POR - Earnings call transcript Q2 2019 | Portland General Electric Company

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Operator

Good morning, everyone and welcome to Portland General Electric Company's Second Quarter 2019 Earnings Results Conference Call. Today is Friday, August 2, 2019. This call is being recorded and as such all lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a question-and-answer period. [Operator Instructions] For opening remarks, I will turn the conference over to Portland General Electric Director of Investor Relations and Treasury, Chris Liddle. ahead. go Please

Chris Liddle

morning, join Good pleased you're that Thanks, today. everyone. to us able Michelle. I'm

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

Form some the most which to our our on available of description a are actual refer press cause earnings that recent results periodic For also materially to XX-Q please website. of and our factors reports and could on release, differ XX-K Form

discussions our Vice Senior of Leading and President are Pope, Jim today CEO; and Lobdell, and Finance, Treasurer. CFO President Maria

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

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

Maria Pope

morning, good our recently Portland we and financial operations build on updates and a earnings plan General results, our will integrated share new Chris research Today of XXXX quarter everyone. center. an filed plan, call. Thanks, to second our Electric's to overview integrated Welcome

to Turning X. Slide

or reported income we've quarter $X.XX second the For share, of $X.XX $XX a share to net XXXX. million compared per per of decrease

summary of Given will factors our the Jim guidance per greater reaffirming to detail. $X.XX expectations results provide of earnings for quarter the XXXX $X.XX a balance share. of into are the year, impacting our we go and diluted second I'll

in to hydro were power lower variable impart the than Northwest. productions costs net Pacific First, significantly due average challenging

plants down revenues. California very quarter prices decreasing regional thermal strong increased hydro [ph] XX% generation As second Concurrently, driving over experienced hotel of power and conditions XXXX. such, the our

the Second, transmission increased system. on and operating to and strengthening due expenses of focused reliability resiliency our enhanced distribution

is X.X% although market Slide to X. with unemployment remains slowed a tight area immigration economy service labor our has rate. The strong, Turning in the

compared Valley jumped our ranking cities so market Silicon with in protect Portland reported recently when among talent top reflecting [ph]. competitive more cost start-ups more that Forbes the for

continue we well energy the expansion construction and customers. underway service quarter and This new leverage across to to area, our see industrial as growth projects

We broad not order of cost-effective I'd like Oregon sessions, stakeholders pass. through session. future in briefly group on with and regulating keep greenhouse emissions stakeholders a touch support towards XXXX In legislative that a program and working with climate cap worked did ultimately of to policy. we will gas trade energy state

transportation gas the electric and we supported the in cap state's and to emissions reduce addition trade, sector adoption successfully boost greenhouse In bill of the to vehicles.

We low also bills assistance. energy customer and targeting supported successful several efficiency income

Turning X. integrated filed to resource Oregon last public XXXX plan utility We our commission Slide with month.

product goal greenhouse with our emissions. a reducing is transformation the Our and of collaborative that filing reflects within our industry process gas

the capacity energy cost at by plan operations seizing by Our resources XXX offset reliance expanding renewable associated driven efficiency, exploration of and a XXXX coal on megawatts for renewable. by additional XXXX, plant XXX-average a approximately government of needed calls by demand megawatts capacity contracts our coal-fire response, effective of megawatts the with XXX-average and

capacity acknowledging We region. will our the our action in to existing for renewable RFPs expect generators anticipate in early order opportunities IRP, resources last an XXXX. we Similar seek to conduct for with bilateral plan and negotiations through

we to resources. able a depth focused second -- if may these of capacity conduct OPSC and market, consult, non-emitting excuse the acquire Given RFP will on me, negotiations, adequate the through conduct also with we're not

strategy advance service operation be integrated $XXX center. by X. This our seismic, I'm announce for XXXX. to that new design grid is be turning of and Board our in this the Slide construction excited of new the facility to week threat. estimated Directors and the center enhanced against and Finally, capital The costs approved cyber for to resilient will security physical million, integrated

to I'll now, you. turn over Jim. Thank the call And

Jim Lobdell

To to summarized Good detail like Maria. Slide specific you, everyone. Thank provide on start, morning, drivers I'd X. mentioned, Maria more on and as the

margin per portfolio factors several $X.XX not diluted decreased share, as Water power in as it this to result. well, to total performed gross First, favorable perform of supply did XXXX. contributed

