Portland General Electric (POR) 26 Oct 182018 Q3 Earnings call transcript

Good morning, everyone and welcome to the Portland General Electric Company Third Quarter 2018 Earnings Results Conference Call. Today is Friday, October 26, 2018. This call is being recorded. [Operator Instructions] For the opening remarks, I will turn the conference call over to Portland General Electric's Director of Investor Relation and Treasury, Chris Liddle. Please go ahead, sir.

good us I’m today. and able that Heather join to you, morning pleased everyone, you're Thank

a this There General constitute are from our call cause Before like written materially law. X, I'd the throughout differ in oral our you subject be statements Portland may fact prepared website forward-looking such, factors like customary results begin the are to current that to disclosures. to based to as we will forward-looking our are Referring historical regarding remind make Electric's under on that discussion These call. statements The at not we our statements available to today. be investors.portlandgeneral.com. which actual that statements and I'd and, statements made we'll discussion, this slides morning, presentation referencing supplement on have Slide to

incorporated Lobdell, discussion update some For and our Leading earnings CEO; third and Senior part website. could the future call. result be CFO Maria statements, were of our such Harbor press differences, that of which a the Jim factors company events Safe this publicly new most released any XX-Q market are the of quarter of of our or no The description release as at Vice and obligation Finance, Form whether before Pope, undertakes should and occur Treasurer. that are our to statement information, of forward-looking transcript today, any as a today that otherwise. President General opened Form may President This via Electric's cause XX-Q. read Portland both recent requests available of company earnings the and you Form XX-K

questions. open the remarks, prepared we your their Following for lines will

it's my to the Pope. pleasure over Now call Maria turn to

morning, everyone. good and Chris, Thanks,

to settlement strong third to see In With continue performance attention distribution and behind transmission and was the our our full quarter, healthy and in-migration focusing generation us, a the on we Carty economy. we’re benefits operating from the future. from

or quarter $X.XX of or of to reported Turning third X. compared income We $X.XX slide share, million in per of $XX per the share XXXX. with million net net income $XX

This which the last the $X.XX previously more What markets million quarter about saw offset more fluctuations. this Jim $XX across the effectively. from energy expensed settlement share, west, is per will decade. we recognized quarter is the market in very that cost or later. on partially seen most we cash the control than items. Carty in volatility we we reliability, with were notable proceeds did details managed third share through in only pleased We're to how maintain but these we've Not able we

continues and Turning of steady to with remains on use to slide growth and experience mixed residential strong our Portland in rate growth, service population to pleased unemployment share activity that X. of I'm X.X% area current Construction X.X%. with low economic focused buildings. projects

the area make to low Our to service fiber to and connections, and Asian particularly Seattle to relative centers. and appealing apparel markets the areas make companies technology the area region this continue attractive Bay proximity and to enhanced data cost

slide X. turning to Now

on We our reduce clean continue vision and execute gas greenhouse to our emissions. strategy to energy

results and XX purchase wind, complete is contract to XX bid shortly resources The hours we party acknowledge for the a on bidders those storage. highly Proposal solar this six and Request is thereafter. expected proposals commission to We've garnered December submitted Also another for shortlist megawatt. Renewable resources shortlist wind the the announce a the hours program include competitive and combinations three shortlist from bids. additional by PGEs bids battery agreement third recently joint Our for company-owned of negotiations for megawatts and The early power of expect OPUC. to of

interveners and energy. our commission product We on who continue XXX% for customers, tariff. and with The green want large designed renewable other energy green work municipalities the to

customers smaller we substations have authorities, future. being America’s joint our the electric a of continues And avenues technologies. with now projects upgraded. list on well American we that growth and I'm placed XXX Cities Six for grow Bloomberg was move as push three the to Climate storage on proposed to a region, hope over greenest grid and plans you. to energy smart number Thank projects. XXth seemed renewables and to Jim. the cities in includes a a adjacent ranking call Additionally, to further forward winter to the Portland in local our project five free projects recent efforts in transit as, and challenge. These pleased PGE turn carbon just

Maria. you, Thank

has and the on of middle firming of we share. mentioned this guidance XXXX year $X.XX our X, towards per expect full Maria are diluted As currently shown to $X.XX slide to We earnings be range.

