POR - Earnings call transcript Q4 2019 | Portland General Electric Company

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Operator

Good morning, everyone, and welcome to Portland General Electric Company’s Fourth Quarter 2019 Earnings Results Conference Call. Today is Friday, February 14, 2020. This call is being recorded and as such all lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be question-and-answer period.[Operator Instructions]

For opening remarks, I would like to turn the conference call over to Portland General Electric’s Director of Investor Relations and Treasury, Chris Liddle. sir. ahead, go Please

Chris Liddle

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

begin morning, supplement we The investors.portlandgeneral.com. have we’ll Before this referencing slides prepared that remind be our a we are you available presentation website the to throughout our on which I’d discussion, call. like at to

inherent and slide to remarks to you morning results constitute will like such this expectations. materially We that that from caution uncertainties, everyone Referring remind I’d risks statements differ may involve forward-looking actual two, our some and statements. our of

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

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

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

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

Maria Pope

Electric’s to and Chris, you, Thank General good Call. everyone. Welcome Portland XXXX morning, Earnings

Today, a detail I’ll on our plan, will legislative more overview resource Jim earnings financial results, our and we’re integrated our regulatory your financial and expectations, session. our a outlook address of in growth on questions. the update what provide seeing we Oregon share results, XXXX, then, on summary of an will

wildfire $X.XX fourth diluted demand in margin slide per higher $X.XX which partially system. Jim later in We margin per improved earnings The Turning higher XXXX. $X.XX per from net and including XXXX. ongoing compared XXXX, quarter compared with share by will mitigation, of share investments by quarter in million, our gross in The of earnings $X.XX due we offset expenses, management industrial four four. to strong higher driven discuss. vegetation or and with operating gross or In of was increase was $XXX share to recorded net the finished million income diluted earning income the $XXX

we’re time full our share. earnings earnings to assessing clarity the removing year $X.XX XXXX we’re ahead, growth, guidance guidance. per $X.XX diluted with more period provide future To initiating Looking to long-term on

X% below by We are now be or have experienced In guiding on this as may average. in X% range. years XXXX we our growth range XXXX, to guidance, growth we indicated some as the our earnings above may growth to

On completed slide five, quarter in significant emissions year Both of portfolio, and reduction our with coal fourth carbon this closure. for this track a the Boardman power by supply few the the of the include, are accomplishments construction renewable on to year. be of energy plant expected Wheatridge ongoing

customers’ up additional corporate Future Additionally, procurement to largest solar facility overwhelming be will energy, in we in plans large response built to average project complements launched to the IRP, Avangrid support We customers municipal XX operational program. our and this This for from facility, Green renewable value energy of XXXX. program be XXX receive renewable expect opportunity the to in the to Impact with megawatts. partner Oregon. and our

territory and the we center, system in previously our on through advancing operations service smart progressed initiatives. on network our XXXX, focused In laying communication investments our our for continued grid integrated announced and also groundwork

electrification transportation yesterday, investment the our service further from on finally, which throughout approval will electrification And planner, enable received just OPUC territory. in we our

it of downward a efficiency deliveries, in XXth area in-migration. for pressure When strong. the comes six. customer XXXX, remained to X.X% Turning increase industrial commercial in was rate a conditions of In Oregon our our The residential energy and to on offsetting XXXX, service major deliveries. slide in deliveries economic driver ranked

growth. way will customers in overall anticipate our we to XXXX, again our the deliveries the For high-tech current lead

legislative to on emissions. regulating month this began renewed with XXXX matters. like The greenhouse touch I’d sessions gas Now, briefly focus on legislative

paying not customers’ our accelerates emissions, trajectory while current renewable for that twice we that legislation of on. clean supportive are to carbon the We’re energy and interests reduce

transportation supporting proposals a few accelerate Additionally, we modern clean and investments, enabling to infrastructure system. a are

The the mid Turning or seven. the process our decision to commission to continues expect final we slide March for from later. plan regulatory in and progress integrated resource

action of focused to we’re XXXX. on megawatts, Regarding of the our This the adding plan, up renewable XXX to tax resources credit. extension of reflects renewable recent end the production average prior federal

megawatts In of up addition, targeting we’re to XXX dispatchable capacity.

bilateral portion in existing with of to a contract engaged region negotiations fill currently this the generators need. in We’re

discussions design and past with parties follow. to plan RFPs we As selection with the with independent processes, RFP initiate evaluator to

I’ll And you and over thank with it that, hand Jim. to

Jim Lobdell

you, Thank Maria.

