Portland General Electric Reports Third Quarter 2009 Financial Results and Initiates 2010 Earnings Guidance
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PORTLAND, Ore.--(BUSINESS WIRE)-- Portland General Electric Company (NYSE: POR) today reported net income of $32 million, or $0.43 per diluted share, for the quarter ended September 30, 2009, compared to zero for the third quarter of 2008.
The net income increase reflects the refund to customers related to the Trojan proceedings, which was recorded on September 30, 2008 and which reduced net income by $20 million in the third quarter of 2008. Higher net income in the third quarter of 2009 compared to the third quarter of 2008 was also driven by the 2009 general rate case, an increase in the fair value of non-qualified benefit plan assets, and lower administrative costs. Operating results continue to reflect the sustained effects of the recession, with a 2% decrease in total retail energy deliveries. Also, during the third quarter of 2009, PGE experienced an increase in purchased power and fuel expense primarily driven by extended outages at Unit 4 of Colstrip and the Boardman coal-fired generating plants.
"Effective management of our business is all the more critical during a period of economic challenges. We've put special emphasis on identifying and implementing cost efficiencies, including temporary reductions in operating expense, while still making progress on key capital projects," said Jim Piro, President and Chief Executive Officer. "We plan to submit a general rate case for 2011 that is consistent with our continued focus on operational excellence and long-term investments that create value for our customers and our shareholders."
Net income increased $20 million, or 30%, for the nine months ended September 30, 2009 relative to the nine months ended September 30, 2008. Net income was $87 million, or $1.21 per diluted share, for the nine months ended September 30, 2009 compared to $67 million, or $1.08 per diluted share, for the nine months ended September 30, 2008. Net income for the nine month periods ended September 30, 2009 and 2008 was comparable, excluding the refund recorded in the third quarter of 2008 related to the Trojan proceedings, which reduced net income by $20 million in 2008.
Third Quarter Highlights
-- Completed Biglow Canyon Phase II on schedule and within budget,
resulting in 65 wind turbines supplying power to our service territory.
Wind generation increased 88% in the third quarter of 2009 compared to
the third quarter of 2008, representing 4% of the Company's total system
load in the third quarter of 2009 compared to 2% in the third quarter of
2008. Biglow Canyon II will be fully in customer prices effective
January 1, 2010 utilizing the Renewable Adjustment Clause regulatory
mechanism.
-- PGE issued its draft Integrated Resource Plan (IRP) for public comment.
The IRP details PGE's proposed strategic power and transmission plans
through 2020. The draft IRP proposes to meet 2015 projected loads with
emphasis on energy efficiency, new natural gas-fired and renewable
resource generation, and new transmission capacity. It also includes a
recommendation to proceed with additional emissions controls at Boardman
to allow the Company to comply with regulatory requirements for
continued operation of the plant.
-- Secured an additional $150 million in financing, expecting to issue
5.43% Series First Mortgage Bonds in early November 2009.
-- Residential energy sales increased 5% as compared to the third quarter
of 2008, but were more than offset by an 11% decrease in total
industrial energy deliveries, which includes energy deliveries to direct
access customers. Total retail energy deliveries decreased approximately
2% as compared to the third quarter of 2008.
-- In the third quarter of 2009, PGE recorded a $5 million gain on the fair
value of non-qualified benefit plan assets, compared to a $4 million
loss recorded in the third quarter of 2008.
-- Administrative and other expense decreased by $5 million, or 10%, as
compared to the third quarter of 2008.
2009 and 2010 Earnings Guidance
PGE reaffirms 2009 earnings guidance with diluted net income per share ranging from $1.35 to $1.45 for 2009.
The Company initiates 2010 earnings guidance with diluted net income per share ranging from $1.50 to $1.65 for 2010. The 2010 expectation is based on the following:
-- Load growth of 0% to 2% in 2010 over weather adjusted 2009, reflecting
the expected continued uncertainty in the industrial sector and impact
from a slow economic recovery;
-- Escalating operating and maintenance costs due to higher healthcare
costs, salary escalations, higher compliance costs and other
administrative costs; and
-- Temporary reductions in operating costs to partially offset escalating
expenses and economic pressure on load growth.
Liquidity
PGE has revolving credit facilities providing an aggregate borrowing capacity of $525 million. As of September 30, 2009, the aggregate borrowing capacity available under the credit facilities was $335 million.
