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): November 8, 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 November 8, 2012, Portland General Electric Company (the “Company”) issued a press release announcing its financial results for the three and nine month periods ended September 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 Thursday, November 8, 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 November 8, 2012. | |
99.2 | Portland General Electric Company Third Quarter 2012 Slides dated November 8, 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: | November 7, 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 | |
FOR IMMEDIATE RELEASE November 8, 2012 | ||
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
Third Quarter 2012 Financial Results
Earnings of $0.50 per diluted share for the third quarter of 2012
Earnings guidance for 2012 reaffirmed ranging between $1.85 to $2.00 per diluted share
Portland, Ore. — Portland General Electric Company (NYSE: POR) today reported net income of $38 million, or $0.50 per diluted share, for the third quarter of 2012, compared with $27 million, or $0.36 per diluted share, for the third quarter of 2011. This increase was due to several items including a 2% increase in residential deliveries, the impact of the power cost adjustment mechanism (PCAM), and an increase in unrealized gains on non-qualified benefit plan trust assets. For the nine months ended September 30, 2012, net income was $113 million, or $1.49 per diluted share, compared with $118 million, or $1.57 per diluted share for the nine months ended September 30, 2011. This decrease was primarily driven by a 2% decrease in residential energy deliveries as a result of warmer weather during the 2012 heating season, and a 1% decrease in average variable power cost as a result of lower natural gas prices partially offset by lower energy received from hydro and wind generating resources.
PGE made continued progress toward implementing its Integrated Resource Plan (IRP) this quarter. For the energy and capacity request for proposals, numerous bids, including the Company’s benchmark proposals, have been received and PGE is in the process of identifying an initial short list of projects, which is expected by the end of 2012. The Company expects negotiations with final short listed bidders to begin in late 2012 or early 2013.
Also, in October, PGE issued a request for proposals seeking approximately 100 average megawatts of renewable generating resources. The Company submitted its renewable resource benchmark proposal and all other bids are due next week. PGE expects to select a final short list and initiate negotiations in early 2013.
“I'm pleased with PGE’s performance this quarter,” said Jim Piro, President and Chief Executive Officer. “Our operating performance remains strong, and we continue to move forward with our IRP Action Plan. As a result, we are on track to meet our financial and operating objectives for the year.”
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Third Quarter Operating Results
Total revenues for the third quarter of 2012 were $450 million compared with $439 million for the third quarter of 2011, an increase of $11 million, or 3%.
Retail revenues were $422 million for the third quarter of 2012 compared to $406 million for the third quarter of 2011. The increase of $16 million, or 4%, consisted of the following (in millions):
Changes in the PCAM for 2011 | $ | 11 | |
Independent Spent Fuel Storage Installation tax credits provided to customers in 2011 | 4 | ||
Increase in volume and price for energy delivered to direct access customers | 3 | ||
Changes in volume of energy sold to retail customers | (4 | ) | |
Average retail price of energy declined 1% | (4 | ) | |
The aggregate impact of several items, including decoupling mechanism, supplemental tariffs and other | 6 | ||
$ | 16 | ||
Residential energy deliveries increased 2%, while energy deliveries to industrial and commercial customers were comparable to the third quarter of 2011. For 2012, there was an increase in the number of industrial and commercial customers electing to purchase their energy requirements from an approved electricity service supplier. Due to this shift, retail revenues attributable to commercial and industrial customers declined in the third quarter of 2012 relative to same period of 2011.
Wholesale revenues in the third quarter of 2012 were $19 million, a decrease of 21%, from $24 million for the third quarter of 2011. Lower wholesale revenues were due to a 22% decrease in average price and a 1% decrease in sales volume. Lower wholesale power prices were driven by low natural gas prices.
Purchased power and fuel expense for the third quarter of 2012 was comparable with the third quarter of 2011. Declines in energy received from hydro and wind resources led to a 1% increase in average variable power cost, which was offset by a 1% decrease in total retail load requirement. The average variable power cost increased to $33.89 per megawatt hour in the third quarter of 2012 compared with $33.49 per megawatt hour in the third quarter of 2011.