for by drivers XXXX. walking the you to through eight., start Turning earnings I’ll slide

and gross with increased better as serve increase weather increase to decoupling net attributable our unfavorable of which we impact average experienced to weather, weather our $X.XX commercial, customers, to of the in a $X.XX due and decline decrease to customer due $X.XX revenues attributable residential by the due consisted First, demand, a $X.XX industrial a associated in $X.XX the XXXX net higher a increased increase per to earnings due $X.XX unfavorable from increase use margin additional to investments XXXX. in a to

the recognized $X.XX XXXX net reoccur, and third attributable increase depreciation did $X.XX and from decrease a from decrease, year, quarter the expenses. XXXX, decrease and change reserves. a cost first a result for half vegetation of In implementation, wind system management not with to a consisting decrease efforts, a attributable employee higher Second, in underperformed associated we a associated resulting expense, to recognized customer debt in PTCs carrying and effect benefits $X.XX the and from associated decrease of bad wildlife litigation with decrease a a a higher tailwind and consists due $X.XX miscellaneous a XXXX, earnings expenses, $X.XX capital additions, a higher from a the IT avoided $X.XX year-over-year benefit and associated lower general of $X.XX costs information to attributable and as bad reserves other in to $X.XX operating which increase with Carter, primarily amortization in decrease $X.XX in onetime expenses, with mitigation the of administrative $X.XX from had of as cash settlement primarily which of debt the labor and a

look structure we and that we determine evaluate year safe our not file service reliable additional ahead, cost and As whether our to to or for ensure we will to are providing customers cost each recovery. we

utility For case to that XXXX a rate and result be opportunities file an for second filing test the decided basis. costs on consecutive will we a year. Oregon annual have to We’ll seen have not a need reevaluate reduce year, as general a the to public continue commission with we

slide Moving to nine.

of we’re X%. X% mentioned, Maria As providing earnings long-term guidance to

year conditions growth $XXX data earnings increases guidance in $XXX $X.XX reflects studies maintenance in or normal the assumes the deliveries increase Average driven a hydro for is not on to thermal full non-residential An of retail count. initiating energy based weather-adjusted. are historical as year customer the deliveries million. as plant generation diluted when share, levels forecast from wind an $X.XX of between residential following. between per million and to costs we This a operations, for and historical available, forecasted year, XXXX five addition, deliveries years X.X% primarily In in operating well high-tech which in by manufacturing increase X.X% sector

last with repurposing Boardman have in the to savings, costs achieve of field we at cost mitigation, to financing maintenance, the been costs. during During generating plant productivity, to quarter is areas This able second addition of in other year. of and lower we incremental inflationary IT the management, elevated operating the our increases year, which offset wildfire begin we’ll repurposing vegetation plant the costs in business elsewhere process and associated including

on Next and expect expense guidance million assumptions, million. $XXX we between $XXX depreciation amortization and

effective year average includes between to which operating the CWIP of We’re and XX% an center. also Wheatridge XX% tax $XXX for forecasting integrated rate the balance million, and an

from $XXX million. million to Finally, $XXX we operations expect of cash

XX. On to slide

continue As liquidity investment-grade a we forward solid including balance we to sheet look to ratings. XXXX, and credit maintain strong

operations with and $XXX estimated up fund debt issuance to the securities requirements million. expect to capital of We from cash

now, for we’re questions. And operator, ready

Operator

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

Your question, please?

Ryan Greenwald

Ryan our Good Julien. taking questions. for for Greenwald Thanks is actually guys. morning, on This

Jim Lobdell

Good morning, Ryan.

Maria Pope

morning. Good

Ryan Greenwald

X% you X% here removing to So, to guys say growth? you EPS just clarify, the base for that are the did

Jim Lobdell

the a on average. keeping to here signaling but base a are we foregoing for basis XXXX, the through X% that on are X% achieve to are We XXXX we trying

Ryan Greenwald

and cost Got you you’re of into that, the case? rate little you. And more just then, the kind how could provide color of cuts thinking about a Helpful. XXXX lack on here, given

Jim Lobdell

our Well, field as the looking great organization. we’re made mentioned, far as our with in ability the I effectiveness, crews. strides across full We’ve associated IT department, schedules our in to have as the

of Boardman we’re that the through a better are we’ll decommissioning organization towards efficiency. move the plant. longer cover prove as as just the associated will That help with working entire us things costs necessary as mentioned the of no will be I’ve move other O&M inflationary that small have across dollars We our challenges year. to repurposing, sample That’s the we that some that we

Ryan Greenwald

Got it. about And guys you aren’t any equity issuances, lastly, right? then, thinking

Jim Lobdell

No. to bill. Otherwise, An major equity we purchase asset or would that be a a don’t issuance necessary. see tied

