News Releases

Portland General Electric Announces Third Quarter 2016 Results

  • Carty Generating Station (Carty) is operating exceptionally well
  • Draft 2016 Integrated Resource Plan (IRP) is available and final will be filed with the Oregon Public Utility Commission (OPUC) in mid-November
  • Based upon retail deliveries year-to-date, full-year retail load growth guidance has been reduced from 1 percent to zero
  • Reaffirming 2016 earnings guidance of $2.05 - $2.20 per share

PORTLAND, Ore.--(BUSINESS WIRE)-- Portland General Electric Company (NYSE: POR) today reported net income of $34 million, or 38 cents per diluted share, for the third quarter of 2016. This compares with net income of $36 million, or 40 cents per diluted share, for the third quarter of 2015. The decrease in third quarter earnings per diluted share was a result of a reduction in sales volume due to mild temperatures, a decrease in deliveries in the commercial and industrial sectors in the third quarter of 2016 in comparison to the third quarter of 2015, and expenses related to Carty not included in customer prices. These decreases were partially offset by the incremental earnings associated with the OPUC approved Carty capital costs being placed in-service, an increase in the decoupling collection, a gain on the non-qualified benefit trust and other miscellaneous items.

"We are reaffirming our guidance of $2.05-$2.20 for the year," said Jim Piro, CEO and president of Portland General Electric. "While we revised our 2016 load forecast to be flat to 2015 related to softening in the industrial and commercial sectors, we still see positive growth ahead based on the continued strength of our local economy."

Company Updates

Carty

PGE placed Carty, a 440 megawatt natural-gas fired baseload generating resource near Boardman, OR, into service on July 29, 2016. The plant is operating as designed and had a 92 percent availability rate through September. Beginning August 1, 2016, PGE began recovering the $514 million of capital costs, as well as the plant's operating costs approved as part of the 2016 General Rate Case (GRC) in customer prices. As of September 30, 2016, PGE had $615 million recorded as plant in-service related to Carty. The company currently estimates that the total capital expenditures for Carty, including allowance for funds used during construction, will be approximately $640 million to $660 million. This cost estimate does not reflect any offsetting amounts that may be received from the sureties pursuant to the performance bond or from Abeinsa Abener Teyma General Partnership (Abeinsa), the contractor or Abengoa S.A., the contractor's parent company.

PGE continues to pursue legal action against Liberty Mutual and Zurich North America, the two sureties that provided a $145.6 million performance bond on the Carty project. At the end of July 2016, the U.S. District Court of Oregon ruled against the sureties' motion to stay the proceedings in U.S. District Court of Oregon and ruled in favor of PGE's motion to enjoin the sureties from an International Chamber of Commerce arbitration proceeding filed by Abengoa under a parental guarantee on the project. As a result, the first phase of the case with the sureties - which will determine whether PGE's termination of the contractor was proper - is currently scheduled to begin trial in the U.S. District Court of Oregon in June 2017. Additionally, in early October, the U.S. Bankruptcy Court granted PGE's motion for relief from the stay imposed by Abeinsa's Chapter 11 bankruptcy proceeding, and, on October 21, 2016, PGE filed a complaint in the U.S. District Court of Oregon against Abeinsa on the Carty project for failure to satisfy its obligations under the terms of the Carty construction agreement. Refer to the company's Form 10-Q for the third quarter 2016 for additional details on the Carty project.

Integrated Resource Plan

PGE is finalizing its 2016 IRP and expects to file it with the OPUC in mid-November. The plan continues to reflect a shift to a less carbon-intensive supply portfolio consistent with the new Oregon Clean Electricity and Coal Transition Plan which calls for 50 percent renewables by 2040. The 2016 IRP addresses the need for additional resources to meet the law's requirements of 20 percent renewables by 2020 and to replace energy and capacity from PGE's Boardman plant, which will cease coal-fired operations at the end of 2020. Actions identified through 2020 are also expected to offset expiring purchase power agreements and integrate variable energy resources, such as wind or solar generation facilities.

The proposed four-year Action Plan associated with the draft IRP includes a minimum of 135 MWa of new cost-effective energy efficiency, 77 MW of new demand response, and the addition of approximately 175 MWa in new qualifying renewable resources. The plan also identifies the need for up to 850 MW of new capacity resources, which includes 375-550 MW of long-term dispatchable resources and up to 400 MW of annual (or seasonal equivalent) capacity resources, to meet reliability needs.

The final IRP plan filed with the OPUC may include modifications to the draft. Acknowledgment of the 2016 IRP is targeted for mid-2017. Upon acknowledgment, PGE will request approval from the OPUC to issue one or more Requests for Proposals to acquire needed resources.

