CEO succession plan implemented
- Jim Piro, president and Chief Executive
Officer, to retire at the end of 2017. Maria Pope, senior vice
president, Power Supply, Operations and Resource Strategy, to
become president Oct. 1 and succeed Piro effective Jan. 1
- Second quarter results reflect strong
retail deliveries due to favorable weather and customer growth,
offset by lower wind generation and restoration costs for a severe
April wind storm
- Integrated Resource Planning continues:
Several options identified to meet the company’s future capacity
needs as the result of productive bilateral negotiations
Portland General Electric Company (NYSE: POR) today reported net
income of $32 million, or 36 cents per diluted share, for the
second quarter of 2017. This compares with net income of $37
million, or 42 cents per diluted share, for the second quarter of
2016. The company is reaffirming 2017 earnings guidance of
$2.20-$2.35 per diluted share.
“We remain in a good position to meet our financial targets for
the year,” said Jim Piro, CEO and president of Portland General
Electric. “We are making progress on our key initiatives, and the
strength of our local economy is contributing to increased energy
deliveries to industrial customers and a growing customer
base.”
Q2 2017 earnings compared to Q2 2016
earnings
The decrease in second quarter earnings per diluted share for
2017 in comparison to the second quarter of 2016 was due to storm
restoration efforts resulting from a severe April wind storm, a
decrease in production tax credits due to lower wind generation, as
well as incremental generation maintenance and repair costs. Also
contributing to the decrease were Carty litigation costs and
depreciation expense and carrying costs for Carty related to
incremental construction costs not included in customer prices. The
additional costs were partially offset by increased deliveries to
retail customers driven by favorable weather and high tech growth
in the industrial sector, as well as favorable estimated
collections from the decoupling mechanism.
Company Updates
PGE announces succession planJim Piro, president and
chief executive officer (CEO), notified the board of directors on
July 26, 2017 of his decision to retire from Portland General
Electric on Dec. 31, 2017. As part of the company’s leadership
succession plan, the board of directors has appointed Maria Pope,
senior vice president of Power Supply, Operations and Resource
Strategy, to succeed Mr. Piro. Ms. Pope will assume the role of
company president on Oct. 1, 2017, and the role of CEO and member
of the board of directors effective Jan. 1, 2018.
Integrated Resource PlanPGE filed its 2016 Integrated
Resource Plan (IRP) with the Oregon Public Utility Commission
(OPUC), including a four-year Action Plan. PGE’s Action Plan calls
for a minimum of 135 MWa of cost-effective energy efficiency, 77 MW
of demand response, the addition of approximately 175 MWa of
qualifying renewable resources, and 561 MW of dispatchable
capacity. As part of the OPUC process, PGE and parties have filed
additional comments and held workshops to address stakeholder
questions and identify the best strategy for achieving a renewable,
reliable, affordable energy future for customers. Next steps in the
process include OPUC Staff’s final comments on July 28, 2017 and a
Public Meeting on August 8, 2017. The company is expecting the
OPUC to issue a decision on its IRP by August 31, 2017.
PGE is engaged in productive bilateral negotiations with owners
of existing regional resources to fill its capacity needs. By
mid-August, upon completing detailed term sheets with potential
sellers, the company intends to file for a waiver of the OPUC
guidelines that call for a competitive bidding process for
resources greater than 100 MWs and a term of more than five years.
Following acknowledgment of the IRP and the outcomes of the
bilateral negotiations and waiver process, PGE may request approval
from the OPUC to issue a request for proposals for (RFPs) for any
remaining capacity need. PGE has also proposed conducting an
RFP for renewable resources as soon as possible after the
commission issues an acknowledgement order. The RFP processes will
include review and input by stakeholders, oversight by an
independent evaluator who reports to the OPUC staff, and overall
review by the OPUC itself.
Since issuing the IRP, PGE has identified a potential benchmark
wind resource that could have a nameplate capacity of up to
approximately 500 MW, and which would qualify for the production
tax credit. The company is continuing to explore this option. The
submission of this resource into an RFP for renewable resources as
a benchmark bid is subject to additional due diligence by PGE and
the negotiation and execution of definitive agreements.
