Portland General Electric (POR) 30 Oct 202020 Q3 Earnings call transcript

Thank you, Jimmy. Good morning everyone. I’m pleased that you’re able to join us today.

Before we begin this morning, I’d like to remind you that we have prepared a presentation to supplement our discussion, which we’ll be referencing throughout the call. The slides are available on our website at investors.portlandgeneral.com. some remarks two, constitute morning slide statements. forward-looking to of this our will Referring that involve our such uncertainties, you caution We statements results differ and inherent may materially from expectations. actual and risks

Maria some of Finance, differ our XX-Q, and President which XX-K Senior to refer Pope, our For a recent please today Leading description the that our reports actual President materially, press could earnings Vice our and on CFO and periodic CEO; are website. Jim Treasurer. factors discussion to most and available results cause release are and Forms of on Lobdell, of

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

pleasure Maria. to my call the it’s over to Now, turn

your continues and healthy all quarter. Thanks thank been families of be today. to several for staying you the I have here this safe all very put General during and us to Portland and test challenging you us time. what Jardon joining are a and hope that times

difficult and has of team to took these two head each like I'd tackled discuss Our actions. events. swift issues on

things our losses to two announced the no longer isolated and no we make that had training the energy had we is was issue, losses. situation. the This team ongoing. our learning Board special a we the trading end August, immediately certain third review exposure. in committee would Directors in in formed quickly quarter impact announced worked I of market September, of energy Upon of electricity that time, review on to effect to trading losses want significant early and the net our at result This wholesale First, markets operations. of activity trading At the clear.

and and responding in windstorm conditions, the of seasons shut proactively focus authorities most historic unwavering several onset emergency the organization with experienced to on and power resilience destructive demonstrated partnership we In wildfire we high wildfire Second, areas. safety. worked off wildfires, in risk responders the customer the to the At entire record. local one on of risk high

not shut the public of about we course power XXX,XXX enacted only also week, safety the but During we restored power customers. to off,

several enabled of last act helped fight vegetation to as resources, swiftly, new maintenance equipment emergency our inspection well the the years, investments and us responders management, which Over our wildfires. in safely as

We continue the substation more steel on operating our These and and important distribution, initiatives equipment. in growing Pacific demand ever. invest to needs these in build improving systems Northwest, are poles, including now other upgrades, foundation. our other automation, strong With than

energy change clear future strategy. and increasingly need meet addressing energy. served a with renewable desire our urgency to Our vision; our drives a be There's clean clean for climate for and to customers'

renewable buying We energy. number are States a track building green program in having projects of XX% United the XXX% energy XX-year over record have of on of our customers largest initiatives we Today, and with the underway.

and Our furthering state. source $X.XX other at agreement service solar range storage, throughout Wheatridge, equivalent end of wind, upper with earnings these from lot the to on investments, and Between we project guidance across a of our investment important facility $X.XX work homes. the several projects our solar testing finish underway share. storage track With battery our have of our of we're to $X.XX, of year-to-date an territory. power will battery in farm Oregon We're XX,XXX Avangrid serve largest the to in per

and throughout organization. remain to find efficiencies our operations costs we and reduce underlying Our strong continue

to above recognize and who and a beyond to of the want protect pandemic, went the responders, our in I Finally, community. our middle work of co-workers hard first

turn a Before over thank call I Jim, take I to to moment would the like to him.

what company. well the alongside the driving connection at and a role as Jim successful career after the dedication is step career camaraderie has played markets. long Jim Vice other year retire on company Xst. Jim CFO end role the Ajello, XX his overstate Executive Hawaiian I improvements west initiatives. appointed afternoon, we a instrumental and and utility and yesterday Industries, November financial have important seen, the a to been has the lives of that XXth. former He leaders board. Electric Advisor, Jim have have been an at year. financial in Jim's you of for in done plans and strategic excited and officer wholesale can't January of President western We're many sure his to He'll our world recognized PGE, CFO and leadership and into actively I'm at As effective throughout the his counsel Senior announced team. to leader meant have values Jim creating note, PGE personal the power On In me with on retirement, the across

for We entire Jim the as Commercial Vice Brett appointed is and to well Strategy, been Regulatory also as announced ensure our transition. Sims, that priority President top Director me, management of A a & Senior has Strategy, Affairs, Energy Supply today. & smooth team effective Planning

