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Portland General Electric Reports 2013 Financial Results and Initiates 2014 Earnings Guidance

  Portland General Electric Reports 2013 Financial Results and Initiates 2014
  Earnings Guidance

 General rate case filing seeks inclusion of two new power plants in customer
                            prices, effective 2015

Business Wire

PORTLAND, Ore. -- February 14, 2014

Portland General Electric Company (NYSE: POR)  today reported net income of
$105 million, or $1.35 per diluted share, for the year ended Dec.31, 2013.
This compares with $141 million, or $1.87 per diluted share, for 2012. Net
income was $47 million, or 59 cents per diluted share, for the fourth quarter
of 2013 compared with $28 million, or 38 cents per diluted share, for the
comparable period of 2012. The decrease in annual net income was largely due
to the write-off of the Cascade Crossing Transmission Project and a customer
billing refund in the second quarter of 2013 (49 cents per share) and
incremental replacement power costs due to plant outages in the second half of
2013 (13 cents per share).

“In 2013, we completed two RFP processes, which resulted in the selection of
three new long-term generation resources that will deliver value to our
customers, and achieved a fair outcome in the 2014 general rate case,” said
Jim Piro, president and chief executive officer. “In 2014, we are focused on
constructing the three new generation resources on time and on budget and
continually emphasizing operational excellence.”

Generation projects

Construction is underway on all three generation projects selected last year
through the competitive RFP processes and each of these projects continue to
be on time and on budget. The majority of engines and generators are now on
site for Port Westward Unit 2, a 220 megawatt natural gas-fired capacity
resource. This plant is needed to help PGE integrate the variable output from
wind and solar facilities and meet customer demand for power during peak
events such as heat waves or cold fronts. Foundations are being poured and
roads are being built at Tucannon River Wind Farm, a 267 megawatt wind farm in
Southeastern Washington that will help PGE increase the amount of renewable
power in its system and meet state renewable power standards. Construction on
Carty Generating Station, a highly-efficient 440 megawatt natural gas-fired
baseload plant, began in early January with ground clearing and site
development.

General rate case filing

With Tucannon River and Port Westward Unit 2 expected to begin serving
customers in the first half of 2015, PGE has initiated a comprehensive
10-month review and approval process with the Oregon Public Utility Commission
in order to include these resources in prices when the plants go online. Late
yesterday, PGE filed a general rate case with a 2015 test year requesting an
overall customer price increase of 4.6 percent effective early 2015. The rate
case requests recovery of incremental costs to bring these two new plants into
service and to provide safe, reliable and sustainable power to customers.

The request is based on a return on equity of 10 percent, a capital structure
of 50 percent debt and 50 percent equity, and an average rate base of $3.9
billion. The specific impact on individual customers’ bills will vary
depending on usage and customer class. If the OPUC approves PGE’s request as
submitted, a typical residential customer using a monthly average of 840
kilowatt-hours of power would see their bill increase by about 5 dollars per
month.

PGE expects the Commission to issue a final order with approved price changes
before the end of 2014, with new customer prices expected to be effective in
three stages. A price reduction for base business costs, resulting from
amortization of several customer credits, is expected to be effective on Jan.
1, 2015, and price increases related to each of the two new generation
facilities are expected to be effective when each facility is providing
service to customers in the first half of 2015.

Fourth quarter operating results

Total revenues increased $36 million in the fourth quarter of 2013 compared
with the fourth quarter of 2012, which was driven by a 6 percent increase in
energy deliveries resulting from cooler weather. During the fourth quarter of
2013, heating degree-days (an indicator of the extent to which customers are
likely to have used electricity for heating) were 26 percent higher than the
fourth quarter of 2012. Residential energy deliveries increased 12 percent and
commercial and industrial deliveries combined increased 2 percent. Adjusting
for the effects of weather, total retail deliveries in the fourth quarter of
2013 were comparable to the fourth quarter of 2012.

Purchased power and fuel expense increased $26 million in the fourth quarter
of 2013 compared with the fourth quarter of 2012, with $16 million related to
an 8 percent increase in average variable power cost per MWh and $9 million
related to a 5 percent increase in total system load. The increase in the
average variable power cost per MWh was driven by the following:

  *Less favorable regional hydro conditions in the fourth quarter of 2013
    compared with the fourth quarter of 2012 contributing to an increase in
    the price per MWh of purchased power;
  *An 11 percent decrease in energy received from PGE owned and contracted
    hydroelectric projects, which was replaced with purchased power; and
  *Unplanned thermal plant outages. During the fourth quarter of 2013, the
    company’s Coyote Springs natural gas-fired generating plant was offline
    until November 30, 2013 and Colstrip Unit 4 coal-fired generating facility
    was offline until January 23, 2014. As a result, the company replaced such
    power with purchased power, incurring $6 million of incremental
    replacement power costs.

