Portland General Electric Co · NYSE:POR
Portland General Electric — Investor Presentation (March 2013)
42 slides from Portland General Electric's investor presentation, March 2013
Slide 1: Investor Presentation
Investor Presentation March 2013 1
Slide 2: Cautionary Statement
Cautionary Statement Information Current as of February 22, 2013 Except as expressly noted, the information in this presentation is current as of February 22, 2013 — the date on which PGE filed its Annual Report on Form 10-K for the year ended December 31, 2012 — and should not be relied upon as bei
Slide 3: PGE Value Drivers
PGE Value Drivers • Clear focus, 100% regulated utility • Growth in service territory • Multiple opportunities for rate-base growth • Progressive environmental and renewable position • Strong financial position 3
Slide 4: Strong Platform. Positioned for Growth.
PGE INVESTMENT THESIS Strong Platform. Positioned for Growth. The Company The Strengths The Growth 4
Slide 5: PGE At A Glance
PGE At A Glance Vertically integrated – generation, Beaver transmission and distribution Port Westward OREGON WASHINGTON Montana Market cap $2B 26 Colstrip 3 & 4 Columbia River Service area in 84 northwest Oregon Portland Sandy Eastern Oregon River T.W. Sullivan Coyote Springs – includes Portl
Slide 6: Attractive, Growing Service Territory
Attractive, Growing Service Territory Demographic Growth Retail Load Growth (2) (Million MWhs) Continued in-migration 18.9 • Population growth of 1-1.2% annually 18.7 18.6 through 2020(1) Industrial Growth Strong industrial economy • Growth in high-tech & manufacturing – Intel’s D1X facility – Data
Slide 7: History of Successful Capital Projects
History of Successful Capital Projects Recent Capital Projects Average Rate Base ($B) Biglow Canyon Wind Farm (2007-2010) ‒ Three phase build-out; $960 million 3.05 3.06 2.86 Smart Meters (2008-2010) 2.38 2.43 ‒ 825,000 meters installed; $145 million 1.94 Selective Water Withdrawal (2009) (1)
Slide 8: Regulatory Environment
Regulatory Environment Oregon Public Utility Commission – Governor-appointed commission with staggered four-year terms 10.0% allowed return on equity 50% debt and 50% equity capital structure Forward Test Year Net Variable Power Cost Recovery – Annual Power Cost Update Tariff – Power Cost
Slide 9: General Rate Case: 2014 Test Year
General Rate Case: 2014 Test Year Filed February 15, 2013 Average overall price increase: 6% Return on Equity (ROE): 10% Capital Structure: 50% debt, 50% equity Rate base: $3.13 billion $105 million annual revenue requirement increase requested New customer prices effective January 1,
Slide 10: Ready for the Next Growth Phase
PGE TODAY Ready for the Next Growth Phase 2006 – 2010 2011 – 2012 2013+ Grew business and built Transition – preparing for Opportunities for strong, solid platform next growth phase sustainable growth 10
Slide 11: Strong Platform. Positioned for Growth.
PGE INVESTMENT THESIS Strong Platform. Positioned for Growth. The Company The Strengths The Growth 11
Slide 12: Key Strengths
Key Strengths 1 High customer satisfaction Diversified customer base and 2 generation portfolio 3 High-quality utility operations 4 Solid financial performance 5 Strong financial position 12
Slide 13: 1. High Customer Satisfaction
1. High Customer Satisfaction No. 1 No. 1 No. 2 Investor-owned In the West for Nationally for utility in the nation general business large key customer for residential customer satisfaction satisfaction customer satisfaction JD Power & JD Power & TQS Research, Associates Associates Inc. All customer
Slide 14: 2. Diversified Customer Base and Generation Portfolio
2. Diversified Customer Base and Generation Portfolio Retail Revenues Power Sources as a by Customer Class Percent of Retail Load (2012) (2013 AUT) (1) Total = $1.7B Total = 2,166 MWa Industrial Purchased Hydro 13% Power 23% 21% Residential Wind & Solar Commercial 50% Natural Gas 9% 37% 21% Coal 26%
Slide 15: 3. High-Quality Utility Operations
3. High-Quality Utility Operations Highly dependable generation portfolio with 94% availability in 2012 Strong power supply operations to stabilize and optimize power costs Progressive approach to reduce coal Effective generation – Boardman 2020 Plan Utility Operations Ongoing T&D investment
Slide 16: 4. Solid Financial Performance: Earnings
4. Solid Financial Performance: Earnings Net Income EPS ROE ($M) (Diluted) $140- 8.2- $1.85- 9.0%(1) 151(1) 9.0% $147 2.00(1) $1.95 $1.87 8.3% $141 2011 2012 2013E 2011 2012 2013E 2011 2012 2013E 1) Based on guidance range, as initiated on February 22, 2013 16
Slide 17: 4. Solid Financial Performance: Dividends
4. Solid Financial Performance: Dividends 3.1% CAGR $1.07 $1.05 $1.03 $1.00 $0.96 $0.92 2007 2008 2009 2010 2011 2012 Target Payout Ratio of 50 to 70% Note: Represents annual dividends paid 17
Slide 18: 5. Strong Financial Position
5. Strong Financial Position Revolving Credit Facilities (1) Financial Resources (in millions) Investment grade ratings of BBB and Baa2 Manageable debt maturities – weighted average 15.5 years Total Credit Available Target capital structure of Facilities Credit 50% debt, 50% equity $700 + Cash
Slide 19: Strong Platform. Positioned for Growth.
