News Release Details

PORTLAND, Ore., Oct 28, 2010 (BUSINESS WIRE) -- Portland General Electric Company (NYSE:POR) today reported net income of $49 million, or $0.65 per diluted share, for the three months ended September 30, 2010, compared to $32 million, or $0.43 per diluted share, for the three months ended September 30, 2009. PGE now estimates earnings per diluted share for 2010 will range from $1.65 to $1.80. The increase in net income and the revision to 2010 guidance were driven by the effects of the Oregon Senate Bill 408 (SB 408) calculation. During the third quarter of 2010, a new federal tax law was enacted that includes the extension of bonus depreciation, which resulted in a significant increase in the amount to be collected from customers pursuant to SB 408. The earnings impact related to SB 408, including the effect of the new tax law, was approximately $0.16 per diluted share for the third quarter of 2010.

Retail revenues increased $25 million, or 6%, from the third quarter of 2009 primarily due to a $20 million increase related to SB 408. Also contributing to the revenue increase was a change in the mix of customers that purchase their energy requirements from PGE. Partially offsetting these increases was the impact of a 5% decrease in average retail prices in the third quarter of 2010 compared to the third quarter of 2009.

Retail energy deliveries were down 2.7%, with decreases in residential and commercial deliveries partially offset by an increase in industrial deliveries. Decreases of 5.4% and 3.8% in residential and commercial deliveries, respectively, were driven primarily by cooler than normal weather in the third quarter of 2010, compared with warmer than normal weather in 2009, and by the continued impact of the weak economy. Partially offsetting these decreases was a 4.2% increase in industrial energy deliveries.

On a weather adjusted basis, retail energy deliveries approximated those of the third quarter of 2009. Weather adjusted retail energy deliveries for 2010 are expected to be approximately 1.5% below 2009 due to the combination of energy efficiency initiatives and the continued effects of the economy. Such declines are expected to be partially offset by a moderate increase in deliveries to existing industrial customers, including those in the high technology sector.

The average variable power cost in the third quarter of 2010 decreased 8% compared to the third quarter of 2009. The decrease was driven primarily by an increase in lower-cost generation, resulting from both lower fuel costs and higher plant availability. Availability of the plants that PGE operates was 94% in the first nine months of 2010 compared to 86% in 2009.

Net income for the nine months ended September 30, 2010 was $100 million, or $1.32 per diluted share, compared to $87 million, or $1.21 per diluted share, for the comparable period of 2009. The $13 million increase was primarily due to the effects of SB 408 and a 7% decrease in the average variable power cost. A 3.9% decrease in retail energy deliveries was driven by the continuing effects of the economy and mild weather.

"PGE is proud to have completed Biglow Canyon Wind Farm - one of the largest wind projects in the Pacific Northwest - on time and under budget," said Jim Piro, President and Chief Executive Officer. "I am also pleased that our generation and power delivery teams performed very well during this period. We have also reached agreement on all items related to revenue requirements in the current general rate case, which we believe provides a fair and reasonable outcome for customers and shareholders."

Third Quarter Highlights

-- Completed Phase III of the Biglow Canyon Wind Farm project at a total cost of $383 million. The completed project has a total of 217 wind turbines in service, with a total installed capacity of approximately 450 MW. Energy from wind resources provided 7% of PGE's retail load requirement in the third quarter of 2010 compared to 4% in the third quarter of 2009.

-- Reached agreement in the Company's 2011 General Rate Case proceeding among PGE, the Public Utility Commission of Oregon (OPUC) staff and customer groups on all items related to revenue requirement issues, with the following impact to the initial filing (in millions):

* The 2011 load forecast was updated in September 2010 and forecasted NVPC for 2011 will be updated through November 15, 2010.

The stipulated items include the following:

â- Capital structure of 50% debt and 50% equity;

â- Return on equity of 10.0%;

â- Cost of capital of 8.033%;

â- The Power Cost Adjustment Mechanism (PCAM) deadband range was fixed at $15 million below and $30 million above the baseline NVPC;

â- Extension of the decoupling mechanism through December 31, 2013; and

â- Agreement between PGE and certain parties to allow changes in customer prices to reflect the incremental revenue requirement impact of a shortened Boardman operating life, if that were to occur, subject to OPUC approval.

After considering all items agreed among PGE, OPUC staff, and customer groups, the filing results in a 3.5% overall customer price increase and an average rate base of approximately $3.153 billion. The price increase is subject to change to incorporate final updates to the forecast of 2011 NVPC. The regulatory review process is continuing, with a final order expected from the OPUC before the end of 2010. New rates are expected to be effective January 1, 2011.

