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Portland General Electric Reports Third Quarter 2012 Financial Results

  Portland General Electric Reports Third Quarter 2012 Financial Results

Earnings of $0.50 per diluted share for the third quarter of 2012

Earnings guidance for 2012 reaffirmed ranging between $1.85 to $2.00 per
diluted share

Business Wire

PORTLAND, Ore. -- November 08, 2012

Portland General Electric Company (NYSE: POR)  today reported net income of
$38 million, or $0.50 per diluted share, for the third quarter of 2012,
compared with $27 million, or $0.36 per diluted share, for the third quarter
of 2011. This increase was due to several items including a 2% increase in
residential deliveries, the impact of the power cost adjustment mechanism
(PCAM), and an increase in unrealized gains on non-qualified benefit plan
trust assets. For the nine months ended September 30, 2012, net income was
$113 million, or $1.49 per diluted share, compared with $118 million, or $1.57
per diluted share for the nine months ended September 30, 2011. This decrease
was primarily driven by a 2% decrease in residential energy deliveries as a
result of warmer weather during the 2012 heating season, and a 1% decrease in
average variable power cost as a result of lower natural gas prices partially
offset by lower energy received from hydro and wind generating resources.

PGE made continued progress toward implementing its Integrated Resource Plan
(IRP) this quarter. For the energy and capacity request for proposals,
numerous bids, including the Company’s benchmark proposals, have been received
and PGE is in the process of identifying an initial short list of projects,
which is expected by the end of 2012. The Company expects negotiations with
final short listed bidders to begin in late 2012 or early 2013.

Also, in October, PGE issued a request for proposals seeking approximately 100
average megawatts of renewable generating resources. The Company submitted its
renewable resource benchmark proposal and all other bids are due next week.
PGE expects to select a final short list and initiate negotiations in early
2013.

“I'm pleased with PGE’s performance this quarter,” said Jim Piro, President
and Chief Executive Officer. “Our operating performance remains strong, and we
continue to move forward with our IRP Action Plan. As a result, we are on
track to meet our financial and operating objectives for the year.”

Third Quarter Operating Results

Total revenues for the third quarter of 2012 were $450 million compared with
$439 million for the third quarter of 2011, an increase of $11 million, or 3%.

Retail revenues were $422 million for the third quarter of 2012 compared to
$406 million for the third quarter of 2011. The increase of $16 million, or
4%, consisted of the following (in millions):

Changes in the PCAM for 2011                                         $ 11
Independent Spent Fuel Storage Installation tax credits provided          4
to customers in 2011
Increase in volume and price for energy delivered to direct               3
access customers
Changes in volume of energy sold to retail customers                      (4 )
Average retail price of energy declined 1%                                (4 )
The aggregate impact of several items, including decoupling              6  
mechanism, supplemental tariffs and other
                                                                        $ 16 
                                                                             

Residential energy deliveries increased 2%, while energy deliveries to
industrial and commercial customers were comparable to the third quarter of
2011. For 2012, there was an increase in the number of industrial and
commercial customers electing to purchase their energy requirements from an
approved electricity service supplier. Due to this shift, retail revenues
attributable to commercial and industrial customers declined in the third
quarter of 2012 relative to same period of 2011.

Wholesale revenues in the third quarter of 2012 were $19 million, a decrease
of 21%, from $24 million for the third quarter of 2011. Lower wholesale
revenues were due to a 22% decrease in average price and a 1% decrease in
sales volume. Lower wholesale power prices were driven by low natural gas
prices.

Purchased power and fuel expense for the third quarter of 2012 was comparable
with the third quarter of 2011. Declines in energy received from hydro and
wind resources led to a 1% increase in average variable power cost, which was
offset by a 1% decrease in total retail load requirement. The average variable
power cost increased to $33.89 per megawatt hour in the third quarter of 2012
compared with $33.49 per megawatt hour in the third quarter of 2011.