PGE’s IRP puts the company ahead of schedule for Oregon’s
Renewable Portfolio Standard goals and enables the company to serve
approximately 50 percent of its customers’ energy from carbon-free
resources by 2020.
2018 General Rate CaseOn Feb. 28, 2017, PGE filed a
general rate case with the Public Utility Commission of Oregon
(OPUC) based on a 2018 test year.
As part of its commitment to provide safe, reliable, sustainable
and affordable energy to customers, the company filed a request for
a $100 million increase in the annual revenue requirement related
to increased base business costs. These costs are related primarily
to necessary upgrades to the transmission and distribution system,
investments in strengthening and safeguarding the grid, and
investments that will integrate more renewable resources and
enhance system reliability. PGE’s request would result in an
average overall increase of 5.6%.The net increase in annual revenue
requirement is based upon:
- A return on equity of 9.75%;
- A capital structure of 50% debt and 50%
equity;
- Rate base of $4.6 billion.
PGE has reached settlements on depreciation expense, net
variable power cost (NVPC), and a partial settlement on non-NVPC
issues. PGE filed its reply testimony on the remaining items
on July 18, 2017. Regulatory review of the 2018 General Rate Case
will continue throughout 2017, with a final order from the OPUC
targeted for the end of 2017. New customer prices are expected to
become effective Jan. 1, 2018. The filing can be found at
http://apps.puc.state.or.us/edockets/search.asp under docket number
UE 319.
Second quarter operating
results
Earnings Reconciliation of Q2 2016 to Q2 2017 ($
in millions, except EPS)
Pre-TaxIncome
Net Income*
Diluted EPS**
Reported Q2 2016 $ 46 $
37 $ 0.42 Revenue Electric
Retail price change 4 2 0.03 Electric Retail volume change 11 7
0.07 Change in decoupling deferral 4 3 0.03 Electric wholesale
price and volume change 2 1 0.01
Change in Revenue 21 13 0.14
Power Cost
Change in average power cost 7 4
0.05 Change purchased power and generation 1 1
0.01
Change in Power Costs 8 5
0.06
O&M
Generation, transmission, distribution (17 ) (10 ) (0.12 )
Administrative and general (4 ) (3 ) (0.03 )
Change in O&M (21 ) (13 )
(0.15 )
Other Items
Depreciation & amortization (3 ) (2 ) (0.02 ) AFDC Equity*** (5
) (5 ) (0.06 ) Other Items (4 ) (3 ) (0.03 )
Change in Other Items (12 )
(10 ) (0.11 ) Reported Q2
2017 $ 42 $ 32
$ 0.36 * After tax adjustments
based on PGE’s statutory tax rate of 39.5% ** Some values may not
foot due to rounding *** Statutory tax rate does not apply to AFDC
equity
Total revenues for the three months ended June 30, 2017
increased $21 million compared to the three months ended June 30,
2016, as Total retail revenues increased $16 million while Other
revenues were $3 million higher.
The change in Retail revenues resulted largely from the
following:
- An $11 million increase resulting from
2.8% greater retail energy deliveries due to favorable weather
conditions and an increase in deliveries to industrial customers,
combined with an increase of $4 million that resulted from customer
price changes. Energy deliveries to residential customers increased
4.4% in the second quarter of 2017 due in part to the effects of
weather, as temperatures in 2016 were abnormally warm during the
spring heating season, and continued customer growth. Energy
deliveries to industrial customers increased 6.5%, largely due to
strength in the high tech sector while energy deliveries to
commercial customers declined 0.7%.
- A $1 million increase resulted from
other tariffs, which included a $4 million increase in estimated
collections under the decoupling mechanism, mostly offset by a
variety of smaller items; partially offset by
- A $1 million decrease in Supplemental
tariffs as a $4 million decrease due to the timing difference
related to the Trojan spent fuel refund to customers, as the
refund, offset in Depreciation and amortization, temporarily
suspended in early 2016, has resumed, partially offset by an
increase related to the accelerated cost recovery of Colstrip and
various smaller tariffs.
Total cooling degree-days for the three months ended June 30,
2017, although below the level for the three months ended June 30,
2016, were nearly double the quarterly 15-year average. Total
heating degree-days for the three months ended June 30, 2017 were
70% above the three months ended June 30, 2016 while nearly
equivalent with historical averages.