Weather-adjusted load growth forecast flat for 2016

PGE is reducing its prior full-year 2016 load growth estimate from 1 percent to flat in comparison to 2015, weather-adjusted and excluding one large paper company. This change is driven by decreased full-year growth expectations for the commercial and industrial sectors due to lower third quarter actual deliveries. Industrial growth in the high tech sector has slowed from the rapid increases seen in recent years and, in 2016, these increases were offset by decreases in deliveries to metals and solar manufacturing customers resulting from operational changes and layoffs announced earlier in the year. In addition, energy efficiency continues to impact growth, with building codes and standards likely reducing energy deliveries beyond the impact of energy efficiency programs. Despite weakness in deliveries growth for 2016, economic fundamentals remain strong, including continued population growth in PGE's service area, low unemployment rates and a robust underlying industrial sector, all of which support future growth.

Third quarter operating results

Earnings Reconciliation of Q3 2015 to Q3 2016
    Pre-Tax        

Diluted

(in $millions, except EPS)     Income     Net Income*    

EPS**

Reported Q3 2015 $ 44 $ 36 $ 0.40
 
Revenue Adjustments
Electric retail average price increase 15 9 0.10
Electric retail volume decrease (34 ) (21 ) (0.23 )
Decoupling refund deferral 9 5 0.06
Electric wholesale volume and price decrease 19 11 0.13
Other revenue decreases (1 )     (1 )     (0.01 )
Change in Revenue 8 3 0.05
 
Power Cost Adjustments                  
Average power cost decrease 4 3 0.03
Increase in purchased power and generation (5 ) (3 ) (0.03 )
Other power cost decreases 2       1       0.01  
Change in Power Costs 1 1 0.01
 
O&M Adjustments                  
Generation, transmission, distribution (5 ) (2 ) (0.03 )
Administrative and general (4 )     (2 )     (0.03 )
Change in O&M (9 ) (4 ) (0.06 )
 
Adjustments to Other Items                  
Depreciation & amortization (3 ) (2 ) (0.02 )
AFDC equity*** (2 ) (2 ) (0.02 )
Gain on non-qualified benefit trust 2 2 0.02
Taxes other than income taxes (1 ) (1 ) (0.01 )
Adjustment for effective vs statutory tax rate       1       0.01  
Change in Other Items     (4 )     (2 )     (0.02 )
Reported Q3 2016     $ 40       $ 34       $ 0.38  
* 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 September 30, 2016 increased $8 million compared to the three months ended September 30, 2015, comprised primarily of a $19 million increase in wholesale revenues partially offset by an $11 million decrease in retail revenues.

The change in retail revenues resulted from the following:

  • A $19 million decrease resulting from a $34 million reduction in revenue related to 7.6% lower retail energy deliveries due to unfavorable weather conditions and a decrease in deliveries to commercial and industrial customers, partly offset by an increase of $15 million that resulted from customer price changes. Energy deliveries to residential and commercial customers decreased 7.5% and 5.7%, respectively, due in part to the effects of more moderate weather, and energy deliveries to industrial customers decreased 10.8%, largely due to the closure of a large paper customer that ceased operations in late 2015. PGE's 2016 GRC took the loss of this customer into consideration and incorporated its effects into prices and load forecasts resulting in minimal impact on net income; and
  • Supplemental tariffs decreased $5 million as a $7 million reduction in collection, which ended in 2015, for certain capital projects was partly offset by increases of $2 million for the combination of property sales gains in 2015 and the timing of the Trojan spent fuel refund to customers; partially offset by
  • An $11 million increase resulted from other tariffs including a $9 million increase in estimated collections under the decoupling mechanism.

Net variable power costs (NVPC) (purchased power and fuel expense, net of wholesale revenues) for the three months ended September 30, 2016 decreased $20 million when compared with the three months ended September 30, 2015. The decrease was driven by a 66% increase in wholesale revenues, a 3% decrease in the average variable power cost per MWh, partially offset by a 3% increase in total system load. The increase in wholesale revenues was driven primarily by a 2% increase in the average wholesale sales price, combined with a 63% increase in wholesale sales volume. For the three months ended September 30, 2016, actual NVPC was $3 million above the baseline, while the three months ended September 30, 2015 actual NVPC was $6 million above baseline NVPC.

Generation, transmission and distribution expense increased $5 million, or 8%, in the three months ended September 30, 2016 compared with the three months ended September 30, 2015 driven primarily by $3 million of expense for Carty (placed in service in 2016).

Administrative and other expense increased $4 million, or 7%, in the three months ended September 30, 2016 compared with the three months ended September 30, 2015. The increase was primarily due to a $3 million increase in legal costs related to Carty.