Net variable power costs, which consists of purchased power and fuel expense
net of wholesale revenues and is used in the company’s power cost adjustment
mechanism, increased $16 million in the fourth quarter of 2013 compared to the
fourth quarter of 2012. The increase is largely due to the increase in the
average variable power cost per MWh partially offset by a higher average price
per MWh for wholesale sales.

Total production, distribution, administrative and other expenses (operating
and maintenance expenses) were $117 million in the fourth quarter of 2013
compared with $114 million in the fourth quarter of 2012. The $3 million
increase was largely due to higher benefits expense.

Income taxes decreased $10 million in the fourth quarter of 2013 compared with
the fourth quarter of 2012, primarily due to an adjustment to increase the
Company’s net deferred income tax liability in 2012, which was driven by an
increase in PGE’s composite state tax rate, and changes related to production
tax credits.

2013 annual operating results

Total revenues increased $5 million in 2013 compared to 2012 primarily due to
the net effect of the following:

  *A $20 million increase resulting from higher volumes of energy deliveries
    driven by more extreme weather in 2013 compared to 2012. Residential
    energy deliveries were up 3 percent in 2013, while commercial and
    industrial deliveries combined were comparable to 2012. Adjusting for the
    effects of weather, total retail deliveries were comparable to prior year;
    and
  *A $5 million increase related to the sale of natural gas and oil not
    needed for operations;
  *A $31 million increase in wholesale revenues consisting of a 55 percent
    increase in average price of wholesale power, combined with a 5 percent
    increase in the volume sold; partially offset by
  *A $38 million decrease as a result of lower average retail prices due to
    lower expected power costs as established in the annual update tariff for
    power costs and a larger portion of energy deliveries going to customers
    who purchase their energy from electricity service suppliers;
  *A $9 million decrease related to an industrial customer refund recorded in
    the second quarter of 2013 for a billing error covering a period of
    several years; and
  *A $4 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 2012, with no estimated refund to or collection from
    customers recorded in 2013.

Purchased power and fuel expense increased $31 million in 2013 compared with
2012, largely due to a 4 percent increase in average variable power cost per
MWh. This increase was due to the combination of the following:

  *Less favorable regional hydro conditions in 2013 compared with 2012
    contributing to an increase in the price per MWh of purchased power;
  *An 11 percent decrease in the energy received from PGE owned and
    contracted hydroelectric projects, which was replaced with thermal
    generation and purchased power.
  *Unplanned thermal plant outages at three of its generating facilities
    during the second half of 2013. As a result, the company replaced such
    power with purchased power, incurring $17 million of incremental
    replacement power costs.

Net variable power costs for 2013 were comparable to 2012. A 55 percent
increase in the average price per MWh of wholesale sales, was offset by the
increase in the average variable power cost per MWh.

Total production, distribution, administrative and other expenses (operating
and maintenance expenses) were $444 million in 2013 compared with $427 million
in 2012. The $17 million increase is primarily due to higher repair and
maintenance costs for the company’s generating plants and distribution system,
as well as higher pension costs.

Cascade Crossing transmission project consists of $52 million of costs charged
to expense in the second quarter of 2013 due to the suspension of permitting
and development of the project.

Interest expense, net decreased $7 million in 2013 compared with 2012, with $4
million related to the timing of the 2013 maturities and issuances of
long-term debt and $3 million related to an increase in the allowance for
borrowed funds used for construction resulting from a higher average
construction work-in-progress balance with the commencement of the
construction for three new generating facilities in 2013.

Other income, net increased $10 million in 2013 compared with 2012, primarily
driven by an increase in the allowance for equity funds used for construction
from the higher average CWIP balance, as well as an increase in earnings from
the non-qualified benefit plan trust assets.

Income taxes decreased $43 million, in 2013 compared with 2012, which resulted
in the company’s effective tax rate decreasing to 16.8 percent in 2013
compared with 31.4 percent in 2012. These decreases are primarily due to a
decrease in pre-tax income for 2013 compared with 2012, which was driven by
the $52 million charge to expense in 2013 related to Cascade Crossing,
combined with other unfavorable impacts to 2013 pre-tax income. Also
contributing to the decreases was an increase to deferred tax balances in 2012
for a change in the blended statutory income tax rate and an increase in
production tax credits in 2013.

