Portland General Electric Announces Third Quarter 2015 Results
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Financial and operating performance on track for 2015 and earnings
guidance reaffirmed at
$2.05 -$2.20 per share -
Carty Generating Station on budget and scheduled to be in-service in the second quarter of 2016 - Settlement reached on all issues in the 2016 general rate case
"Although our financial results were lower quarter over quarter, we are
on track to meet our revised 2015 financial targets, and I'm pleased
with our solid operations and strong load growth supported by continued
positive economic trends in Oregon," said
When compared to the prior year, earnings in the third quarter of 2015
were positively impacted by new generating resources (approx.
Company Updates
2016 General Rate Case: During the third quarter of 2015, PGE,
- A capital structure of 50% debt and 50% equity;
- A return on equity of 9.6%, down from the current authorized rate of 9.68%;
- A cost of capital of 7.52%; and
-
An average rate base of
$4.4 billion .
On
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Stipulations and |
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As Filed | Updates through |
Updates through |
As Revised | ||||||||
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Carty |
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Base business cost* |
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Supplemental tariff updates |
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Annual revenue requirement, net |
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* The July reduction in base business revenue requirement includes
various Operating and Maintenance and other cost adjustments ( |
The net annual revenue requirement increase of
Updates to power costs and actual cost of debt, to be finalized in
Third quarter operating results |
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Earnings Reconciliation of Q3 2014 to Q3 2015 | ||||||||||||||
($ in millions, except EPS) | Pre-Tax Income | Net Income* | Diluted EPS | |||||||||||
Reported Q3 2014 | $ | 54 | $ | 39 | $ | 0.47 | ||||||||
Adjustment for change in share count | (0.05 | ) | ||||||||||||
EPS After share count adjustment | 0.42 | |||||||||||||
Revenue Adjustments | ||||||||||||||
Electric retail price and volume | 12 | 7 | 0.08 | |||||||||||
Supplemental tariffs | (7 | ) | (4 | ) | (0.05 | ) | ||||||||
Electric wholesale price and volume | (10 | ) | (6 | ) | (0.07 | ) | ||||||||
Other revenue adjustments | (3 | ) | (2 | ) | (0.01 | ) | ||||||||
Change in Revenue | (8 | ) | (5 | ) | (0.05 | ) | ||||||||
Power Cost Adjustments | ||||||||||||||
Average power cost | 18 | 11 | 0.13 | |||||||||||
Purchased power and generating volume | 3 | 2 | 0.02 | |||||||||||
Change in Power Costs | 21 | 13 | 0.15 | |||||||||||
O&M Adjustments | ||||||||||||||
Generation, transmission, distribution | (4 | ) | (3 | ) | (0.03 | ) | ||||||||
Administrative and general | (5 | ) | (3 | ) | (0.03 | ) | ||||||||
Change in O&M | (9 | ) | (6 | ) | (0.06 | ) | ||||||||
Other Item Adjustments | ||||||||||||||
Depreciation & amortization | — | — | — | |||||||||||
Interest | (5 | ) | (3 | ) | (0.03 | ) | ||||||||
AFDC equity** | (5 | ) | (5 | ) | (0.06 | ) | ||||||||
Other Items | (4 | ) | (2 | ) | (0.03 | ) | ||||||||
Adjustment for effective vs statutory tax rate | 5 | 0.06 | ||||||||||||
Change in Other Items | (14 | ) | (5 | ) | (0.06 | ) | ||||||||
Reported Q3 2015 | $ | 44 | $ | 36 | $ | 0.40 | ||||||||
* After tax adjustments based on PGE's statutory tax rate of 39.5% | ||||||||||||||
** Statutory tax rate applied only to AFDC debt | ||||||||||||||
Retail revenues increased
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A
$10 million increase related to a 2.3 percent increase in average customer prices largely resulting from the 2015 general rate case; and -
A
$2 million increase related to a 0.6 percent higher volume of retail energy delivered in the third quarter of 2015 compared with the third quarter of 2014, with an increase in residential and industrial deliveries of 0.2 percent and 4.0 percent, respectively and a decrease in commercial deliveries of 0.9 percent; partially offset by -
A
$7 million decrease related to various supplemental tariff changes, including the return of$5 million to customers in the third quarter of 2015 of proceeds received in connection with the settlement of a legal matter related to the operation of the Independent Spent Fuel Storage Installation (ISFSI) at the Trojan nuclear power plant, which was closed in 1993 (offset in depreciation and amortization).