PGE posts or receives collateral (in the form of cash or letters of credit) pursuant to its power and natural gas purchase contracts. As of September 30, 2009, PGE had posted collateral of $256 million. Provided market prices do not change from September 30, 2009, the Company expects approximately 35% of the margin deposits to roll-off in the fourth quarter of 2009, and approximately 47% to roll-off in 2010.
Capital Expenditures
Capital expenditures in 2009 are estimated to be $732 million, primarily related to Biglow Canyon Phases II ($230 million) and III ($175 million), the smart meter project ($60 million) and continuing expenditures for production, transmission and distribution ($235 million). The Company estimates capital expenditures to be $545 million in 2010, the majority of which relate to Biglow Canyon Phase III ($200 million), the smart meter project ($60 million) and continuing expenditures for production, transmission and distribution ($245 million). PGE plans on issuing approximately $250 million in debt in 2010 to finance its capital expenditures.
Third Quarter 2009 Earnings Call and Web cast -- October 29, 2009
PGE will host a conference call with financial analysts and investors on Thursday, October 29, 2009, at 11 a.m. EDT. The conference call will be web cast live on the PGE website at www.PortlandGeneral.com. A replay of the call will be available beginning at 1 p.m. EDT on Thursday, October 29, 2009 through Thursday, November 5, 2009.
Jim Piro, President and CEO; Maria Pope, Senior Vice President, CFO, and Treasurer; and Bill Valach, Director, Investor Relations, will participate in the call. Management will respond to questions following formal comments.
The attached condensed consolidated statements of income, balance sheets, and 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 818,000 residential, commercial and industrial customers in the Portland/Salem metropolitan area of Oregon. The Company's headquarters are located at 121 SW Salmon Street, Portland, Oregon 97204. Visit our website at www.PortlandGeneral.com.
Safe Harbor Statement
Statements in this news release that related 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 and future load growth and operating and maintenance costs; statements regarding future capital expenditures; statements regarding future financings and PGE's access to capital and cost of capital; statements regarding PGE's future liquidity; statements regarding the cost, completion and benefits of capital projects, such as Biglow Canyon Phase III and the smart meter project; statements regarding the outcome of any regulatory proceeding; statements regarding the roll-off of collateral posted pursuant to power and natural gas purchase contracts; statements regarding the filing of a general rate case in 2010; 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 the reductions in demand for electricity and the sale of excess energy during periods of low wholesale market prices; final regulatory review and approval of the deferral of excess power costs related to Boardman's forced outage from November 2005 to February 2006; regulatory approval and rate treatment of the smart meter and Biglow Canyon Wind Farm projects; 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; unforeseen problems or delays in completing capital projects, resulting in the failure to complete such projects on schedule or within budget; 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
(Dollars in millions, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Revenues $ 445 $ 400 $ 1,319 $ 1,296
Operating expenses:
Purchased power and fuel 225 217 664 652
Production and distribution 42 40 127 125
Administrative and other 43 48 134 142
Depreciation and amortization 53 54 160 154
Taxes other than income taxes 20 20 64 63
Total operating expenses 383 379 1,149 1,136
Income from operations 62 21 170 160
Other income (expense):
Allowance for equity funds used 5 3 13 7
during construction
Miscellaneous income (expense), 5 (4 ) 6 (6 )
net
Other income (expense), net 10 (1 ) 19 1
Interest expense 25 21 76 67
Income (loss) before income 47 (1 ) 113 94
tax expense (benefit)
Income tax expense (benefit) 16 (1 ) 32 27
Net income 31 - 81 67
Less: net loss attributable to (1 ) - (6 ) -
noncontrolling interests
Net income attributable to
Portland General Electric $ 32 $ - $ 87 $ 67
Company
Weighted-average shares
outstanding (in thousands):
Basic 75,182 62,554 71,980 62,539
Diluted 75,223 62,607 72,057 62,589
Earnings per share - basic and $ 0.43 $ - $ 1.21 $ 1.08
diluted
Dividends declared per common $ 0.255 $ 0.245 $ 0.755 $ 0.725
share
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
(Unaudited)
September 30, December 31,
2009 2008
ASSETS
Current assets:
Cash and cash equivalents $ 46 $ 10