Energy received from hydroelectric resources, including that purchased from
mid-Columbia projects, in the third quarter of 2012 decreased 32% from the
third quarter of 2011. This was 14% above the levels projected in PGE’s 2012
Annual Power Cost Update Tariff (AUT) for the current quarter, compared with
16% above the levels projected in the 2011 AUT for the third quarter of 2011.
Energy received from the Company’s Biglow Canyon Wind Farm decreased 10%, from
less favorable wind conditions during the third quarter of 2012 relative to
the third quarter of 2011.

For the three and nine month periods ended September 30, 2012, actual net
variable power costs (NVPC) were approximately $4 million and $14 million,
respectively, below baseline NVPC. NVPC for the year ending December 31, 2012
is currently estimated to be within the $15 million lower deadband of the
PCAM. Accordingly, no estimated refund to or collection from customers was
recorded as of September 30, 2012. For the third quarter of 2011, actual NVPC
was approximately $7 million below baseline NVPC, with PGE recording an
estimated refund to customers of $4 million.

Administrative and other expense decreased $5 million, or 9%, driven by lower
legal fees and employee compensation and benefit costs, partially offset by
increased pension-related costs resulting from a lower discount rate and lower
return on trust assets.

Other income, net was $1 million in the third quarter of 2012 compared with
Other expense, net of $3 million in the third quarter of 2011, as PGE recorded
unrealized losses on the non-qualified benefit plan trust assets in the amount
of $4 million in the third quarter of 2011.

Income taxes increased in the third quarter of 2012 for an effective tax rate
of 33.9% compared with an effective tax rate of 28.9% in the third quarter of
2011. The higher effective tax rate for the third quarter of 2012 compared
with the third quarter of 2011 resulted from a reduced income tax rate benefit
from both production tax credits (PTCs) and state income tax credits resulting
from an increase in pre-tax income. The effective tax rate for the nine months
ended September 30, 2012 was 27.7% compared with 26.3% for the same period of
2011.

2012 Earnings Guidance

PGE’s 2012 earnings are expected to be within the guidance range of $1.85 to
$2.00 per diluted share, which is based on the following:

  *Retail energy deliveries approximately one-half of 1% higher than weather
    adjusted 2011 levels, excluding certain paper customers that do not
    significantly impact the company’s gross margin;
  *Favorable power supply operations;
  *Operating and maintenance costs of approximately $105 million to $110
    million per quarter; and
  *Capital deferrals of $16 million for the full year, with $11 million
    recorded in the first nine months of 2012.

Third Quarter 2012 Earnings Call and Webcast — November8, 2012

PGE will host a conference call with financial analysts and investors on
Thursday, November8, 2012, at 11:00 a.m. ET. The conference call will be
webcast live on the PGE website at PortlandGeneral.com. A replay of the call
will be available beginning at 2:00 p.m. ET on Thursday, November8, 2012
through Thursday, November15, 2012.

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 829,000 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 PortlandGeneral.com.

Safe Harbor Statement

Statements in this news release that relate to future plans, objectives,
expectations, performance, events and the like may constitute “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Forward-looking
statements include statements regarding earnings guidance; statements
regarding future load, hydro conditions and operating and maintenance costs;
statements concerning implementation of the Company’s Integrated Resource
Plan; statements concerning future compliance with regulations limiting
emissions from generation facilities and the costs to achieve such compliance;
as well as other statements containing words such as “anticipates,”
“believes,” “intends,” “estimates,” “promises,” “expects,” “should,”
“conditioned upon,” and similar expressions. Investors are cautioned that any
such forward-looking statements are subject to risks and uncertainties,
including reductions in demand for electricity and the sale of excess energy
during periods of low wholesale market prices; operational risks relating to
the Company’s generation facilities, including hydro conditions, wind
conditions, disruption of fuel supply, and unscheduled plant outages, which
may result in unanticipated operating, maintenance and repair costs, as well
as replacement power costs; the costs of compliance with environmental laws
and regulations, including those that govern emissions from thermal power
plants; changes in weather, hydroelectric and energy market conditions, which
could affect the availability and cost of purchased power and fuel; changes in
capital market conditions, which could affect the availability and cost of
capital and result in delay or cancellation of capital projects; failure to
complete capital projects on schedule and within budget, or the abandonment of
capital projects which could result in the company’s inability to recover
project costs; the outcome of various legal and regulatory proceedings; and
general economic and financial market conditions. As a result, actual results
may differ materially from those projected in the forward-looking statements.
All forward-looking statements included in this news release are based on
information available to the Company on the date hereof and such statements
speak only as of the date hereof. The Company assumes no obligation to update
any such forward-looking statement. Prospective investors should also review
the risks and uncertainties listed in the Company’s most recent Annual Report
on Form 10-K and the Company’s reports on Forms 8-K and 10-Q filed with the
United States Securities and Exchange Commission, including Management’s
Discussion and Analysis of Financial Condition and Results of Operations and
the risks described therein from time to time.

