Portland General Electric Announces First Quarter 2017 Results
- Favorable Q1 results driven by increased sales volumes due to historic cold temperatures and continued strength in the high tech sector, offset by higher distribution costs related to storm restoration efforts
-
2018 General Rate Case filed with the
Oregon Public Utility Commission -
Reaffirming 2017 earnings guidance of
$2.20 -$2.35 per share
"The company's strong operational performance during a quarter of
historic snow, ice and rain demonstrated our employees' commitment to
deliver safe and reliable service to our customers, regardless of the
elements," said
Q1 2017 earnings compared to Q1 2016 earnings
The increase in the first quarter earnings per diluted share for 2017 in
comparison to the first quarter of 2016 was due to an increase in sales
volume to residential customers related to an exceptionally cold winter,
an increase in deliveries to industrial customers due to continued
strength in the high tech sector, and lower power prices in the region.
This was partially offset by lower commercial deliveries resulting, in
part, from the impact to commercial activity of snow events in the first
quarter of 2017; incremental distribution costs primarily driven by
storm restoration efforts; as well as a reduction in production tax
credits due to lower wind generation. Additional offsets include
Company Updates
2018 General Rate Case
On
As part of its commitment to provide safe, reliable, sustainable and
affordable energy to customers, the company filed a request for a
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 .
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
Integrated Resource Plan
On
Since filing, the 2021 capacity need in the IRP has been reduced from 819 MW to 561 MW. This is due to three key developments:
-
The
December 2016 load forecast update, which reduced the capacity need by 71 MW. -
A 10-year power purchase agreement (PPA) with Douglas County Public
Utility District that PGE executed on
March 29, 2017 , renewing PGE's contract for the output of theWells Hydroelectric Project beginningSept. 1, 2018 . This contract reduces PGE's capacity need by 135 MW. -
Additional contracts that were executed with PURPA qualifying
facilities between
June 1, 2016 andDec. 31, 2016 for approximately 143 MW of nameplate capacity, reducing PGE's capacity shortfall by 52 MW.
PGE continues to explore opportunities to acquire additional reliable and cost-effective flexible capacity for customers through bilateral negotiations, including exploration of potential dispatchable generation from Northwest facilities for additional capacity. If the company is able to secure capacity through bilateral negotiations, it will submit such agreements to the commission for approval along with a waiver request of the commission's competitive bidding guidelines as necessary.
As part of OPUC's public review process, PGE filed reply comments on
Following acknowledgment of the IRP and the outcomes of bilateral negotiations for flexible capacity, PGE will request approval from the OPUC to issue one or more request for proposals (RFPs) for remaining capacity and renewable resource needs. PGE has no predetermined outcome in the RFPs and is open to a variety of options. The company will be seeking the best combination of resources, consistent with the acknowledged IRP Action Plan, to meet its customers' future energy and capacity needs. Resource options could include hydro, wind, solar, geothermal, biomass, efficient natural gas-fired facilities, and energy storage. The RFP process will include oversight by an independent evaluator, who reports to the OPUC, 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 submission of this resource into an RFP as a benchmark bid is subject to additional due diligence by PGE and the negotiation and execution of definitive agreements.
