Portland General Electric Company (NYSE:POR) today reported net
income of $58 million, or 73 cents per diluted share, for the first
quarter of 2014. This compares with net income of $49 million, or 65
cents per diluted share, for the first quarter of 2013. The increase in
earnings reflects the alignment of revenues and operating expenses as
authorized in the 2014 general rate case and increased allowance of
funds used during construction for the three new generating resources.
“We’re seeing strong operational performance across the company in
2014,” said Jim Piro, president and chief executive officer.
“Construction of our three new generating resources is proceeding on
time and on budget, our 2015 general rate case is under way, and our
continued focus on operational excellence is delivering benefits for our
customers, shareholders and other stakeholders.”
Company updates
-
Generation projects: Construction is progressing smoothly on
all three generation projects selected last year through the
competitive RFP processes.
-
Port Westward Unit 2—Support structures are being completed at
Port Westward Unit 2, a 220 megawatt natural gas-fired capacity
resource, and with the recent delivery of the twelfth engine, all
major equipment is now on site. The plant is expected to be placed
in service in the first quarter of 2015 at an estimated cost of
$300 million, excluding allowances for funds used during
construction.
-
Tucannon River Wind Farm—Design work is almost complete for
Tucannon River Wind Farm, a 267 megawatt wind farm in Southeastern
Washington, and turbine foundations are being poured. The wind
farm is expected to be placed in service between December 2014 and
March 2015 at an estimated cost of $500 million, excluding AFDC.
-
Carty Generating Station—Land has been leveled at Carty Generating
Station, a 440 megawatt natural gas-fired baseload plant, and
foundations will be poured over the next three months. The plant
is expected to be placed in service mid-2016 at an estimated cost
of $450 million, excluding AFDC.
-
General rate case filing: In February of this year, PGE filed a
general rate case requesting an overall customer price increase of 4.6
percent effective early 2015. The rate case primarily requests
recovery of incremental costs to bring Port Westward Unit 2 and
Tucannon River Wind Farm into service. 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. PGE
expects the Oregon Public Utility Commission to issue a final order
with approved price changes before the end of 2014.
First quarter operating results
Total revenues increased $20 million, or 4 percent, to $493 million in
the first quarter of 2014 from $473 million in the first quarter of 2013
primarily due to the net effect of the following:
-
A $21 million increase in the average retail price resulting from the
January 1, 2014 price increase authorized by the OPUC in the company’s
2014 general rate case; and
-
A $5 million increase related to the collection of costs deferred in
2012 related to four capital projects beginning January 1, 2014
(offset in depreciation and amortization expense); and
-
$1 million, or 6 percent, increase in wholesale revenues consisting of
$6 million related to a 51 percent increase in the average price of
wholesale power largely offset by $5 million related to a 29 percent
decrease in the volume sold; partially offset by
-
A $7 million decrease related to lower volumes of energy delivered
largely driven by the 2.5 percent decline in residential energy
deliveries. During the first quarters of 2014 and 2013, PGE recorded
an estimated $4 million collection from customers pursuant to the
decoupling mechanism, as weather-adjusted use per customer was lower
than that approved in the applicable general rate case.
Purchased power and fuel expense decreased $8 million, or 4 percent, for
the first quarter of 2014 compared to the first quarter of 2013, which
consisted of $6 million related to a 3 percent decrease in total system
load and $2 million related to a 1 percent decrease in the average
variable power cost per megawatt hour.
Production and distribution expense increased $3 million, or 6 percent,
in the first quarter of 2014 compared with the first quarter of 2013,
primarily due to higher storm and service restoration costs and an
increase in costs associated with the company’s ownership of Boardman.
On December 31, 2013, PGE’s ownership of Boardman increased from 65
percent to 80 percent. Partially offsetting the increases was a $3
million reserve recorded in the first quarter of 2013 related to the
company’s benchmark bid, which was not selected as a winning bid in the
request for proposal for renewable resources.