POR-F

Source: Portland General Electric Company

PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in millions, except per share amounts)
(Unaudited)

                    Three Months Ended          Nine Months Ended
                       September 30,                 September 30,
                       2012         2011           2012         2011
Revenues, net          $ 450          $ 439          $ 1,342        $ 1,334
Operating
expenses:
Purchased power          182            182            533            545
and fuel
Production and           49             50             153            147
distribution
Administrative           50             55             160            158
and other
Depreciation and         63             59             188            170
amortization
Taxes other than        24           25           77           74     
income taxes
Total operating         368          371          1,111        1,094  
expenses
Income from              82             68             231            240
operations
Other income
(expense):
Allowance for
equity funds             1              1              4              3
used during
construction
Miscellaneous
income                  —            (4     )      2            (1     )
(expense), net
Other income             1              (3     )       6              2
(expense), net
Interest expense        27           27           82           82     
Income before            56             38             155            160
income taxes
Income taxes            19           11           43           42     
Net income               37             27             112            118
Less: net loss
attributable to         (1     )      —            (1     )      —      
noncontrolling
interests
Net income
attributable to        $ 38          $ 27          $ 113         $ 118    
Portland General
Electric Company
                                                                    
Weighted-average
shares
outstanding (in
thousands):
Basic                   75,528       75,342       75,486       75,329 
Diluted                 75,541       75,358       75,500       75,345 
Earnings per
share — basic          $ 0.50        $ 0.36        $ 1.49       $ 1.57   
and diluted
Dividends
declared per           $ 0.270       $ 0.265       $ 0.805       $ 0.790  
common share
                                                                    

PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)

                                             September 30,   December 31,
                                                2012              2011
ASSETS
Current assets:
Cash and cash equivalents                       $    156          $    6
Accounts receivable, net                             129               144
Unbilled revenues                                    75                101
Inventories                                          78                71
Margin deposits                                      53                80
Regulatory assets — current                          154               216
Deferred income tax assets                           40                33
Other current assets                                99               65
Total current assets                                784              716
Electric utility plant, net                          4,351             4,285
Regulatory assets — noncurrent                       490               594
Nuclear decommissioning trust                        37                37
Non-qualified benefit plan trust                     32                36
Other noncurrent assets                             63               65
Total assets                                    $    5,757        $    5,733
                                                                  
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable                                $    76           $    111
Liabilities from price risk management               147               216
activities — current
Short-term debt                                      —                 30
Current portion of long-term debt                    200               100
Accrued expenses and other current                  225              157
liabilities
Total current liabilities                           648              614
Long-term debt, net of current portion               1,536             1,635
Regulatory liabilities — noncurrent                  760               720
Deferred income taxes                                598               529
Liabilities from price risk management               90                172
activities — noncurrent
Unfunded status of pension and                       201               195
postretirement plans
Non-qualified benefit plan liabilities               102               101
Other noncurrent liabilities                        103              101
Total liabilities                                   4,038            4,067
Total equity                                        1,719            1,666
Total liabilities and equity                    $    5,757        $    5,733
                                                                       

PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)