second production, the contributed PGE-owned increase pipeline projects first this resulted to resources such quarter market in As Enbridge in hydro [ph] from costs. lower in the in XX% to when variation net during outage, primarily compared power to addition XXXX. variable to was the production resulting in the the of due in an quarter hydro particular, This a decrease Mid-Columbia in prices

of the in fewer our due power we lower XXXX increase case, a volume. to earnings to whether and sales rate increase attributable degree is $X.XX a sales price An earnings Additionally, lower $X.XX revenues average wholesale per experienced and in demand from due heating and general XX% XX% from share wholesale per decreased wholesale by decrease day. decreased an our to share cooling

net There underground management, miscellaneous next and is preventative security. of of maintenance, to inspections decrease an maintenance with attributable on along item cyber is lower $X.XX a $X.XX in tax a quarter. for distribution focus to drove and finally $X.XX emphasis of particular The credit, system the overhead production and increase from items. our decrease and increased vegetation which resiliency was great second enhance on expense Next, higher wildfire

we some achieve are confident higher earnings can spending challenges that Despite we objectives. and our

of upwards per the We of we $XXX a our expect and are guidance revenue to reaffirming range $XXX the see EPS to share million, as $X.XX improvements revising year. our to are O&M we million continued $X.XX diluted through of to balance guidance in

being expect plan cost PCAM as as quarter's operating in towards work variable also increase of we cost below increases improvements expenses, several baseline. forecast years. our the We our be next mitigating this for power focus Despite the our will net in we

As our annual we year. guidance such we're X% earlier to this reaffirming growth that provided earnings X%

discussed This XX we includes XXXX the summary strong including earlier. investment grade XXXX. sheet the Maria On cost we've maintain through expenditure Slide operation integrated X Slide to of our provided capital solid forecast associated balance On credit current with and continue rating. a centers that a liquidity company's from

requirements we upto of to find from expect additional XXXX, issuance remainder and For the with debt operations an estimated capital the $XXX securities million. of cash

we're And now for questions. ready operator,

Operator

[Operator America. first question the of. comes Instructions] Bank line from with Dumoulin-Smith Julien of Our

ahead. is open. Please line Your go

Julien Dumoulin-Smith

you structurally what how just here sort of in thinking IRP the about process the angle the the ownership. renewable the for Thank kind call but you in we're before happy amount the that yeah think be last here know get from IRP early just was to of be I of that opportunity I ownership mean about wanted around I very firm piece. is both very of to award the different some and go there in which might in And you

Maria Pope

the looking be point time. you at on Thank will option in for so this both ownership at

expect There's of will IRP process to expect then in some renewal how capture credits and the if some be in production scheduled be past. We IRP concluded the on move hearings particular don't quickly tax we me the XXXX. will differences to that we already not important are significant able we're of not we January approach to first from before be be very fuse any things the hoping should of the they the public quarter in and for into expire

should in the going admitting not we are we resources you're to back market peas then bilateral and together death processes. work find the can will which procurement with on the not market the further putting how go in commission the side, all the of looking with existing capacity all negotiations really we're start out for existing off On to regard find what we

Julien Dumoulin-Smith

Historically IRP If you there's have there's counterpoint your again existing Thanks. made then obvious just either. How separately Thailand them up there to X I and up for ones balance any I and confidence bit of historically perhaps can tax would the load pushed suppose help so that the this you on rack about from if that process that been think pushback around in I back on on that what a accelerate degree new little based recurrent in follow related credit that expiration now forecasts your of and do been you change the you some your renewal more demand of on will. and firm credit for you the put forecast here contemplated the process. can on to questions Blackstar level speak view

Maria Pope

Thank about this first talked backdrop the questions in your and answer is This you with calls then we've in the regards also and to remarks. previous grow. my in

ground resources racks region significantly competitiveness expiring importantly and down of to any production racks and what forecast in extensive Our is those and capture driven cost given with consensus creation with of credit credit the in to we It's If we solid around modeling regards much all market. see forward are so effective of issues expiring service also tax the to our sense your coming territory the with move the do. we to connection procuring sector in and had continue renewable the forward load PC's for of to customers tax not have makes number we largely of our had cost in most to and with into feel. but out discussions tech our in by calm want we quite impressed regards it out the consistent the remain stakeholders good very going by production The move us term and renewables. in future with including long have pastor to terms have the do see we my timeliness X% that us

Julien Dumoulin-Smith

back go will in thank you. the queue I

Operator

line comes of you our Thank a and question from next [indiscernible].