Torgerson bring Thank me and want extensive And of to skills I to now, it [ph]. Michael valuable to pleased we're to Finally, over Directors. and add future energy for Argonians utility that you. ensure experience Both clean efforts Board Jim. Jim support our Michael let welcome our a will turn that Lewis to and Jim

Good for Thank you, morning thank those comments. Maria everyone. you and

that Before recognize has I'd on our continue we affordable results, resiliency and this energy invest to ensuring like for in challenges, the commitments throughout reliable, to customers. maintained the and focus we clean, our and our financial deliver quarter's safe, company discuss

results. Turning to slide six, through quarter-over-quarter I'll walk our

core by this were energy Despite strong activity. were our earnings Maria our highlight. trading impacted quarter there operational with were several items and impact, to this As results our associated mentioned the losses earlier,

$X.XX with the for start of quarter I'll walk, the For XXXX. third

gross in deliveries includes year. energy residential over Retail to our power decreased increase are compared Excluding XXXX, third the impacts will In $X.XX attributable of in increase The increase by the and the $X.XX. quarter collections to industrial of as our considerable prior usage XXXX which increased offset offset X% the of expense, showed X% revenues. again. the impact This margin was both growth price deliveries, trading on mechanism purchase This and a decoupling an costs, total fuel deliveries loss residential mechanism. their cut an to power higher decrease increased this in by for power. driven by average the partially by $X.XX decoupling exceeded quarter. Commercial largely declined customers revenue on reset purchase

and an services, $X.XX facilities. generation distribution maintenance increased and plant for O&M and primarily Second, at expense, relative in work there's our by operating reduced outside increase reductions to transmission driven was which cent lower capital

and includes expenses that primarily a did of increase and from shut premiums; October. lower at general a system not health administrative which $X.XX down coal-fired XXXX; Boardman the associated in a we operations finalized $X.XX the with efficiencies the Third, to expenses do incentives increase a in reoccur, from to due $X.XX increase increase from stabilization plants reduced leading administrative billing as $X.XX expenses our insurance reduced up

energy Next, forecast lower a returns. associated equity benefit facilities by increase losses. of $X.XX center in following to and $X.XX operation driven our income after was increase from expense, book trust ongoing an integrated income, AFDC with Wheatridge the investment other pretax trading from a our tax increase lower primarily impact There of in revisions the construction in unqualified

Public energy a net $X.XX $XXX amount per million share This $XX per miscellaneous losses the represents a in our was gap losses diluted diluted from impact of million Commission deferrals. trading increase there the $X.XX Utility of impact income impact lower brings trading share. diluted non-GAAP Last from impact per earnings of trading Oregon adjusting to net represented tax losses, the expense. $X.XX negative This two After Energy quarter. of a share. update. Onto our Finally, loss was a the of regulatory the the approved for week, outstanding $X.XX.

with approved includes for to deferral -- restarting from the related payment deferral final costs incremental has late our agreements. time the and stipulation Commission been the among application commission. First, stipulation The fees, for extended certain to of dates The disconnects, parties COVID-XX. related filed

deferral to wildfire Second, and related the expenses O&M for capital approved the the September incremental events. Commission

in the to costs system to related received to renewable continuing adjustment be we and be Also, to a are deferral. the We facility. capital additional approving assess of by assessed expect this Commission in to clause the is with decision an evaluator. for the the by The The independent and our acted Wheatridge addressed damage to or end facility wildfires consultation project our O&M order the found service select prudently we year. that into scheduled energy go to

half our the Regarding one in continue end RFPs before resource and balance sheet invest of remains capacity to plan year strong customers. our seven, slide or to has IRP to On issue our next for future of non-emitting to update needs, more to and to an new first serve file the the XXXX. necessary we resources plan

first $XXX by plan as million $XXX purposes $XXX repayment to in strengthen had million we general issuing securities long-term capacity. being our of up letter corporate position bond mortgage of XXXX, net this credit debt with for We issuance and short-term XXth, short-term September later a quarter and capacity further cash of of used proceeds borrowings. liquidity debt As available credit million to