Net variable power costs (purchased power and fuel expense, net
of wholesale revenues) decreased
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An
$18 million decrease related to a 9 percent decline in the average variable power cost per MWh; and -
A
$3 million decrease related to a 2 percent decline in total system load which included both retail and wholesale loads; partially offset by -
A
$10 million decrease in wholesale revenue, related to a 16 percent decrease in wholesale sales volume and a 12 percent decrease in wholesale prices.
For the third quarter of 2015, actual NVPC were
Generation, transmission and distribution expense increased
Administrative and other expense in the third quarter of
2015 was
Depreciation and amortization expense in the third quarter
of 2015 was comparable to the third quarter of 2014. A
Interest expense in the third quarter of 2015 was
Other income, net in the third quarter of 2015 was
Income tax expense was
2015 earnings guidance
PGE is reaffirming its full-year 2015 earnings guidance of
- Annual weather adjusted load growth of approximately 2 percent;
- Below average hydro conditions for the year;
- Normal thermal plant and wind generation for the remainder of the year;
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Depreciation and amortization expense between
$300 and$310 million ; and, -
Capital expenditures of
$580 million .
Third Quarter 2015 earnings call and web cast —
PGE will host a conference call with financial analysts and investors on
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
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; 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
POR-F
Source:
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||
(In millions, except per share amounts) |
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(Unaudited) |
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Three Months Ended | Nine Months Ended | ||||||||||||||||
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2015 | 2014 | 2015 | 2014 | ||||||||||||||
Revenues, net | $ | 476 | $ | 484 | $ | 1,399 | $ | 1,400 | |||||||||
Operating expenses: | |||||||||||||||||
Purchased power and fuel | 181 | 202 | 490 | 528 | |||||||||||||
Generation, transmission and distribution | 64 | 60 | 192 | 181 | |||||||||||||
Administrative and other | 59 | 54 | 179 | 164 | |||||||||||||
Depreciation and amortization | 76 | 76 | 227 | 224 | |||||||||||||
Taxes other than income taxes | 28 | 27 | 86 | 82 | |||||||||||||
Total operating expenses | 408 | 419 | 1,174 | 1,179 | |||||||||||||
Income from operations | 68 | 65 | 225 | 221 | |||||||||||||
Interest expense (1) | 28 | 23 | 86 | 71 | |||||||||||||
Other income: | |||||||||||||||||
Allowance for equity funds used during construction | 6 | 11 | 15 | 26 | |||||||||||||
Miscellaneous income, net | (2 | ) | 1 | — | 1 | ||||||||||||
Other income, net | 4 | 12 | 15 | 27 | |||||||||||||
Income before income tax expense | 44 | 54 | 154 | 177 | |||||||||||||
Income tax expense | 8 | 16 | 33 | 46 | |||||||||||||
Net income | 36 | 38 | $ | 121 | $ | 131 | |||||||||||
Less: net loss attributable to noncontrolling interests | — | (1 | ) | — | (1 | ) | |||||||||||
Net income attributable to |
$ | 36 | $ | 39 | $ | 121 | $ | 132 | |||||||||
Weighted-average shares outstanding (in thousands): | |||||||||||||||||
Basic | 88,766 | 78,203 | 82,633 | 78,170 | |||||||||||||
Diluted | 88,766 | 80,225 | 82,633 | 79,977 | |||||||||||||
Earnings per share: | |||||||||||||||||
Basic | $ | 0.40 | $ | 0.48 | $ | 1.47 | $ | 1.67 | |||||||||
Diluted | $ | 0.40 | $ | 0.47 | $ | 1.47 | $ | 1.63 | |||||||||