Unidentified Analyst

here I thank focusing that in more Hi, would could the just measures type on elaborate you think the more the on a XXXX spent bit preventative that little question is pull items there. comment is quarter maintenance on that have you than My or on your stuff you. first forward second them

Maria Pope

Absolutely.

the answer. let that James of details you You're some correct on in tell give

Jim Lobdell

so I in help and that focused lower wildfires a and XX%long that reaffirming another did investments operating of then we're on now are mentioned future too management we're our we inspection the why system costs we're to vegetation we making as are reason sure the growth will term make rate. in us that's we trying up the

Unidentified Analyst

then separately AC the case operations what's that of prior can know during couple regulators capital the the contemplated period HM you process that center I the timing little to relation or had you earned at the DC recent with the know all have next its give the you of you at And plan Understood. in timing that have and of discussions. copy a construction of previously. the around that had but rate in

Jim Lobdell

that. primary sell to up period being if associate respond perspective. is stakeholders to calculated with correct had be You and with facility. going that AC we're DC the from conversations able resiliency Having we that associate are during have construction with to

we as the seen. regulatory costs of time through associated determination a be the move to if So as that make the we recovery will with timing so of to it's

Unidentified Analyst

you Thank very much. Understood.

Operator

And Gregg our next UBS. of Orrill question a comes from with line

Gregg Orrill

regard with much view. up the change garden. verses in that O&M How coming of to have you is the in already year your Hi, the spent

Jim Lobdell

it good already has The been part spent. of

Operator

of from with next comes Thank our question a you and line Travis Miller Morningstar.

Travis Miller

in number cut much of million of of $XXX the the On conversation of Could if your give R. can it parts the relative early dependent phone $XXX how IRP get sense and initial number. of were is rate XXXX that P. planning XXXX parts million a is how to that filing. could that you for backs you ranges conversations I. if us of R. and on characterize run IRP P. all certain the much you the cap upside of the backs to I.

Maria Pope

so growing he be and ownership rate from would None number addition. is the of reflect otherwise anything is the in to capital things of investment RFP or run in reflected an have be all IRP $XXX new rate that ongoing we a million any resiliency of system the $XXX capitals that upgrade and that also customer territory service might reflects options it ours all would come maintenance the investment or our meet reflects fact run it our needs quite in million that IRP of of significantly out

Travis Miller

it any terms of idea of be. in that would or single cost gives range you that large it Of have the Did of projects.

Maria Pope

the the market wide for P. document running from of we've wind way solar You XXXX thermal some look in a how minutes to range R. numbers the at deal is we're in all XXXX. the I. storage of projects. included call large variety terms resources filing actual after in a which could in included what

Travis Miller

have you and on system. Okay challenges characterize your that to level on is service then view corporate Corporate that energy purchases respect renewable your higher buyers territory what go as in opportunities arrests your energy with to. renewable

Maria Pope

not actually corporations seeing them certainly municipalities been only vertically and That's in products tech from would XXX%green of of the digital call and working well for large structured interest but it's program are faces that is successful then received futures love out year we've have high have over minutes an let on over in green also our me really companies a very matter we I done we've go selling energy and a hugely from program. not increase in and that a question that with the been him a for that next he'll

Jim Lobdell

out available willing decision step looking very up portfolios. but people customers ability there It And kind corporations robust earn a company with phase resources of go now ownership that's man a phase earnings to parties very response in we're that associated Maria so that and had any by are about up As our getting we to any with be our we on on what rate testimony are X one there base con that the green for thank without through. to looking stakeholders terra. then the investment A.'s green out is to response pointed call what about growth by to we what process associate the robust a capital with need we point from at expanding opportunity of the it we're their year seen so the we're the more program could P. as end P. and of working

Travis Miller

Thank you.

Operator

ExodusPoint. Our question comes Andy a from line with next Levi of

Andy Levi

is of fourth Xrd third just there XX. and guess over that dollar will think combined you a know Xth what quarters you was and that be and the you tell had about I the a XXX I trying mid-point where values thought flood to the the quarter if be first that arcs range. it Could quarter XXX explain like was That the you you the you're show XXX. you X and kind cut you have then drivers is we'll I go what like and for suggest to to. XX

Jim Lobdell

Well referring to slide that number presentations. that in you're X if

Andy Levi

at you we're. now but the so of but that. important the to down think you of explain we in know how to rest kind I Because concern it dollar happening make know you What the comfort you that for for a today today lot action think of like can in you looking kind the of stock we're range be of to $XX us kind XXX there's number. the explain stock with the X%the like detail group's you I not midpoint Stuff of stock if of could your $XX would use that so have the the know your year

