UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) March 27, 2006
PORTLAND GENERAL ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
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Oregon |
Commission File Number |
93-0256820 |
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(State or other jurisdiction of incorporation or organization) |
1-5532-99 |
(I.R.S. Employer Identification No.) |
121 SW Salmon Street, Portland, Oregon 97204
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (503) 464-8000
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Section 7 - Regulation FD
Item 7.01 Regulation FD Disclosure.
The information included in this Current Report on Form 8-K, including Exhibit 99.1, is being furnished to comply with Regulation FD, but is not considered to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934.
On March 27 through March 30, 2006, representatives of Portland General Electric Company (Company) will make presentations to various members of the financial and investment community in connection with the expected issuance of the Company's new common stock on April 3, 2006. A copy of the slide presentation is attached hereto as Exhibit 99.1.
Section 9 - Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit Description
(99) Additional exhibits
99.1 Portland General Electric Company Presentation Slides dated March 2006
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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PORTLAND GENERAL ELECTRIC COMPANY |
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(Registrant) |
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March 24, 2006 |
By: |
/s/ James J. Piro |
James J. Piro Executive Vice President, Finance Chief Financial Officer and Treasurer |
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March 24, 2006 |
By: |
/s/ Kirk M. Stevens |
Kirk M. Stevens Controller and Assistant Treasurer |
Exhibit 99.1
| Investor Presentation March 2006 |
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Cautionary Statement This presentation contains statements that are forward-looking within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward looking statements are statements of expectations, beliefs, plans, objectives, assumptions or future events or performance. Words or phrases such as "anticipates," "believes," "should," "estimates," "expects," "intends," "plans," "predicts," "projects," "will likely result," "will continue," or similar expressions identify forward-looking statements. The forward-looking statements in this presentation include, but are not limited to, events related to the distribution of new PGE common stock; expected earnings; future growth; financial performance; expected dividend policy; power supply strategy and portfolio; estimates related to the 2007 general rate case; estimates related to Oregon Senate Bill 408, the Boardman facility outage and recovery of investment costs from the Trojan nuclear facility; infrastructure and re source investment opportunities; and operational and company goals. Although PGE believes that the expectations reflected in any forward-looking statements are based on reasonable assumptions, PGE can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from those contemplated include, among others, events related to the distribution of new PGE common stock; effects of electric industry restructuring; governmental policies; outcome of legal and regulatory proceedings; changes in weather, hydroelectric, and energy market conditions; wholesale energy prices; operational factors affecting PGE's power generation facilities; growth and demographic patterns in PGE's service territory; general political, economic, and financial market conditions; and other factors that might be described from time to time in PGE's filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by law, PGE undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. |
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Agenda
1. Stock Issuance Plan William J. Valach, Director of Investor Relations 2. Company Overview Peggy Y. Fowler, CEO and President 3. Regulatory and Financial Overview James J. Piro, Executive Vice President of Finance, CFO and Treasurer |
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Stock Issuance Plan
William J. Valach Director of Investor Relations |
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Stock Issuance Plan
- - Current PGE common stock will be cancelled and 62,500,000 shares of new stock will be issued - - Expected common stock issuance date: April 3, 2006 - - Currently anticipated that 35 - 45% of the new shares will be distributed to creditors holding allowed claims at the initial issuance - - Balance of outstanding shares will be issued to a Disputed Claims Reserve ("DCR") - - PGE common stock to be listed on New York Stock Exchange under the ticker symbol "POR;" trading to begin on a "when issued" basis on April 3, 2006 - - Following the issuance of new common stock, PGE will no longer be a subsidiary or affiliate of Enron Common shares: 80,000,000 Shares Authorized 12,812,500 Shares not issued or listed 4,687,500 Shares listed but not issued - Set aside for future L-T incentive plans - OPUC approval required for issuing 62,500,000 Shares issued and listed - 35-45% to creditors - Balance to Disputed Claims Reserve |