Accounts receivable, net 137 168
Unbilled revenues 66 96
Assets from price risk management activities - 22 31
current
Inventories 72 71
Margin deposits 86 189
Current deferred income taxes 92 17
Regulatory assets - current 200 194
Other current assets 44 44
Total current assets 765 820
Electric utility plant, net 3,800 3,301
Non-qualified benefit plan trust 48 46
Nuclear decommissioning trust 49 46
Regulatory assets - noncurrent 534 631
Other noncurrent assets 56 45
Total assets $ 5,252 $ 4,889
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 206 $ 217
Liabilities from price risk management activities 187 225
- current
Regulatory liabilities - current 57 43
Short-term debt - 203
Current portion of long-term debt 186 142
Other current liabilities 111 59
Total current liabilities 747 889
Long-term debt, net of current portion 1,408 1,164
Liabilities from price risk management activities - 133 201
noncurrent
Regulatory liabilities - noncurrent 658 640
Noncurrent deferred income taxes 408 304
Unfunded status of pension and postretirement plans 177 174
Non-qualified benefit plan liabilities 94 91
Other noncurrent liabilities 72 72
Total liabilities 3,697 3,535
Total shareholders' equity 1,555 1,354
Total liabilities and shareholders' equity $ 5,252 $ 4,889
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Nine Months Ended
September 30,
2009 2008
Cash flows from operating activities:
Net income $ 81 $ 67
Reconciliation of net income to net cash provided by
operating activities:
Depreciation and amortization 160 154
Increase (decrease) in net liabilities (assets) from price (94 ) 139
risk management activities
Regulatory deferral - price risk management activities 94 (139 )
Deferred income taxes 23 9
Allowance for equity funds used during construction (13 ) (7 )
Power cost deferrals (13 ) 2
Unrealized (gains) losses on qualified benefit plan trust (7 ) 9
assets
Trojan refund liability 3 33
Other non-cash income and expenses, net 10 21
Changes in working capital:
(Increase) decrease in margin deposits 103 (120 )
Decrease in receivables 61 66
Decrease in payables (51 ) (10 )
Other working capital items, net 15 7
Other, net 5 (9 )
Net cash provided by operating activities 377 222
Cash flows from investing activities:
Capital expenditures (544 ) (281 )
Sales of nuclear decommissioning trust securities 30 23
Purchases of nuclear decommissioning trust securities (31 ) (20 )
Insurance proceeds received - 3
Other, net (1 ) (2 )
Net cash used in investing activities (546 ) (277 )
Cash flows from financing activities:
Proceeds from issuance of common stock, net of issuance 170 -
costs
Proceeds from issuance of long-term debt 430 50
Debt issuance costs (4 ) -
Payments on long-term debt (142 ) (56 )
Borrowings on revolving credit facilities 82 11
Payments on revolving credit facilities (213 ) -
Borrowings (payments) on short-term debt, net (72 ) 27
Dividends paid (53 ) (45 )
Noncontrolling interests' cash contributions 7 -
Net cash provided by (used in) financing activities 205 (13 )
Change in cash and cash equivalents 36 (68 )
Cash and cash equivalents, beginning of period 10 73
Cash and cash equivalents, end of period $ 46 $ 5
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
SUPPLEMENTAL OPERATING STATISTICS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Revenues(dollars in millions):
Retail sales:
Residential $ 173 $ 155 $ 574 $ 559
Commercial 165 156 463 450
Industrial 44 42 125 119
Total retail sales 382 353 1,162 1,128
Direct access customers 1 (3 ) - (7 )
Other retail revenues 19 (22 ) 52 (13 )
Total retail revenues 402 328 1,214 1,108
Wholesale revenues 36 61 85 153
Other operating revenues 7 11 20 35
Total revenues $ 445 $ 400 $ 1,319 $ 1,296
Energy sold and delivered(MWh in thousands):
Retail energy sales:
Residential 1,719 1,643 5,716 5,765
Commercial 1,916 1,909 5,367 5,439
Industrial 610 649 1,772 1,857
Total retail energy sales 4,245 4,201 12,855 13,061
Delivery to direct access customers:
Commercial 112 152 299 456
Industrial 393 484 1,120 1,369
Total retail energy deliveries 4,750 4,837 14,274 14,886
Wholesale sales 877 942 2,274 2,429
Total energy sold and delivered 5,627 5,779 16,548 17,315
Number of retail customers at end of period:
Residential 714,869 711,963
Commercial 103,016 101,783
Industrial 257 220
Direct access 253 426
Total retail customers 818,395 814,392
Heating Degree-days Cooling Degree-days
2009 2008 2009 2008
1st Quarter 2,022 1,981 - -
Average 1,831 1,840 - -
2nd Quarter 578 860 90 98
Average 683 664 71 67
3rd Quarter 63 80 537 376
Average 80 82 394 385
Note: "Average" represents the 15-year rolling average provided by the
National Weather Service (Portland Airport).
Source: Portland General Electric Company
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