Energy received from hydroelectric resources, including that purchased from mid-Columbia projects, in the third quarter of 2012 decreased 32% from the third quarter of 2011. This was 14% above the levels projected in PGE’s 2012 Annual Power Cost Update Tariff (AUT) for the current quarter, compared with 16% above the levels projected in the 2011 AUT for the third quarter of 2011. Energy received from the Company’s Biglow Canyon Wind Farm decreased 10%, from less favorable wind conditions during the third quarter of 2012 relative to the third quarter of 2011.
For the three and nine month periods ended September 30, 2012, actual net variable power costs (NVPC) were approximately $4 million and $14 million, respectively, below baseline NVPC. NVPC for the year ending December 31, 2012 is currently estimated to be within the $15 million lower deadband of the PCAM. Accordingly, no estimated refund to or collection from customers was recorded as of September 30, 2012. For the third quarter of 2011, actual NVPC was approximately $7 million below baseline NVPC, with PGE recording an estimated refund to customers of $4 million.
Administrative and other expense decreased $5 million, or 9%, driven by lower legal fees and employee compensation and benefit costs, partially offset by increased pension-related costs resulting from a lower discount rate and lower return on trust assets.
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Other income, net was $1 million in the third quarter of 2012 compared with Other expense, net of $3 million in the third quarter of 2011, as PGE recorded unrealized losses on the non-qualified benefit plan trust assets in the amount of $4 million in the third quarter of 2011.
Income taxes increased in the third quarter of 2012 for an effective tax rate of 33.9% compared with an effective tax rate of 28.9% in the third quarter of 2011. The higher effective tax rate for the third quarter of 2012 compared with the third quarter of 2011 resulted from a reduced income tax rate benefit from both production tax credits (PTCs) and state income tax credits resulting from an increase in pre-tax income. The effective tax rate for the nine months ended September 30, 2012 was 27.7% compared with 26.3% for the same period 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, which is based on the following:
• | Retail energy deliveries approximately one-half of 1% higher than weather adjusted 2011 levels, excluding certain paper customers that do not significantly impact the company’s gross margin; |
• | Favorable power supply operations; |
• | Operating and maintenance costs of approximately $105 million to $110 million per quarter; and |
• | Capital deferrals of $16 million for the full year, with $11 million recorded in the first nine months of 2012. |
Third Quarter 2012 Earnings Call and Webcast — November 8, 2012
PGE will host a conference call with financial analysts and investors on Thursday, November 8, 2012, at 11:00 a.m. ET. The conference call will be webcast live on the PGE website at PortlandGeneral.com. A replay of the call will be available beginning at 2:00 p.m. ET on Thursday, November 8, 2012 through Thursday, November 15, 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 829,000 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 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 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
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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; failure to complete capital projects on schedule and within budget, or the abandonment of capital projects 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 September 30, | Nine Months Ended September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Revenues, net | $ | 450 | $ | 439 | $ | 1,342 | $ | 1,334 | |||||||
Operating expenses: | |||||||||||||||
Purchased power and fuel | 182 | 182 | 533 | 545 | |||||||||||