The following table indicates the number of heating and cooling
degree-days for the three months ended June 30, 2017 and 2016,
along with 15-year averages based on weather data provided by the
National Weather Service, as measured at Portland International
Airport:
Heating Degree-days Cooling
Degree-days 2017 2016 Avg.
2017 2016 Avg. April 421 227 386
— 18 1 May 196 109 216 41 31 18 June 69 67 87
88 105 51 Totals for the quarter 686 403
689 129 154 70
Wholesale revenues for the three months ended June 30, 2017
increased $2 million, or 14%, from the three months ended June 30,
2016, and consisted of a $3 million increase related to a 27%
increase in average wholesale price partially offset by a $1
million decrease related to a 13% decrease in wholesale sales
volume.
Actual NVPC for the three months ended June 30, 2017
decreased $10 million when compared with the three months ended
June 30, 2016. The decrease was driven by a 6% decline in the
average variable power cost per MWh, and a 1% decrease in total
system load. The increase in wholesale revenues was driven
primarily by a 27% increase in the average wholesale sales price,
offset slightly by a 13% decrease in wholesale sales volume. For
the three months ended June 30, 2017, actual NVPC was $3 million
below the baseline, while the three months ended June 30, 2016
actual NVPC was $7 million below baseline NVPC.
Generation, transmission and distribution expense
increased $17 million, or 27%, in the three months ended June 30,
2017 compared with the three months ended June 30, 2016, driven
primarily by $6 million of storm restoration costs, $5 million of
operating expense for Carty (placed in service in July 2016), and
$3 million higher maintenance expense at Beaver.
Administrative and other expense increased $4 million, or
7%, in the three months ended June 30, 2017 compared with the three
months ended June 30, 2016. The increase was primarily due to a $1
million increase in legal costs related to Carty litigation and
other miscellaneous expenses.
Depreciation and amortization expense increased $3
million in the three months ended June 30, 2017 compared with the
three months ended June 30, 2016. The increase was driven by higher
depreciation expense of $4 million due to Carty going into service
in July 2016, $3 million higher depreciation expense for other
capital additions, partially offset by an amortization credit in
the second quarter of 2017 related to the Trojan spent fuel refund
to customers, which is also reflected in reduced revenues.
Increases or decreases in expense resulting from amortization of
regulatory assets or liabilities are directly offset in
revenues.
Interest expense increased $3 million, or 11% in the
three months ended June 30, 2017 compared with the three months
ended June 30, 2016, primarily due to a lower allowance for
borrowed funds used during construction, as a result of Carty going
into service in July 2016.
Other income, net decreased $5 million for the three
months ended June 30, 2017 compared with the three months ended
June 30, 2016, due to a decrease in the allowance for equity funds
used during construction, primarily related to the construction of
Carty in 2016.
Income tax expense was $10 million in the three months
ended June 30, 2017 compared with $9 million in the three months
ended June 30, 2016, with effective tax rates of 23.8% and 19.6%,
respectively. The increase in income tax expense and effective tax
rate was primarily due to lower production tax credits, partially
offset by lower pre-tax income.
2017 earnings guidance
PGE reaffirms its 2017 guidance of $2.20 - $2.35 per diluted
share. The guidance is based on the following assumptions:
- A decline in retail deliveries between
zero and one percent, weather-adjusted;
- Normal hydro conditions for the
remainder of the year based on the current hydro forecast;
- Wind generation for the remainder of
the year based on five years of historic levels or forecast studies
when historical data is not available;
- Normal thermal plant operations for the
remainder of the year;
- Depreciation and amortization expense
between $340 and $350 million;
- Revised operating and maintenance costs
between $555 and $575 million driven by increased distribution
costs.
Second Quarter 2017 earnings call and
web cast — July 28, 2017
PGE will host a conference call with financial analysts and
investors on Friday, July 28 at 11 a.m. ET. The conference
call will be webcast live on the PGE website at investors.portlandgeneral.com. A replay of the
call will be available beginning at 2 p.m. ET on Friday,
July 28, through Friday, August 4th.
Jim Piro, president and CEO; Jim Lobdell, senior vice president
of finance, CFO, and treasurer; and Chris Liddle, manager,
corporate finance and investor relations, will participate in the
call. Management will respond to questions following formal
comments.