Adjusted operating earnings per share

Excluding the impacts of the Cascade Crossing charge and the customer billing
matter, PGE’s adjusted operating earnings for 2013 would be $1.84 per share,
as shown below:

                                                                    
2013 GAAP earnings per share                                            $ 1.35
Exclude the second quarter Cascade Crossing expense                     0.42
Exclude the second quarter customer billing matter revenue              0.07
reduction
2013 Non-GAAP adjusted operating earnings per share                     $ 1.84
                                                                          

PGE believes this non-GAAP adjusted earnings reconciliation 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.

2014 earnings guidance

PGE is initiating full-year 2014 earnings guidance of $2.00 to $2.15 per
diluted share. Guidance is based on the following assumptions:

  *Retail deliveries and revenues in line with levels set in the 2014 general
    rate case;
  *Average hydro conditions;
  *Wind generation based on historical levels;
  *Normal thermal plant operations;
  *Colstrip Unit 4 replacement power costs of $1.5 million in January;
  *Operating and maintenance costs between $480 and $500 million;
  *Depreciation and amortization expense between $300 and $310 million; and
  *Capital expenditures slightly above $1 billion.

Fourth quarter 2013 earnings call and web cast — Feb. 14, 2014

PGE will host a conference call with financial analysts and investors on
Friday, Feb.14, 2014, 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, Feb.14, 2014 through Friday,
Feb.21, 2014.

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 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      Years Ended
                             December 31,              December 31,
                            2013       2012         2013        2012
Revenues, net                $ 499        $ 463        $ 1,810       $ 1,805
Operating expenses:
Purchased power and          219          193          757           726
fuel
Production and               56           58           225           211
distribution
Cascade Crossing             —            —            52            —
transmission project
Administrative and           61           56           219           216
other
Depreciation and             62           60           248           248
amortization
Taxes other than             24          25          103          102     
income taxes
Total operating              422         392         1,604        1,503   
expenses
Income from operations       77           71           206           302
Interest expense, net        26           26           101           108
^(1)
Other income:
Allowance for equity
funds used during            5            2            13            6
construction
Miscellaneous income,        2           2           7            4       
net
Other income, net            7           4           20           10      
Income before income         58           49           125           204
taxes
Income taxes                 11          21          21           64      
Net income                   47           28           104           140
Less: net loss
attributable to              —           —           (1      )     (1      )
noncontrolling
interests
Net income
attributable to              $ 47        $ 28        $ 105        $ 141   
Portland General
Electric Company
                                                                     
Weighted-average
shares outstanding (in
thousands):
Basic                        78,068      75,535      76,821       75,498  
Diluted                      78,812      75,677      77,388       75,647  
Earnings per share:
Basic                        $ 0.59      $ 0.38      $ 1.36       $ 1.87  
Diluted                      $ 0.59      $ 0.38      $ 1.35       $ 1.87  

(1) Includes an
allowance for borrowed       $ 3          $ 1          $ 7           $ 4
funds used during
construction
                                                                             


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

                                                      As of December 31,
                                                         2013        2012
ASSETS
Current assets:
Cash and cash equivalents                                $ 107         $ 12
Accounts receivable, net                                 146           152
Unbilled revenues                                        104           97
Inventories                                              65            78
Margin deposits                                          9             46
Regulatory assets—current                                66            144
Other current assets                                     94           93
Total current assets                                     591           622
Electric utility plant, net                              4,880         4,392
Regulatory assets—noncurrent                             464           524
Nuclear decommissioning trust                            82            38
Non-qualified benefit plan trust                         35            32
Other noncurrent assets                                  49           62
Total assets                                             $ 6,101      $ 5,670
                                                                       
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable                                         $ 173         98
Liabilities from price risk management                   49            127
activities—current
Short-term debt                                          —             17
Current portion of long-term debt                        —             100
Accrued expenses and other current liabilities           171          179
Total current liabilities                                393          521
Long-term debt, net of current portion                   1,916         1,536
Regulatory liabilities—noncurrent                        865           765
Deferred income taxes                                    586           588
Unfunded status of pension and postretirement            154           247
plans
Liabilities from price risk management                   141           73
activities—noncurrent
Non-qualified benefit plan liabilities                   101           102
Asset retirement obligations                             100           94
Other noncurrent liabilities                             25           14
Total liabilities                                        4,281        3,940
Total equity                                             1,820        1,730
Total liabilities and equity                             $ 6,101      $ 5,670
                                                                         


