million(1) Customer Refund Customer Refund 90/10 Sharing Customer Surcharge Deadband Customer Surcharge Power Cost Sharing Earnings Test 1) Per OPUC’s 2011 General Rate Case Order, deadband ranges are fixed and no longer represent 75 – 150 basis points of ROE
O&M, Depreciation and Capital Expenditures 12 (in millions) Q2 2011 Q2 2012 YTD 2011 YTD 2012 Production & Distribution $55 $51 $97 $104 Administrative & General $51 $56 $103 $110 Total O&M $106 $107 $200 $214 Depreciation & Amortization $55 $63 $111 $125 $69 $68 $186 Remainder of 2012 Q2 2012 Q1 2012 Capital Expenditures in millions $323 million
Financial Position 13 Senior Secured Senior Unsecured Outlook S&P A- BBB Stable Moody’s A3 Baa2 Positive Credit Ratings Total Liquidity (in millions) Lines of Credit $670 Letters of Credit $(115) Cash $74 Available $629
2012 Earnings Guidance 14 Weather-adjusted load growth of 1% Favorable power supply operations Capital Projects $17 million deferral in 2012 O&M Quarterly Run Rate of $105 to $110 million 2012 EPS On Track with Guidance - $1.85 to $2.00 per share Current Assumptions for FY 2012 Change from Initial Assumptions