Production and distribution | 49 | 50 | 153 | 147 | |||||||||||
Administrative and other | 50 | 55 | 160 | 158 | |||||||||||
Depreciation and amortization | 63 | 59 | 188 | 170 | |||||||||||
Taxes other than income taxes | 24 | 25 | 77 | 74 | |||||||||||
Total operating expenses | 368 | 371 | 1,111 | 1,094 | |||||||||||
Income from operations | 82 | 68 | 231 | 240 | |||||||||||
Other income (expense): | |||||||||||||||
Allowance for equity funds used during construction | 1 | 1 | 4 | 3 | |||||||||||
Miscellaneous income (expense), net | — | (4 | ) | 2 | (1 | ) | |||||||||
Other income (expense), net | 1 | (3 | ) | 6 | 2 | ||||||||||
Interest expense | 27 | 27 | 82 | 82 | |||||||||||
Income before income taxes | 56 | 38 | 155 | 160 | |||||||||||
Income taxes | 19 | 11 | 43 | 42 | |||||||||||
Net income | 37 | 27 | 112 | 118 | |||||||||||
Less: net loss attributable to noncontrolling interests | (1 | ) | — | (1 | ) | — | |||||||||
Net income attributable to Portland General Electric Company | $ | 38 | $ | 27 | $ | 113 | $ | 118 | |||||||
Weighted-average shares outstanding (in thousands): | |||||||||||||||
Basic | 75,528 | 75,342 | 75,486 | 75,329 | |||||||||||
Diluted | 75,541 | 75,358 | 75,500 | 75,345 | |||||||||||
Earnings per share — basic and diluted | $ | 0.50 | $ | 0.36 | $ | 1.49 | $ | 1.57 | |||||||
Dividends declared per common share | $ | 0.270 | $ | 0.265 | $ | 0.805 | $ | 0.790 | |||||||
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PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
September 30, 2012 | December 31, 2011 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 156 | $ | 6 | |||
Accounts receivable, net | 129 | 144 | |||||
Unbilled revenues | 75 | 101 | |||||
Inventories | 78 | 71 | |||||
Margin deposits | 53 | 80 | |||||
Regulatory assets — current | 154 | 216 | |||||
Deferred income tax assets | 40 | 33 | |||||
Other current assets | 99 | 65 | |||||
Total current assets | 784 | 716 | |||||
Electric utility plant, net | 4,351 | 4,285 | |||||
Regulatory assets — noncurrent | 490 | 594 | |||||
Nuclear decommissioning trust | 37 | 37 | |||||
Non-qualified benefit plan trust | 32 | 36 | |||||
Other noncurrent assets | 63 | 65 | |||||
Total assets | $ | 5,757 | $ | 5,733 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 76 | $ | 111 | |||
Liabilities from price risk management activities — current | 147 | 216 | |||||
Short-term debt | — | 30 | |||||
Current portion of long-term debt | 200 | 100 | |||||
Accrued expenses and other current liabilities | 225 | 157 | |||||
Total current liabilities | 648 | 614 | |||||
Long-term debt, net of current portion | 1,536 | 1,635 | |||||
Regulatory liabilities — noncurrent | 760 | 720 | |||||
Deferred income taxes | 598 | 529 | |||||
Liabilities from price risk management activities — noncurrent | 90 | 172 | |||||
Unfunded status of pension and postretirement plans | 201 | 195 | |||||
Non-qualified benefit plan liabilities | 102 | 101 | |||||
Other noncurrent liabilities | 103 | 101 | |||||
Total liabilities | 4,038 | 4,067 | |||||
Total equity | 1,719 | 1,666 | |||||
Total liabilities and equity | $ | 5,757 | $ | 5,733 | |||
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PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Nine Months Ended September 30, | |||||||
2012 | 2011 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 112 | $ | 118 | |||
Depreciation and amortization | 188 | 170 | |||||
Other non-cash items, net, included in Net income | 99 | 109 | |||||
Changes in working capital | 57 | 46 | |||||
Contributions to pension plan and voluntary employees’ beneficiary association trust | (2 | ) | (40 | ) | |||
Other, net | (4 | ) | (4 | ) | |||
Net cash provided by operating activities | 450 | 399 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (218 | ) | (215 | ) | |||
Proceeds received from sale of solar power facility | 10 | — | |||||