PGE INVESTMENT THESIS Strong Platform. Positioned for Growth. The Company The Strengths The Growth 19
Slide 20: Future Generation Need
Future Generation Need Load-Resource Forecast(1) - Energy MWa Demand Exceeds Generation Resources 3000 2500 Retail load 2016 shortfall Opportunity 2000 649 MWa to grow Long-Term Contracts rate base 1500 1000 PGE Generation 500 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 1) Load-Resource Forecast
Slide 21: Potential Opportunities for Rate-Base Growth
Potential Opportunities for Rate-Base Growth Potential to add $2B to (2) rate base (1) 2019+ 2018 4 3 Cascade 2 Renewable Crossing $3.1B 1 Base load energy Peaking energy capacity Average 2016-2019 Rate Base 2012 1) Rate base growth dependent on outcome of RFP processes and negotiations with BPA on
Slide 22: 1. Peaking & Seasonal Capacity Resources
1. Peaking & Seasonal Capacity Resources IRP-Identified Need 200 MW year-round flexible capacity resource 200 MW bi-seasonal (winter and summer) peaking supply (PPA) 150 MW winter-only peaking supply (PPA) RFP Process Results PW2 CapEx PGE’s benchmark bid – Port Westward 2 – selected in ($ m
Slide 23: 2. New Base Load Energy Resource
2. New Base Load Energy Resource IRP-Identified Need 300-500 MW base load energy resource Status of Energy RFP In negotiations with top performing bid on the short list Bids on short list include ownership and PPA options PGE has not confirmed whether its benchmark bid is on the short list
Slide 24: 3. New Renewable Energy Resource
3. New Renewable Energy Resource IRP-Identified Need 100 MWa resource(1) Status of Renewable RFP 64 bids received, representing 39 distinct generating projects Bids include ownership and PPA options – Wind, geothermal, biomass, biogas, hydro, and solar PGE has submitted a benchmark bid for t
Slide 25: 4. Cascade Crossing Transmission Project
4. Cascade Crossing Transmission Project Project Specifications MOU with Bonneville Power Administration (BPA) signed in January 2013 Revised project scope includes: 500 kV line, approximately 120 miles (2+ year construction, starting as early as 2017) New substations, investments in BPA’s s
Slide 26: Capital Projects Timeline
Capital Projects Timeline (in millions) 2013 2014 2015 2016 2017 Planned Capital Expenditures Base Capital Spending(1) $353 $313 $281 $263 $245 Port Westward Unit 2 $161 $107 $33 Potential Capital Expenditures Energy Resource $550-$700 Renewable Resource $700-$850 Cascade Crossing ≥$800 PGE is in
Slide 27: PGE Value Proposition
PGE Value Proposition Strong financial position High-quality utility operations Strong Platform positioned for Sustained Solid growth in customer demand Growth Multiple opportunities for rate-base growth 27
Slide 28: PGE Investor Relations Team
PGE Investor Relations Team Director, Investor Relations William J. (503) 464-7395 Valach [email protected] Analyst, Investor Relations Lucia M. (503) 464-8586 Dempsey [email protected] Portland Investors.PortlandGeneral.com 121 S.W. Salmon Street General Suite 1WTC0509 Electric Portland, O
Slide 29: Appendices
Portland General Electric Appendices 29
Slide 30: Appendices
Appendices 1. Financials 2. Resource planning 3. Regulatory environment 4. Business initiatives – details 30
Slide 31: Full Year 2012 Financial Results
Full Year 2012 Financial Results $1.95 $1.87 Q4 Weather-Adjusted Q4 $0.38 $0.38 Load Growth Q3 $0.36 Q3 2011A 1.4% Q2 $0.50 $0.29 Q2 2012A 0.6% $0.34 Q1 2013F 0.5 – 1.0% $0.92 Q1 $0.65 2011 EPS 2012 EPS Full Year 2011: $34 million below baseline PCAM Results Full Year 2012: $17 million below baselin
Slide 32: Resource Mix