Dividends declared per common share | $ | 0.300 | $ | 0.280 | $ | 0.880 | $ | 0.835 |
(1) Net of an allowance for borrowed funds used during construction
of |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(In millions) |
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(Unaudited) |
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2015 | 2014 | |||||||
ASSETS |
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Current assets: | ||||||||
Cash and cash equivalents | $ | 92 | $ | 127 | ||||
Accounts receivable, net | 133 | 149 | ||||||
Unbilled revenues | 72 | 93 | ||||||
Inventories | 94 | 82 | ||||||
Regulatory assets—current |
122 | 133 | ||||||
Other current assets | 92 | 115 | ||||||
Total current assets | 605 | 699 | ||||||
Electric utility plant, net | 5,920 | 5,679 | ||||||
Regulatory assets—noncurrent | 547 | 494 | ||||||
Nuclear decommissioning trust | 40 | 90 | ||||||
Non-qualified benefit plan trust | 33 | 32 | ||||||
Other noncurrent assets | 52 | 48 | ||||||
Total assets | $ | 7,197 | $ | 7,042 | ||||
LIABILITIES AND EQUITY |
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Current liabilities: | ||||||||
Accounts payable | $ | 96 | $ | 156 | ||||
Liabilities from price risk management activities—current |
115 | 106 | ||||||
Current portion of long-term debt | — | 375 | ||||||
Accrued expenses and other current liabilities | 254 | 236 | ||||||
Total current liabilities | 465 | 873 | ||||||
Long-term debt, net of current portion | 2,204 | 2,126 | ||||||
Regulatory liabilities—noncurrent | 939 | 906 | ||||||
Deferred income taxes | 664 | 625 | ||||||
Unfunded status of pension and postretirement plans | 246 | 237 | ||||||
Liabilities from price risk management activities—noncurrent | 184 | 122 | ||||||
Asset retirement obligations | 137 | 116 | ||||||
Non-qualified benefit plan liabilities | 105 | 105 | ||||||
Other noncurrent liabilities | 21 | 21 | ||||||
Total liabilities | 4,965 | 5,131 | ||||||
Total equity | 2,232 | 1,911 | ||||||
Total liabilities and equity | $ | 7,197 | $ | 7,042 | ||||
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(In millions) |
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(Unaudited) |
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Nine Months Ended |
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2015 | 2014 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 121 | $ | 131 | ||||
Depreciation and amortization | 227 | 224 | ||||||
Other non-cash income and expenses, net included in Net income | 70 | 61 | ||||||
Changes in working capital | 41 | 65 | ||||||
Proceeds received from legal settlement | — | 6 | ||||||
Other, net | (20 | ) | (14 | ) | ||||
Net cash provided by operating activities | 439 | 473 | ||||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (452 | ) | (824 | ) | ||||
Distribution from Nuclear decommissioning trust | 50 | (6 | ) | |||||
Sales tax refund received related to |
23 | — | ||||||
Other, net | 2 | 9 | ||||||
Net cash used in investing activities | (377 | ) | (821 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of common stock, net of issuance costs | 271 | — | ||||||
Repayment of long-term debt, net of issuances | (298 | ) | 404 | |||||
Dividends paid | (70 | ) | (66 | ) | ||||
Net cash (used in) provided by financing activities | (97 | ) | 338 | |||||
Decrease in cash and cash equivalents | (35 | ) | (10 | ) | ||||
Cash and cash equivalents, beginning of period | 127 | 107 | ||||||
Cash and cash equivalents, end of period | $ | 92 | $ | 97 | ||||
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SUPPLEMENTAL OPERATING STATISTICS | |||||||||||||||||
(Unaudited) |