Other, net | (1 | ) | 1 | ||||
Net cash used in investing activities | (209 | ) | (214 | ) | |||
Cash flows from financing activities: | |||||||
Payments on long-term debt | — | (10 | ) | ||||
Maturities of commercial paper, net | (30 | ) | (19 | ) | |||
Dividends paid | (61 | ) | (59 | ) | |||
Noncontrolling interests’ capital distributions | — | (4 | ) | ||||
Net cash used in financing activities | (91 | ) | (92 | ) | |||
Increase in cash and cash equivalents | 150 | 93 | |||||
Cash and cash equivalents, beginning of period | 6 | 4 | |||||
Cash and cash equivalents, end of period | $ | 156 | $ | 97 | |||
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PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
SUPPLEMENTAL OPERATING STATISTICS
(Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Revenues (dollars in millions): | |||||||||||||||
Retail: | |||||||||||||||
Residential | $ | 187 | $ | 184 | $ | 630 | $ | 635 | |||||||
Commercial | 168 | 167 | 476 | 474 | |||||||||||
Industrial | 57 | 59 | 166 | 168 | |||||||||||
Subtotal | 412 | 410 | 1,272 | 1,277 | |||||||||||
Other accrued (deferred) revenues, net | 10 | (4 | ) | 6 | (18 | ) | |||||||||
Total retail revenues | 422 | 406 | 1,278 | 1,259 | |||||||||||
Wholesale revenues | 19 | 24 | 38 | 49 | |||||||||||
Other operating revenues | 9 | 9 | 26 | 26 | |||||||||||
Total revenues | $ | 450 | $ | 439 | $ | 1,342 | $ | 1,334 | |||||||
Energy sold and delivered (MWh in thousands): | |||||||||||||||
Retail energy sales: | |||||||||||||||
Residential | 1,626 | 1,598 | 5,506 | 5,604 | |||||||||||
Commercial | 1,848 | 1,879 | 5,239 | 5,297 | |||||||||||
Industrial | 886 | 931 | 2,573 | 2,667 | |||||||||||
Total retail energy sales | 4,360 | 4,408 | 13,318 | 13,568 | |||||||||||
Delivery to direct access customers: | |||||||||||||||
Commercial | 115 | 91 | 327 | 263 | |||||||||||
Industrial | 210 | 158 | 607 | 489 | |||||||||||
325 | 249 | 934 | 752 | ||||||||||||
Total retail energy sales and deliveries | 4,685 | 4,657 | 14,252 | 14,320 | |||||||||||
Wholesale energy deliveries | 771 | 780 | 1,861 | 1,848 | |||||||||||
Total energy sold and delivered | 5,456 | 5,437 | 16,113 | 16,168 | |||||||||||
Number of retail customers at end of period: | |||||||||||||||
Residential | 723,804 | 719,993 | |||||||||||||
Commercial | 104,749 | 104,341 | |||||||||||||
Industrial | 216 | 237 | |||||||||||||
Direct access | 511 | 246 | |||||||||||||
Total retail customers | 829,280 | 824,817 | |||||||||||||
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PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
SUPPLEMENTAL OPERATING STATISTICS, continued
(Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||
Sources of energy (MWh in thousands): | |||||||||||
Generation: | |||||||||||
Thermal: | |||||||||||
Coal | 995 | 1,200 | 2,280 | 2,708 | |||||||
Natural gas | 856 | 723 | 1,993 | 1,058 | |||||||
Total thermal | 1,851 | 1,923 | 4,273 | 3,766 | |||||||
Hydro | 331 | 345 | 1,461 | 1,524 | |||||||
Wind | 341 | 379 | 964 | 1,025 | |||||||
Total generation | 2,523 | 2,647 | 6,698 | 6,315 | |||||||
Purchased power: | |||||||||||
Term | 1,895 | 1,337 | 6,042 | 5,057 | |||||||
Hydro | 422 | 766 | 1,358 | 2,489 | |||||||
Wind | 95 | 95 | 272 | 203 | |||||||
Spot | 460 | 617 | 1,641 | 2,200 | |||||||
Total purchased power | 2,872 | 2,815 | 9,313 | 9,949 | |||||||
Total system load | 5,395 | 5,462 | 16,011 | 16,264 | |||||||
Less: wholesale sales | (771 | ) | (780 | ) | (1,861 | ) | (1,848 | ) | |||
Retail load requirement | 4,624 | 4,682 | 14,150 | 14,416 | |||||||
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 | |||||||
Third Quarter | 58 | 51 | 395 | 346 | |||||||
Average | 81 | 87 | 387 | 393 | |||||||
Year-to-date | 2,734 | 2,971 | 435 | 362 | |||||||
Year-to-date average | 2,643 | 2,630 | 455 | 462 | |||||||
Note: “Average” amounts represent the 15-year rolling averages provided by the National Weather Service (Portland Airport).