Depreciation and amortization expense increased $3 million in the three months ended September 30, 2016 compared with the three months ended September 30, 2015. The increase was primarily driven by $6 million additional expense due to capital additions, offset by a $5 million decrease that resulted from the completion of the amortization of the regulatory asset for four capital project deferrals as authorized in the company's 2011 GRC. Increases or decreases in expense resulting from amortization of regulatory assets or liabilities are directly offset in revenues.

Other income, net remained flat for three months ended September 30, 2016 compared with the three months ended September 30, 2015. This was due to a decrease in the allowance for equity funds used during construction resulting from lower average construction work in progress balances, primarily related to the Carty project, offset by gains on the non-qualified benefit trust.

Income tax expense was $6 million in the three months ended September 30, 2016 compared with $8 million in the three months ended September 30, 2015, with effective tax rates of 15.0% and 18.2%, respectively. The decrease in income tax expense and effective tax rate was primarily due to lower pre-tax income partially offset by a decrease in production tax credits.

2016 earnings guidance

PGE is reaffirming its revised 2016 guidance of $2.05 - $2.20 per diluted share. The guidance is based on the following assumptions:

  • Flat retail load for the full-year, weather-adjusted and excluding one large paper company;
  • Average hydro conditions for the remainder of the year;
  • Wind generation for the remainder of the year based on 5 years of historic levels or forecast studies when historical data is not available;
  • Normal thermal plant operations;
  • Operating and maintenance costs between $515 and $535 million; and
  • Depreciation and amortization expense between $315 and $325 million.

Third Quarter 2016 earnings call and web cast — October 28th

PGE will host a conference call with financial analysts and investors on Friday, October 28th, 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 28th, through Friday, November 4th.

Jim Piro, president and CEO; Jim Lobdell, senior vice president of finance, CFO, and treasurer; and Chris Liddle, manager, investor relations and corporate finance, 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 vertically integrated electric utility that serves approximately 863,000 residential, commercial and industrial customers in the Portland/Salem metropolitan area of Oregon. The company's headquarters are located at 121 S.W. Salmon Street, Portland, Oregon 97204. 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 expected capital costs for the Carty Generating Station and the recovery of those costs; 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

(In millions, except per share amounts)

(Unaudited)

 
    Three Months Ended     Nine Months Ended
September 30, September 30,
2016     2015 2016     2015
Revenues, net $ 484 $ 476 $ 1,399 $ 1,399
Operating expenses:
Purchased power and fuel 180 181 455 490
Generation, transmission and distribution 69 64 199 192
Administrative and other 63 59 185 179
Depreciation and amortization 79 76 244 227
Taxes other than income taxes 29 28   89 86
Total operating expenses 420 408   1,172 1,174
Income from operations 64 68 227 225
Interest expense (1) 28 28 82 86
Other income:
Allowance for equity funds used during construction 4 6 19 15
Miscellaneous income, net (2 )
Other income, net 4 4   19 15
Income before income tax expense 40 44 164 154
Income tax expense 6 8   32 33
Net income and Comprehensive income $ 34 $ 36   $ 132 121
 
Weighted-average shares outstanding (in thousands):
Basic 88,921 88,766   88,885 82,633
Diluted 88,921 88,766   88,885 82,633
 
Earnings per share:
Basic $ 0.38 $ 0.40   $ 1.49 $ 1.47
Diluted $ 0.38 $ 0.40   $ 1.49 $ 1.47
 
Dividends declared per common share $ 0.32 $ 0.30   $ 0.94 $ 0.88
                         
(1) Net of an allowance for borrowed funds used during construction of $2 million and $3 million in the three months ended September 30, 2016 and 2015, respectively.
 
 
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

 
    September 30,     December 31,
2016 2015

ASSETS

Current assets:
Cash and cash equivalents $ 88 $ 4
Accounts receivable, net 140 158
Unbilled revenues 60 95
Inventories 82 83
Regulatory assets—current 65 129
Other current assets 41 88
Total current assets 476 557
Electric utility plant, net 6,340 6,012
Regulatory assets—noncurrent 515 524
Nuclear decommissioning trust 41 40
Non-qualified benefit plan trust 34 33
Other noncurrent assets 49 44
Total assets $ 7,455 $ 7,210
 

LIABILITIES AND EQUITY

Current liabilities:
Accounts payable $ 112 $ 98
Liabilities from price risk management activities - current 66 130
Short-term debt 6
Current portion of long-term debt 133
Accrued expenses and other current liabilities 270 259
Total current liabilities 448 626
Long-term debt, net of current portion 2,325 2,060
Regulatory liabilities—noncurrent 958 928
Deferred income taxes 644 632
Unfunded status of pension and postretirement plans 267 259
Liabilities from price risk management activities - noncurrent 163 161
Asset retirement obligations 156 151
Non-qualified benefit plan liabilities 105 106
Other noncurrent liabilities 79 29
Total liabilities 5,145 4,952
Total equity 2,310 2,258
Total liabilities and equity $ 7,455 $ 7,210
 