                                                      Nine Months Ended
                                                         September 30,
                                                         2012       2011
Cash flows from operating activities:
Net income                                               $ 112        $ 118
Depreciation and amortization                              188          170
Other non-cash items, net, included in Net income          99           109
Changes in working capital                                 57           46
Contributions to pension plan and voluntary                (2   )       (40  )
employees’ beneficiary association trust
Other, net                                                (4   )      (4   )
Net cash provided by operating activities                 450        399  
Cash flows from investing activities:
Capital expenditures                                       (218 )       (215 )
Proceeds received from sale of solar power                 10           —
facility
Other, net                                                (1   )      1    
Net cash used in investing activities                     (209 )      (214 )
Cash flows from financing activities:
Payments on long-term debt                                 —            (10  )
Maturities of commercial paper, net                        (30  )       (19  )
Dividends paid                                             (61  )       (59  )
Noncontrolling interests’ capital distributions           —          (4   )
Net cash used in financing activities                     (91  )      (92  )
Increase in cash and cash equivalents                      150          93
Cash and cash equivalents, beginning of period            6          4    
Cash and cash equivalents, end of period                 $ 156       $ 97   
                                                                      

PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
SUPPLEMENTAL OPERATING STATISTICS
(Unaudited)

                        Three Months Ended      Nine Months Ended
                           September 30,             September 30,
                           2012      2011          2012        2011
Revenues (dollars in
millions):
Retail:
Residential                $ 187       $ 184         $ 630         $ 635
Commercial                   168         167           476           474
Industrial                  57         59          166          168     
Subtotal                     412         410           1,272         1,277
Other accrued
(deferred) revenues,        10         (4    )      6            (18     )
net
Total retail                 422         406           1,278         1,259
revenues
Wholesale revenues           19          24            38            49
Other operating             9          9           26           26      
revenues
Total revenues             $ 450       $ 439        $ 1,342       $ 1,334   
                                                                   
Energy sold and
delivered (MWh in
thousands):
Retail energy sales:
Residential                  1,626       1,598         5,506         5,604
Commercial                   1,848       1,879         5,239         5,297
Industrial                  886        931         2,573        2,667   
Total retail energy          4,360       4,408         13,318        13,568
sales
Delivery to direct
access customers:
Commercial                   115         91            327           263
Industrial                  210        158         607          489     
                            325        249         934          752     
Total retail energy          4,685       4,657         14,252        14,320
sales and deliveries
Wholesale energy            771        780         1,861        1,848   
deliveries
Total energy sold           5,456      5,437       16,113       16,168  
and delivered
                                                                   
Number of retail
customers at end of
period:
Residential                                            723,804       719,993
Commercial                                             104,749       104,341
Industrial                                             216           237
Direct access                                         511          246     
Total retail                                          829,280      824,817 
customers
                                                                   

PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
SUPPLEMENTAL OPERATING STATISTICS, continued
(Unaudited)

                              Three Months Ended    Nine Months Ended
                                 September 30,           September 30,
                                 2012      2011        2012       2011
Sources of energy (MWh in
thousands):
Generation:
Thermal:
Coal                             995         1,200       2,280        2,708
Natural gas                      856        723        1,993       1,058  
Total thermal                    1,851       1,923       4,273        3,766
Hydro                            331         345         1,461        1,524
Wind                             341        379        964         1,025  
Total generation                 2,523      2,647      6,698       6,315  
Purchased power:
Term                             1,895       1,337       6,042        5,057
Hydro                            422         766         1,358        2,489
Wind                             95          95          272          203
Spot                             460        617        1,641       2,200  
Total purchased power            2,872      2,815      9,313       9,949  
Total system load                5,395       5,462       16,011       16,264
Less: wholesale sales            (771  )     (780  )     (1,861 )     (1,848 )
Retail load requirement          4,624      4,682      14,150      14,416 
                                                                             

                        Heating Degree-days   Cooling Degree-days
                           2012       2011       2012        2011
First Quarter              1,967        1,974      —            —
Average                    1,848        1,845      —            —
Second Quarter             709          946        40           16
Average                    714          698        68           69
Third Quarter              58           51         395          346
Average                    81           87         387          393
Year-to-date               2,734        2,971      435          362
Year-to-date average       2,643        2,630      455          462
                                                                

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

Contact:

Portland General Electric Company
Media Contact:
Steven Corson, 503-464-8444
Corporate Communications
or
Investor Contact:
Bill Valach, 503-464-7395
Director, Investor Relations
 
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