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Stock Issuance Plan (Cont'd)
Disputed Claims Reserve (DCR) - - Shares issued to the DCR will be released over time to Enron creditors holding allowed claims in accordance with the Chapter 11 Plan - Share releases from the DCR expected every six months in April and October (1) - Shares may also be released every other month to "catch-up" creditors who have settled their claims during the two-month period - - The registered owner of the new PGE common stock held in the DCR will be the DCR Disbursing Agent - - The Disbursing Agent votes the shares at the direction of the DCR Overseers, who are currently those individuals who serve on Enron's Board of Directors (1) Number of shares distributed in April and October decrease over time, as fewer shares are held in the DCR. |
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Company Overview
Peggy Y. Fowler CEO and President |
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Mission
PGE is a company customers depend on to provide electric service in a safe and reliable manner, with excellent customer service at a reasonable price. |
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Strategy for Investment Success
Portland General is a well-capitalized, stable company with on-going growth opportunities Stability - - Vertically-integrated, regulated business - - Strong balance sheet / credit ratings - - Experienced management team - - Supportive regulatory environment Growth - - Strong load and customer growth - - Necessary and prudent regulated rate base investment opportunities - - Earnings and dividend growth |
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Company Overview
Oregon Beaver Port Westward Colstrip 3 Colstrip 4 Boardman Coyote Springs Bull Run T.W. Sullivan River Mill Faraday North Fork Oak Grove Pelton Round Butte - - 780,000 retail accounts - - Service territory population 1.5 million, 43% of state's population - - 52 cities served - Portland and Salem are the largest - - Net Plant-in-Service - $2.09 billion - Generation $549 million - Distribution $973 million - Transmission $149 million - General $138 million - Intangible $100 million - CWIP $177 million - - 4,000 square-mile service area - - 26,000 miles of T&D lines - - 1,973 MW of generation - - Annual demand of 2,295 MWa - - Actual peak load of 3,608 MW (2005-06 winter) - - 2,620 employees All numbers updated for year-ending 12/31/05. |
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Portland General Electric Company
(32) Peggy Fowler CEO and President (31) Jim Piro Executive Vice President Finance, Chief Financial Officer & Treasurer 145 employees (18) Pamela Lesh Vice President Regulatory Affairs and Strategic Planning 29 employees (15) Bill Valach Director Investor Relations 2 employees (33) Doug Nichols Vice President General Counsel and Secretary 24 employees (28) Steve Quennoz Vice President Generation 384 employees (21) Jim Lobdell Vice President Power Operations & Resource Planning 38 employees (27) Arleen Barnett Vice President Administration 369 employees (32) Stephen Hawke Vice President Customer Service and Delivery 656 employees (34) Joe McArthur Vice President Distribution 891 employees (29) Ron Johnson Vice President Business and Government Customers; Economic Development 44 employees (18) Carol Dillin Vice President Public Policy 35 employees Employee counts are as of December 2005 excluding temporary employees. ( ) = Number of utility years experience |
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Customer and Revenue Summary
Revenue by Segment Industrial 14% Residential 46% Commercial 40% Retail Revenue and Load Growth - - 1.9% annualized customer growth from 1995-2005, with 1.7% customer growth in 2005 - - 0.9% normalized annual load growth over the past 10 years, with 0.9% growth in 2005 Customers(1) Residential: 680,093 Commercial: 94,941 Industrial: 253 Total: 775,287 Revenue ($mm)(2) Residential: $593 Commercial: $505 Industrial: $178 Total: $1,276 Energy (000s of MWh)(2) Residential: 7,323 Commercial: 7,069 Industrial: 3,148 Total: 17,540 (1) Average customers for fiscal year 2005, based on FERC Form 1. (2) 2005 10-K. |
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Industrial Customer Base Industrial Load by Sector (1) (12 months ending December 31, 2005) Manufacturing 7% Retail 12% Technology 33% Paper 28% Metals 7% Services 13% No single customer accounts for more than 4% of retail revenues (1) Data based on NAICS classifications. |
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Operational Excellence
Portland General has consistently achieved strong operating metrics, as shown in the table below Net Income ($ in millions) 2002: $66 2003: $59 2004: $92 2005: $64 At Fault Complaints 2002: 26 2003: 30 2004: 24 2005: 16 2006 Goals: less than or equal 55 SAIDI (outage minutes) 2002: 73 2003: 86 2004: 85 2005: 86 2006 Goals: less than 90 SAIFI (outage frequency) 2002: 0.65 2003: 0.84 2004: 0.8 2005: 0.83 2006 Goals: less than 1.2 MAIFI (momentaries) 2002: 2.2 2003: 2.2 2004: 1.8 2005: 1.6 2006 Goals: less than 5 Hydro Plant Availability 2002: 99.5% 2003: 91.3% 2004: 98.1% 2005: 99.0% 2006 Goals: 99.0% Thermal Plant Availability 2002: 84.6% 2003: 82.7% 2004: 83.4% 2005: 83.4% 2006 Goals: 90.0% OSHA Recordable Accidents 2002: 141 2003: 154 2004: 185 2005: 152 2006 Goals: less than 150 - - PGE also ranks well in overall customer satisfaction |