The attached unaudited 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 fully integrated utility
based in Portland, Ore., serving approximately 872,000 residential,
commercial and industrial customers in 51 cities. For more than 125
years, PGE has been delivering safe, reliable energy to Oregonians.
With approximately 2,750 employees across the state, PGE is
committed to building a cleaner, more efficient energy future.
Together with its customers, PGE has the number one voluntary
renewable energy program in the U.S. For more information, visit
PGE’s website at investors.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 the recovery of capital costs for the Carty
Generating Station; 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; the sale of excess energy
during periods of low demand or 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; failure to complete capital projects on
schedule or within budget, or the abandonment of capital projects,
which could result in the company’s inability to recover project
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; 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
PORTLAND GENERAL ELECTRIC COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
AND COMPREHENSIVE INCOME
(Dollars in millions, except per share
amounts)
(Unaudited)
Three Months EndedJune 30,
Six Months EndedJune 30, 2017
2016 2017 2016 Revenues, net
$ 449 $ 428 $ 979
$ 915 Operating expenses: Purchased power and
fuel 118 126 259 275 Generation, transmission and distribution 81
64 162 130 Administrative and other 65 61 133 122 Depreciation and
amortization 86 83 170 165 Taxes other than income taxes 31
30 64 60 Total operating expenses 381 364
788 752
Income from operations 68
64 191 163 Interest expense, net 30 27
60 54
Other income: Allowance for equity funds used during
construction 3 8 5 15 Miscellaneous income, net 1 1 2
— Other income, net 4 9 7 15
Income
before income tax expense 42 46 138
124 Income tax expense 10 9 33 26
Net income $ 32 $ 37
$ 105 $ 98 Other
comprehensive income 1 — — —
Comprehensive
income $ 33 $ 37 $ 105 $ 98
Weighted-average shares outstanding—basic and diluted (in
thousands) 89,063 88,902 89,033 88,867
Earnings per share—basic and diluted $ 0.36 $ 0.42 $
1.18 $ 1.10 Dividends declared per common share $
0.34 $ 0.32 $ 0.66 $ 0.62
PORTLAND GENERAL ELECTRIC COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Dollars in millions)
(Unaudited)
June 30, 2017 December
31, 2016
ASSETS
Current assets: Cash and cash equivalents $ 33 $ 6 Accounts
receivable, net 139 155 Unbilled revenues 68 107 Inventories 82 82
Regulatory assets—current 47 36 Other current assets 43 77
Total current assets 412 463 Electric
utility plant, net 6,573 6,434 Regulatory assets—noncurrent 536 498
Nuclear decommissioning trust 41 41 Non-qualified benefit plan
trust 36 34 Other noncurrent assets 55 57
Total
assets $ 7,653 $ 7,527
PORTLAND GENERAL ELECTRIC COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS,
continued
(Dollars in millions)
(Unaudited)
June 30, 2017 December
31, 2016
LIABILITIES AND
EQUITY
Current liabilities: Accounts payable $ 90 $ 129 Liabilities
from price risk management activities—current 46 44 Current portion
of long-term debt 150 150 Accrued expenses and other current
liabilities 226 254
Total current liabilities
512 577 Long-term debt, net of current
portion 2,200 2,200 Regulatory liabilities—noncurrent 989 958
Deferred income taxes 685 669 Unfunded status of pension and
postretirement plans 286 281 Liabilities from price risk management
activities—noncurrent 158 125 Asset retirement obligations 165 161
Non-qualified benefit plan liabilities 106 105 Other noncurrent
liabilities 160 107
Total liabilities
5,261 5,183 Commitments and
contingencies (see notes) Equity: Portland General
Electric Company shareholders’ equity: Preferred stock, no par
value, 30,000,000 shares authorized; none issued and outstanding as
of June 30, 2017 and December 31, 2016 — — Common stock, no par