First quarter operating results
Earnings Reconciliation of Q1 2016 to Q1 2017 | ||||||||||||||||
($ in millions, except EPS) |
Pre-Tax |
Net Income* |
Diluted |
|||||||||||||
Reported Q1 2016 | $ | 78 | $ | 61 | $ | 0.68 | ||||||||||
Revenue | ||||||||||||||||
Retail average price increase | 10 | 6 | 0.07 | |||||||||||||
Retail volume increase | 29 | 17 | 0.20 | |||||||||||||
Change in decoupling deferral | 3 | 2 | 0.02 | |||||||||||||
Wholesale price increase and volume decrease | 1 | 1 | 0.01 | |||||||||||||
Change in Revenue | 43 | 26 | 0.30 | |||||||||||||
Power Cost | ||||||||||||||||
Average power cost decrease | 16 | 10 | 0.11 | |||||||||||||
Increase in purchased power and generation | (8 | ) | (5 | ) | (0.06 | ) | ||||||||||
Change in Power Costs | 8 | 5 | 0.05 | |||||||||||||
O&M | ||||||||||||||||
Generation, transmission, distribution | (15 | ) | (9 | ) | (0.10 | ) | ||||||||||
Administrative and general | (7 | ) | (4 | ) | (0.05 | ) | ||||||||||
Change in O&M | (22 | ) | (13 | ) | (0.15 | ) | ||||||||||
Other Items | ||||||||||||||||
Depreciation & amortization | (2 | ) | (1 | ) | (0.01 | ) | ||||||||||
AFDC Equity*** | (5 | ) | (5 | ) | (0.06 | ) | ||||||||||
Other Items | (4 | ) | (3 | ) | (0.03 | ) | ||||||||||
Adjustments for effective vs statutory tax rate | N/A | 3 | 0.04 | |||||||||||||
Change in Other Items | (11 | ) | (6 | ) | (0.06 | ) | ||||||||||
Reported Q1 2017 | $ | 96 | $ | 73 | $ | 0.82 | ||||||||||
* 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
The change in Retail revenues resulted from the following:
-
A
$29 million increase from a 6.2% increase in retail energy deliveries due largely to considerably cooler temperatures than experienced in the first quarter of 2016; -
A
$10 million net increase from an average price increase of 2.0% over 2016 levels. Price changes, as authorized by the OPUC, includeCarty going into service in mid-2016 and reflect a reduction as a result of lower net variable power costs as filed in the 2017 AUT. Higher delivery volumes also pushed average prices higher as the increased volumes are, at times, subject to higher tariff prices; -
A
$4 million increase resulted from other tariffs including a$3 million increase in estimated collections under the decoupling mechanism; partially offset by -
A
$5 million decrease from supplemental tariffs, due to the timing of the Trojan spent fuel refund to customers, as the refund - offset in Depreciation and amortization - temporarily suspended in early 2016, has resumed.
Total heating degree-days for the three months ended
The following table indicates the number of heating degree-days for the
three months ended
Heating Degree-days | ||||||||||
2017 | 2016 | Avg. | ||||||||
January | 969 | 688 | 734 | |||||||
February | 672 | 448 | 599 | |||||||
March | 530 | 449 | 533 | |||||||
Totals for the quarter | 2,171 | 1,585 | 1,866 | |||||||
Wholesale revenues for the three months ended
Actual NVPC for the three months ended
Generation, transmission and distribution expense increased
Administrative and other expense increased
Depreciation and amortization expense increased
Taxes other than income taxes increased
Interest expense increased
Other income, net decreased
Income tax expense was
First Quarter 2017 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 the recovery of
capital costs for the
POR-F
Source:
|
|||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||
AND COMPREHENSIVE INCOME | |||||||||||
(Dollars in millions, except per share amounts) |
|||||||||||
(Unaudited) |
|||||||||||
Three Months Ended |
|||||||||||
2017 | 2016 | ||||||||||
Revenues, net | $ | 530 | $ | 487 | |||||||
Operating expenses: | |||||||||||
Purchased power and fuel | 141 | 149 | |||||||||
Generation, transmission and distribution | 81 | 66 | |||||||||
Administrative and other | 68 | 61 | |||||||||
Depreciation and amortization | 84 | 82 | |||||||||
Taxes other than income taxes | 33 | 30 | |||||||||