Jim Lobdell

our our to through baseline per territory as any is history lot working Portland beginning a the a amount earnings to are the because the in it's we strong growth previously we the around power territory service cost see and we reduce going customer activities occurring is lot is to get Maria to we lot of contributing help other got around specially tech the growth manufacturing year had a Yes guidance question put of about what saying officers and to in is to that of that us and will that commercial trying half the of up we've a going going of what lying that it continue that's I and this your sector service is pointed construction the we costs on are P. in out growth am we're high the in with on there we and out mentioned going so we to pal continued focus the below and mentioned centers use that offering around and is in data line a forward the a first couple the cam future. the year this know it are customer now keeping costs in to hard we've search strong got get so cover on

taking Again, as as our long a term structure. we view far were cost overall

geography to top term account long as to heal service on read while as long going putting we just line had for some normal a out up that some the we first we a that's statement that balancing inside guidance terminated pointed storm in one earnings year so quarter in the much at facilities otherwise we so we present such as to expenses number addition the on in not term. so from that a geography they're addition In it on looking have our they you that reaching that expenses there's as it where income that in are also agreements up dissociated the and by and our of we wrong focused or the overall provide some that are into we as would the for ended

Maria Pope

we're point range. reiterate and the wind and Northwest fluctuation we bear we just are particularly uses on customer Dennis long can that the lower will expect in term whether confident me cost results quarter overall quarter the see fruit our to that Let our Pacific making can system in investments guidance hydro affect our in that a

Andy Levi

Just this Xst with plant guess the relative the mention quarter? in of second the account to that balancing quarter power I the

Jim Lobdell

in was I the second quarter.

Andy Levi

was that? how And much Okay.

Maria Pope

our what the a if of guidance are and forward be in into expecting… and forth a look work it back will line puts given O&M where moving we're and ranges once anyone takes and we've full a on we know there's in so while quarter So entire you that

Andy Levi

sometimes guys you're way very that adjusted everything the really don't way because you have earnings, -- you things -- to throw do Let if ask you of kind in tend me in. another you

talking or kind in that were time So you it of negative in a next how that way. the account things it's that in one of whether the is quarter the hydro else year tell Can in nature not but second condition kind like be account. won't in quarter, us anything balancing the occurring balance or many anything and you whether about there I'm that threw affected

Jim Lobdell

all pieces associate Andy, a to adequate took time lot to of items. moving those of long that there's with an and go through a provide it explanation

spend like they'll some If to to on you'd with willing that clarity. provided more that, than Peter be time Christian

Maria Pope

at incurred are as costs our going look we We them and managing forward.

Andy Levi

guess do is trying ask costs but they having but just I second the there's run costs Right, quarter. are negative to know or how to they what some because that with Chris hydro conditions. I'm of general, nature your onetime one-time why and there's in where much some We plant of don't where beyond

Maria Pope

there and Yes, forward. forecast were those into we factor our going

Andy Levi

just you Okay. overall, -- then range, of the towards And year? Can for range range, you second the of low-end the on are you the trending categorize, of the just the just half. midpoint are high-end the

Jim Lobdell

I that can't provide guidance.

Maria Pope

question. We Thank the appreciate you.

Andy Levi

thanks. Okay,

Operator

next Reiss Greg line with of Centenus. question from our And the comes

Greg Reiss

one that of implied is kind how second maybe about is looking try half X and other cases the right aware in he you the that come the first more $X.X. I to comes I and for in that that midpoint not looking want the just year to about came the on second it on power expected one step was not where and to of up to kind just rate and get year it's to then kind half. a year just $X.X really were of little at of just the about costs in $X.XX half quarter range the are of just it of get $X.XX at getting that here section bearable in incremental from occur items a color of some and it's the

Jim Lobdell

we're No. out expecting expecting continued really diligently revenues are as I very gets them expenses we're we the AM have the we've it growth for year getting we've on we're got across Greg specially quarter baseline the and efforts stated in the below X:XX mentioning sector first onetime and remarks increased the and in strong working appreciate high yes the costs tech down the at to in and around the question year. power prepared there's did the customer the are items Tandy of of balance our we point some

those full plus got items of we've So will our year a bunch us get where not confidence and combination of cats dogs all guidance. in

Greg Reiss

is and have to Gotcha it and shake it into the pull guess would guys range. forwards that to how year some expenses the pulled insight some out the I forward safe pretty of to from able balance and you XXXX of also say to award to like XXXX guys sounded have had expenses kind you good in order be into still

Maria Pope

Yes, correct. that's

Greg Reiss

much. Okay, great. Thank you very

Jim Lobdell

Greg. Thanks,

Operator

our comes next from you [ph]. Anthony and of a Thank question line

Unidentified Analyst

have questions any Good morning the a benefit Greg if jump year estimate of my over year just most for on basis. question could I in provided on guys unanswered you growth of

Jim Lobdell

provided we haven't Anthony sorry. No

Unidentified Analyst

so good I'm thanks Well much.

