Portland General Electric Co · NYSE:POR

Portland General Electric — Investor Presentation (December 2013)

43 slides from Portland General Electric's investor presentation, December 2013

  1. Slide 1: Investor Presentation

    Investor Presentation December 2013

  2. Slide 2: Slide 2

  3. Slide 3: Cautionary Statement

    Cautionary Statement Information Current as of November 1, 2013 Except as expressly noted, the information in this presentation is current as of November 1, 2013 — the date on which PGE filed its Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 — and should not be relied upon a

  4. Slide 4: PGE Value Drivers

    PGE Value Drivers  Clear focus, 100% regulated utility  Attractive service area  Strategic initiatives drive rate-base growth  Progressive environmental and renewable position  Strong financial position 4

  5. Slide 5: Strong Platform. Positioned for Growth.

    PGE INVESTMENT THESIS Strong Platform. Positioned for Growth. The Company The Strengths The Growth 5

  6. Slide 6: PGE At A Glance

    PGE At A Glance  Vertically integrated – Beaver generation, transmission Port Westward and distribution OREGON WASHINGTON Montana Colstrip 3 & 4 26  Market cap $2.3B Columbia River 84  Service area in northwest Portland Sandy Eastern Oregon River Oregon T.W. Sullivan Coyote Springs River Mill Big

  7. Slide 7: Attractive, Growing Service Area

    Attractive, Growing Service Area 2014 Load Growth  Driven by industrial delivery growth Retail Load Growth (1) (Million MWhs)  In aggregate, residential and commercial deliveries approximately flat year-over-year 18.9 18.7 18.7 18.6 Industrial Growth Strong industrial economy  Growth in high-tech

  8. Slide 8: 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) 2.43 2.38 ‒ 825,000 meters installed; $145 million 1.94  Selective Water Withdrawal (2009) ‒ In

  9. Slide 9: Constructive Regulatory Environment

    Constructive Regulatory Environment Regulatory Construct Tracking Mechanisms  Oregon Public Utility Commission  Net variable power cost recovery – Governor-appointed – Annual Power Cost Update three-member commission Tariff (AUT) with staggered four-year terms – Power Cost Adjustment Mechanism (PC

  10. Slide 10: General Rate Case: 2014 Test Year

    General Rate Case: 2014 Test Year  All issues settled with OPUC Staff and interveners  PGE and parties have stipulated to:  Return on Equity: 9.75%  Capital structure: 50% debt, 50% equity  Rate base: $3.1 billion  Pension expense recovery of $19.5 million in 2014  New customer prices effecti

  11. Slide 11: General Rate Case: 2015 Test Year

    General Rate Case: 2015 Test Year  Expected to be filed mid-February 2014  Case expected to include: 1. General base business costs  Prices effective January 1, 2015 2. Port Westward Unit 2  3-4% customer price increase  Prices effective when plant comes online; expected in Q1 2015 3. Tucannon

  12. Slide 12: Beginning the Next Growth Phase

    PGE TODAY Beginning the Next Growth Phase 2006 – 2010 2011 – 2013 2014+ Grew business and built Transition – preparing for Opportunities for strong, solid platform next growth phase sustainable growth 12

  13. Slide 13: Strong Platform. Positioned for Growth.

    PGE INVESTMENT THESIS Strong Platform. Positioned for Growth. The Company The Strengths The Growth 13

  14. Slide 14: 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 14

  15. Slide 15: 1. High Customer Satisfaction

    1. High Customer Satisfaction Top Top Quartile Decile No. 4 residential general business large customer customer key customer satisfaction satisfaction satisfaction Market Strategies Market Strategies TQS Research, International International Inc. All customer satisfaction and reliability measures c

  16. Slide 16: 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%

  17. Slide 17: 3. High Quality Utility Operations

    3. High Quality Utility Operations  Highly dependable generation portfolio with 90% availability through September 2013  Strong power supply operations to stabilize and optimize power costs  Progressive approach to reduce coal Effective generation – Boardman 2020 Plan Utility Operations  Ongoing