Total operating expenses | 407 | 388 | |||||||||
Income from operations | 123 | 99 | |||||||||
Interest expense, net | 30 | 27 | |||||||||
Other income: | |||||||||||
Allowance for equity funds used during construction | 2 | 7 | |||||||||
Miscellaneous income (expense), net | 1 | (1 | ) | ||||||||
Other income, net | 3 | 6 | |||||||||
Income before income tax expense | 96 | 78 | |||||||||
Income tax expense | 23 | 17 | |||||||||
Net income | $ | 73 | $ | 61 | |||||||
Other comprehensive loss | (1 | ) | — | ||||||||
Comprehensive income | $ | 72 | $ | 61 | |||||||
Weighted-average shares outstanding—basic and diluted (in thousands) | 89,003 | 88,833 | |||||||||
Earnings per share—basic and diluted | $ | 0.82 | $ | 0.68 | |||||||
Dividends declared per common share | $ | 0.32 | $ | 0.30 | |||||||
|
|||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
(Dollars in millions) | |||||||||
(Unaudited) | |||||||||
2017 |
2016 |
||||||||
ASSETS |
|||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 31 | $ | 6 | |||||
Accounts receivable, net | 162 | 155 | |||||||
Unbilled revenues | 71 | 107 | |||||||
Inventories | 77 | 82 | |||||||
Regulatory assets—current | 57 | 36 | |||||||
Other current assets | 87 | 77 | |||||||
Total current assets | 485 | 463 | |||||||
Electric utility plant, net | 6,466 | 6,434 | |||||||
Regulatory assets—noncurrent | 532 | 498 | |||||||
Nuclear decommissioning trust | 41 | 41 | |||||||
Non-qualified benefit plan trust | 34 | 34 | |||||||
Other noncurrent assets | 54 | 57 | |||||||
Total assets | $ | 7,612 | $ | 7,527 | |||||
|
|||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS, continued | |||||||||||
(Dollars in millions) | |||||||||||
(Unaudited) | |||||||||||
2017 |
2016 |
||||||||||
LIABILITIES AND EQUITY |
|||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 92 | $ | 129 | |||||||
Liabilities from price risk management activities—current | 59 | 44 | |||||||||
Current portion of long-term debt | 150 | 150 | |||||||||
Accrued expenses and other current liabilities | 247 | 254 | |||||||||
Total current liabilities | 548 | 577 | |||||||||
Long-term debt, net of current portion | 2,200 | 2,200 | |||||||||
Regulatory liabilities—noncurrent | 973 | 958 | |||||||||
Deferred income taxes | 682 | 669 | |||||||||
Unfunded status of pension and postretirement plans | 283 | 281 | |||||||||
Liabilities from price risk management activities—noncurrent | 156 | 125 | |||||||||
Asset retirement obligations | 164 | 161 | |||||||||
Non-qualified benefit plan liabilities | 106 | 105 | |||||||||
Other noncurrent liabilities | 113 | 107 | |||||||||
Total liabilities | 5,225 | 5,183 | |||||||||
Equity: | |||||||||||
|
|||||||||||
Preferred stock, no par value, 30,000,000 shares authorized; none
issued and outstanding as of |
— | — | |||||||||
Common stock, no par value, 160,000,000 shares authorized;
89,067,858 and 88,946,704 shares issued and outstanding as of |
1,200 | 1,201 | |||||||||
Accumulated other comprehensive loss | (8 | ) | (7 | ) | |||||||
Retained earnings | 1,195 | 1,150 | |||||||||
Total equity | 2,387 | 2,344 | |||||||||
Total liabilities and equity | $ | 7,612 | $ | 7,527 | |||||||
|
|||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
(In millions) | |||||||||||
(Unaudited) | |||||||||||
Three Months Ended |
|||||||||||
2017 | 2016 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 73 | $ | 61 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 84 | 82 | |||||||||
Deferred income taxes | 17 | 14 | |||||||||
Pension and other postretirement benefits | 6 | 7 | |||||||||
Allowance for equity funds used during construction | (2 | ) | (7 | ) | |||||||
Decoupling mechanism deferrals, net of amortization | (9 | ) | (4 | ) | |||||||
Other non-cash income and expenses, net | 7 | 8 | |||||||||
Changes in working capital: | |||||||||||
Decrease in accounts receivable and unbilled revenues | 29 | 46 | |||||||||
