News Release Details

General rate case filing seeks inclusion of new power plant in customer prices, effective 2016

PORTLAND, Ore.--(BUSINESS WIRE)-- Portland General Electric Company (NYSE:POR) today reported net income of $175 million, or $2.18 per diluted share, for the year ended Dec. 31, 2014. This compares with $105 million, or $1.35 per diluted share, for 2013. Net income was $43 million, or 55 cents per diluted share, for the fourth quarter of 2014 compared with $47 million, or 59 cents per diluted share, for the comparable period of 2013. In addition, the company is initiating full-year 2015 earnings guidance of $2.20 to $2.35 per diluted share.

"I'm very proud of our employees' accomplishments in delivering outstanding customer service along with strong operating and financial performance in 2014," said Jim Piro, president and chief executive officer. "In addition to achieving excellent performance at our generating facilities, we delivered on the significant objective of completing two new major generating plants — on time and on budget. These plants will play an important role in meeting our customers' energy needs for years to come in a safe, sustainable and reliable manner."

2014 Earnings Compared to 2013

The increase in annual net income was largely due to the expense in 2013 of capitalized costs related to termination of the Cascade Crossing Transmission Project and an industrial customer refund recorded in 2013. Results for 2014 reflect an increase in allowance for equity funds used during construction for the company's three new generating resources, improved generation plant operations and alignment of our revenues with our cost structure with implementation of new retail prices on January 1, 2014. The increase in net income was partially offset by a higher effective tax rate in 2014 over 2013. Excluding the Cascade Crossing expense and the industrial customer refund, PGE's non-GAAP adjusted earnings per share for 2013 would have been $1.84.

Company Updates

Generation Projects

• Tucannon River Wind Farm - PGE's second fully owned and operated large-scale wind project with total installed capacity of 267 megawatts was placed into service on December 15, 2014 and will allow PGE to increase the amount of renewable power in its system and meet the requirements of Oregon's Renewable Portfolio Standard. As of December 31, 2014, $501 million is included in Electric utility plant related to Tucannon River Wind Farm. The Company estimates that final completion of the wind farm will require approximately $29 million of capital expenditures in 2015.
• Port Westward Unit 2 - PGE's 220 megawatt natural gas-fired power plant was placed into service on December 30, 2014 and is designed for maximum flexibility to help meet real-time fluctuations in customer demand and integrate intermittent renewable resources, such as wind. As of December 31, 2014, $295 million is included in Electric utility plant related to Port Westward Unit 2. The Company estimates that final completion of the plant will require approximately $20 million of capital expenditures in 2015.
• Carty Generating Station - Construction is on schedule for the 440 megawatt natural gas-fired baseload power plant located near Boardman, Ore. The plant is expected to be placed into service during the second quarter of 2016 at an estimated cost of $450 million, excluding AFDC. Major foundation work and the cooling tower are complete, the heat recovery steam generator modules and casings have been installed and welding of piping components has commenced.

Updates on General Rate Cases

2015 GRC

On December 4, 2014, the Oregon Public Utility Commission (OPUC) issued an order that, when combined with customer credits, resulted in an overall increase in customer prices of approximately one percent. Embedded in the price change was a decrease related to PGE's base business and customer credits, and increases related to the addition of the Tucannon River Wind Farm and Port Westward Unit 2. These prices became effective January 1, 2015 and reflect:

• Return on equity of 9.68 percent;
• Capital structure of 50 percent debt and 50 percent equity;
• Cost of capital of 7.56 percent;
• Rate base of $3.8 billion;
• Annual revenue increase of $15 million.

