Portland General Electric Announces Third Quarter Results

  Portland General Electric Announces Third Quarter Results

Business Wire

PORTLAND, Ore. -- November 1, 2013

Portland General Electric Company (NYSE:POR)  today reported net income of $31
million, or 40 cents per diluted share, for the third quarter of 2013. This
compares with net income of $38 million, or 50 cents per diluted share, for
the third quarter of 2012. The decrease in earnings is primarily the result of
higher power costs due to plant outages and increased delivery system costs
due to service restoration work and other planned expenses. The company is
reducing its full-year 2013 earnings guidance from $1.25 - $1.40 per share to
$1.20 - $1.30 per share.

“While the generating plant outages have been challenging this year, the
balance of the company's operations have been very strong,” said Jim Piro,
president and chief executive officer. “Our performance in distribution
reliability and customer satisfaction is top quartile, we reached a reasonable
settlement on all issues in our 2014 general rate case, and the construction
of our new thermal and renewable resources is proceeding on time and on
budget.”

Company updates

  *Board of directors update—Effective Oct. 31, Chairman Corbin McNeill has
    announced his retirement from PGE’s board of directors and Jack Davis has
    been elected as the new chairman. McNeill joined the board in 2004 and has
    made significant contributions to PGE during the past decade.

“Corbin has provided outstanding leadership, perspective and guidance during
his tenure as chairman,” Piro said. “We appreciate his steadfast dedication
and service to our customers, employees and shareholders.”

Davis has been a member of the PGE board of directors since June 2012. He has
extensive knowledge of the utility industry with over 35 years of utility
experience at Arizona Public Service Company, including management positions
in generation, transmission, power operations and customer service, and six
years as chief executive officer.

  *Generation projects—PGE is making progress on its three new generation
    projects. Construction is underway on Port Westward Unit 2, a 220 megawatt
    natural gas-fired capacity resource and on Tucannon River, a 267 MW wind
    farm. Engineering and design is underway for the Carty Generating Station,
    a 440 MW natural gas-fired energy resource, and construction is expected
    to begin in early 2014.
  *General rate case—PGE filed a 2014 general rate case in February and has
    settled all items with the Oregon Public Utility Commission staff and
    interveners. Stipulating parties have settled on an allowed return on
    equity of 9.75 percent and an average rate base of $3.1 billion. The
    stipulated items, including a recent stipulation on pension expense,
    result in an expected increase of $67 million in annual revenue
    requirements. The company will provide a final update on power costs in
    November and awaits a final order from the OPUC in December.
  *Generation plant outages—The Boardman and Colstrip coal-fired plants both
    tripped off-line on July 1^st due to equipment failures. Boardman came
    back online at the end of July and Colstrip is expected to come back
    online in the first quarter of 2014. Coyote Springs, one of PGE’s natural
    gas-fired plants, tripped off-line in late August due to cracks in the
    steam turbine rotor. Repairs to the plant are underway and Coyote Springs
    is expected to be online later this month. PGE’s share of repair costs for
    the coal plants - approximately $13 million - is expected to be covered by
    insurance, net of approximately $2 million in deductibles. Repair costs
    for Coyote Springs are estimated to be $2 million. All together,
    replacement power costs in 2013 for the three outages are expected to be
    $16 to $18 million.
  *Transmission discussions with the Bonneville Power Administration—In late
    October, PGE and BPA agreed to discontinue discussions regarding PGE’s
    potential ownership of approximately 1,500 MW of BPA’s transmission
    capacity rights. PGE and BPA concluded that they would not be able to
    reach an agreement on financial terms that benefited both PGE and BPA
    customers. At this time, PGE has determined that transmission service
    offered under BPA’s open access transmission tariff is the best option for
    meeting its current transmission needs.

