Portland General Electric Announces Third Quarter 2017 Results
- Strong third quarter results due to increased retail deliveries and favorable weather
- Settlement reached on all issues in the 2018 General Rate Case
-
PGE joined the western Energy Imbalance Market on
Oct. 1
"PGE's strong third quarter financial performance was driven by higher
energy deliveries across all customer groups," said
Q3 2017 earnings compared to Q3 2016 earnings
The increase in third quarter earnings per diluted share for 2017 in comparison to the third quarter of 2016 was due to an increase in retail deliveries driven by increased customer usage and increased customer counts, as well as favorable weather. This increase was partially offset by an increase in the estimated refund under the decoupling mechanism, higher depreciation and amortization expense, an increase in the effective tax rate and other miscellaneous items.
Company Updates
Integrated Resource Plan
In
In
- Acknowledge capacity needs of 561 MW, of which 240 MW must be dispatchable, in 2021;
- Acquire a total of 135 MWa of cost-effective energy efficiency;
- Acquire at least 77 MW (winter) and 69 MW (summer) demand response through 2020 and 16 MW of dispatchable standby generation from customers to help manage peak load conditions and other supply contingencies;
- Deploy 1 MWa of conservation voltage reduction through 2020;
-
Submit one or more energy storage proposals in accordance with Oregon
House Bill 2193, by
January 1, 2018 , with an initial proposal expected to be filed with the OPUC bymid-November 2017 ; and -
Perform various research and studies related to flexible capacity and
curtailment metrics, customer insights, decarbonization, risks
associated with direct access programs, treatment of market capacity,
accessing resources from
Montana , and load forecasting improvements.
PGE is engaged in bilateral negotiations with owners of existing
regional resources to fill its capacity need. In
The OPUC did not acknowledge PGE's proposed actions for acquiring
renewable resources and asked the company to work with OPUC staff and
parties to prepare and submit a revised proposal, which PGE presented at
a public meeting on
Since issuing the IRP, PGE has identified a potential benchmark wind resource that could have a nameplate capacity of up to approximately 300 MW, which would meet the need for the renewable resources, and which would qualify for the production tax credit. The company continues 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 and negotiation along with execution of definitive agreements. If agreements are reached, the potential benchmark resource would be considered in the RFP along with other renewable resource offerings.
The RFP process will include oversight by an independent evaluator and review by the OPUC.
2018 General Rate Case
On
- A capital structure of 50 percent debt and 50 percent equity;
- A return on equity of 9.75 percent; and
-
A rate base of
$4.6 billion .
PGE, OPUC staff, and certain customer groups have reached agreements
that resolve all issues in the case, provide for an expected
- A capital structure of 50 percent debt and 50 percent equity;
- A return on equity of 9.5 percent; and
-
A rate base of
$4.5 billion .
The net increase in annual revenue requirement as proposed in the company's initial filing and as revised consists of the following (in millions):
As Filed |
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Load and Power Cost Updates |
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Depreciation Study Updates |
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Base Business Revenue Requirement Updates: | ||||||||||||||||||||
Lower return on equity |
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Lower labor costs |
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Adjustment to depreciation expense |
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Lower level of plant in service |
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Other reductions to rate base |
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Other various modifications |
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Subtotal |
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As Stipulated |
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Regulatory review of the 2018 GRC will continue until the final order is
issued, which is expected in
The 2018 GRC filing (OPUC Docket UE 319), as well as copies of direct and reply testimony, exhibits, and stipulations are available on the OPUC website at www.oregon.gov/puc.