2016 GRC

Late yesterday, PGE filed a general rate case with a 2016 test year which would result in an overall price increase of 3.7 percent effective in 2016, primarily to recover the costs associated with the Carty Generating Station which is expected to begin serving customers in the second quarter of 2016. PGE has initiated a comprehensive 10-month review and approval process with the OPUC in order to include this resource in prices when the plant goes in service. The requested price increase reflects:

• Return on equity of 9.90 percent;
• Capital structure of 50 percent debt and 50 percent equity;
• Cost of capital of 7.67 percent;
• Rate base of $4.5 billion;
• Annual revenue increase of $66 million, net of customer credits and supplemental tariff updates.

PGE expects the Commission to issue a final order with approved price changes before the end of 2015, with new customer prices expected to be effective in two stages. A price reduction of approximately 1.0 percent is expected on Jan. 1, 2016 reflecting an increase in base business costs more than offset by the amortization of customer credits and supplemental tariff updates, and a price increase of approximately 4.7 percent for the Carty Generating Station is expected to be effective when the plant is placed into service in the second quarter of 2016.

The specific impact on individual customers' bills will vary depending on usage and customer class. If the OPUC approves PGE's request as submitted, typical residential customers using a monthly average of 840 kilowatt-hours of power would see their bill increase by about three dollars per month when Carty goes into service.

Fourth quarter operating results

Retail revenues decreased $2 million in the fourth quarter of 2014 compared with the fourth quarter of 2013, which was driven by an 11 percent decrease in residential energy deliveries resulting from warmer weather. During the fourth quarter of 2014, heating degree-days (an indicator of the extent to which customers are likely to have used electricity for heating) were 25 percent lower than in the fourth quarter of 2013. Commercial and industrial deliveries combined were comparable to the fourth quarter of 2013. Adjusting for the effects of weather and one large paper customer, total retail deliveries in the fourth quarter of 2014 were 0.5 percent lower than in the fourth quarter of 2013. Revenue increased approximately $5 million due to storm cost reserves, which were offset in operating and maintenance expenses.

Net variable power costs, which consist of purchased power and fuel expense net of wholesale revenues, decreased $35 million in the fourth quarter of 2014 compared to the fourth quarter of 2013. The decrease is largely due to a 15 percent decrease in the average variable power cost per MWh resulting from increases in energy received from the Company's generating resources, combined with a 28 percent decline in the cost of natural gas-fired generation. In the fourth quarter of 2013, the Company had unplanned plant outages at two thermal generating facilities and incurred $6 million of incremental replacement power costs related to the outages.

Total operating and maintenance expenses were $139 million in the fourth quarter of 2014 compared with $117 million in the fourth quarter of 2013. The $22 million, or 19 percent, increase was largely due to higher storm-related restoration costs (which were partially offset in revenue by using $5 million of storm cost reserves), increased operating costs for Boardman as a result of the company's ownership percent increasing to 80 percent from 65 percent in December 2013, and higher plant and distribution maintenance expenses.

Depreciation and amortization expense was $15 million higher in the fourth quarter of 2014 compared with the fourth quarter of 2013, with $8 million related to timing of the deferral and amortization of costs of four capital projects as authorized in the company's 2011 General Rate Case. In the fourth quarter of 2013, PGE deferred $4 million of costs related to these four projects and in the fourth quarter of 2014, the company recorded $4 million of amortization expense related to the recovery of these costs (offset in retail revenues). Capital additions also increased depreciation and amortization expense by $5 million.

2014 annual operating results

Retail revenues increased $71 million in 2014 compared to 2013 primarily due to the net effect of the following:

• $60 million increase related to higher average retail prices effective January 1, 2014;
• $20 million increase as a result of the collection of deferred costs related to four capital projects beginning January 1, 2014 (offset in Depreciation and amortization expense); and
• $14 million increase as a result of a $9 million industrial customer refund recorded in the second quarter of 2013 and a $5 million increase related to other various items including the use of storm reserves, partially offset by:
• $10 million decrease related to the decoupling mechanism; and
• $13 million decrease related to an 0.8 percent decline in retail energy deliveries, with a 3.1 percent decrease in residential loads, partially offset by increases of 0.7 percent and 0.8 percent in commercial and industrial sales, respectively.