  18. Slide 18: 4. Financial Performance

    4. Financial Performance Net Income EPS ROE ($M) (Diluted) $147 9.0% $141 $1.95 (2) $1.87 8.3% $131 – 139 (2) $1.70 - $1.80 (2) 7.3% - 7.8% $1.20- 1.30(1) (1) (1) (1) 2011 2012 2013E 2011 2012 2013E 2011 2012 2013E (1) On PGE’s Q3 Earnings Call on November 1, PGE reduced full-year 2013 earnings guid

  19. Slide 19: 4. Consistent Dividend Growth

    4. Consistent Dividend Growth 3% CAGR $1.09 $1.07 $1.05 $1.03 $1.00 $0.96 $0.92 2007 2008 2009 2010 2011 2012 2013E Target Payout Ratio of 50% to 70% Note: Represents annual dividends paid 19

  20. Slide 20: 5. Strong Financial Position

    5. Strong Financial Position Revolving Credit Facilities (1) Financial Resources (in millions)  Investment grade ratings S&P Moody’s Senior Secured A- A2 Available Senior Unsecured BBB Baa1 Total Credit Credit Facilities + Cash Outlook Stable Stable $752 $787  Manageable debt maturities  Target c

  21. Slide 21: 5. Strong Financial Position

    5. Strong Financial Position 2013 Financing Activity Equity Issuances Description Date Shares Net Proceeds Equity Forward Issuance June 2013 11.1 million -- Draw pursuant to forward August 2013 0.7 million $20 million Net remaining shares available for issuance: 10.4 million Equity Over-Allotment Ju

  22. Slide 22: Strong Platform. Positioned for Growth.

    PGE INVESTMENT THESIS Strong Platform. Positioned for Growth. The Company The Strengths The Growth 22

  23. Slide 23: Load-Resource Forecast

    Load-Resource Forecast Load-Resource Forecast(1) - Energy MWa 3000 2500 2000 New Generation: RFP Projects Long-Term Contracts Incremental Energy Efficiency 1500 1000 PGE Generation 500 0 2014 2015 2016 2017 2018 2019 2020 2021 1) Load-Resource Forecast Data as of June 2013 23

  24. Slide 24: Strategic Initiatives: Capacity Resources

    Strategic Initiatives: Capacity Resources Flexible Capacity Seasonal Capacity Purchased Power Agreements Project Name Port Westward Unit 2 with Iberdrola 100 MW of winter capacity Project Location Clatskanie, OR 100 MW of summer capacity Capacity/Fuel 220 MW/Natural Gas Wärtsilä Technology Reciproca

  25. Slide 25: Strategic Initiatives: Renewable Resources

    Strategic Initiatives: Renewable Resources Renewable Energy Project Name Tucannon River Wind Farm Project Location Columbia County, WA Capacity/Fuel 267 MW Wind Project Tucannon River 116 2.3 MW CapEx Technology (in millions) Siemens Turbines Estimated Capital Cost $375 $500 million (excluding AFDC)

  26. Slide 26: Strategic Initiatives: Baseload Resources

    Strategic Initiatives: Baseload Resources Baseload Energy Project Name Carty Generating Station Project Location Boardman, OR Capacity/Fuel 440 MW/Natural Gas Technology Mitsubishi CCGT Carty CapEx (in millions) Estimated Capital Cost $450 million (excluding AFDC) $170 Estimated In-Service Date Mid-

  27. Slide 27: Expected Rate Base and Capital Expenditures

    Expected Rate Base and Capital Expenditures $1.4B of Expected Increase in Rate Base $4.5B 8% CAGR $3.1B 2012 2012 2017 2017 Expected Capital Expenditures (in millions) 2013 2014 2015 2016 2017 TOTAL Base Capital Spending(1) $320 $365 $315 $270 $245 $1,515 Port Westward Unit 2 $165 $125 $10 $300 Tuca

  28. Slide 28: PGE Value Proposition

    PGE Value Proposition  Strong financial position  High quality utility operations Strong Platform positioned for Sustained  Attractive service area Growth  Strategic initiatives drive rate-base growth 28