Western Energy Imbalance Market
On
"Joining the EIM is an important milestone in our effort to build a
smarter, cleaner, more resilient energy grid," said
As a market participant, PGE's generating plants now receive automated
dispatch signals from the
Third quarter operating results
Earnings Reconciliation of Q3 2016 to Q3 2017 | |||||||||||||||||||||||||||||
($ in millions, except EPS) |
Pre-Tax Income |
Net Income* |
Diluted EPS** |
||||||||||||||||||||||||||
Reported Q3 2016 | $ | 40 | $ | 34 | $ | 0.38 | |||||||||||||||||||||||
Revenue | |||||||||||||||||||||||||||||
Electric Retail price change | (7 | ) | (4 | ) | (0.05 | ) | |||||||||||||||||||||||
Electric Retail volume change | 37 | 22 | 0.25 | ||||||||||||||||||||||||||
Change in decoupling deferral | (3 | ) | (2 | ) | (0.02 | ) | |||||||||||||||||||||||
Electric wholesale price and volume change | 2 | 1 | 0.01 | ||||||||||||||||||||||||||
Other Items | 4 | 2 | 0.02 | ||||||||||||||||||||||||||
Change in Revenue | 33 | 19 | 0.21 | ||||||||||||||||||||||||||
Power Cost | |||||||||||||||||||||||||||||
Change in average power cost | (1 | ) | (1 | ) | (0.01 | ) | |||||||||||||||||||||||
Change purchased power and generation | (3 | ) | (2 | ) | (0.02 | ) | |||||||||||||||||||||||
Change in Power Costs | (4 | ) | (3 | ) | (0.03 | ) | |||||||||||||||||||||||
O&M | |||||||||||||||||||||||||||||
Generation, transmission, distribution | (4 | ) | (2 | ) | (0.02 | ) | |||||||||||||||||||||||
Administrative and general | (1 | ) | (1 | ) | (0.01 | ) | |||||||||||||||||||||||
Change in O&M | (5 | ) | (3 | ) | (0.03 | ) | |||||||||||||||||||||||
Other Items | |||||||||||||||||||||||||||||
Depreciation & amortization | (8 | ) | (4 | ) | (0.06 | ) | |||||||||||||||||||||||
AFDC Equity*** | (1 | ) | (1 | ) | (0.01 | ) | |||||||||||||||||||||||
Other Items | (2 | ) | (2 | ) | (0.02 | ) | |||||||||||||||||||||||
Change in Other Items | (11 | ) | (7 | ) | (0.09 | ) | |||||||||||||||||||||||
Reported Q3 2017 | $ | 53 | $ | 40 | $ | 0.44 | |||||||||||||||||||||||
* 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 largely from the following:
-
A
$37 million increase resulting from 8.5 percent greater retail energy deliveries due to favorable weather conditions and increased average usage per customer across all classes. Energy deliveries to residential customers increased 12.3 percent in the third quarter of 2017 due in part to the effects of weather, as temperatures in 2017 were abnormally warm during the summer cooling season, and customer growth continued. Energy deliveries to commercial customers showed an increase of 6.8 percent while deliveries to industrial customers increased 6.0 percent, largely due to strength in the high tech sector; and -
A
$3 million increase in various Supplemental tariffs, the largest of which was a$1 million increase due to the accelerated cost recovery ofColstrip ; partially offset by -
A
$7 million decrease that resulted from customer price changes; and -
A
$4 million decrease that resulted from other tariffs, which included$3 million greater estimated refunds under the decoupling mechanism, combined with a variety of smaller items.
Total cooling degree-days for the three months ended
The following table indicates the number of heating and cooling
degree-days for the three months ended
Heating Degree-days | Cooling Degree-days | |||||||||||||||||||||||||||||||||
2017 | 2016 | Avg. | 2017 | 2016 | Avg. | |||||||||||||||||||||||||||||
July | 1 | 3 | 9 | 164 | 140 | 163 | ||||||||||||||||||||||||||||
August | 1 | 3 | 8 | 275 | 224 | 168 | ||||||||||||||||||||||||||||
September | 76 | 72 | 61 | 132 | 30 | 68 | ||||||||||||||||||||||||||||
Totals for the quarter | 78 | 78 | 78 | 571 | 394 | 399 | ||||||||||||||||||||||||||||
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
Interest expense, net increased
Other income, net increased
Income tax expense was
2017 earnings guidance
PGE reaffirms its 2017 guidance of
- 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 are not available;
- Normal thermal plant operations for the remainder of the year;
-
Depreciation and amortization expense between
$340 million and$350 million ; and -
Operating and maintenance costs between
$555 million and$575 million .