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Power Supply Strategy
- - Manage power supply operations to: - Capitalize on PGE's assets and position in the marketplace - Meet load in most economic fashion to lower costs to customers - - Capture the benefits of the unique optionality of PGE's assets and their positioning in real-time markets - - Manage all components of power supply operations to optimize results and provide clear organizational accountability and feedback - - Manage and monitor risks with appropriate systems and processes to assure this strategy is prudently implemented 400 MW Port Westward plant is expected to come online in Q1 2007. |
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Power Supply Portfolio 2007E Generation Capacity Hydro Deschutes River Projects: Physical Capacity 298MW % of Total Capacity 10% Clackamas/Willamette River Projects: Physical Capacity 211MW % of Total Capacity 8% Hydro Contracts: Physical Capacity 492MW % of Total Capacity 17% Total Physical Capacity: 1,001 Total % of Total Capacity: 35% Natural Gas/Oil Beaver Units 1-8: Physical Capacity 545MW % of Total Capacity 19% Coyote Springs: Physical Capacity 243MW % of Total Capacity 8% Port Westward: Physical Capacity 400MW % of Total Capacity 14% Total Physical Capacity: 1,188 Total % of Total Capacity: 41% Coal Boardman: Physical Capacity 380MW % of Total Capacity 13% Colstrip: Physical Capacity 296MW % of Total Capacity 10% Total Physical Capacity: 676 Total % of Total Capacity: 23% Wind Klondike II: Physical Capacity 27MW % of Total Capacity 1% Total PGE System Capability Physical Capacity 2,892W % of Total Capacity 100% 2007E Peak Load Physical Capacity 3,834MW Power Sources as a Percent of Retail MWh Load 2005 Actual Purchased Power 49% Gas/Oil 8% Coal 22% Hydro 21% PGE meets its remaining system peak winter load with a mix of short and long-term purchases |
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Regulatory Environment Oregon Public Utility Commission - - Three member governor-appointed Commission with four-year terms - - Rates set based on a forward test year - - Regulatory Research Associates describes the Oregon regulatory environment as constructive PGE's Approach to Regulation - - Communicate constantly - No surprises - Understand our issues; participate in crafting solutions - - Seek agreement on goals or end state - - Propose paths - Internally consistent alternatives - Alignment of interests always preferable - - Keep an eye on total result: must be reasonable, in context |
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Focus Goals - - High Customer Value - We will increase customers' experience of value received from PGE - - Reliable, Reasonably-Priced Supply - We will design and maintain an energy resource portfolio with cost-effective resources that provide a reliable supply of electricity to customers at prices that are no higher than necessary and as stable and predictable as possible - - Strong Financial Performance - We will achieve a return on equity that is at or above that achieved by a group of vertically integrated utilities with similar operating characteristics, service territory environment and business risks - - Sustained Operational Excellence - We will maintain high performance levels in safety, power quality, reliability, plant availability, customer service, regulatory and environmental stewardship, and improve performance where it is cost effective to do so - - Engaged, Valued Workforce - We will be an employer that fosters its employees' best efforts and talents. We will focus on improving employee unity, work-life satisfaction, performance and accountability - - Active Corporate Responsibility - We will act in a manner true to our company's values, which reflects the values of our customers and the communities we serve - - Economic Strength - We will exert a positive influence on the long-term economic strength of our service territory |
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Regulatory and Financial Overview James J. Piro Executive Vice President of Finance, CFO and Treasurer |
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2007 Rate Case - - General rate case filed in March 2006 based on a 2007 test year - Filed rate base of $2,027 million (including Port Westward) - 10.75% requested ROE based on a capital structure of 56% equity - - Proposed revenue increase of 8.9% driven primarily by: Power Cost Recovery (NVPC) Revenue Increase (%): 4.1% Port Westward Revenue Increase (%): 2.9% General Business Costs Revenue Increase (%): 1.7% - - Request that the OPUC consider whether PGE should proceed with investment in Advanced Metering Infrastructure - - Process expected to take 9-10 months, with new rates proposed effective January 1, 2007 - - General rate case filing available on www.PortlandGeneral.com |