Third Quarter Operating Results

-- Retail revenues increased $25 million, or 6%, in the third quarter of 2010 compared to the third quarter of 2009 primarily due to:

â- A $20 million increase related to SB 408, resulting primarily from the effect of a new federal tax law that provides for the extension of bonus depreciation, which resulted in a significant increase in the amount to be collected from customers;

â- A $12 million increase in energy sales, consisting of the net effect of:

• A 4.2% increase in deliveries to industrial customers, primarily due to improvement in the high technology sector, the 2010 return of a large customer from another electricity supplier to PGE for its energy requirements, and increased production by another large industrial customer; and
• Decreases of 5.4% and 3.8% in residential and commercial deliveries, respectively, driven primarily by both cooler summer weather and the continued impact of the weak economy. Partially offsetting the effects of the weather and the economy was the impact of a 4,700 increase in the average number of customers served;

â- A $5 million increase related to the reversal of a deferral for customer refunds under the 2005 Oregon Corporate Tax Kicker, pursuant to an OPUC order;

â- A $4 million increase related to the accrual of revenue requirements for Biglow Canyon;

â- A $2 million increase related to the decoupling mechanism, due to a $2 million customer refund recorded in 2009; partially offset by

â- A $19 million decrease related to a 5% decrease in average retail price. A decrease in net variable power costs, pursuant to the Company's Annual Power Cost Update Tariff, was partially offset by increases related to the Biglow Canyon Phase II and Selective Water Withdrawal capital projects.

-- Purchased power and fuel expense decreased $22 million, or 10%, in the third quarter of 2010 compared to the third quarter of 2009, with $20 million related to an 8% decrease in average variable power cost and $2 million related to a 1% decrease in total system load. The average variable power cost decreased to $38.12 per MWh in the third quarter of 2010 from $41.54 per MWh in the third quarter of 2009, primarily due to a shift in the mix of energy sources. Thermal generation was higher in the third quarter of 2010 compared to 2009. Energy from hydro resources was approximately 9% and 10% below normal in the third quarter and first nine months of 2010, respectively, and is expected to be below normal for the year.

-- Depreciation and amortization expense increased $6 million, or 11%, in the third quarter of 2010 compared to the third quarter of 2009 largely due to increased capital additions related to Biglow Canyon Phase III and the smart meter project.

-- Other income, net decreased $3 million primarily due to a decrease in income from non-qualified benefit plan trust assets. In the third quarter of 2010, PGE recorded a $3 million gain, compared to a $5 million gain recorded in the third quarter of 2009.

2010 Earnings Guidance

PGE is revising earnings guidance from the previously reported range of $1.40 to $1.55 per diluted share to $1.65 to $1.80 per diluted share. The guidance change reflects the effect of a change in federal law regarding 2010 bonus depreciation on SB 408, representing approximately $0.20 per diluted share. The aggregate net effect of several other items represents an additional positive impact of approximately $0.05 per diluted share

2011 Earnings Guidance

2011 earnings guidance will be initiated on PGE's fourth quarter earnings call in February 2011.

Third Quarter 2010 Earnings Call and Web cast -- October 28, 2010

PGE will host a conference call with financial analysts and investors on Thursday, October 28, 2010, at 11 a.m. EDT. The conference call will be web cast live on the PGE website at www.PortlandGeneral.com. A replay of the call will be available beginning at 2 p.m. EDT on Thursday, October 28, 2010 through Thursday, November 4, 2010.

Jim Piro, President and CEO; Maria Pope, Senior Vice President, 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 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 822,000 residential, commercial and industrial customers in the Portland/Salem metropolitan area of Oregon. The Company's headquarters are located at 121 SW Salmon Street, Portland, Oregon 97204. Visit PGE's website at www.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 the outcome of the 2011 general rate case and the timing of a final order from the OPUC; statements regarding the outcome of any legal or regulatory proceeding; 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 the reductions in demand for electricity and the sale of excess energy during periods of low wholesale market prices; the outcome of the 2011 general rate case filing; regulatory approval and rate treatment of the smart meter project and Phase III of the Biglow Canyon Wind Farm project; 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; unforeseen problems or delays in completing capital projects, resulting in the failure to complete such projects on schedule or within budget; 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

SOURCE: Portland General Electric Company

Portland General Electric Company
Media Contact:
Gail Baker, Director, Corporate Communications, 503-464-8693
or
Investor Contact:
Bill Valach, Director, Investor Relations, 503-464-7395

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