fund of issuance requirements capital is We remainder cash with expect the needed. the paper commercial to XXXX of from the and operations

our a demonstrated forecast. of reliability slide of to eight, our that reliable system prices. facing safe system We to while million have despite and minimizing events. grid capital investments which our added wind forecast weeks for customer the our wildfire continued of updated as the shows on resiliency capital and $XXX high importance Moving and prioritize to maintaining Recent perform challenges the

year to share. mentioned, reaffirming As we're Maria had our $X.XX of $X.XX guidance per XXXX full

our We're for focus a establishing long-term for customers the safe to and the finish to benefits base carbonizing guidance. on of as our For guidance. ready results we're now delivering growth we're power This long-term by operator, this electrifying X% expecting clean the strong XXXX, supported economy reaffirming operational to affordable supply, top of year energy. EPS also for is And XXXX ensure our continued questions. of half earnings growth in and X%

Instructions] you. Kim Thank [Operator from Goldman first Insoo with Sachs. question The comes

open. is line now Your

Morning.

Congrats luck and you. next best in the of stage. Thank morning Good Jim.

you. Thank

wildfire anticipate are COVID equity? do rate file you or timing First scenario you for next latest your stabilize the timing general thoughts you of somewhat. question file on deferral the year, not is need on next in of the where and given do helps What case? case, a trajectory any so potential And earnings the rate the

a basis forward there annual an on whether continuing to a case evaluate do that always basis for and is need we're rate a general we Insoo on evaluation.

significant that probably we out in shared are if is news our And we making any investments know, will we regarding on to be in of generic behalf case, you'll system deferrals a call. likely, you hear quarter our will most there those But have customers. fourth As there.

any need financing. equity no for with Insoo, And

Understood.

guidance COVID to more the But at half balance Just a a the been meaningfully the basis, or is just years be just the on fourth in that? potentially based the Jim. the driving Besides net what upper variable little be to for for XQ specific, lower what the -- on based implies of power quarter. year in earning costs, that else on of year-over-year demand on you or differences, some know you've few previous

to in pointed you've out in that revenues the full doing have when really the our is that One on. to you while drivers we've mechanism fourth kicked mind quarter, our get decoupling comments, in, are several keep of Well, you got as are in force. going is, well, kind

in decoupled amount X% being if away, looked that hit you always is, below were then into earlier out the and commercial is do way absorbing the fourth customers. side, hydro. year on we're constraints fact into the now the the down of market, we transmission at with we're that the from flows in loads. being on the been cost continued that baseline thing But the the of out of by And prior really power energy some that the the the the with facility some have And taken other decrease quarters. quarter. there's and move we a from moving on cap we've deadbands. collections and commercial that's pointed associated residential the it's we driven side, along that can been marketplace size, in is in caused now basically the decreased And up we've And given We cap, outage

of in have let's -- COVID in that. and this we that on things we you've revenue other until next do we then our cannot are of So quarters there. get, I Xs with the losses going incurring defending with was costs out disconnects mentioned, the till of when get that a of prior charge And because miscellaneous and associated part anticipating miscellaneous that the that the of Obviously, to the of a items the for got trading been like special fact December, an regarding we in say, committee ones stuff. can't on. April upcoming deferral, we fees, commercial residential, always then have all associated and late late additional year, we're we're that ourselves there's And review fees that as then by the some the the bunch bunch

And that commercial quarter based seems year-over-year what you're could. Can more like Got on just what declines, seeing one if you the it. quarter. muted in second the Maria, little Thank ground side and in for it the a third I than the detail. your commercial a it was bit neighborhood? definitely describe lot you small on we on saw loan more,

Great. Thank you.

pandemic more decline the and decline did it with rapidly of late. in of have to So the beginning less we commercial, seen regards much

it's the we We about had country. see pleased cases with and industrial there's Oregon no second X% increase about, the early are in to too continued growth on strong What Clearly, to rise be growth across as is be the quarter, Last industrial quarter, continued we lumpy. think I quarter, adjusted is industrial call. in in a And third good that different. weather in a talked up can basis. growth really very the to customers.

of So industrial, customers centers overall, of both the the the be about in we migration, as we're data a and continue but importantly, very more additional and which residential around commercial, many into seeing optimistic tech our drives come that growth territory, somewhat high area. service to result

it. both. you Got Thank

you. Thank

Insoo. Thanks,

you. Thank

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

now is line Your open.