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2007 Rate Case (Cont'd) Proposed Power Cost Recovery Mechanisms: Net Variable Power Costs ("NVPC") Initially Set by General Rate Case Annual Variance Tariff - - 90% customer / 10% Company sharing between forecast and actual NVPC - - Load variations normalized out of the calculation - - PGE shares with customers 50% of earnings greater than 1% above authorized ROE for a given calendar year - - Annual variance will be determined in the following year, with rate effects flowing to customers the year after (e.g. 2007 variance calculated in 2008; rate adjustment in 2009) Annual Update Tariff - - PGE updates rates on January 1st of each year to reflect changes in the NVPC, which includes: - Power, fuel and transmission contracts; load forecast; forward power curves; and forced and planned outages |
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Other Regulatory and Legal Considerations Oregon Senate Bill 408: Beginning January 1, 2006 - - Designed to solve the issue of taxes in rates not being paid to the proper taxing authorities - - Calls for annual rate adjustment if difference between taxes authorized to be collected by the utility and taxes paid by the utility exceed $100,000 - - Permanent rules are being developed by the OPUC - - Could have material adverse effect on 2006 earnings, up to approximately $35 million - - Senate Bill 408 and regulations implementing the law have the potential to be challenged on the basis of constitutionality Boardman Outage - - Taken out of service in October 2005, expected return to service in April 2006 - - Filed with OPUC to recover replacement power costs under deferred accounting (1) - - Alternatively, impact of forced outage could be included in the 4-year rolling average component of rates requested under the RVM process beginning in 2007 Recovering Investment Costs from Trojan Nuclear Facility - - OPUC proceedings - - Class action proceedings (1) Deferral period 11/18/05 through 2/5/06. |
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Financial Highlights - - Strong balance sheet - - Projected growth in earnings and cash flow - - Commitment to maintaining investment grade ratings Current Ratings / Sr. Secured / Sr. Unsecured / Outlook S&P (1) / BBB+ / BBB / Negative Moody's / Baa1 / Baa2 / Stable Fitch / A - / BBB+ / Stable - - Strong commercial banking relationships providing $400 million 5-year revolving line of credit - - PGE remains ring-fenced by OPUC stipulation until the DCR holds less than 20% of PGE's stock (1) S&P rates the business risk of PGE at "5" on a scale of 1 to 10 with 1 being the least risky. Most integrated utility companies are rated from 4 to 6 on this scale. |
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Infrastructure and Resource Investment Opportunities - - Attractive growth opportunities through capital investment in core utility assets Project ($ in Millions) Approved and Under Construction Port Westward (CCCT) Investment: $275 - $295 Timing: 2005 - 2007 (Online: Q1 2007) Hydro Relicensing Investment: $180 - $220 Timing: 2006 - 2010 Under Review Advanced Metering Infrastructure Investment: $120 - $150 Timing: 2006 - 2009 Wind Development Investment: $200 - $240 Timing: 2006 - 2008 - - Annual on-going production, transmission, and distribution capital expenditures of approximately $175 - $200 million |
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Rate Base and Earnings Growth Supported by Strong Balance Sheet Historical Net Income 2003: $59 2004: $92 2005: $64 Capex 2003: $167 2004: $194 2005: $255 2006E(1): $332 2007E(1): $473 Debt/Capitalization (S&P "BBB": 50% - 60%) 2003: 45 2004: 42% 2005: 43% 2006E(1): 45% 2007E(1): 50% Rate Base 2002: $1,766 2007E(2): $2,027 (2) Note: S&P target credit statistic range based on Business Position 5. (1) Includes Advanced Metering Infrastructure and wind development projects, which are under review. (2) Includes full cost of Port Westward. |
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Earnings Guidance - - 2006 earnings per share guidance of $0.80 - $0.90 - Includes impact of Boardman outage and no regulatory action on the deferral request - Does not include potential impact of Senate Bill 408 - - 2007 earnings per share guidance of $1.70 - $1.80 - - Earnings expected to grow 4 - 5% per year over the long-term PGE is committed to both earnings and dividend growth |
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Expected Dividend Policy - - Initial annualized dividend of $0.90 per share, payable quarterly, pending approval by Board of Directors in May - - First dividend expected to be paid for the second quarter of 2006 - Declared in May - Record date in June - Payment date in July - - Over the long term, we expect a target dividend payout ratio in the range of 60% PGE is committed to both earnings and dividend growth |
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Compelling Investment Opportunity Strong Cash Flows - - Vertically-integrated, regulated utility - - Investment grade credit ratings - - Competitive dividend Regulated Growth Opportunities - - Earnings growth driven by significant infrastructure investment, especially new generation resources - - Attractive load and customer growth Experienced Management Team & Workforce - - Customer and shareholder-focused - - Results driven |
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William J. Valach Director of Investor Relations (503) 464-7395 William.Valach@pgn.com Portland General Electric Company 121 SW Salmon Street Suite 1-WTC-0403 Portland, Oregon 97204 www.PortlandGeneral.com |