Third quarter operating results

Total revenues decreased $15 million, or 3 percent, to $435 million in the
third quarter of 2013 from $450 million in the third quarter of 2012 primarily
due to the net effect of the following:

  *An $11 million decrease resulting from lower average prices due primarily
    to the reduction in power costs as forecasted in the company’s 2013 annual
    power cost update tariff and a slightly larger portion of energy
    deliveries going to customers who purchase their energy from electricity
    service suppliers;
  *A $7 million decrease related to the company’s power cost adjustment
    mechanism, as the estimated refund to customers related to the 2011 PCAM
    was reduced in the third quarter of 2012 as a result of the application of
    the regulated earnings test, with no estimated refund to or collection
    from customers recorded in the third quarter of 2013; and
  *A $3 million decrease related to the decoupling mechanism, with a $1
    million potential refund recorded in the third quarter of 2013 compared
    with a $2 million potential collection recorded in the third quarter of
    2012; partially offset by
  *$3 million, or 16 percent, increase in wholesale revenues consisting of a
    57 percent increase in the average price of wholesale power and a 25
    percent decrease in the volume sold; and
  *A $2 million increase related to a 1 percent increase in the volume of
    retail energy delivered primarily due to the effects of weather.
    Residential energy deliveries were up 2 percent, while commercial and
    industrial deliveries were comparable to the third quarter of 2012.

Purchased power and fuel expense increased $8 million, or 4 percent, for the
third quarter of 2013 compared to the third quarter of 2012. The increase
consisted of $15 million related to a 9 percent increase in the average
variable power cost, which is largely due to the unplanned plant outages,
partially offset by $7 million related to a 4 percent decrease in total system
load. During the third quarter of 2013, the company incurred approximately $11
million of incremental replacement power costs related to the unplanned plant
outages.

Production and distribution expense increased $5 million, or 10 percent, in
the third quarter of 2013 compared with the third quarter of 2012, primarily
due to planned higher operating and maintenance costs related to the company’s
distribution system, including technology upgrades as well as increased repair
and restoration work.

Interest expense decreased $2 million, or 7 percent, in the third quarter of
2013 compared with the third quarter of 2012, due to an increase in the
allowance for debt funds used for construction driven by a higher average
construction work-in-progress balance resulting from the commencement of the
construction of Port Westward Unit 2, Carty Generating Station and Tucannon
River Wind Farm in 2013, as well as a decrease in interest expense driven by
the timing of the maturities and issuances of long-term debt.

Other income, net increased $6 million in the third quarter of 2013 compared
with the third quarter of 2012, primarily due to higher earnings on the
non-qualified benefit plan trust assets, as well as an increase in the
allowance for equity funds used for construction from the higher average CWIP
balance.

Income tax expense was $4 million in the third quarter of 2013 compared with
$19 million in the third quarter of 2012. The decrease is primarily due to the
decrease in the annual estimated pre-tax income for 2013 compared to 2012,
which was driven by the $52 million expense for Cascade Crossing and a $9
million industrial customer refund both recorded in the second quarter of
2013.

2013 earnings guidance

PGE is reducing full-year 2013 earnings guidance from $1.25 to $1.40 per share
to $1.20 to $1.30 per share primarily due to replacement power costs for the
Coyote Springs outage. This guidance range is based on:

  *Weather-adjusted energy deliveries comparable to weather-adjusted 2012;
  *Normal hydro conditions and wind conditions in line with expectations;
  *Incremental replacement power costs of $16 million to $18 million for the
    three plant outages;
  *Ongoing operating and maintenance costs between $440 million and $460
    million;
  *Depreciation expense between $240 million and $250 million; and
  *Capital expenditures between $710 million and $730 million.

Excluding the impacts of the Cascade Crossing charge and the customer billing
matter, PGE’s adjusted operating earnings guidance for 2013 would be $1.70 to
$1.80 per share, as shown below:

2013 GAAP earnings per share guidance                 $ 1.20 - 1.30
Exclude the second quarter Cascade                               0.42
Crossing expense
Exclude the second quarter customer                              0.07
billing matter revenue reduction
2013 Non-GAAP adjusted operating earnings                        $ 1.70 - 1.80
per share guidance
                                                                 

PGE believes this non-GAAP adjusted guidance is useful to investors, analysts,
rating agencies and other parties, as it facilitates the analysis of our
results of operations from one period to another andprovides clarity
concerning the impact of certain events on operational results.

Third quarter 2013 earnings call and web cast — Nov.1, 2013

PGE will host a conference call with financial analysts and investors on Fri.
Nov. 1, at 11 a.m. ET. The conference call will be web cast live on the PGE
website at portlandgeneral.com. A replay of the call will be available
beginning at 1 p.m. ET on Friday, Nov. 1 through Friday, Nov. 8.