Depreciation and amortization expense increased $13 million, or 21
percent, in the first quarter of 2014 compared with the first quarter of
2013, with $8 million related to timing of the deferral and amortization
of costs of four capital projects as authorized in the company’s 2011
general rate case. In the first quarter of 2013, PGE deferred $4 million
of costs related to these four projects and in the first quarter of
2014, the company recorded $4 million of amortization expense related to
the recovery of these costs (offset in retail revenues). In addition,
capital additions increased depreciation and amortization expense by $5
million.
Interest expense in the first quarter of 2014 was comparable with the
first quarter of 2013, with a $3 million increase related to a higher
average balance of debt outstanding which was largely offset by an
increase in the allowance for borrowed funds used during construction
resulting from a higher average construction work-in-progress balance
from the construction of three new generation projects.
Other income, net increased $2 million in the first quarter of 2014
compared with the first quarter of 2013, primarily due to an increase in
the allowance for equity funds used during construction from the higher
average CWIP balance, partially offset by lower earnings on the
non-qualified benefit plan trust assets.
Income tax expense was $20 million in the first quarter of 2014 compared
with $17 million in the first quarter of 2013. The increase is primarily
due to the increase in pre-tax income for 2014 compared to 2013 combined
with a decrease in estimated annual production tax credits, partially
offset by a favorable income tax benefit in 2014 related to an increase
in the allowance for equity funds used during construction.
2014 earnings guidance
PGE is increasing full-year 2014 earnings guidance by 5 cents to $2.05
to $2.20 per diluted share. This is driven by a delay in issuance of
equity under the equity forward sale agreement as a result of updated
financing plans. In May, PGE expects to enter into an 18-month unsecured
loan agreement to borrow approximately $305 million and to execute a
bond purchase agreement to issue approximately $280 million of First
Mortgage Bonds with draws delayed to the second half of 2014. Other
guidance assumptions are as follows:
-
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 $295 and $305 million;
and
-
Capital expenditures slightly over $1 billion.
First quarter 2014 earnings call and web cast — Apr. 29
PGE will host a conference call with financial analysts and investors on
Tuesday. Apr. 29, at 11 a.m. ET. The conference call will be webcast
live on the PGE website at portlandgeneral.com.
A replay of the call will be available beginning at 3 p.m. ET on
Tuesday, Apr. 29 through Tuesday, May 6.
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 838,000 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 March 31,
|
|
|
2014
|
|
2013
|
Revenues, net
|
|
$
|
493
|
|
|
$
|
473
|
|
Operating expenses:
|
|
|
|
|
|
|
Purchased power and fuel
|
|
184
|
|
|
192
|
|
Production and distribution
|
|
54
|
|
|
51
|
|
Administrative and other
|
|
54
|
|
|
54
|
|
Depreciation and amortization
|
|
75
|
|
|
62
|
|
Taxes other than income taxes
|
|
28
|
|
|
27
|
|
Total operating expenses
|
|
395
|
|
|
386
|
|
Income from operations
|
|
98
|
|
|
87
|
|
Interest expense (1)
|
|
25
|
|
|
25
|
|
Other income (expense):
|
|
|
|
|
|
|
Allowance for equity funds used during construction
|
|
6
|
|
|
2
|
|
Miscellaneous income (expense), net
|
|
(1
|
)
|
|
1
|
|
Other income, net
|
|
5
|
|
|
3
|
|
Income before income tax expense
|
|
78
|
|
|
65
|
|
Income tax expense
|
|
20
|
|
|
17
|
|
Net income
|
|
58
|
|
|
48
|
|
Less: net loss attributable to noncontrolling interests
|
|
—
|
|
|
(1
|
)
|
Net income attributable to Portland General Electric Company
|
|
$
|
58
|
|
|
$
|
49
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding (in thousands):
|
|
|
|
|
|
|
Basic
|
|
78,992
|
|
|
75,608
|
|
Diluted
|
|
80,156
|
|
|
75,699
|
|
Earnings per share:
|
|
|
|
|
|
|
Basic
|
|
$
|
0.74
|
|
|
$
|
0.65
|
|
Diluted
|
|
$
|
0.73
|
|
|
$
|
0.65
|
|
Dividends declared per common share
|
|
$
|
0.275
|
|
|
$
|
0.270
|
|
(1) Includes an allowance for borrowed funds used during construction of
$4 million and $1 million for three months ended March 31, 2014 and
2013, respectively.