  29. Slide 29: 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

  30. Slide 30: Appendices

    Portland General Electric Appendices 30

  31. Slide 31: Q3 2013 Financial Results

    Q3 2013 Financial Results Net Income (Loss) Earnings (Loss) per Share (in millions) 2012 2013 2012 2013 Q1 $49 $49 $0.65 $0.65 Q2 $26 $(22) $0.34 $(0.29) Q3 $38 $31 $0.50 $0.40 YTD $113 $58 $1.49 $0.76 Quarter over Quarter Drivers of Results in millions, pre-tax Q3 over Q3 Increased purchased power

  32. Slide 32: Q3 2013 Plant Outages

    Q3 2013 Plant Outages Colstrip Coyote in m illions, P GE Share Boardman Unit 4 Springs Date of Outage July 1 July 1 August 24 Actual/Expected Online Date July 31 Q1 2014 Nov. 30 2013 Replacement Power Costs $4 $5-$6 $7-8  Boardman, of which PGE owns 65 percent, tripped offline on July 1st due to a

  33. Slide 33: Generation Plant Operations

    Generation Plant Operations  Track record of high availability 2008 2009 2010 2011 2012 PGE Thermal Plants 89% 84% 94% 90% 92% PGE Hydro Plants 99% 99% 99% 100% 99% PGE Wind Farm 92% 97% 96% 97% 98% PGE Average 93% 93% 96% 96% 96% Colstrip Unit 3 & 4 97% 68% 95% 84% 93%  Generation Reliability, an

  34. Slide 34: Diversified Resource Mix

    Diversified Resource Mix Resource Capacity (at 12/31/12)(1) Power Sources as a Capacity in MW % of Total Capacity Percent of Retail Load Hydro(1) (2012 Actuals) Deschutes River Projects 298 7% Clackamas/Willamette River Projects 191 5 Total = 2,166 MWa Hydro Contracts 588 14 1,077 26 Hydro Natural G

  35. Slide 35: Changing Generation Portfolio

    Changing Generation Portfolio 2013 Power Sources as a 2017 Power Sources as a Percent of Retail Load(1) Percent of Retail Load(2) Purchased Purchased Hydro Power Hydro Power 6% 23% 20% 21% Wind & Solar Natural Gas Wind & Solar Natural Gas 9% 39% 12% 21% Coal Coal 26% 23% New Resources Driving Change

  36. Slide 36: Regulatory Strategy for Tucannon Wind Farm

    Regulatory Strategy for Tucannon Wind Farm Non-cash AFDC Non-cash AFDC Full project in (for full project) (for portion not online) customer prices Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 File 2015 RAC deferral of Amortization of Test Year initial turbine RAC deferral

  37. Slide 37: 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

  38. Slide 38: 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

  39. Slide 39: Renewable Portfolio Standard

    Renewable Portfolio Standard Additional Renewable Resources  Integrated Resource Plan addresses procurement of wind or other renewable resources to meet requirements of Oregon’s Renewable Portfolio Standard by 2015 – need is approximately 100 MWa (or 300 MW wind nameplate capacity) Year Renewable T

  40. Slide 40: 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. This includes a Sales Normalization Adjustment (SNA) mechanism for residential and small nonresi

  41. Slide 41: Cost Efficiency Initiatives

    Cost Efficiency Initiatives  Companywide 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  Working to man

  42. Slide 42: Average Retail Price Comparison

    Average Retail Price Comparison Residential and Commercial – Summer 2013 Residential Electric Service Costs Commercial Electric Service Prices Northwest Investor-Owned Northwestern Investor-Owned and Public Utilities and Public Utilities 1000 kWh per Month 40 kW Demand - 14,000 kWh per Month (cents

  43. Slide 43: Average Retail Price Comparison

    Average Retail Price Comparison Small and Large Industrial – Summer 2013 Small Industrial Electric Service Prices Large Industrial Electric Service Prices Northwestern Investor-Owned Northwestern Investor-Owned and Public Utilities and Public Utilities 1,000 kW Demand - 400,000 kWh per Month, Primar

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