Jim Piro, president and CEO; Jim Lobdell, senior vice president of 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 unaudited 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 836,000 residential, commercial and industrial
customers in the Portland/Salem metropolitan area of Oregon. The company’s
headquarters are located at 121 S.W. 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 markets conditions, which
could affect the availability and cost of purchased power and fuel; changes in
capital market conditions, which could affect the availability and cost of
capital and result in delay or cancellation of capital projects; failure to
complete capital projects on schedule or 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
(In millions, except per share amounts)
(Unaudited)
                                                         
                                                         
                         Three Months Ended              Nine Months Ended
                         September 30,                   September 30,
                         2013         2012            2013         2012
Revenues, net            $ 435           $ 450           $ 1,311         $ 1,342
Operating
expenses:
Purchased power          190             182             538             533
and fuel
Production and           54              49              169             153
distribution
Cascade Crossing
transmission             —               —               52              —
project
Administrative           49              50              158             160
and other
Depreciation and         62              63              186             188
amortization
Taxes other than         27             24             79             77      
income taxes
Total operating          382            368            1,182          1,111   
expenses
Income from              53              82              129             231
operations
Interest expense         25              27              75              82
Other income:
Allowance for
equity funds             4               1               8               4
used during
construction
Miscellaneous            3              —              5              2       
income, net
Total other              7              1              13             6       
income
Income before
income tax               35              56              67              155
expense
Income tax               4              19             10             43      
expense
Net income               31              37              57              112
Less: net loss
attributable to          —              (1      )       (1      )       (1      )
noncontrolling
interests
Net income
attributable to          $ 31           $ 38           $ 58           $ 113   
Portland General
Electric Company
                                                                         
Weighted-average
shares
outstanding (in
thousands):
Basic                    77,637         75,528         76,401         75,486  
Diluted                  78,330         75,541         76,703         75,500  
Earnings per
share—basic and          $ 0.40         $ 0.50         $ 0.76         $ 1.49  
diluted
Dividends
declared per             $ 0.275        $ 0.270        $ 0.820        $ 0.805 
common share
                                                                                 

                                                     
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
                                                                  
                                                                  
                                            September 30,         December 31,
                                            2013                  2012
ASSETS
Current assets:
Cash and cash equivalents                   $   91                $    12
Accounts receivable, net                    137                   152
Unbilled revenues                           67                    97
Inventories                                 72                    78
Margin deposits                             36                    46
Regulatory assets—current                   99                    144
Other current assets                        63                   93
Total current assets                        565                   622
Electric utility plant, net                 4,659                 4,392
Regulatory                                  504                   524
assets—noncurrent
Nuclear decommissioning                     82                    38
trust
Non-qualified benefit plan                  34                    32
trust
Other noncurrent assets                     47                   62
Total assets                                $   5,891            $    5,670
                                                                  
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable                            $   99                $    98
Liabilities from price risk
management activities -                     89                    127
current
Short-term debt                             —                     17
Current portion of                          —                     100
long-term debt
Accrued expenses and other                  192                  179
current liabilities
Total current liabilities                   380                  521
Long-term debt, net of                      1,761                 1,536
current portion
Regulatory                                  852                   765
liabilities—noncurrent
Deferred income taxes                       565                   588
Unfunded status of pension                  253                   247
and postretirement plans
Non-qualified benefit plan                  103                   102
liabilities
Asset retirement                            96                    94
obligations
Liabilities from price risk
management                                  71                    73
activities—noncurrent
Other noncurrent                            17                   14
liabilities
Total liabilities                           4,098                3,940
Total equity                                1,793                1,730
Total liabilities and                       $   5,891            $    5,670
equity
                                                                       