Operator

from comes Russo Our next Brian the Sidoti line of question from

Brian Russo

just Boardman the plant retire on repurposing cost? Hey, at expected could elaborate Boardman you on comments your to end of XXXX. of

savings savings XXXX Just XXXX. there? to So, you more would accelerating O&M? those manage cost a Are into begin little those in insight

Jim Lobdell

Yes.

started quarter decommissioning trouble fourth going bit Boardman, having end that activities of the down with We’ll of road stop of And O&M I of activities these you, associated allow dollars because towards Brian. is your of got it. facility. the little towards the some hearing On year. already to the will coal Boardman with of We’ve We’re question. us a But, repurpose some XXXX. associated taking the that

Maria Pope

the and for the -- path really that be having have pursuing glide into Boardman We year for time the ceasing operations of a balance for planning thoughtful and been next. we’ll coal-fired some

Brian Russo

PCAM the the what And year understood. at XXXX? Okay, balance end

Jim Lobdell

We million. challenge We -- baseline were $X by wind the water and just this the were above year.

Brian Russo

hydro early on know with facilities? any I seeing XXXX your season, in early the And you’re but what hydro it’s Okay. on look

Jim Lobdell

last is the XXX% Right the Mid-Columbia it’s down. and up Last the The year. almost It’s instate from than we this higher were closer flip like the resources that year, saw Mid-Columbia interstate’s over up year. opposite. Mid-Columbia. hydro now, is The a to

lot still to more weather we have go. So, a

only we March. We’re first end in Oregon, know the as and happen February. the in of And of can part between now anything

Maria Pope

I cautious. would emphasize Jim’s Yes.

right very We’re winter for time, period temperatures now a low precipitation. of modest having

balance the very for and for load. for hydro, appear of And we’re but the for the to good, so, be wind also particularly numbers and year cautious while

Operator

Mizuho. Our next Colaizzo line the from Agostina comes question of from

Your question, please?

Agostina Colaizzo

the to being sense be about like growth know a in growth or guys terms just better what wanted the X% you at just So, X% or would main drivers rate? of of get overall the

Jim Lobdell

Maria here in economy I strong that’s have factor is the was the a a talking about X% X%. track. along Oregon. Well, is range driving And think to with earlier, Wheatridge And on we as really

to opportunity in expenses that the there we’ve we high-tech And some an got us gives digital and in fact then, services Boardman a the growth along our strong repurpose of cost mentioned, cover we are others. As territory. other seeing service to reductions help the with

Operator

[Operator from Instruction] Travis Miller comes Morningstar. Our the line next of question from

Your question, please?

Travis Miller

and Good potentially any, I have but IRP earnings timing. morning. growth? you. with I’m the kind growth? wondering to impact to have when suspecting IRP X% Would do any XXXX not, Thank would or that And impact that that on X% anything of then, from timing

Maria Pope

Sure.

pursue IRP with all, go it process, hoping that we and later. evaluator mid-March, will along could to and get stakeholders first of independent selection that. RFPs the with processes the of all And So, acknowledgement are we of then, be

or seek we XXXX, procurement On extension XXXX, service we of credit. as as in production late late tax the renewable could the as side, the as that given indicated

window However, to would we and hope able be between then, is now move faster. and that to

interested factor Green move as very seeing costumers, Impact our non-carbon products Our are Future with us well in resources. as indicated by regards as to others,

Travis Miller

just purchase on Does more that or such? more for suggest a you, agreements and investment opportunities power

Maria Pope

We independent So, cost, we’ll fully process an we least proposals in And that. and evaluator transparent into way. move risk XXXX. come take determining we our as year open and least have through that this a the with work next

Jim Lobdell

Travis, we’re going it’s that impossible at Yes. to it’s look the everything because door. through Right comes to tell now,

Travis Miller

we’re What wrapped lot Avangrid that and about mean wondering into does could this little And of energy the you Future that financial Future lot more question. more there, then in whole if to I the hearing It guys and more program, and a then, was talk Green idea interested state. on Impact a Avangrid the deal the just for also that a that’s but side? renewable going this And in a in has of Green Impact, there. just kind you growth into getting about. how deal,