Third 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) |
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Three Months Ended |
Nine Months Ended |
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2017 | 2016 | 2017 | 2016 | |||||||||||||||||
Revenues, net | $ | 515 | $ | 484 | $ | 1,494 | $ | 1,399 | ||||||||||||
Operating expenses: | ||||||||||||||||||||
Purchased power and fuel | 184 | 180 | 443 | 455 | ||||||||||||||||
Generation, transmission and distribution | 73 | 69 | 235 | 199 | ||||||||||||||||
Administrative and other | 64 | 63 | 197 | 185 | ||||||||||||||||
Depreciation and amortization | 87 | 79 | 257 | 244 | ||||||||||||||||
Taxes other than income taxes | 30 | 29 | 94 | 89 | ||||||||||||||||
Total operating expenses | 438 | 420 | 1,226 | 1,172 | ||||||||||||||||
Income from operations | 77 | 64 | 268 | 227 | ||||||||||||||||
Interest expense, net | 30 | 28 | 90 | 82 | ||||||||||||||||
Other income: | ||||||||||||||||||||
Allowance for equity funds used during construction | 4 | 4 | 9 | 19 | ||||||||||||||||
Miscellaneous income, net | 2 | — | 4 | — | ||||||||||||||||
Other income, net | 6 | 4 | 13 | 19 | ||||||||||||||||
Income before income tax expense | 53 | 40 | 191 | 164 | ||||||||||||||||
Income tax expense | 13 | 6 | 46 | 32 | ||||||||||||||||
Net income and Comprehensive income | $ | 40 | $ | 34 | $ | 145 | $ | 132 | ||||||||||||
Weighted-average shares outstanding—basic and diluted (in thousands) | 89,065 | 88,921 | 89,044 | 88,885 | ||||||||||||||||
Earnings per share—basic and diluted | $ | 0.44 | $ | 0.38 | $ | 1.62 | $ | 1.49 | ||||||||||||
Dividends declared per common share | $ | 0.34 | $ | 0.32 | $ | 1.00 | $ | 0.94 | ||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in millions) (Unaudited) |
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2017 |
2016 |
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ASSETS |
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Current assets: | |||||||||||
Cash and cash equivalents |
$ |
89 |
$ |
6 | |||||||
Accounts receivable, net | 151 | 155 | |||||||||
Unbilled revenues | 71 | 107 | |||||||||
Inventories | 70 | 82 | |||||||||
Regulatory assets—current | 42 | 36 | |||||||||
Other current assets | 43 | 77 | |||||||||
Total current assets | 466 | 463 | |||||||||
Electric utility plant, net | 6,638 | 6,434 | |||||||||
Regulatory assets—noncurrent | 526 | 498 | |||||||||
Nuclear decommissioning trust | 41 | 41 | |||||||||
Non-qualified benefit plan trust | 37 | 34 | |||||||||
Other noncurrent assets | 51 | 57 | |||||||||
Total assets | $ | 7,759 |
$ |
7,527 | |||||||
2017 |
2016 |
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LIABILITIES AND EQUITY |
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Current liabilities: | |||||||||||
Accounts payable | $ | 100 |
$ |
129 | |||||||
Liabilities from price risk management activities—current | 43 |
44 |
|||||||||
Current portion of long-term debt | 100 |
150 |
|||||||||
Accrued expenses and other current liabilities | 248 |
254 |
|||||||||
Total current liabilities | 491 |
577 |
|||||||||
Long-term debt, net of current portion | 2,277 |
2,200 |
|||||||||
Regulatory liabilities—noncurrent | 1,002 |
958 |
|||||||||
Deferred income taxes | 701 |
669 |
|||||||||
Unfunded status of pension and postretirement plans | 288 |
281 |
|||||||||
Liabilities from price risk management activities—noncurrent | 150 |