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Earnings Conference Call Third Quarter 2012 1 Exhibit 99.2
Cautionary Statement 2 Information Current as of November 8, 2012 Except as expressly noted, the information in this presentation is current as of November 8, 2012 — the date on which PGE filed its Quarterly Report on Form 10-Q for the quarterly period ended September 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 and related future capital expenditures, 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; failure to complete projects on schedule and within budget, or the abandonment of capital projects, 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
Q3 2012 Earnings Results 4 in millions Q3 2011 Q3 2012 YTD Q3 2011 YTD Q3 2012 Net Income $27 $38 $118 $113 Q1 $0.92 Q1 $0.65 Q2 $0.29 Q2 $0.34 Q3 $0.36 Q3 $0.50 Q4 $0.38 Q4 $0.36- $0.51 2011 EPS 2012 EPS $1.95 $1.85-$2.00
On Today’s Call 5 Economic Outlook Operational Excellence Business Growth Financial Update Q&A Session
Economic Outlook 6 Growth in Operating Area • High-technology – Intel’s D1X fab – Data centers • Parts manufacturing and health care sector • 4,500 new customers since September 30, 2011 September 2011 September 2012 Oregon 9.5% 8.7% PGE’s operating area 8.3% 7.6% Unemployment Rate Economy Continues to Improve
Operational Excellence 7 1st quartile in system power quality and reliability metrics Q3 2012 generating plant availability: 93%
Capacity and Energy RFP 8 Capacity 200 MW year-round flexible resource 200 MW bi-seasonal peaker 150 MW winter-only peaker Energy 300-500 MW base load resource November 2012 Identify initial short list December 2012 Identify final short list Q4 2012 - Q1 2013 Begin negotiations with bidders on final short list Q1 2013 Independent Evaluator issues final closing report to OPUC Q1-Q2 2013 Final resource selection Next Steps
Renewable RFP 9 100 MWa of renewable energy Wind, biomass, solar, or other Bidders can submit a PPA, a build own transfer, or an asset purchase agreement of an existing facility PGE has submitted a benchmark bid Next Steps October 2012 Renewable RFP issued to market; PGE benchmark submitted November 2012 All third-party bids due Q1 2013 Identify initial and then final short list of projects Q1 2013 Independent Evaluator issues final closing report to OPUC Q1-Q2 2013 Final resource selection
Cascade Crossing Transmission Project 10 Permitting Processes 1. Environmental Impact Study from USDA Forest Service 2. Environmental analysis and easements from the Confederated Tribes of the Warm Springs Ongoing Discussions 1. Bonneville Power Administration 2. PacifiCorp 3. Confederated Tribes of the Warm Springs 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 no earlier than 2017 Next Steps
Third Quarter Financial Results 11 Quarter over Quarter Earnings Drivers 2% increase in residential energy deliveries related to warmer weather this summer Adjustment to 2011 Power Cost Adjustment Mechanism refund An investment gain on non-qualified benefit plan trust assets compared to an investment loss in Q3 2011 NI in millions Q3 2011 Q3 2012 YTD Q3 2011 YTD Q3 2012 Net Income $27 $38 $118 $113 EPS $0.36 $0.50 $1.57 $1.49
Retail Revenues and Load 12 Q3 YTD Q3 Full Year Forecast -0.4% 0.5% 0.5% $406 $422 2011 2012 Q3 Retail Revenues (in millions) Quarter over Quarter Drivers of Retail Revenue Weather-Adjusted Load Growth: 2012 over 2011(1) (1) Excludes certain industrial customers that have little impact on margin Adjustment to the 2011 PCAM Refund 1% decrease in average price Increase in number of customers purchasing power from an energy service supplier
Purchased Power and Fuel 13 Q3 2011 Q3 2012 YTD Q3 2011 YTD Q3 2012 $182 $182 $545 $533 Net Variable Power Costs (in millions) NVPC Baseline Q1 2012: $5 million below baseline Q2 2012: $5 million below baseline YTD 2012: $14 million below baseline Q3 2012: $4 million below baseline Lower Deadband $15M below baseline Power cost savings greater than $15 million are shared with customers if PGE’s regulated earnings are greater than 11%
O&M, Depreciation and Capital Expenditures 14 Q3 2011 Q3 2012 YTD 2011 YTD 2012 Production & Distribution $50 $49 $147 $153 Administrative & General $55 $50 $158 $160 Total O&M $105 $99 $305 $313 Depreciation & Amortization $59 $63 $170 $188 $69 $68 $81 $110 Q4 (Estimated) Q3 Q2 Q1 2012 Capital Expenditures in millions $328 in millions
Financial Position 15 Senior Secured Senior Unsecured Outlook S&P A- BBB Stable Moody’s A3 Baa2 Positive Credit Ratings Total Liquidity as of 9/30/12 (in millions) Lines of Credit $660 Letters of Credit $(61) Cash $156 Available $755
2012 Earnings Guidance 16 Weather-adjusted load growth of 0.5% Favorable power supply operations Capital projects: $16 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