Portland General Electric Announces Third Quarter 2018 Results

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Portland General Electric Announces Third Quarter 2018 Results

  • Stipulations reached on revenue requirement in 2019 General Rate Case
  • Recognized $10 million proceeds from Carty Generating Station settlement
  • RFP shortlist submitted to the OPUC to procure 100 MWa of qualifying renewable resources

PORTLAND, Ore.--(BUSINESS WIRE)--Oct. 26, 2018-- Portland General Electric Company (NYSE: POR)today reported net income of $53 million, or 59 cents per diluted share, for the third quarter of 2018. This compares with net income of $40 million, or 44 cents per diluted share, for the third quarter of 2017.

“With the Carty settlement behind us, we can now focus our full attention on the future,” said Maria Pope, PGE president and CEO. “In addition to achieving solid operational and financial results this quarter, we have made progress toward adding new renewables and advancing several smart grid projects.”

The increase in third quarter earnings was driven by the Carty Generating Station cash settlement. Additionally, increased wholesale revenues and reductions in other expenses were partially offset by less favorable weather conditions.

Company update

Carty Generating Station

In July 2018, PGE finalized the settlement with parties related to the Carty Generating Station. As part of the settlement, PGE was paid $130 million. Of this, $120 million offset the investment on our balance sheet and the remaining $10 million, or 7 cents per share, was booked to administration and general income to reflect the partial recovery of previous expenses. For the third and fourth quarters of 2018, PGE will realize the benefit of avoided litigation and carrying costs.

2019 General Rate Case

As of September 2018, PGE has reached agreement on all revenue requirement issues in the 2019 General Rate Case. The agreements support rate base of $4.75 billion, a 9.5 percent return on equity, a 7.3 percent cost of capital and a 50 percent debt and 50 percent equity capital structure. Remaining unresolved issues involve full volumetric decoupling that would include the effects of weather, the storm restoration balancing account and application of weather trends in the load forecasting models. Review by the Public Utility Commission of Oregon (OPUC) will continue until the final order is issued, which is expected by the end of the year. New customer prices will go into effect January 1, 2019.

Renewable Request for Proposal (RFP)

In October 2018, PGE completed the review process of the Renewable Request for Proposal with oversight from an independent evaluator selected by the OPUC. PGE and a developer jointly submitted a project that includes 36 MWa of company-owned wind resources that would qualify for the federal production tax credit, and a power purchase agreement representing up to 83 MWa. The project was selected along with two other projects as part of the Final Shortlist submitted to the OPUC. The Shortlist included various combinations of wind, solar and battery storage as well as PPA and partial ownership options. PGE requested that the OPUC acknowledge the Final Shortlist by early December 2018 to enable the company to execute definitive agreements with the selected parties and allow sufficient time to capture expiring federal production tax credits for the benefit of customers. PGE expects to finalize negotiations by the end of 2018.

 

Third quarter operating results

 
Earnings Reconciliation of Q3 2017 to Q3 2018
(in $ millions, except EPS)   Pre-Tax Income     Net Income*     Diluted EPS **
Reported Q3 2017   $ 53       $ 40       $ 0.44  
Revenue                
Electric retail price change   1     1     0.01
Electric retail volume change (2 ) (2 ) (0.02 )
Change in decoupling deferral 2 1 0.01
Electric wholesale price and volume change 16 12 0.13
Other Items (7 )     (5 )     (0.06 )
Change in Revenue 10 7 0.07
                 
Power Cost                
Change in average power cost 6 4 0.05
Change in purchased power and generation (8 )     (6 )     (0.06 )
Change in Power Costs (2 ) (2 ) (0.01 )
                 
O&M                
Administrative and general 14       10       0.11  
Change in O&M 14 10 0.11
                 
Other Items                
Depreciation and amortization (9 ) (7 ) (0.07 )
Other Items (4 ) (3 ) (0.03 )
Adjustment for effective vs statutory tax rate       8       0.08  
Change in Other Items   (13 )     (2 )     (0.02 )
Reported Q3 2018   $ 62       $ 53       $ 0.59  

* After tax adjustments based on PGE’s statutory tax rate of 27.5%

** Some values may not foot due to rounding
 

The following table indicates the number of heating and cooling degree-days for the three months ended September 30, 2018 and 2017, 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
2018     2017     Avg. 2018     2017     Avg.
July 2 1 7 289 164 179
August 6 1 7 238 275 182
September 61 76 62 48 132 66
Totals 69 78 76 575 571 427
(Decrease)/increase from the 15-year average (9)% 3% 35% 34%
       