Net variable power costs decreased $59 million for 2014 compared with 2013, primarily driven by a $44 million decrease related to a 6 percent decline in the average variable power cost per MWh and $17 million in replacement power costs incurred in 2013 in connection with unplanned outages. In addition, an 11 percent increase in the average price per MWh of wholesale power sales combined with a 7 percent increase in the volume of wholesale power sale contributed to the decrease in NVPC.

Total operating and maintenance expenses were $484 million in 2014 compared with $444 million in 2013. The $40 million, or 9 percent, increase is primarily due to the following:

• $10 million primarily due to storm-related and restoration costs as the company's service territory experienced three major wind storms during the fourth quarter, $5 million of which was offset in revenues through our storm recovery mechanism for the three major storms during Q4;
• $7 million as a result of the Company's ownership interest in Boardman increasing from 65% to 80% on December 31, 2013;
• $17 million for numerous items including maintenance, generation, transmission and distribution, partially offset by the $3 million expense for the 2013 renewable benchmark bid; and
• $8 million due to a number of items including higher incentive compensation as a result of improved performance, medical, and technology costs, offset by lower pension, injury and damage expense.

Cascade Crossing transmission project consisted of $52 million of costs charged to expense in the second quarter of 2013 due to the termination of the project.

Depreciation and amortization expense was $301 million in 2014 compared with $248 million in 2013. The $53 million, or 21 percent, increase is primarily due to timing of the deferral and amortization of costs of four capital projects as authorized in the company's 2011 General Rate Case. In 2013, PGE deferred $17 million of costs related to these four projects and in 2014, the company recorded $16 million of amortization expense related to the recovery of these costs (offset in retail revenues). Capital additions also increased depreciation and amortization expense by $16 million.

Interest expense, net decreased $5 million in 2014 compared with 2013, with a $16 million decrease due to an increase in the allowance for borrowed funds used for construction resulting from a higher average construction work-in-progress (CWIP) balance from the construction of the three new generating plants, partially offset by an increase in the average balance of debt outstanding during 2014 compared with 2013.

Other income, net increased $18 million in 2014 compared with 2013, primarily driven by a $24 million increase in the allowance for equity funds used for construction resulting from the higher average CWIP balance, partially offset by a decrease in earnings from the non-qualified benefit plan trust assets.

Income taxes increased $40 million in 2014 compared with 2013, largely due to an increase in pre-tax income, which was driven in part by the $52 million charge to expense of capitalized costs related to the Cascade Crossing transmission project and a $9 million customer refund, both of which were recorded in 2013. The company's effective tax rate increased to 26.0 percent in 2014 compared with 16.8 percent in 2013 due primarily to the increase in pre-tax income and the smaller relative percentage thereof represented by federal and state tax credits, partially offset by the effect of increased AFDC equity.

2013 adjusted operating earnings per share

Excluding the impacts of the Cascade Crossing charge and the customer billing matter, PGE's adjusted operating earnings for 2013 would be $1.84 per share, as shown below:

2013 GAAP earnings per share			$1.35
Exclude the Cascade Crossing expense			0.42
Exclude the customer billing matter revenue reduction			.07
2013 Non-GAAP adjusted operating earnings per share			$1.84

PGE believes this non-GAAP adjusted earnings reconciliation is useful to investors, analysts, rating agencies and other parties, as it facilitates the analysis of our results of operations from one period to another and provides clarity concerning the impact of certain events on operational results.

2015 earnings guidance

PGE is initiating full-year 2015 earnings guidance of $2.20 to $2.35 per diluted share. Guidance is based on the following assumptions:

• Retail deliveries growth of approximately 1%;
• Average hydro conditions;
• Wind generation based on five years of historical levels or forecast studies when historical data is not available;
• Normal thermal plant operations;
• Operating and maintenance costs between $510 and $530 million;
• Depreciation and amortization expense between $300 and $310 million; and
• Capital expenditures of approximately $629 million.