Turning eight, to shows the drivers slide which quarter. earnings for

cents to – carrying a $X.XX related due diluted increase costs increase cash proceeds, to $XX are per settlement First, cash a Carty million a costs. with to and share $X.XX increased carrying avoided earnings pretax litigation $X.XX settlement related

our in increased to $X.XX due of increase offset followed quarter-over-quarter, for higher due by increased a prices. prices electric Second, by plants other favorable decrease as $X.XX gross wholesale decrease less result $X.XX the and gas expenses. lower Allowing weather margin earnings to a $X.XX economic dispatch by natural a of

gas quarter, facility. electricity a in California, due pipeline as third mentioned unplanned capacity and of that outages methane natural prices a and to result Maria in As reduced largest gas were state's the constraints west volatile at the in leak storage wildfires the extremely natural

and below a and lower excellent an units have to the outages, generation to prices opportunity natural the or testing The hydro lower particular, output due wholesale been X. this testing the operational has completed diverse been Our of helped costs minimal to September. X power at and the operations normal coal units maintain electric natural production the In mitigate use slightly our prices largely to help higher wind mission opportunity of manage thermal strips -- and did since gas energy and job, managing reliability portfolio team systems.

price equity XXXX to our return information slide revenue and of rate resulted cost Moving rate a includes return base for due with the system. Last full remaining storm to to the in capital being restoration the structure issues a decoupling, and debt trended The on than customer customer our The into will XX% The that less settled is capital, equity, our operating balancing be related power X% To X.X% final XX% final whether resolved general to the forecast. is rate expected include, extent a is which provide manage case. volumetric issues in mid proposal November. we average we will the capital. in X, account updates The customer issued, to billion, review agreement base and load $X.XX cost January effect on increase regulatory X. of incremental XXXX. December going X.X% the month, XXXX all up with continue expected order prices higher, be ends new until which in a costs requirement

related secure that and toward of to continued a moving current XXXX we're On the to a result capital provide forecast. XXXX, process our growth, system. investments of forecast rolling a expenditure more frequent reliable capital slide updates development XX, support we and the efficient, planning company's these may from to Managing in customer expenditures, summary more

updates deliver third We every quarter. to our capital will primary continue

calls, included potential capital RFP. related our forecast in shared projects As to our any not pursuant in expenditures previous renewable our we’ve to

to On credit slide maintain sheet, ratings. the balance we great continue investment the strong solid including XX, a liquidity in

of credit debt requirements commercial from of insurances available and cash, As common short-term XX, first $XX billion million, $X.X million totaling expect $XXX ready as for ratio we're estimated cash capital letter fund issuance now we In of to needed. of operator, capacity operations, had bond And XX.X%. questions. September a credit capacity XXXX, equity with and paper we and of mortgage

from comes [Operator Instructions] with JPMorgan. Your Christopher Turner first question

line is open. Your

Chris. morning, Good

give an the guys. perhaps morning not that do any to return in on the in to end more dividend broadly up update event wins you shareholders you RFP cash your process strategy here? strategy and Good owning your us Could

and morning. Chris good Sure, thank you,

our continuing we grow our dividend to having into know, ratio to dividend we future. payout the you where overtime go between to are target committed our a and As dividend and we earnings expect healthy

at for have really to capital up you also our expenditures, not invest saw able see. to but probably a security, grid. in we we opportunities that for And our foundation took only that we be the more expect smarter, to XXXX, years. also well robust forecast, our look in system to As enhance reliability, the outer as, integrated issues the prepare the And set then environmental as we for

Got you.

was visibility with like Clearly, sure have historically your it opportunities and there. side plan wanting erred there make So, the conservative on in plenty guys sounds invest. to us to CapEx updates you providing in of

the you typically be So, to say kind that when payout dividend that year? or growth is historical no there it of to up part fair trends middle would coming change of the next in review

You're right. We in the and of year. board range each there announcement after. earnings strategy, to maybe dividend time target spring the we review between payout And makes do awfully about the payout generally our and our our and XX% XX% continue of

out a about looking that about maybe something think and you of in now confidence year? have growth of term cases that. longer this this load when it in you're beyond a year, also help Is question, rate little bit stay you thinking you Okay. how particular And do then could potential that just beyond more

So, that's terrific a question.