value, 160,000,000 shares authorized; 89,062,560 and 88,946,704
shares issued and outstanding as of
June 30, 2017 and December 31, 2016,
respectively
1,203 1,201 Accumulated other comprehensive loss (7 ) (7 ) Retained
earnings 1,196 1,150
Total equity 2,392
2,344 Total liabilities and equity
$ 7,653 $ 7,527
PORTLAND GENERAL ELECTRIC COMPANY AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In millions)
(Unaudited)
Six Months Ended June 30, 2017
2016 Cash flows from operating activities: Net
income $ 105 $ 98 Adjustments to reconcile net income to net cash
provided by operating activities: Depreciation and amortization 170
165 Deferred income taxes 20 20 Pension and other postretirement
benefits 13 14 Allowance for equity funds used during construction
(5 ) (15 ) Decoupling mechanism deferrals, net of amortization (15
) (3 ) Other non-cash income and expenses, net 16 12 Changes in
working capital: Decrease in accounts receivable and unbilled
revenues 55 59 Increase in inventories — (4 ) Decrease in margin
deposits, net 7 18 Decrease in accounts payable and accrued
liabilities (29 ) (13 ) Other working capital items, net 11 6
Other, net (15 ) (19 )
Net cash provided by operating
activities 333 338 Cash flows
from investing activities: Capital expenditures (245 ) (319 )
Sales of Nuclear decommissioning trust securities 11 11 Purchases
of Nuclear decommissioning trust securities (9 ) (11 ) Other, net
(2 ) —
Net cash used in investing activities
(245 ) (319 ) Cash flows from
financing activities: Proceeds from issuance of long-term debt
— 265 Payments on long-term debt — (133 ) Change in short-term debt
— (6 ) Dividends paid (57 ) (53 ) Other (4 ) (3 )
Net cash (used
in) provided by financing activities (61 )
70 Increase (Decrease) in cash and cash
equivalents 27 89 Cash and cash equivalents,
beginning of period 6 4 Cash and
cash equivalents, end of period $ 33
$ 93 Supplemental cash flow
information is as follows: Cash paid for interest, net of
amounts capitalized $ 55 $ 49 Cash paid for income taxes 13 7
Non-cash investing and financing activities: Assets obtained under
capital lease 55 57
PORTLAND GENERAL ELECTRIC COMPANY AND
SUBSIDIARIES
SUPPLEMENTAL OPERATING
STATISTICS
(Unaudited)
Three Months Ended June 30, 2017
2016 Revenues (dollars in millions):
Retail: Residential $ 203 45 % $ 191 45 % Commercial 162 36
162 38 Industrial 54 12 50 12 Subtotal
419 93 403 95 Other retail revenues, net 1 — 1
— Total retail revenues 420 93 404 95 Wholesale revenues 16
4 14 3 Other operating revenues 13 3 10 2
Total revenues $ 449 100 % $ 428 100 %
Energy deliveries (MWh in thousands): Retail: Residential
1,626 31 % 1,557 30 % Commercial 1,655 32 1,695 33 Industrial 749
14 717 14 Subtotal 4,030 77
3,969 76 Direct access: Commercial 160 3 133 3
Industrial 359 7 323 6 Subtotal 519
10 456 9 Total retail energy deliveries
4,549 87 4,425 85 Wholesale energy deliveries 673 13
773 15 Total energy deliveries 5,222 100 %
5,198 100 %
Average number of retail customers:
Residential 761,443 88 % 750,961 88 % Commercial 107,620 12 106,656
12 Industrial 196 — 190 — Direct access 572 — 375 —
Total 869,831 100 % 858,182 100 %
PORTLAND GENERAL ELECTRIC COMPANY AND
SUBSIDIARIES
SUPPLEMENTAL OPERATING STATISTICS,
continued
(Unaudited)
Three Months Ended June 30, 2017
2016 Sources of energy (MWh in thousands):
Generation: Thermal: Coal 256 5 % 360 7 % Natural gas
237 5 772 16 Total thermal 493 10 1,132
23 Hydro 528 11 379 7 Wind 504 10 628 13
Total generation 1,525 31 2,139 43
Purchased power: Term 2,815 57 2,354 47 Hydro 503 10 393 8
Wind 85 2 91 2 Total purchased power
3,403 69 2,838 57 Total system load
4,928 100 % 4,977 100 % Less: wholesale sales (673 )
(773 ) Retail load requirement 4,255 4,204
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170728005133/en/
Portland General ElectricMedia Contact:Melanie
Moir, 503-464-8790Corporate CommunicationsorInvestor
Contact:Chris Liddle, 503-464-7458Investor Relations
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