125 |
|||||||||
Asset retirement obligations | 166 |
161 |
|||||||||
Non-qualified benefit plan liabilities | 105 |
105 |
|||||||||
Other noncurrent liabilities | 177 |
107 |
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Total liabilities | 5,357 |
5,183 |
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Commitments and contingencies (see notes) | |||||||||||
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;
89,091,955 and 88,946,704 shares issued and outstanding as of
|
1,204 |
1,201 |
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Accumulated other comprehensive loss |
(7 |
) |
(7 |
) |
|||||||
Retained earnings | 1,205 |
1,150 |
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Total equity | 2,402 |
2,344 |
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Total liabilities and equity | $ | 7,759 |
$ |
7,527 | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited) |
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Nine Months Ended |
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2017 | 2016 | |||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||
Net income | $ | 145 | $ | 132 | ||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||
Depreciation and amortization | 257 | 244 | ||||||||||||||||
Deferred income taxes | 35 | 18 | ||||||||||||||||
Pension and other postretirement benefits | 19 | 21 | ||||||||||||||||
Allowance for equity funds used during construction | (9 | ) | (19 | ) | ||||||||||||||
Decoupling mechanism deferrals, net of amortization | (15 | ) | (4 | ) | ||||||||||||||
Other non-cash income and expenses, net | 18 | 12 | ||||||||||||||||
Changes in working capital: | ||||||||||||||||||
Decrease in accounts receivable and unbilled revenues | 40 | 53 | ||||||||||||||||
Decrease in inventories | 12 | 1 | ||||||||||||||||
Decrease in margin deposits, net | 4 | 25 | ||||||||||||||||
Increase in accounts payable and accrued liabilities | 14 | 31 | ||||||||||||||||
Other working capital items, net | 20 | 12 | ||||||||||||||||
Other, net | (21 | ) | (29 | ) | ||||||||||||||
Net cash provided by operating activities | 519 | 497 | ||||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||
Capital expenditures | (369 | ) | (454 | ) | ||||||||||||||
Sales of Nuclear decommissioning trust securities | 14 | 17 | ||||||||||||||||
Purchases of Nuclear decommissioning trust securities | (12 | ) | (16 | ) | ||||||||||||||
Other, net | (2 | ) | (1 | ) | ||||||||||||||
Net cash used in investing activities | (369 | ) | (454 | ) | ||||||||||||||
Cash flows from financing activities: | ||||||||||||||||||
Proceeds from issuance of long-term debt | 75 | 265 | ||||||||||||||||
Payments on long-term debt | (50 | ) | (133 | ) | ||||||||||||||
Change in short-term debt | — | (6 | ) | |||||||||||||||
Dividends paid | (87 | ) | (82 | ) | ||||||||||||||
Other | (5 | ) | (3 | ) | ||||||||||||||
Net cash (used in) provided by financing activities | (67 | ) | 41 | |||||||||||||||
Increase in cash and cash equivalents | 83 | 84 | ||||||||||||||||
Cash and cash equivalents, beginning of period | 6 | 4 | ||||||||||||||||
Cash and cash equivalents, end of period | $ | 89 | $ | 88 | ||||||||||||||
Supplemental cash flow information is as follows: | ||||||||||||||||||
Cash paid for interest, net of amounts capitalized | $ | 68 | $ | 61 | ||||||||||||||
Cash paid for income taxes | 16 | 12 | ||||||||||||||||