2018 earnings guidance

PGE is affirming its 2018 guidance of $2.25 to $2.40 per diluted share. The guidance is based on the following assumptions:

  • Flat weather-adjusted retail deliveries
  • Normal hydro conditions for the remainder of the year, based on the current hydro forecast
  • Wind generation based on five years of historical levels, or forecast studies when historical data is not available
  • Normal thermal plant operations
  • Depreciation and amortization expense between $370 and $380 million
  • Operating and maintenance costs between $550 and $570 million

Third Quarter 2018 earnings call and webcast — October 26, 2018

PGE will host a conference call with financial analysts and investors on Friday, October 26, 2018, 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, October 26, 2018, through 2 p.m. ET on Friday, November 2, 2018.

Maria Pope, president and CEO; Jim Lobdell, senior vice president of Finance, CFO, and treasurer; and Chris Liddle, director, Investor Relations and Treasury, will participate in the call. Management will respond to questions following formal comments.

The attached unaudited condensed consolidated statements of income and comprehensive 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 (NYSE: POR) is a fully integrated energy company based in Portland, Oregon, serving more than 885,000 customers in 51 cities. For more than 125 years, PGE has been delivering safe, affordable and reliable energy to Oregonians. Together with its customers, PGE has the No. 1 voluntary renewable energy program in the U.S. With approximately 2,900 employees across the state, PGE is committed to helping its customers and the communities it serves build a clean energy future. For more information, visit PortlandGeneral.com/CleanVision.

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, wind 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 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 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 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 Ended
September 30,

Nine Months Ended
September 30,

2018     2017 2018     2017
Revenues:
Revenues, net $ 525 $ 515 $ 1,469 $ 1,494
Alternative revenue programs, net of amortization     (2 )
Total revenues 525   515   1,467   1,494
Operating expenses:
Purchased power and fuel 186 184 420 443
Generation, transmission and distribution 72 73 212 235
Administrative and other 49 63 188 194
Depreciation and amortization 96 87 281 257
Taxes other than income taxes 31   30   95   94
Total operating expenses 434   437   1,196   1,223
Income from operations 91 78 271 271
Interest expense, net 31 30 93 90
Other income:
Allowance for equity funds used during construction 2 4 8 9
Miscellaneous income (expense), net   1     1
Other income, net 2   5   8   10
Income before income tax expense 62 53 186 191
Income tax expense 9   13   23   46
Net income and Comprehensive income $ 53   $ 40   $ 163   $ 145
 
Weighted-average common shares outstanding—basic and diluted (in thousands) 89,239   89,065   89,205   89,044
 
Earnings per share—basic and diluted $ 0.59   $ 0.44   $ 1.82   $ 1.62
 
Dividends declared per common share $ 0.3625   $ 0.3400   $ 1.0650   $ 1.0000
 
     

PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in millions)
(Unaudited)
 

September 30,
2018

December 31,
2017
Current assets:
Cash and cash equivalents $ 200 $ 39
Accounts receivable, net 189 168
Unbilled revenues 73 106
Inventories 76 78
Regulatory assets—current 42 62
Other current assets 51   73  
Total current assets 631   526  
Electric utility plant, net 6,782 6,741
Regulatory assets—noncurrent 426 438
Nuclear decommissioning trust 42 42
Non-qualified benefit plan trust 39 37
Other noncurrent assets 55   54  
Total assets $ 7,975   $ 7,838  
Current liabilities:
Accounts payable $ 110

$

132

Liabilities from price risk management activities—current 42 59
Current Portion of long-term debt 300
Accrued expenses and other current liabilities 251   241  
Total current liabilities 703   432  
Long-term debt, net of current portion 2,127 2,426
Regulatory liabilities—noncurrent 1,379 1,288
Deferred income taxes 372 376
Unfunded status of pension and postretirement plans 283 284
Liabilities from price risk management activities—noncurrent 124 151
Asset retirement obligations 196 167
Non-qualified benefit plan liabilities 106 106
Other noncurrent liabilities 199   192  
Total liabilities 5,489   5,422  
 