Fourth quarter 2014 earnings call and web cast — Feb. 13, 2015

PGE will host a conference call with financial analysts and investors on Friday, Feb. 13, 2015, at 11 a.m. ET. The conference call will be web cast live on the PGE website at PortlandGeneral.com. A replay of the call will be available beginning at 2 p.m. ET on Friday, Feb. 13, 2015 through Friday, Feb. 20, 2015.

Jim Piro, president and CEO; Jim Lobdell, senior vice president of finance, CFO, and treasurer; and Bill Valach, director, investor relations, will participate in the call. Management will respond to questions following formal comments.

The attached unaudited 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 842,000 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 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 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 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
(In millions, except per share amounts)
(Unaudited)
		Three Months Ended										Years Ended
		December 31,										December 31,
		2014					2013					2014					2013
Revenues, net		$	500				$	499				$	1,900				$	1,810
Operating expenses:
Purchased power and fuel		185					219					713					757
Generation, transmission and distribution		76					56					257					225
Cascade Crossing transmission project		—					—					—					52
Administrative and other		63					61					227					219
Depreciation and amortization		77					62					301					248
Taxes other than income taxes		27					24					109					103
Total operating expenses		428					422					1,607					1,604
Income from operations		72					77					293					206
Interest expense, net (1)		25					26					96					101
Other income:
Allowance for equity funds used during construction		11					5					37					13
Miscellaneous income, net		—					2					1					7
Other income, net		11					7					38					20
Income before income taxes		58					58					235					125
Income taxes		15					11					61					21
Net income		43					47					174					104
Less: net loss attributable to noncontrolling interests		—					—					(1		)			(1		)
Net income attributable to Portland General Electric Company		$	43				$	47				$	175				$	105
Weighted-average shares outstanding (in thousands):
Basic		78,210					78,068					78,180					76,821
Diluted		81,174					78,812					80,494					77,388
Earnings per share:
Basic		$	0.57				$	0.59				$	2.24				$	1.36
Diluted		$	0.55				$	0.59				$	2.18				$	1.35
(1) Includes an allowance for borrowed funds used during construction		$	7				$	3				$	22				$	7

PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
			As of December 31,
			2014				2013
ASSETS
Current assets:
Cash and cash equivalents			$	127			$	107
Accounts receivable, net			149				146
Unbilled revenues			93				104
Inventories			82				65
Regulatory assets—current			133				66
Other current assets			115				103
Total current assets			699				591
Electric utility plant, net			5,679				4,880
Regulatory assets—noncurrent			494				464
Nuclear decommissioning trust			90				82
Non-qualified benefit plan trust			32				35
Other noncurrent assets			48				49
Total assets			$	7,042			$	6,101
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable			$	156			173
Liabilities from price risk management activities—current			106				49
Current portion of long-term debt			375				—
Accrued expenses and other current liabilities			236				171
Total current liabilities			873				393
Long-term debt, net of current portion			2,126				1,916
Regulatory liabilities—noncurrent			906				865
Deferred income taxes			625				586
Unfunded status of pension and postretirement plans			237				154
Liabilities from price risk management activities—noncurrent			122				141
Asset retirement obligations			116				100
Non-qualified benefit plan liabilities			105				101
Other noncurrent liabilities			21				25
Total liabilities			5,131				4,281
Total equity			1,911				1,820
Total liabilities and equity			$	7,042			$	6,101

PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
		Years Ended December 31,
		2014				2013
Cash flows from operating activities:
Net income		$	174			$	104
Depreciation and amortization		301				248
Capitalized costs expensed related to Cascade Crossing		—				52
Other non-cash income and expenses, net included in Net income		70				51
Changes in working capital		(19		)		68
Proceeds received from legal settlement		6				44
Other, net		(14		)		(23		)
Net cash provided by operating activities		518				544
Cash flows from investing activities:
Capital expenditures		(1,007		)		(656		)
Contribution to Nuclear decommissioning trust		(6		)		(44		)
Other, net		19				8
Net cash used in investing activities		(994		)		(692		)
Cash flows from financing activities:
Net issuance of long-term debt		583				277
Proceeds from issuance of common stock, net of issuance costs		—				67
Maturities of commercial paper, net		—				(17		)
Dividends paid		(87		)		(84		)
Net cash provided by financing activities		496				243
Increase in cash and cash equivalents		20				95
Cash and cash equivalents, beginning of year		107				12
Cash and cash equivalents, end of year		$	127			$	107

PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
SUPPLEMENTAL OPERATING STATISTICS
(Unaudited)
		Three Months Ended							Years Ended
		December 31,							December 31,
		2014			2013				2014				2013
Revenues (dollars in millions):
Retail:
Residential		$	240		$	250			$	893			$	861
Commercial		164			159				657				619
Industrial		57			57				221				217
Subtotal		461			466				1,771				1,697
Other accrued (deferred) revenues, net		3			—				(8		)		(5		)
Total retail revenues		464			466				1,763				1,692
Wholesale revenues		22			21				95				80
Other operating revenues		14			12				42				38
Total revenues		$	500		$	499			$	1,900			$	1,810
Energy sold and delivered (MWh in thousands):
Retail energy sales:
Residential		1,990			2,232				7,462				7,702
Commercial		1,733			1,764				6,931				6,896
Industrial		838			832				3,211				3,210
Total retail energy sales		4,561			4,828				17,604				17,808
Retail energy deliveries:
Commercial		140			137				563				545
Industrial		276			258				1,099				1,066
Total retail energy deliveries		416			395				1,662				1,611
Total retail energy sales and deliveries		4,977			5,223				19,266				19,419
Wholesale energy deliveries		628			461				2,520				2,353
Total energy sold and delivered		5,605			5,684				21,786				21,772
Number of retail customers at end of period:
Residential									738,008				732,341
Commercial									103,637				103,021
Industrial									198				204
Direct access									430				504
Total retail customers									842,273				836,070

PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
SUPPLEMENTAL OPERATING STATISTICS, continued
(Unaudited)
		Three Months Ended							Years Ended
		December 31,							December 31,
		2014			2013				2014			2013
Sources of energy (MWh in thousands):
Generation:
Thermal:
Coal		1,387			1,084				4,466			4,070
Natural gas		1,156			1,076				3,429			3,375
Total thermal		2,543			2,160				7,895			7,445
Hydro		458			415				1,750			1,646
Wind		219			199				1,172			1,200
Total generation		3,220			2,774				10,817			10,291
Purchased power:
Term		1,228			1,652				5,926			6,472
Hydro		349			343				1,568			1,629
Wind		50			41				317			311
Spot		608			697				2,626			2,547
Total purchased power		2,235			2,733				10,437			10,959
Total system load		5,455			5,507				21,254			21,250
Less: wholesale sales		(628	)		(461	)			(2,520	)		(2,353	)
Retail load requirement		4,827			5,046				18,734			18,897

			Heating Degree-days					Cooling Degree-days
			2014		2013			2014		2013
1st Quarter			1,891		1,902			—		—
Average			1,864		1,850			—		—
2nd Quarter			530		593			57		82
Average			713		721			70		68
3rd Quarter			18		90			579		457
Average			85		82			382		385
4th Quarter			1,355		1,801			17		—
Average			1,602		1,586			1		1
Annual total			3,794		4,386			653		539
Annual total average			4,264		4,239			453		454

Note: "Average" amounts represent the 15-year rolling averages provided by the National Weather Service (Portland Airport).

Portland General Electric Company
Media Contact:
Melanie Moir, 503-464-8790
Corporate Communications
or
Investor Contact:
Bill Valach, 503-464-7395
Investor Relations

Source: Portland General Electric Company

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