due to and flat the we're robust about a return to actually immigration we're of with the territory We have noted, to growing regard couple and State’s we're have in now very last more about region X.X%. and in our load load seeing Right we've utility and growth going in looking actually quarters we to low forward. about X%, our in at largely talked position a really and growth expect more about be having normal X.X% to in our service rate roughly about of as have to in admirable of state. we the expect the in-migration at in

of continue and growth the into this coming see very in coming businesses We here. also are with pleased area to types companies

to the the of growth customers? benefit would nature partial something that you're current or referring is it is that you to accrue that kind something would a And decoupling with to of Okay. allow that mechanism

we But offset energy we that generally have see that growth what No, relates does of is current some on does to regular we the efficiency mechanism a the more decoupling to it really basis. weather. customers, accrue really our

looking keep mind, we're lot basis and Chris, with do of industrial future in growth this a also, that at on loads our Yeah, to has

and Maria. Thanks, Got Great. it. Jim

you. Thank

comes America. Your Dumoulin-Smith Julien next from Bank question with of

is line open. Your

typical the Quickly of exactly the what a is the CapEx quarter to I just docket the as on comment side to respect that replacement that XX respect reflected in the make storage provide with substations with of slide include wind XX/XX to wanted $XXX I an RPF distribution eye new too. first on also respect if towards I'm just to around anything upgrade. upgrades of you and of want can here. handful we're you expect and Does Then clear And third reflect a but asking follow-up items the to million suppose and sure aging generation. updates to want all you about context not, that? with well, with the reconcile and the secondly

So, just teasing sorry. Chris, worries, how that, many was No questions Julien, you.

particular of it. take to with and What basis. every on and have do It earlier we've So, is things the in out trying board talk able new extensions load is investing talked side switch are into that some deliver out -- and territory. Yeah that think of system you growth adding what got line third our the a to like environmental it had continued systems, those required all more that substations to updated of we’re into to growth a service we area. to into industrial about that’s transformers as the is where points continuing. to to in pointed In is more updated we've we those reduce that the our Maria to capacity to a continuing we're so look lot amount trying that support going CapEx be disclosures infrastructure, invest doing it’s coming other PCBs with customer is in budget before. quarter associated We're about. tremendous the visibility our existence we’ve provide We've the their got on as it our been in we that in long-term that those items there into we're gear

that thousands our O&M exists We've We faults need of of we these there increasing crews the are miles got underground out are on aging for are causing that companies the faults. of expenditures there. worth continuing of the our of to time chasing are rest cable the infrastructure that to focus types that out remove,

and So, those. effort a we’re spending of on time lot

resiliency a offices, We’re perspectives are to from from lot system in And your then there out the spending being additional also on of the the cyber the from were Mount subduction a a that recently IT service our of the impact into as are focus were seismic systems fact will field. Cascadia under that as systems we on sides, the the just that faults Hood and in well. are identified perspective zone that territory that

before, what have of So, that we capital items a to an continual grid. talked with we about call focus interoperable lot the forward move on along trying

will be in integrate that on side, out as operations, the or in management side, the it’s direction able but of energy and resiliency one as, ability the to it’s customers, field, in So, our move only the customer the in distributed over our the far technology particular to resources. out be with to whether system not energy

of So, in the your in years Jim XXX projects. hydro RFP old are there mentioned question on seismic areas. that the Many and repowering are facilities to West included relates to at have about program Julien, the capital upgrades our been reinvest related is we one generation regards generation, more and of or Side included looking not is wind specific that The and forecast. those facilities. and with to

for that been we last talking included. storage of couple are quarters about have projects the However,

you’ve that with here And just well? robust that Is as the or historically update clarify third should typical quarter. to fourth or distribution cycle reconcile done be we reflected rather with quarter something CapEx also more expecting

that's Nope included now.

we’ll than But the inside the Yeah. what we is have see more in company past. visibility

much. very Thank all you it. Got

Thank you.

Goldman Your next question with from Kim Sachs. Insoo is

line Your is open.

plans RFP XXXX guys and be selected to that know reshuffling associated be level the plan CapEx have, one the incremental a with additive? Turning CapEx what's to were I that's if in not of purely to the in some Portland’s or to you place, currently get the shown is there XXXX their purely potentially would be to

plan. I'd to that be incremental Insoo, that

then and went factors color mix? have kind And mix you Got and a could more on know provide renewable I what you guys it. in the, just the your that bit on the of PPA guess, proposals you owned that little of capacity into

Sure.