Non-cash investing and financing activities: | ||||||||||||||||||
Assets obtained under capital lease | 73 | 57 | ||||||||||||||||
SUPPLEMENTAL OPERATING STATISTICS (Unaudited) |
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Three Months Ended |
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2017 | 2016 | |||||||||||||||||||||
Revenues* (dollars in millions): | ||||||||||||||||||||||
Retail: | ||||||||||||||||||||||
Residential | $ | 224 | 43 | % | $ | 203 | 42 | % | ||||||||||||||
Commercial | 178 | 35 | 170 | 35 | ||||||||||||||||||
Industrial | 55 | 11 | 54 | 11 | ||||||||||||||||||
Subtotal | 457 | 89 | 427 | 88 | ||||||||||||||||||
Other retail revenues, net | (2 | ) | (1 | ) | 1 | — | ||||||||||||||||
Total retail revenues | 455 | 88 | 428 | 88 | ||||||||||||||||||
Wholesale revenues | 50 | 10 | 48 | 10 | ||||||||||||||||||
Other operating revenues | 10 | 2 | 8 | 2 | ||||||||||||||||||
Total revenues | $ | 515 | 100 | % | $ | 484 | 100 | % | ||||||||||||||
Energy deliveries (MWh in thousands): | ||||||||||||||||||||||
Retail: | ||||||||||||||||||||||
Residential | 1,817 | 29 | % | 1,618 | 27 | % | ||||||||||||||||
Commercial | 1,851 | 30 | 1,751 | 30 | ||||||||||||||||||
Industrial | 752 | 12 | 754 | 13 | ||||||||||||||||||
Subtotal | 4,420 | 71 | 4,123 | 70 | ||||||||||||||||||
Direct access: | ||||||||||||||||||||||
Commercial | 169 | 3 | 141 | 2 | ||||||||||||||||||
Industrial | 366 | 6 | 301 | 5 | ||||||||||||||||||
Subtotal | 535 | 9 | 442 | 7 | ||||||||||||||||||
Total retail energy deliveries | 4,955 | 80 | 4,565 | 77 | ||||||||||||||||||
Wholesale energy deliveries | 1,224 | 20 | 1,360 | 23 | ||||||||||||||||||
Total energy deliveries | 6,179 | 100 | % | 5,925 | 100 | % | ||||||||||||||||
Average number of retail customers: | ||||||||||||||||||||||
Residential | 763,553 | 88 | % | 753,345 | 87 | % | ||||||||||||||||
Commercial | 108,705 | 12 | 107,844 | 13 | ||||||||||||||||||
Industrial | 200 | — | 204 | — | ||||||||||||||||||
Direct access | 588 | — | 373 | — | ||||||||||||||||||
Total | 873,046 | 100 | % | 861,766 | 100 | % |
* Includes revenues from customers who purchase their energy from the
Company as well as
SUPPLEMENTAL OPERATING STATISTICS, continued (Unaudited) |
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Three Months Ended |
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2017 | 2016 | |||||||||||||||||||
Sources of energy (MWh in thousands): | ||||||||||||||||||||
Generation: | ||||||||||||||||||||
Thermal: | ||||||||||||||||||||
Coal | 1,404 | 24 | % | 1,418 | 24 | % | ||||||||||||||
Natural gas | 2,442 | 41 | 2,243 | 39 | ||||||||||||||||
Total thermal | 3,846 | 65 | 3,661 | 63 | ||||||||||||||||
Hydro | 277 | 5 | 267 | 4 | ||||||||||||||||
Wind | 480 | 8 | 570 | 10 | ||||||||||||||||
Total generation | 4,603 | 78 | 4,498 | 77 | ||||||||||||||||
Purchased power: | ||||||||||||||||||||
Term | 908 | 15 | 913 | 16 | ||||||||||||||||
Hydro | 332 | 6 | 322 | 6 | ||||||||||||||||
Wind | 83 | 1 | 91 | 1 | ||||||||||||||||
Total purchased power | 1,323 | 22 | 1,326 | 23 | ||||||||||||||||
Total system load | 5,926 | 100 | % | 5,824 | 100 | % | ||||||||||||||
Less: wholesale sales | (1,224 | ) | (1,360 | ) | ||||||||||||||||
Retail load requirement | 4,702 | 4,464 | ||||||||||||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20171027005203/en/
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