Maria Pope

located in of The It’s yesterday. all, on The output Well, about nameplate through our the made is municipal we standard. Oregon, PPA our County, for and east this announcement faster It’s average is green meet Gilliam Sure. who that first just XXX-megawatt of but corporate of expected renewable is go Dalles. basis, will wanted project a than some traditional ourselves XXX% customers, megawatts. the to XX needs portfolio largest which

a wherever in customer-by-customer that them the So in program. And ways, this our they of want trajectory. think program green in additional be XXX% opportunity addition to top many buy it give I than up XX% them or as that purchase sort to varies will current solar be to to factor to enable of

and having to discussions to So, this. others. there to for Public we want as It’s detail. time on. been project looking with go are you we second some any Oregon also on working other Commission with working And the something forward with over do that Utility Avangrid very with much well a continue is phase Jim, we’ve will customers

Jim Lobdell

thing Travis, you that this does asking IRP what The project as plan. in our think context about in for IRP, of I’d other in action not only we’re our change it particular our

Maria Pope

say, and what very specific for do customers to stakeholders that achieving our through incremental. I that standards -- that it’s and anything above we’re No. that beyond IRPs we RPS important this is is would

Travis Miller

on appropriate you do going? guess, then, Green way Future of Impact, load, Green Future that kind percent And served where to Okay. that Is have Impact? thoughts of the an any that be might measure that I by

Maria Pope

going not our have load. It’s a on Yes. material to impact overall

Travis Miller

material? a not It’s

Maria Pope

average XX megawatts.

Jim Lobdell

An about X,XXX… average of

Maria Pope

Yes, X,XXX…

Travis Miller

terms the right whole of now hours... talking of numbers of megawatts in program about was I

Maria Pope

That’s the with we currently contracts program and that have negotiated.

to would be that. next on in And the regards to premature discussions think phases. with We’re I it speculate

that or will have We take But, large make are seeing basis. larger. and digital project-by-project interest customer-by-customer from companies, of could some to on we a high-tech that which sort

Operator

you. Thank

Karp question comes line next of Sophie the KeyBanc. Our from from

question, please? Your

Sophie Karp

more have a in IRP. we growth, about wondering standards, on decent, state. the bit comments seems by chat contemporary could the I was if it a little And the you guys like load

that, and of term, seen your renewable is this we against puts early talk And going of acquisitions maybe the about have your we but how granted, procurement So of think on delays, and that, range cadence should cost, the about some assets. renewable it’s forward? too to longer takes

Maria Pope

XXX So, about megawatts calls our up of capacity. average for to renewables integrated of resource plan XXX addition of megawatts and

process the public. have in will the It’ll past. fairly as We go we through be

the we’ll through about and at how to is first stakeholders begin we’ll be this procurement, IRP; doing and talking expeditiously. then, The looking get work that with the RFPs, of we’re and hope to acknowledgement at looking move XXXX evaluator, an doing independent

we’re discussions existing addition, with In capacity already providers. having some

the we in update for looking have on And will that at we’re this material. be information point is as capacity you non-emitting we of All will time. future calls capacity

Jim Lobdell

be which by stair XX% by retail served; mind thing other to you portfolio to is XXXX; to renewable eventually keep XXXX Sophie, with going that needs XXXX. in XX; XX% of standard, and following one be in the need we’re it’s our says load XX% associated steps it’s in XXXX

Sophie Karp

that that that something is with this session respect question watching had, I up so should year? we Another shaping legislative far? How be Oregon in to is there

Maria Pope

a we legislative it’s last So, it’s cap-and-trade. are had the a and followed have session. changing session, would session. The year really fairly complex, time, that from around short It’s contentious all issues

I as projects on remarks, just our noted that a supports also discussed supportive in call, already to customers the session pay in will the March. cap-and-trade interest outlined. bringing do as since well we’ve but energy future not are current twice, renewable Jim that legislation of trajectory that low as as be in ensuring we’re And finished early carbon We, the moving in so, my customers’

Sophie Karp

Do session? something going in see to done you we’re think this

Maria Pope

I that We would are it’s call, we -- hopeful. we to remain hopeful, anything but too are say happen. But, early and can very

Operator

you. Thank

follow-up a Dumoulin-Smith Julien is of question line next the America. from of Our from Bank

Jim Lobdell

this again, Ryan? Is you

Julien Dumoulin-Smith

the the growth bulky I understand to want rather. Julien. lumpy It’s can pivoting that at I No. just response. the understand. the in CapEx earlier reasoning wanted behind the is so and just therefore times What rates? to be I clarify

you I a hear certain if what here? you specific or alluding that you But reasoning to there’s otherwise enable trajectory. might to? may exactly, be rate pivot And case. I years from understand it necessarily be the not want finally is behind the And so therefore, smooth might not slight may anything guys,

Maria Pope

So, that. let Jim? And me please let request your know are for for Jim to address responsive But, being investors’ this. first, heard interest that visibility. we we’ve more