Resource Mix Resource Capacity (at 12/31/12)(1) Power Sources as a Capacity % of Total Percent of Retail Load Capacity (2012 Actuals) Hydro Deschutes River Projects 298 MW 7.0% Clackamas/Willamette River Projects 191 5.0 Total = 2,166 MWa Hydro Contracts 588 14.0 1,077 26.0 Natural Gas/Oil Hydro Bea
Slide 33: Integrated Resource Plan
Integrated Resource Plan Integrated Resource Planning Process Under OPUC guidelines, PGE is required to file an Integrated Resource Plan (IRP) within two years of acknowledgment of the previous plan The IRP requires that the primary goal must be the selection of a portfolio of resources with the
Slide 34: Energy Load-Resource Balance
Energy Load-Resource Balance Load-Resource Balance (2013-2021) Energy 3000 2500 Retail load before EE Retail load including EE 2016 shortfall: 649 MWa Annual Average Availability (MWa) 2000 (526 MWa after EE) Long-term Contracts Wind - Biglow 1-3, Klondike II, Vansycle 1500 Hydro - PGE-owned & Mid-C
Slide 35: Energy Action Plan
Energy Action Plan Annual Annual Energy Action Plan for 2016(1) MWa PGE Load Before EE Savings 2,680 Remove 5-year Opt-Outs (195) Existing PGE & Contract Resources (1,836) PGE Resource Target 649 Resource Actions Thermal: CCCT 406 Combined Heat & Power 2 Renewable: ETO Energy Savings(2) 183 Existing
Slide 36: Capacity Load-Resource Balance
Capacity Load-Resource Balance Load-Resource Balance (2013-2021) Winter Capacity 5000 Peak Hour Load before EE + Reserves 4500 Peak Hour Load 4000 after EE + Reserves 2016 Shortfall 1,360 MW before EE Wind - Biglow 1-3, 3500 1,179 MW after EE Klondike II, Available Capacity (MW) Vansycle 3000 Long-T
Slide 37: Capacity Action Plan
Capacity Action Plan Capacity Action Plan for 2016(1) MW PGE Load Before EE Savings 4,185 Remove 5-year Opt-Outs (226) Operating Reserves(2) 182 Contingency Reserves(3) 225 Existing PGE & Contract Resources (3,006) PGE Resource Target 1,360 Resource Actions Thermal: CCCT 441 Combined Heat & Power 2
Slide 38: Regulatory Environment: Additional Detail
Regulatory Environment: Additional Detail Oregon Public Utility Commission (OPUC) – Governor-appointed commission with staggered four-year terms (John Savage 3/2013, Stephen Bloom 12/2015, Susan Ackerman (chair) 3/2016) Return on Equity & Capital Structure – 10.0% allowed return on equity – 50%
Slide 39: Recovery of Power Costs
Recovery of Power Costs Annual Power Cost Update Tariff • Annual reset of prices based on forecast of net variable power costs (NVPC) for the coming year • Subject to OPUC prudency review and approval, new prices go into effect on or around January 1 of the following year Power Cost Adjustment Mecha
Slide 40: Renewable Energy Standard
Renewable Energy Standard Additional Renewable Resources Integrated Resource Plan addresses procurement of wind or other renewable resources to meet requirements of Oregon’s Renewable Energy Standard by 2015. Such need is now approximately 100 MWa (or 300 MW wind nameplate capacity). Year Renewable
Slide 41: Decoupling Mechanism
Decoupling Mechanism The decoupling mechanism is intended to allow recovery of margin lost due to a reduction in sales of electricity resulting from customers’ energy efficiency and conservation efforts Includes a Sales Normalization Adjustment mechanism (SNA) for residential and small non- resident
Slide 42: Cost Efficiency Initiatives
Cost Efficiency Initiatives Company-wide benchmarking to identify best practices Investments to leverage technology – Financial system and supply chain replacement project – Timekeeping System – Enterprise Asset and Work Management Systems Process improvements and work redesign Savings will
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