Equity:
Preferred stock, no par value, 30,000,000 shares authorized; none issued and outstanding as of September 30, 2018 and December 31, 2017
Common stock, no par value, 160,000,000 shares authorized; 89,244,659 and 89,114,265 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively 1,209 1,207
Accumulated other comprehensive loss (8 ) (8 )
Retained earnings 1,285   1,217  
Total equity 2,486   2,416  
Total liabilities and equity $ 7,975   $ 7,838  
 
 
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 
Nine Months Ended September 30,
2018   2017
Cash flows from operating activities:
Net income $ 163 $ 145
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 281 257
Deferred income taxes 2 35
Pension and other postretirement benefits 19 19
Allowance for equity funds used during construction (8 ) (9 )
Decoupling mechanism deferrals, net of amortization 2 (15 )
Deferral of net benefits due to Tax Reform 37
Other non-cash income and expenses, net 8 18
Changes in working capital:
Decrease in accounts receivable and unbilled revenues 12 40
Decrease in inventories 2 12
Decrease in margin deposits, net 6 4
Increase in accounts payable and accrued liabilities 17 14
Other working capital items, net 19 20
Other, net (24 ) (21 )
Net cash provided by operating activities 536   519  
Cash flows from investing activities:
Capital expenditures (401 ) (369 )
Sales of Nuclear decommissioning trust securities 11 14
Proceeds received from Carty Settlement 120
Purchases of Nuclear decommissioning trust securities (9 ) (12 )
Other, net 1   (2 )
Net cash used in investing activities (278 ) (369 )
Cash flows from financing activities:
Proceeds from issuance of long-term debt 75
Payments on long-term debt (50 )
Dividends paid (93 ) (87 )
Other (4 ) (5 )
Net cash used in financing activities (97 ) (67 )
Increase in cash and cash equivalents 161 83
Cash and cash equivalents, beginning of period 39   6  
Cash and cash equivalents, end of period $ 200   $ 89  
 
Supplemental cash flow information is as follows:
Cash paid for interest, net of amounts capitalized $ 72 $ 68
Cash paid for income taxes 20 16
Non-cash investing and financing activities
Assets obtained under leasing arrangements 18 73
 
 
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
SUPPLEMENTAL OPERATING STATISTICS

(Unaudited)

 
Three Months Ended September 30,
2018     2017
Revenues (dollars in millions):        
Retail:
Residential $ 224 43 % $ 224 43 %
Commercial 171 32 173 34
Industrial 55 10 50 10
Direct Access 9   2   10   2  
Subtotal 459 87 457 89
Alternative revenue programs, net of amortization
Other accrued (deferred) revenues, net (11 ) (2 ) (2 ) (1 )
Total retail revenues 448 85 455 89
Wholesale revenues 67 13 50 10
Other operating revenues 10   2   10   2  
Total revenues $ 525   100 % $ 515   100 %
 
Energy deliveries (MWh in thousands):
Retail:
Residential 1,712 27 % 1,817 29 %
Commercial 1,837 28 1,851 30
Industrial 844   13   752   12  
Subtotal 4,393   68   4,420   71  
Direct access:
Commercial 170 2 169 3
Industrial 368   6   366   6  
Subtotal 538   8   535   9  
Total retail energy deliveries 4,931 76 4,955 80
Wholesale energy deliveries 1,529   24   1,224   20  
Total energy deliveries 6,460   100 % 6,179   100 %
 
Average number of retail customers:
Residential 773,514 88 % 763,553 88 %
Commercial 110,028 12 108,705 12
Industrial 200 200
Direct access 604   588  
Total 884,346 100 % 873,046 100 %
 
 
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
SUPPLEMENTAL OPERATING STATISTICS, continued

(Unaudited)

 
Three Months Ended
September 30,
2018     2017
Sources of energy (MWh in thousands):        
Generation:
Thermal:
Natural gas 2,777 45 % 2,442 41 %
Coal 1,054   17   1,404   24  
Total thermal 3,831 62 3,846 65
Hydro 258 4 277 5
Wind 475   8   480   8  
Total generation 4,564   74   4,603   78  
Purchased power:
Term 1,208 20 908 15
Hydro 325 5 332 6
Wind 85   1   83   1  
Total purchased power 1,618   26   1,323   22  
Total system load 6,182   100 % 5,926   100 %
Less: wholesale sales (1,529 ) (1,224 )
Retail load requirement 4,653   4,702  

Source: Portland General Electric Company

Portland General Electric Company
Media Contact:
Andrea Platt, 503-464-7980
Corporate Communications
or
Investor Contact:
Chris Liddle, 503-464-7458
Investor Relations