|
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(In millions)
|
(Unaudited)
|
|
|
|
March 31,
|
|
December 31,
|
|
|
2014
|
|
2013
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
64
|
|
|
$
|
107
|
Accounts receivable, net
|
|
158
|
|
|
146
|
Unbilled revenues
|
|
77
|
|
|
104
|
Inventories
|
|
64
|
|
|
65
|
Margin deposits
|
|
17
|
|
|
9
|
Regulatory assets—current
|
|
55
|
|
|
66
|
Other current assets
|
|
114
|
|
|
94
|
Total current assets
|
|
549
|
|
|
591
|
Electric utility plant, net
|
|
5,009
|
|
|
4,880
|
Regulatory assets—noncurrent
|
|
448
|
|
|
464
|
Nuclear decommissioning trust
|
|
83
|
|
|
82
|
Non-qualified benefit plan trust
|
|
33
|
|
|
35
|
Other noncurrent assets
|
|
47
|
|
|
49
|
Total assets
|
|
$
|
6,169
|
|
|
$
|
6,101
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
147
|
|
|
$
|
173
|
Liabilities from price risk management activities - current
|
|
52
|
|
|
49
|
Current portion of long-term debt
|
|
70
|
|
|
—
|
Accrued expenses and other current liabilities
|
|
182
|
|
|
171
|
Total current liabilities
|
|
451
|
|
|
393
|
Long-term debt, net of current portion
|
|
1,846
|
|
|
1,916
|
Regulatory liabilities—noncurrent
|
|
899
|
|
|
865
|
Deferred income taxes
|
|
605
|
|
|
586
|
Unfunded status of pension and postretirement plans
|
|
157
|
|
|
154
|
Non-qualified benefit plan liabilities
|
|
102
|
|
|
101
|
Asset retirement obligations
|
|
101
|
|
|
100
|
Liabilities from price risk management activities—noncurrent
|
|
126
|
|
|
141
|
Other noncurrent liabilities
|
|
25
|
|
|
25
|
Total liabilities
|
|
4,312
|
|
|
4,281
|
Total equity
|
|
1,857
|
|
|
1,820
|
Total liabilities and equity
|
|
$
|
6,169
|
|
|
$
|
6,101
|
|
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In millions)
|
(Unaudited)
|
|
|
|
Three Months Ended March 31,
|
|
|
2014
|
|
2013
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net income
|
|
$
|
58
|
|
|
$
|
48
|
|
Depreciation and amortization
|
|
75
|
|
|
62
|
|
Other non-cash income and expenses, net included in Net income
|
|
25
|
|
|
29
|
|
Changes in working capital
|
|
—
|
|
|
26
|
|
Net cash provided by operating activities
|
|
158
|
|
|
165
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
Capital expenditures
|
|
(185
|
)
|
|
(108
|
)
|
Other, net
|
|
6
|
|
|
1
|
|
Net cash used in investing activities
|
|
(179
|
)
|
|
(107
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
Maturities of commercial paper, net
|
|
—
|
|
|
(17
|
)
|
Dividends paid
|
|
(22
|
)
|
|
(20
|
)
|
Net cash used in financing activities
|
|
(22
|
)
|
|
(37
|
)
|
(Decrease) increase in cash and cash equivalents
|
|
(43
|
)
|
|
21
|
|
Cash and cash equivalents, beginning of period
|
|
107