Hey, best time. good morning, And, of the team. Thanks for Jim, luck here.

you, Thank Julien.

but potential and your if relates to to on back if wanted Absolute, broadly, it the board senses you it's even bit can the the on timeframe can there's importantly, we on anything that trading talk review a be perhaps Oregon talk frankly, at I process this process, more And to? been to may pleasure. should stand QC that? about loss, any as come more Specifically to a watching where now? little front wildfire more we

Sure.

I ongoing, we sure And more. Julien. that as transparency the the that then make review we special thorough, thank noted, So you, we're all And took to place. we'll committees we'll it's learn bottom get is sure that as of and make

the that. have So our appropriate to competence I the more would to Decker PUC will regards in I philosophies. chair anything and would don't ensure actions take with and recovery proceedings all on say with COVID is timing regards with pricing I to imagine that customer number risk PUC the active, continue regards wildfire, regards a to very to constructively dockets parties. we it's overall and at recovery work with of with there to management there's

wildfires, swiftly we're when appreciated. the And acted that very so to greatly pleased came it it commission was

none fortunate any of contributed an to no, the our of we There's have any we know swift are unprecedented no -- have that it. of question about prevented wildfires. was taken to action It event. we are to And equipment

queue. in that Saw the Yes.

here, can. if I Just quick clarification

details on is else? separately, the the a XXX CapEx XXX. And that XXXX couple Just a reduction or thought balance prospect previous curious back? bring verse of what's then it baseline the Portland is to the the -- in something actual process Just there that's in

detail we that around investors our So for X% our regards needs significant resiliency, when infrastructure let at to to very are the to rates. customer with as addition, that we details more long But forecasts. growth in to others. wanting new that support are But then please me our heard we address we Jim our let have another area prices. and wildfire that know look in And X% exactly base and capital, growth. term use the to growth aging, you customer recognize impacting capital our investments And that's customer lucky in are attuned also we we and granular

it's call, on point up So at our and there remain to low -- this continue But customer come we early are focused maybe in ensuring to as projects as time, amounts. prices very we affordable across additional plan area. too

about want do little baseline? a Jim, So more to bit the talk you

of we to was going a quickly. built being service agreements in a And that in on territory, of got last of State forecast Homes look, in people with shortage in at busiest. additional we've the And and basis. forward load pointed growth are because through minimum XXXX that by when that increases being a digital provides cleaner we mean, so is customers, housing space, the been out a up Maria on have Julien, a keeping very, signed overall as the chose very I generic and trying we had case that that migration. Yes, Oregon. the just of the lot capital, lot you're

that's of showing here, demand up amount great So in numbers. really and our

all it. I'll much. you Thank All there. it leave Got right. Excellent. very

Julien. Thanks

Thank you.

from Our next KeyBanc. Karp question with Sophie comes

is line Your now open.

for Hi, good on Sangeeta is for Thanks taking morning. Sophie. my This question.

Good morning.

Good morning.

us little the be on costs are of you if of State a you color mechanisms So, bit that the what magnitude wildfire discovery the could deferring will Oregon. in the more give

you're your to going a be separate proceeding, it's If on color into to that helpful. any pretty GRC, fold if or plan be would

lines a now. wildfires, some in Yes. million about damage comes to currently the to trying in When we're to the mechanism rural cost the runs. assess additional period deferral that the it right We're areas. XX-month they're of The is our that out transmission $XX

with we And don't those point estimates this have time. at in associated particular so cost

So there's more out. to be figured

spend numbers anticipating to going that those to with know done get of infrastructure. we're that those when recover this assessments. we to we're capital some more there's have we'll So And

is Or to a bit And proceeding? more it want separate it that, be a you GRC? do a into you more fold think on little to likely

point hasn't of a been the be yet. of deferral at fact that time, this determined the would separate, it recovery in as period particular is this If

that's so Thanks Okay, much. great.

Thank you.