Jim Lobdell

XXXX Oregon. looking in we’re strong and saying, off Yes. of I on Again, limiter this previously, a our mentioned basis, through Julien, economy XXXX we’ve at is that objective. just as long-term taken

immigration we’ve have got lot had of a saving growth We’ve sector us turning the to continue a that going right in there. have that high promise. of of showing in line the We gave on lot the lot out a start guidance. all out a of we’re direction. in territory. We got I type back really you they’re cost service load a of the continuing when come really in And Company, company paper into confidence to inside on think, state, a tech things lot the up, of more actually these adding And putting lot that efforts

Julien Dumoulin-Smith

Got it.

is ‘XX saying it this anything given more than to Right? specific about any year. So, outlook is post a

Maria Pope

Absolutely.

it’s Sometimes be is sometimes it we’re -- and this will long-term it future. towards higher be looking but where will lower, the

Julien Dumoulin-Smith

you what your decisions, you that compound trajectory, today, know to rate case in rate, growth about outlook etc. not question. ‘XX giving and you’re achieve ‘XX given that cost it. And that the cuts through ‘XX per since subsequent ‘XX while ‘XX your feel being the se cost Got into about guidance on in Right? still know able and talking I off then ‘XX, confident talking and we’re given we’re suspect I

Maria Pope

Company but and that working our that across and of with Yes. to accelerate services that utility commensurate for customers’ responsiveness serve only And be the are know more please effective to energy business. we’re not as and needs for efficient green outside industries those

Operator

next Our the from question Murti Capital. Vedula of from Avon line comes

please? question, Your

Vedula Murti

post dead of rate through for is understand kind that growth compounded the having beat well what the that of discussing Not being basically so like horse to ‘XX going X% Okay. kind set were here, X -- a to Julien the ‘XX as ex forward? I just out of parameters that now we idea targeted just is type ‘XX with

Jim Lobdell

Yes.

Vedula Murti

Okay.

Secondarily, your associated plant. that of give over electrification plan potential sure it Can you a about that that CapEx here in transportation reasonable say slides of that associated -- a that us whether you with period? currently. XQ -- there’s could dollars the and lot as be doesn’t be approval be capital the mentioned -- one sense that planning to And in whole a not the I’m I with would would

Maria Pope

we’re and that’s So, was approved something reliability and that It really just And our question. a yesterday, pleased. customer on focuses very service, energy supply demand great physical was infrastructure, operations management, this management. distribution

$XXX an As upwards for forecast. at in over that growth, fairly We as the and new hard time a we’re is five-year X,XXX term period. ballpark, see it’s could need of about term, long the you as But, other well this looking probably is infrastructure. very area over know, modest charging near to million maybe ports new

particular some we municipalities number closely their go is well one and country, other really are of of infrastructure TriMet, in have closely which others their bus we greenhouse with supporting routes And a charging the working with is partners, in of existing with a emitter with on advancing very and And it’s largest working depots. us. Transportation closely the is So, very already partnerships larger of number some in as the bus over of around authorities as of transit Oregon. could the working gases. us the transformation sector

Vedula Murti

there RFP, Okay. to that could request have regards RFP. this indicated this there in the obviously will is with the to attributions for the with are And nature that might the the that I you evaluator third in options tax with usually the of being the might that ultimate structural propose the incumbent proposals the then favor my IRP you own you be self end past, and in then that when that Is And recollection anything disadvantages go assess. you time different along time? think for you’ve independent going to parties that tend the build, that of to regards or -- be out, or to that selection things more anything third-parties utility at advantageous past

Maria Pope

it’s So, tell. to early just too

a evaluator. be that, through in process there’s And in work independent think we lot if there. a it competitive. We’ll PUC. transparent the put go I your with with we We’ll open of hope speculation will and comments, bid or will just

important We customer’s least have risk portfolio. but good track lowest into add record, it’s a that our the we projects cost,

Vedula Murti

it when just, And of answered end outcome and the earlier, you Vietnam selection announced. year? of think I the the of actual be the RFP around this will final Is but the

Maria Pope

just early for it’s speculate on questions. Again, thank that. your you too But, to

Vedula Murti

you. Thank

Operator

back This to session today’s the you. I’d Maria remarks. any for hand to conclude Thank does program program. the question-and-answer further of Pope like

Maria Pope

appreciate We XXXX General We join for us and your call. April interest Thank Portland in you. in quarter you joining for invite Thank you. today’s us first results. Electric’s to questions

Operator

your conclude Thank This you and gentlemen conference. the program. today’s in for does ladies participation

disconnect. You may day. Good now

Portland General Electric (POR) 14 Feb 202019 Q4 Earnings call transcript