                                               
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
                                                        
                                                        
                                                        Nine Months Ended
                                                        September 30,
                                                        2013       2012
Cash flows from operating activities:
Net income                                              $ 57           $ 112
Depreciation and amortization                           186            188
Capitalized costs expensed related to                   52             —
Cascade Crossing
Other non-cash income and expenses, net                 40             99
included in Net income
Changes in working capital                              94             57
Proceeds received from legal settlement                 44             —
Other, net                                              (14  )         (6    )
Net cash provided by operating                          459           450   
activities
Cash flows from investing activities:
Capital expenditures                                    (453 )         (218  )
Contribution to Nuclear decommissioning                 (44  )         —
trust
Sale of solar power facility                            —              10
Other, net                                              6             (1    )
Net cash used in investing activities                   (491 )         (209  )
Cash flows from financing activities:
Net issuance of long-term debt                          123            —
Proceeds from issuance of common stock,                 67             —
net of issuance costs
Maturities of commercial paper, net                     (17  )         (30   )
Dividends paid                                          (62  )         (61   )
Net cash provided by (used in)                          111           (91   )
financing activities
Increase in cash and cash equivalents                   79             150
Cash and cash equivalents, beginning of                 12            6     
period
Cash and cash equivalents, end of                       $ 91          $ 156 
period
                                                                             

                                            
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
SUPPLEMENTAL OPERATING STATISTICS
(Unaudited)
                                                     
                                                     
                     Three Months Ended              Nine Months Ended
                     September 30,                  September 30,
                     2013        2012            2013          2012
Revenues
(dollars in
millions):
Retail:
Residential          $ 186           $ 187           $ 611             $ 630
Commercial           162             168             461               476
Industrial           55             57             160              166
Subtotal             403             412             1,232             1,272
Other retail
revenues,            —              10             (6      )         6
net
Total retail         403             422             1,226             1,278
revenues
Wholesale            22              19              59                38
revenues
Other
operating            10             9              26               26
revenues
Total                $ 435          $ 450          $ 1,311          $ 1,342
revenues
                                                                       
Energy sold
and
delivered
(MWh in
thousands):
Retail
energy
sales:
Residential          1,660           1,626           5,469             5,506
Commercial           1,811           1,848           5,132             5,239
Industrial           823            886            2,378            2,573
Total retail         4,294           4,360           12,979            13,318
energy sales
Retail
energy
deliveries:
Commercial           146             115             408               327
Industrial           275            210            808              607
Total retail
energy               421            325            1,216            934
deliveries
Total retail
energy sales         4,715           4,685           14,195            14,252
and
deliveries
Wholesale
energy               581            771            1,892            1,861
deliveries
Total energy
sold and             5,296          5,456          16,087           16,113
delivered
                                                                       
Number of
retail
customers at
end of
period:
Residential                                          729,512           723,804
Commercial                                           105,315           104,749
Industrial                                           202               216
Direct                                               511              511
access
Total retail                                         835,540          829,280
customers
                                                                       

                                               
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
SUPPLEMENTAL OPERATING STATISTICS, continued
(Unaudited)
                                                                                    
                                                                                    
                            Three Months Ended              Nine Months Ended
                            September 30,                  September 30,           
                            2013        2012            2013         2012
Sources of
energy (MWh
in
thousands):
Generation:
Thermal:
Coal                        830             995             2,985            2,280
Natural gas                 1,096          856            2,300           1,993  
Total                       1,926           1,851           5,285            4,273
thermal
Hydro                       314             331             1,231            1,461
Wind                        372            341            1,001           964    
Total                       2,612          2,523          7,517           6,698  
generation
Purchased
power:
Term                        940             1,895           4,821            6,042
Hydro                       385             422             1,286            1,358
Wind                        92              95              269              272
Spot                        1,147          460            1,850           1,641  
Total
purchased                   2,564          2,872          8,226           9,313  
power
Total                       5,176           5,395           15,743           16,011
system load
Less:
wholesale                   (581  )         (771  )         (1,892 )         (1,861 )
sales
Retail load                 4,595          4,624          13,851          14,150 
requirement
                                                                                    

                                               
                                   Heating                   Cooling
                                   Degree-days                Degree-days
                                   2013      2012          2013     2012
First                              1,902        1,967         —            —
quarter
Average                            1,850        1,848         —            —
Second                             593          709           82           40
quarter
Average                            721          714           68           68
Third                              90           58            457          395
quarter
Average                            82           81            385          387
Year-to-date                       2,585        2,734         539          435
Year-to-date                       2,653        2,643         453          455
average

* — “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
Investor Relations