Thank you.

question with Our Anthony next Mizuho. from comes Crowdell

Your open. line is

Hey, hi, good morning.

morning. Good

James, Portland. great of phase, the with in congratulations. Best next career luck years a in XX

Thank a you. long-haul. It's been

above, more the is the just to weeds follow-up on that It's of every thought year I in get growth. the will question out, year be between earlier, will XXX. that Julian's post some XXXX XXXX to going within be for earnings have to each in X% is looking that And range. on XXXX, X% base Apologies the not some the something is to But fall that it's just guidance. at

Correct.

think to was I you there there, transition transmission, savings, then if took I distribution on that savings, what but G&A for going and can we forward? this quarter, $X.XX O&M waterfall Great. sustainable slide was, could chart not the I And O&M some is I guys but lost also more only something

Sure.

were just number in that significant Jim reflective were like there place of of moves outage. cost favorable the that a issues some were our As that mentioned, took issues and quarter of

we and to little more bit productivity, a So made our we have particularly going and performance of year, good to you're a quarter long-term. while look significant across improvements this had operations, need sort

and And all embedded become As while don't relative at improvements they to but those and capital, our the just relate to a happen take in necessarily really technology. to investments would they once, all management operations.

So continuing but improve really third operating our would, and as and I focus great performance to on experience, we O&M move grateful muted for the we're productivity. quarter, forward

on report it before? I safeguards a or lastly, coming to? And review, there's And in I'm tell you the trading out versus just could of to anything about there's was just just Great. what us what know thinking independent talk what report could place type report about Who that or that any there trading does like, and has there? are curious you who then now, now changed, maybe loss, that the

Sure.

move is number I events quarter, noted, the reporting clear actions. impact and associated So consolidate we swiftly and as we changes and trading other of first been very a very to to and third have all, we've just isolate the with the losses of on, their made taken

also an knowledge will management this in markets again. the much brought to of findings. ensure power I the outside staffing, report I has our Jim to operations look seriously are regards help want beefed to as and myself up no to Directors, foremost, other Board it happens in more. to expert very you and We've us. never Western Power and across my and we and Jim's you he career, and Risk remarks promise reports currently taking First him. with add. forward our have as the to reports extensive mentioned company to be transparent I we We being that Jim, with anything finalized, of else in

No.

management is these to changes operations Just happened event. that to something clarify the reports post power that were me

Yes.

And that Board? the be was investors, great. something just is that or lastly, to being Okay, issued just report will channeled that to

I making. will process. don't This that. how and know But they the them a to will decision know that their up proceeding Board thorough handle through please is are

questions. Great Maria, for James, thanks taking my

you. Thank

you. Thank

you. Thank

comes Russo from with Our next Sidoti. question Brian

Your line is now open.

Brian. morning, Good

Brian. morning, Good

follow-up Hi. outlook Are Good an the April? million XXXX? for incremental that in you And to how what does from CapEx the kind your in maybe $XXX Hey, morning. improving back of into territory economic April? on question, you're CapEx adding just that service play reduced in on of laying was essentially just

Well, Brian, growth hand-in-hand. are you've spot territory. see a the those to in service continuing on, We're got

continue housing to what resources in And is to to in As growth out we I then and have were system. strong space. renewable the of that's in do associated restoration the no we the got in then then wildfires. there there we've the And we've going got in in strong is on If with that aging the infrastructure process, of that the investments the system amount come plan adding associated we invest they any system. RFP resiliency is a in lot still a to market, of mentioned then digital on and growth migration, earlier, residential and

will will done, we a always basis. -- evaluate we've quarterly on we as So

expenditure making gating goes to that that gets is forward phase moved have through process before previously, a SEC mentioned it sure capital diligence updates. our included project We we're be that every I've in

September, in as year-over-year, the the were costs, according I and baseline, to $XX just it. looks power Okay. then like supply headwind you'll you range. think below Got of comments the that the within queue on Thanks. be is fourth million that that quarter And

above $XX will million least it? zero, below million way look to Is still zero. but $XX but below the So below that go the at to at

generation thing we only that is I coal One closed days facility want number Yes. a to Oregon's of note ago. fired

has also operations. its gas elsewhere. prices we're throughout We've the Canada Jim, hydro pretty So want precipitation seen to watching issues issues and ceased Northwest of a higher plant the else Pacific the anything add? Boardman And pipeline as you and result in closely.