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Three Months Ended | Nine Months Ended | ||||||||||||||||
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2015 | 2014 | 2015 | 2014 | ||||||||||||||
Revenues (dollars in millions): | |||||||||||||||||
Retail: | |||||||||||||||||
Residential | $ | 213 | $ | 208 | $ | 647 | $ | 653 | |||||||||
Commercial | 176 | 176 | 498 | 493 | |||||||||||||
Industrial | 59 | 59 | 172 | 164 | |||||||||||||
Subtotal | 448 | 443 | 1,317 | 1,310 | |||||||||||||
Other retail revenues, net | (9 | ) | (9 | ) | (11 | ) | (11 | ) | |||||||||
Total retail revenues | 439 | 434 | 1,306 | 1,299 | |||||||||||||
Wholesale revenues | 29 | 39 | 66 | 73 | |||||||||||||
Other operating revenues | 8 | 11 | 27 | 28 | |||||||||||||
Total revenues | $ | 476 | $ | 484 | $ | 1,399 | $ | 1,400 | |||||||||
Energy sold and delivered (MWh in thousands): | |||||||||||||||||
Retail energy sales: | |||||||||||||||||
Residential | 1,749 | 1,746 | 5,308 | 5,472 | |||||||||||||
Commercial | 1,862 | 1,872 | 5,246 | 5,198 | |||||||||||||
Industrial | 870 | 848 | 2,563 | 2,373 | |||||||||||||
Total retail energy sales | 4,481 | 4,466 | 13,117 | 13,043 | |||||||||||||
Retail energy deliveries: | |||||||||||||||||
Commercial | 145 | 154 | 401 | 423 | |||||||||||||
Industrial | 313 | 290 | 875 | 823 | |||||||||||||
Total retail energy deliveries | 458 | 444 | 1,276 | 1,246 | |||||||||||||
Total retail energy sales and deliveries | 4,939 | 4,910 | 14,393 | 14,289 | |||||||||||||
Wholesale energy deliveries | 836 | 999 | 1,954 | 1,892 | |||||||||||||
Total energy sold and delivered | 5,775 | 5,909 | 16,347 | 16,181 | |||||||||||||
Number of retail customers at end of period: | |||||||||||||||||
Residential | 744,172 | 736,289 | |||||||||||||||
Commercial | 106,892 | 106,188 | |||||||||||||||
Industrial | 197 | 203 | |||||||||||||||
Direct access | 389 | 430 | |||||||||||||||
Total retail customers | 851,650 | 843,110 | |||||||||||||||
Heating Degree-days | Cooling Degree-days | ||||||||||||
2015 | 2014 | Average | 2015 | 2014 | Average | ||||||||
First quarter | 1,481 | 1,891 | 1,864 | — | — | — | |||||||
Second quarter | 513 | 530 | 713 | 207 | 57 | 70 | |||||||
Third quarter | 76 | 18 | 85 | 573 | 579 | 383 | |||||||
Year-to-date | 2,070 | 2,439 | 2,662 | 780 | 636 | 453 |
* — "Average" amounts represent the 15-year rolling averages
provided by the |
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SUPPLEMENTAL OPERATING STATISTICS, continued | |||||||||||||
(Unaudited) |
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Three Months Ended | Nine Months Ended | ||||||||||||
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2015 | 2014 | 2015 | 2014 | ||||||||||
Sources of energy (MWh in thousands): | |||||||||||||
Generation: | |||||||||||||
Thermal: | |||||||||||||
Coal | 1,445 | 1,479 | 2,656 | 3,079 | |||||||||
Natural gas | 1,702 | 1,282 | 3,356 | 2,273 | |||||||||
Total thermal | 3,147 | 2,761 | 6,012 | 5,352 | |||||||||
Hydro | 267 | 311 | 1,063 | 1,292 | |||||||||
Wind | 568 | 332 | 1,371 | 953 | |||||||||
Total generation | 3,982 | 3,404 | 8,446 | 7,597 | |||||||||
Purchased power: | |||||||||||||
Term | 527 | 916 | 3,403 | 4,698 | |||||||||
Hydro | 326 | 352 | 1,239 | 1,219 | |||||||||
Wind | 88 | 102 | 241 | 267 | |||||||||
Spot | 733 | 977 | 2,594 | 2,018 | |||||||||
Total purchased power | 1,674 | 2,347 | 7,477 | 8,202 | |||||||||
Total system load | 5,656 | 5,751 | 15,923 | 15,799 | |||||||||
Less: wholesale sales | (836 | ) | (999 | ) | (1,954 | ) | (1,892 | ) | |||||
Retail load requirement | 4,820 | 4,752 | 13,969 | 13,907 |
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