So, we remains for they or partnership megawatts. terrific includes we some this that and we with roughly would say have received several wind a project a I doing that XX average on working we bids have It's resulted and the about partner have development time been where about megawatts been XX solar also some are competitive megawatt, are And have in competitive battery we storage. bid. odd and doing the a process ongoing. and mix that

much. very you Thank Understood.

you. Thank

you. Thank

next Your from comes with question Ridzon Paul KeyBanc.

line Your open is

frequent the maybe into? getting capital appreciate this granularity Do kind to CapEx dialogue. of as thank the bucket we you going is A set update more more the quick you and question, for envision

Not particular time in at Paul. this point

I Jim, of are think with kind of felt the some things are That the quarter? a then, the guidance. implies comfortable you middle that fourth And What said going quarter. of fourth hit to kind weak you of

quarter. fourth Well, and into kind had made made power to that had regarding of the costs going comments it I goes back Maria

going that's season, the are year. you an into the and $XX for got [indiscernible] of just gas up winter like bit gas things You've we storm to causing and think be for to and or the of And to quarter higher. going quarter, That gas, end tomorrow be got issue. that tomorrows the a the expecting is so that a In the I-X of done before the for get coming that's prices a challenge. We're Enbridge I-X to be bit so get restoration. few be the little power Canada to it's higher so degrading in we and a I Gas issue to the causing prices amount significantly down

late energy direction. I drive markets hard saw We and worked and volatility of on actions results One given took early we early to under that in the things, wouldn’t in O&M earnings Jim’s July the to is under-appreciate our August.

are Given but costs, we the of largely typical that And hard lot a was as we restoration everyone into weather pretty that possible, higher quarter. because more fourth had. much storm and other which put work it, we'll the weather good into of a November that also challenging head a December from more have and situation,

outage that? O&M builds Was was what quarter. or this down plant that markedly time

by but It the quarter, was there. plant it driven by, a just not was in driven it’s outages

in keep or but change the the not associated settlement the to got we time. same You at recorded had the Carty that mind change, with

lastly, kind next some questions, commented And as step just the process in and had of RFP what's the there? the on

next end work of step shortlist. to PTCs into the to year all We were able beginning projects. negotiations of we to the the through by need the able So, be conclude parties incorporate the also is be because to all these for the fully with us the to process

Thank Okay. you.

you. Thank

Paul. Thanks

Thank you.

next Miller Your comes question Morningstar. from Travis with

Your line is open.

morning. Thank you. Good

morning, Good Travis.

that is kind of RFP, guys infrastructure wind. supporting some on Just involvement quick or CapEx battery clarification in megawatts of real you it part a or storage that have just kind the any either or would of XX

are the going about So, and collaboratively working section, partner $XX ongoing storage of the total part at forward. storage battery our battery other have that inclusive investment million the with is we company, we're PPA but projects

-- generating one generating In storage attesting substations, we're putting at residential then grids that in our case it, looking of in storage battery micro at our plants. as at looking battery out we're and our

renewable from And be separate Okay. RFP. that’d this

is. It Yes.

$XXX about XXXX is question, or to that generation going was understood of terms previous going up I you're question. we distribution million that XXXX split that answered you other the something ask in break following either then out that in And the is to how not our previous on transmission

not we time. capital go forward. we're point The are transmission Yeah, at as breaking this area and our our in in it incremental expenditures vast majority out of distribution

seeing We’re mentioned, we’re as substantial Jim seeing has customer growth.

a also grid where and that resiliency our smart in our spending. up really do catch expenditures focused incremental really the of to to We are we’ve bidirectional do is beginning steps environmental terms have

role imagine allocation even level, higher a some electric one just putting wondering there? to together Was budget a looked all from related. And on thoughts the looking in your there enough Then and your out specific there. it will they throughout CapEx be CapEx, vehicles spending, out playing a as or view you're material looking directly you XXXX, amount operational large out play a more that allocation specific but was role too that actually far if you're

doing good regards with a lot That's and really question to vehicle. we're electric a

additional capital We I sorts -- of this get excited this will to doing charging with there completely have authorities. our to municipal But service might happen out and together on that be we'll a think we see come for are a but manufacturers amounts parties time. really the all none make at about electric We avenues and significant future, And electric really partners. several collectively opportunities area. our that transportation local amount our the our separate creating education lot of within in in point to partnerships of transit working we and working with customers distributors with around that partners car have I’m for and

appreciate so much. Thanks it. I Great. Okay.

you. Thank

Thank you.