No, below, year-to-date by you've if -- Brian, got end. basis, base will up in the call math, $XX right, a be somewhere we on the we your then million and it

it. Right. Got

So your supply, the cost guidance for zero $XX of XXXX supply benefits between includes and for anywhere year? million power

Yes. correct. That's

more you line? So it? clarification. Okay. one did million bad of to to million And Is the the that Or look then that debt quarter? deferred? still hit way $X that not third just $X expense is guys be pending expense in the defer Did at

bad expense of we associated probably that worth assume $X We the we right $X bad now had deferral incurring, amount we would debt previously case with and our rate about million deferring range. are around and the about debt. general that Well, talked million generally now is be

still Okay. results, reported quarter you bad expensing third expense, correct? the debt But the were in

Yes.

Yes. Got it.

much, good you luck, and Okay. Thank very Jim.

Brian. you, Thank Okay.

Miller Morningstar. comes Thank from you. with And next question Travis our

open. now is Your line

morning. again, Good for best congratulations And questions. I'll taking and eco Jim, of Thanks my luck.

Travis. you, Thank

relative $XXX cost after would right over purchase costs? your the thinking, costs year, think over a fuel should of Can in of terms you quarter perspective power XXX months? that putting a should over I'm how Wanted that'd XXX, we nine in a we a put in be perspective, that? other and then to trading purchase about me this losses. about in or be relative the Is more and couple a How tax, little years? something the power bit million to that think the that sense over One, quarter give number on

a $XXX So number. isolated The is And number ongoing does thank EPS is is third impact quarter The million to the power pretax of you, $X.X. the Travis. not to operations. event our relate

market all that fourth in that from so carryover And quarter just know were added positions no those be and there quarter, to the closed exposure.

Okay. quarter the or you confined booked where quarter, during to these series of and just from the right. quarter, were And trading losses they that when quarters, past say the these where over happened a in -- costs

think purchase cost? I'm about to So trying your power to this terms of in try overall

were realized in XXX% third they the quarter. Yes,

Okay.

be the relative that So thinking of about Is power in a costs. that fair? purchase XXX booked to number

Yes. That's I how would it. look at

Okay.

then action. And you losses, recovering to that mentioned recovering legal from you chance Okay. recourse of means? Any Do legal have legal to through any them…. potential trading those customers related of anything

that were these XX-Q, a customers. we we have we disclosed note So clear those. losses very have received recovering we're not costs from In of that our couple and

you are And guys filing Okay. or against against lawsuits those you're lawsuits the people?

No us. those are lawsuits against

losses, Okay. trading losses? the Do you have trading who any the legal recourse against the doing people who made were

So the ongoing? is investigation

Okay.

about through then mitigation obviously wildfire And in PUC discussions designated neighbors like to your with the capital chance stuff kind any good. doing putting on some Okay. program thoughts forward? that, and plan, South, any of Very going the

Sure.

Public leaning time. risks Oregon into Utility some the for wildfire the around So has Commission been

across leader really in is. west, to thing with shutoff there out minds safety across commissioners west, forums the others, do to, One collaboration is not equipment, regards together we a the of power the insurance, best the and right with was figure even as convening what Australia, the and bringing

over continue a of with work continue all taken we'll that have to to we're actions adequately invested that years, ensure stakeholders collaboratively work will and the in number the equipment. of We And commission. that including well prepared we've couple last

Okay. in Would be investment interested putting you Capital together multi-year some of plan? plan? kind

do. we mean, I

have pretty utility, in a nature, multi-year and service territory. in imagine, can of most you things As that the do running throughout are infrastructure as our we extensive we

you Thank great. Okay, much. very

you. Thank

Thanks, Travis.

closing call showing time, the Maria like any for turn you. the Thank to the remarks. for back And queue. this questions up At in I'd I'm to Pope

we Thank very forward you, to very you for also out Congratulations. close We today. continuing in EEIs will we you And as and thank who to look in forward talking much with joining then meetings. look with you conversation Thank us February fourth quarter. much virtual Jim. the of participate the you those

you. Thank