Maria Pope

But One just happened you %growth for right. term work not our still expecting haven't… forecast near in has

Jim Lobdell

we like political Yes, have now or part of a an anything year we are answer. that that

Unidentified Analyst

much my question. Thanks Okay. for so taking

Operator

Thank next question from of Kevin you. [ph] And Citadel. a with line comes our

Unidentified Analyst

any in you're on first you're you the at power targeting half baseline below is are benefit I second way second getting that be a could I the so X that you to the quantify it's think above million guys to half Xmillion where the just on said that ask date to terrible back. the think least there because potential savings you half in wanted the

Jim Lobdell

Kevin, dissipating below is begin the year. full that all for of all say baseline we're the

Unidentified Analyst

of confidence over see variable that what next months. seeing follow-up than that it to it fairly something right far high that far is how heads more where X have you outdoors to with do your now that have on conditions the the market which Just then that occurs a just play degree you is less

Jim Lobdell

the power think in power the improvements and that happened rest out We're cost. that markets just the what we'll were what we the see conditions given where our to are of forecasting working today current anticipating year we're

Unidentified Analyst

going terms half something of in terms in in increase overall anything general with or were the in first to that that you be where going you going guidance the thought that was were you is coming these are thought adjustments in these that the be. to the are results year you be wherever you range are the the an year where into in there to ONM things moves Just of of your where

Maria Pope

they them So balance adjustment timing is any up pull our the of guide year these investments through that . are of we not of these but the providing items although forward some met systems onetime insights reiterate some are on not we some are we're additional neck are main the we of looking and with for where at

Unidentified Analyst

terror last Okay green it not. some is invest to clarity to upon be face the you able what's got you the line or to thing for for there whether the time on the on

Jim Lobdell

I believe pace answer that to should Kevin end an on year. we have of by the the

Operator

Bank with do follow-up a America. of from [Operator line Julien Dumoulin-Smith the Instructions] question of We have

Julien Dumoulin-Smith

a and the about. there's going earn to much more different to X hold weather cost mean a part between know but read consistently on back very rate talked in to I want items and he not up far construction to you've the on the to earning to forward ability obviously higher too I the this the years you again are on little a the weeds past different be pile onetime the between Perhaps O. here well confidence I'm bit do just the PVC as in line in get a record. of did to the C. and in go confidence more again little lines president curious I cases weeds as bit be distance ability and is understand a you're subsequent period ahead are and through and just level to I respect XX I. is Hi, a basis about that original with accruing

Maria Pope

move be had of quarter different pull bit mentioned in feel to will a of time expenses of important our before center XXX area important X marketing case IOC just than in in forward on some we ability of to management and time it'll stability no over we've be fashion that quite that and holders to Wallace important number and and it I'm are Florida we bouncing our trading. in timing an with to so been spent also are was to strong talking round us able manage of items and really cyber security regards here the south are allow to the look year the operation number stake how rate to level Kim a holders to on parties to we the forward very a system and power into will be a modern is changes center commission and will is stake of we we confidence located operations really include in Our physical it distribution working have seismic a we've to by underlying a our Stress all isn't point as project Q-Xnd a or our any corner. guidance all businesses continue being integrated and our supported lot in address talk the our this this X and confident more floored plans integrated with discussed able for which heavily or is of the is

Julien Dumoulin-Smith

thank it All right leave you. there

Jim Lobdell

you Thank

Operator

further time. showing remarks. I'm Thank turn like And the for this would to no you. at now questions over conference closing back Maria And I

Maria Pope

of Conference our we'll for the you look Goldman both you XXXX very quarter those attending please join we you forward thank August in And Barclays Sachs And September, at joining in all to today. results. report the October, or you us us those of Great, third seeing conferences. for much. Thank Conference in

Operator

thank in participating for you program. conclude the This Ladies and conference. does today's gentlemen,

Everyone, a may day. You disconnect. all great have

Portland General Electric (POR) 2 Aug 192019 Q2 Earnings call transcript