|
|
|
12
|
|
Cash and cash equivalents, end of period
|
|
$
|
64
|
|
|
$
|
33
|
|
|
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
|
SUPPLEMENTAL OPERATING STATISTICS
|
(Unaudited)
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2014
|
|
2013
|
Revenues (dollars in millions):
|
|
|
|
|
|
Retail:
|
|
|
|
|
|
Residential
|
|
$
|
257
|
|
|
$
|
246
|
Commercial
|
|
158
|
|
|
149
|
Industrial
|
|
52
|
|
|
51
|
Subtotal
|
|
467
|
|
|
446
|
Other retail revenues, net
|
|
2
|
|
|
4
|
Total retail revenues
|
|
469
|
|
|
450
|
Wholesale revenues
|
|
17
|
|
|
16
|
Other operating revenues
|
|
7
|
|
|
7
|
Total revenues
|
|
$
|
493
|
|
|
$
|
473
|
|
|
|
|
|
|
Energy sold and delivered (MWh in thousands):
|
|
|
|
|
|
Retail energy sales:
|
|
|
|
|
|
Residential
|
|
2,174
|
|
|
2,229
|
Commercial
|
|
1,651
|
|
|
1,657
|
Industrial
|
|
740
|
|
|
760
|
Total retail energy sales
|
|
4,565
|
|
|
4,646
|
Retail energy deliveries:
|
|
|
|
|
|
Commercial
|
|
130
|
|
|
130
|
Industrial
|
|
261
|
|
|
264
|
Total retail energy deliveries
|
|
391
|
|
|
394
|
Total retail energy sales and deliveries
|
|
4,956
|
|
|
5,040
|
Wholesale energy deliveries
|
|
381
|
|
|
540
|
Total energy sold and delivered
|
|
5,337
|
|
|
5,580
|
|
|
|
|
|
|
Number of retail customers at end of period:
|
|
|
|
|
|
Residential
|
|
734,265
|
|
|
726,799
|
Commercial
|
|
103,369
|
|
|
102,379
|
Industrial
|
|
203
|
|
|
207
|
Direct access
|
|
446
|
|
|
513
|
Total retail customers
|
|
838,283
|
|
|
829,898
|
|
|
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
|
|
SUPPLEMENTAL OPERATING STATISTICS, continued
|
|
(Unaudited)
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2014
|
|
2013
|
Sources of energy (MWh in thousands):
|
|
|
|
|
|
|
Generation:
|
|
|
|
|
|
|
Thermal:
|
|
|
|
|
|
|
Coal
|
|
1,233
|
|
|
1,361
|
|
Natural gas
|
|
948
|
|
|
976
|
|
Total thermal
|
|
2,181
|
|
|
2,337
|
|
Hydro
|
|
533
|
|
|
481
|
|
Wind
|
|
217
|
|
|
245
|
|
Total generation
|
|
2,931
|
|
|
3,063
|
|
Purchased power:
|
|
|
|
|
|
|
Term
|
|
1,220
|
|
|
1,310
|
|
Hydro
|
|
378
|
|
|
393
|
|
Wind
|
|
63
|
|
|
66
|
|
Spot
|
|
747
|
|
|
684
|
|
Total purchased power
|
|
2,408
|
|
|
2,453
|
|
Total system load
|
|
5,339
|
|
|
5,516
|
|
Less: wholesale sales
|
|
(381
|
)
|
|
(540
|
)
|
Retail load requirement
|
|
4,958
|
|
|
4,976
|
|
|
|
|
|
|
|
Heating Degree-days
|
|
|
|
2014
|
|
2013
|
January
|
|
724
|
|
|
835
|
|
February
|
|
683
|
|
|
569
|
|
March
|
|
484
|
|
|
498
|
|
1st Quarter
|
|
1,891
|
|
|
1,902
|
|
Average *
|
|
1,864
|
|
|
1,850
|
|
* — “Average” amounts represent the 15-year rolling averages provided by
the National Weather Service (Portland Airport).
Copyright Business Wire 2014