next question Khan Ashar from comes with Visium. Your

pretty guidance, Can is picked a assume of that year. this I the we the we just ask midpoint as normalized can

know weather mean year. in weak mean, this and I of takes would In was the for and assume normal the weather that strong a I in beginning weather I terms a you had you what to like help whether I zero, third. of trying this just on be not can it's the if good would that? was a better But sense for normalized number get year, ask,

we were associated not in that a the Boardman Carty cost the outage this weren’t costs, our million particular much. had and settlements. as we normal an $XXX the were Colstrip’s is Ashar, Outside had earlier A&G off offsets Power that And We reduction in of $XX we that mentioning what in have for X that, we as in difference seen. year Enbridge of the brought it units those costs then big the some Gas Well, outage loads an of and Pacific situation Northwest. partially have with Plant, given million, settlement chasing X. cash

the quantify Could in in year? year would up much the normal your now of how look as end for right you at you that forecast

No, head. of top I couldn't off the that my

rate I energy wonder is the something that You and normal more region. decoupling across we're but prices what in year, year, terms energy truly going that typical whether be It's states there we’ve ever prices in the last in country. of case of the in whether our in additional looking this one the know, seen volatility reasons gas other in of that also given you prices are see to for as mechanisms

And change. trended weather as that to trying well, up, our given shorten climate I’m

Okay.

if then, related booked X so was leads you can year-to-date. it said stopped million I just I million Q read at before it and like Carty And X follow-up to the correctly,

I booked can was related that that then X to which of an year gives that rate this after-tax like it positive, kind in or to that, in at by $X.XX is million correct? I or like to negative then $X.XX we or Is way it. you $X.XX effect wrong. look $X.XX am or my about something we net that the am really Carty what or overall. so or So get $X.XX take XX% I right, the $X.XX right got So, it math the Carty or have a $X.XX, $X.XX doing or But

we the above the million. $XX the on, commission million was had had And million million still $XX with the we to what was A&G. agreement the settlement what at with books that applied left $XXX on that after we $XXX us that we and Well, that looked eventually

we is that additional have to we to as litigation continuing did EPS perspective $X.XX absent $X.XX the chase would and avoided costs that have we about settlement. or that had forward of a any continued what Now we are from had going of charges one-time

then on or mean, like that to expect you I by And kind anything number of it. Is could rate give on kind one million regards. I I get thought should Okay checking $XX going forward. increased a just I that [indiscernible] ask the of from but better million. depreciation. depreciation so can if $XX sense just $XX run million

is it bit anomaly of things. in than -- we a Yeah that little capital would higher a you're that retirements an two there thing additions One be. seeing you're is little what seeing only in not

is thing $XX in there three year Fuel Trojan other about that The we were Spent collecting over with trust. period associated decommissioning the a million

So, annually $XX $XX we back about total. million were crediting million or

So, it it revenue reflected showed up depreciation the and as also in as and a in the reduction line well. past was

so its run So, seeing of a jump you're bit a why year-over-year. now up that's depreciation in course and that's

its level, saying, depreciation is more So, you’re okay? normal what the its

Yes.

was went -- because Okay, of because down it them.

really time. I Thank your Okay appreciate you.

[Operator comes Instructions] Avon Your with next from question Capital. Martin [indiscernible]

Your is open. line

if were capital the one, me, potential slide does since that come RFP remind you that allocated? spending not include that A can wind how be How would things; to couple you [indiscernible] much know program of pass, to

Sure.

looking $XXX million XXXX. million $XXX be XXXX and You between anywhere could and at over

Likely, that? or want that backend to or loaded be would I rata how that’s pro spread would

calling in time premature it's point I own just to your this At judgment. was speculate. too

into capital least a rate know the, net XXX of relative like its is shown gives on at or the growth? at What program something to is we in as you that, And annual just now. base translate as like now growth also depreciation and look does the as of to of right then over in does here basis that What if running, Okay. based wondering deprecation terms is, if CapEx rate translate and an that it take I'm takes.

long-term exactly forecast, do go don't forward. the our that know as or math up growth we you to we rate earnings long-term So, base to you growth we disclose our leave

base would then net XXXX of million $XXX incorrect that XXX $XXX and I take see would to say rate to capital million it I Well, that in mean, be depreciation translate growth. of of

the math. you how do would That's roughly

Okay. right. you All much. very Thank

you. Thank

Thank you.

I'm at over Pope questions remarks. sorry Maria the closing like time. I'm showing further to this I'd back no call turn to for

General we you XXXX. you. interest when next appreciate report we your earnings very Thank We and our quarter join February results in invite much and fourth us the Portland in to

you a everyone. very and great thank have So, weekend much

thank you the in for disconnect. Ladies conclude a Everyone and all gentlemen, participating and program conference. have wonderful does today's you may This day.