Decrease in inventories | 5 | 1 | |||||||||
(Increase) in margin deposits, net | (12 | ) | (7 | ) | |||||||
(Decrease) in accounts payable and accrued liabilities | (10 | ) | (11 | ) | |||||||
Other working capital items, net | (13 | ) | (16 | ) | |||||||
Other, net | (5 | ) | (13 | ) | |||||||
Net cash provided by operating activities | 170 | 161 | |||||||||
Cash flows from investing activities: | |||||||||||
Capital expenditures | (114 | ) | (131 | ) | |||||||
Sales of Nuclear decommissioning trust securities | 7 | 6 | |||||||||
Purchases of Nuclear decommissioning trust securities | (5 | ) | (6 | ) | |||||||
Other, net | (1 | ) | (2 | ) | |||||||
Net cash used in investing activities | (113 | ) | (133 | ) | |||||||
Cash flows from financing activities: | |||||||||||
Proceeds from issuance of long-term debt | — | 140 | |||||||||
Payments on long-term debt | — | (133 | ) | ||||||||
Change in short-term debt | — | (6 | ) | ||||||||
Dividends paid | (28 | ) | (27 | ) | |||||||
Other | (4 | ) | (2 | ) | |||||||
Net cash used in financing activities | (32 | ) | (28 | ) | |||||||
Increase in cash and cash equivalents | 25 | — | |||||||||
Cash and cash equivalents, beginning of period | 6 | 4 | |||||||||
Cash and cash equivalents, end of period | $ | 31 | $ | 4 | |||||||
|
|||||||||
SUPPLEMENTAL OPERATING STATISTICS | |||||||||
(Unaudited) |
|||||||||
Three Months Ended | |||||||||
|
|||||||||
2017 | 2016 | ||||||||
Revenues (dollars in millions): | |||||||||
Retail: | |||||||||
Residential | $ | 288 | $ | 254 | |||||
Commercial | 161 | 160 | |||||||
Industrial | 49 | 49 | |||||||
Subtotal | 498 | 463 | |||||||
Other retail revenues, net | 8 | 3 | |||||||
Total retail revenues | 506 | 466 | |||||||
Wholesale revenues | 13 | 12 | |||||||
Other operating revenues | 11 | 9 | |||||||
Total revenues | $ | 530 | $ | 487 | |||||
Energy sold and delivered (MWh in thousands): | |||||||||
Retail energy sales: | |||||||||
Residential | 2,383 | 2,103 | |||||||
Commercial | 1,687 | 1,702 | |||||||
Industrial | 686 | 697 | |||||||
Total retail energy sales | 4,756 | 4,502 | |||||||
Direct access retail deliveries: | |||||||||
Commercial | 143 | 129 | |||||||
Industrial | 321 | 283 | |||||||
Total direct access retail deliveries | 464 | 412 | |||||||
Total retail energy sales and direct access deliveries | 5,220 | 4,914 | |||||||
Wholesale energy deliveries | 439 | 488 | |||||||
Total energy sold and delivered | 5,659 | 5,402 | |||||||
Number of retail customers at end of period: | |||||||||
Residential | 758,996 | 750,027 | |||||||
Commercial | 105,521 | 104,986 | |||||||
Industrial | 196 | 186 | |||||||
Direct access | 560 | 374 | |||||||
Total retail customers | 865,273 | 855,573 | |||||||
|
|||||||||||||||||
SUPPLEMENTAL OPERATING STATISTICS, continued | |||||||||||||||||
(Unaudited) |
|||||||||||||||||
Three Months Ended |
|||||||||||||||||
2017 | 2016 | ||||||||||||||||
Sources of energy (MWh in thousands): | |||||||||||||||||
Generation: | |||||||||||||||||
Thermal: | |||||||||||||||||
Coal | 911 | 16 | % | 757 | 14 | % | |||||||||||
Natural gas | 1,303 | 24 | 1,002 | 19 | |||||||||||||
Total thermal | 2,214 | 40 | 1,759 | 33 | |||||||||||||
Hydro | 548 | 10 | 568 | 11 | |||||||||||||
Wind | 299 | 5 | 361 | 7 | |||||||||||||
Total generation | 3,061 | 55 | 2,688 | 51 | |||||||||||||
Purchased power: | |||||||||||||||||
Term | 1,982 | 35 | 2,088 | 39 | |||||||||||||
Hydro | 497 | 9 | 445 | 9 | |||||||||||||
Wind | 39 | 1 | 59 | 1 | |||||||||||||
Total purchased power | 2,518 | 45 | 2,592 | 49 | |||||||||||||
Total system load | 5,579 | 100 | % | 5,280 | 100 | % | |||||||||||
Less: wholesale sales | (439 | ) | (488 | ) | |||||||||||||
Retail load requirement | 5,140 | 4,792 |
View source version on businesswire.com: http://www.businesswire.com/news/home/20170428005168/en/
Media Contact:
Corporate Communications
or
Investor
Contact:
Investor Relations
Source:
News Provided by Acquire Media