 
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 
    Nine Months Ended
September 30,
2016     2015
Cash flows from operating activities:
Net income $ 132 $ 121
Depreciation and amortization 244 227
Other non-cash income and expenses, net included in Net income 28 70
Changes in working capital 122 44
Other, net (29 ) (23 )
Net cash provided by operating activities 497   439  
Cash flows from investing activities:
Capital expenditures (454 ) (452 )
Distribution from Nuclear decommissioning trust 50
Sales tax refund received related to Tucannon River Wind Farm 23
Other, net   2  
Net cash used in investing activities (454 ) (377 )
Cash flows from financing activities:
Proceeds from issuance of common stock, net of issuance costs 271
Net (payments) issuances of long-term debt 132 (297 )
Payments on short-term debt (6 )
Dividends paid (82 ) (70 )
Other (3 ) (1 )
Net cash provided by (used in) financing activities 41   (97 )
Increase (Decrease) in cash and cash equivalents 84 (35 )
Cash and cash equivalents, beginning of period 4   127  
Cash and cash equivalents, end of period $ 88 $ 92
 
 
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
SUPPLEMENTAL OPERATING STATISTICS

(Unaudited)

 
    Three Months Ended     Nine Months Ended
September 30, September 30,
2016     2015 2016     2015
Revenues (dollars in millions):
Retail:
Residential $ 203 $ 213 $ 648 $ 647
Commercial 170 176 492 498
Industrial 54   59   153   172  
Subtotal 427 448 1,293 1,317
Other retail revenues, net 1   (9 ) 5   (11 )
Total retail revenues 428 439 1,298 1,306
Wholesale revenues 48 29 74 66
Other operating revenues 8   8   27   27  
Total revenues $ 484   $ 476   $ 1,399   $ 1,399  
 
Energy sold and delivered (MWh in thousands):
Retail energy sales:
Residential 1,618 1,749 5,278 5,308
Commercial 1,751 1,862 5,148 5,246
Industrial 754   871   2,168   2,563  
Total retail energy sales 4,123 4,482 12,594 13,117
Retail energy deliveries:
Commercial 141 145 403 401
Industrial 301   312   907   875  
Total retail energy deliveries 442   457   1,310   1,276  
Total retail energy sales and deliveries 4,565 4,939 13,904 14,393
Wholesale energy deliveries 1,360   836   2,621   1,954  
Total energy sold and delivered 5,925   5,775   16,525   16,347  
 
Number of retail customers at end of period:
Residential 754,149 744,172
Commercial 108,063 106,892
Industrial 206 197
Direct access 374   389  
Total retail customers 862,792   851,650  
 
       
Heating Degree-days     Cooling Degree-days
2016     2015     Average* 2016     2015     Average*
First quarter 1,585 1,481 1,866
Second quarter 403     513     689     154     207     70
July 3 9 140 287 163
August 3 8 224 235 168
September 72     76     61     30     51     68
Third quarter 78     76     78     394     573     399
Year to Date 2,066     2,070     2,633     548     780     469
 
* — "Average" amounts represent the 15-year rolling average calculated from data provided by the National Weather Service (Portland Airport).
 
 
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
SUPPLEMENTAL OPERATING STATISTICS, continued

(Unaudited)

 
    Three Months Ended     Nine Months Ended
September 30, September 30,
2016     2015 2016     2015
Sources of energy (MWh in thousands):
Generation:
Thermal:
Coal 1,418 1,445 2,535 2,656
Natural gas 2,243   1,702   4,017   3,356  
Total thermal 3,661 3,147 6,552 6,012
Hydro 267 267 1,214 1,063
Wind 570   568   1,559   1,371  
Total generation 4,498   3,982   9,325   8,446  
Purchased power:
Term 913 1,260 5,355 5,997
Hydro 322 326 1,160 1,239
Wind 91   88   241   241  
Total purchased power 1,326   1,674   6,756   7,477  
Total system load 5,824 5,656 16,081 15,923
Less: wholesale sales (1,360 ) (836 ) (2,621 ) (1,954 )
Retail load requirement 4,464   4,820   13,460   13,969  

Portland General Electric Company
Media Contact:
Melanie Moir, 503-464-8790
Corporate Communications
or
Investor Contact:
Chris Liddle, 503-464-7458
Investor Relations

Source: Portland General Electric Company

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