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

                                                   Years Ended December 31,
                                                      2013           2012
Cash flows from operating activities:
Net income                                            $  104           $ 140
Depreciation and amortization                         248              248
Capitalized costs expensed related to Cascade         52               —
Crossing
Other non-cash income and expenses, net               51               74
included in Net income
Changes in working capital                            68               40
Proceeds received from legal settlement               44               —
Other, net                                            (23     )        (8    )
Net cash provided by operating activities             544             494   
Cash flows from investing activities:
Capital expenditures                                  (656    )        (303  )
Contribution to Nuclear decommissioning trust         (44     )        —
Other, net                                            8               9     
Net cash used in investing activities                 (692    )        (294  )
Cash flows from financing activities:
Net issuance (repayment) of long-term debt            277              (100  )
Proceeds from issuance of common stock, net of        67               —
issuance costs
Maturities of commercial paper, net                   (17     )        (13   )
Dividends paid                                        (84     )        (81   )
Net cash provided by (used in) financing              243             (194  )
activities
Increase in cash and cash equivalents                 95               6
Cash and cash equivalents, beginning of year          12              6     
Cash and cash equivalents, end of year                $  107          $ 12  
                                                                             


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

                              Three Months Ended    Years Ended
                                 December 31,          December 31,
                                 2013      2012        2013        2012
Revenues (dollars in
millions):
Retail:
Residential                      $ 250       $ 230       $ 861         $ 860
Commercial                       159         157         619           633
Industrial                       57         60         217          226
Subtotal                         466         447         1,697         1,719
Other accrued (deferred)         —          (2    )     (5      )     4
revenues, net
Total retail revenues            466         445         1,692         1,723
Wholesale revenues               21          11          80            49
Other operating revenues         12         7          38           33
Total revenues                   $ 499      $ 463      $ 1,810      $ 1,805
                                                                       
Energy sold and delivered
(MWh in thousands):
Retail energy sales:
Residential                      2,232       1,999       7,702         7,505
Commercial                       1,764       1,725       6,896         6,964
Industrial                       832        902        3,210        3,475
Total retail energy sales        4,828       4,626       17,808        17,944
Retail energy deliveries:
Commercial                       137         111         545           438
Industrial                       258        201        1,066        808
Total retail energy              395        312        1,611        1,246
deliveries
Total retail energy sales        5,223       4,938       19,419        19,190
and deliveries
Wholesale energy                 461        388        2,353        2,249
deliveries
Total energy sold and            5,684      5,326      21,772       21,439
delivered
                                                                       
Number of retail customers
at end of period:
Residential                                              732,341       725,502
Commercial                                               103,021       102,138
Industrial                                               204           216
Direct access                                            504          498
Total retail customers                                   836,070      828,354
                                                                       


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

                              Three Months Ended    Years Ended
                                 December 31,            December 31,
                                 2013      2012        2013       2012
Sources of energy (MWh in
thousands):
Generation:
Thermal:
Coal                             1,084       1,330       4,070        3,610
Natural gas                      1,076      889        3,375       2,882  
Total thermal                    2,160       2,219       7,445        6,492
Hydro                            415         482         1,646        1,943
Wind                             199        160        1,200       1,125  
Total generation                 2,774      2,861      10,291      9,560  
Purchased power:
Term                             1,652       1,340       6,472        7,382
Hydro                            343         370         1,629        1,728
Wind                             41          47          311          319
Spot                             697        644        2,547       2,285  
Total purchased power            2,733      2,401      10,959      11,714 
Total system load                5,507       5,262       21,250       21,274
Less: wholesale sales            (461  )     (388  )     (2,353 )     (2,249 )
Retail load requirement          5,046      4,874      18,897      19,025 
                                                                             
                                                                             
                                 Heating Degree-days     Cooling Degree-days
                                 2013        2012        2013         2012
1st Quarter                      1,902       1,967       —            —
Average                          1,850       1,848       —            —
2nd Quarter                      593         709         82           40
Average                          721         714         68           68
3rd Quarter                      90          58          457          395
Average                          82          81          385          387
4th Quarter                      1,801       1,435       —            1
Average                          1,586       1,592       1            1
Annual total                     4,386       4,169       539          436
Annual total average             4,239       4,235       454          456

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
Investor Relations
 
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