Portland General Electric Co · NYSE:POR
Portland General Electric — Investor Presentation (December 2014)
38 slides from Portland General Electric's investor presentation, December 2014
Slide 1: Investor Presentation
Investor Presentation December 2014
Slide 2: Cautionary Statement
Cautionary Statement Information Current as of October 28, 2014 Except as expressly noted, the information in this presentation is current as of October 28, 2014 — the date on which PGE filed its Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 — and should not be relied upon a
Slide 3: PGE Value Drivers
PGE Value Drivers Clear focus, 100% regulated utility Attractive service area Progressive environmental and renewable position Strong financial position New generation projects drive rate-base growth 3
Slide 4: Strong Platform. Executing our Growth.
PGE INVESTMENT THESIS Strong Platform. Executing our Growth. The Company The Strengths The Execution 4
Slide 5: 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 ~ $2.8B Columbia River 84 Service area in northwest Portland Sandy Eastern Oregon River Oregon T.W. Sullivan Coyote Springs River Mill B
Slide 6: Strategic Direction
Strategic Direction Mission: To be a company our customers and communities can depend upon to provide electric service in a safe, sustainable and reliable manner, with excellent customer service, at a reasonable price. The path forward is guided by: Strengthening our relationship with customers an
Slide 7: Attractive, Growing Service Area
Attractive, Growing Service Area 2014 Load Growth Driven by industrial delivery growth In aggregate, residential and commercial deliveries approximately flat year-over-year Retail Load Growth (1) Growth is weather adjusted and (Million MWhs Rounded) assumes exclusion of one large paper custome
Slide 8: Constructive Regulatory Environment
Constructive Regulatory Environment Regulatory Construct Oregon Public Utility Commission – Governor-appointed three-member commission Chair: Susan Ackerman [D] March 2016 John Savage [D] March 2017 Stephen Bloom [R] November 2015 9.68% allowed return on equity(1) 50% debt and 50% equity
Slide 9: General Rate Case Updates
General Rate Case Updates 2015 Test Year Agreement reached by PGE , OPUC Staff and interveners: Return on Equity (ROE): 9.68% Cost of Capital: 7.56% Capital Structure: 50% debt, 50% equity Rate base: $3.8 billion Port Westward 2 and Tucannon River Wind Farm in rate base Annual revenue re
Slide 10: Executing our Strategic Plan
PGE TODAY Executing our Strategic Plan 2014 – 2016 2016 – 2017 2018 – 2021 Focus on operational excellence to further customer satisfaction New generation resources Integrated planning for Address replacement of drive rate base growth next set of resources Boardman, RPS requirements and evaluate cap
Slide 11: Strong Platform. Executing our Growth.
PGE INVESTMENT THESIS Strong Platform. Executing our Growth. The Company The Strengths The Execution 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 Top Top Top Quartile Decile Decile 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 measu
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 (2013) (2014 AUT)(1) Total = $1.7B Total = 2,153 MWa Industrial Purchased Hydro 13% Power 23% 20% Residential Wind & Solar Commercial 51% Natural Gas 9% 36% 25% Coal 23%
Slide 15: 3. High Quality Utility Operations
3. High Quality Utility Operations Highly dependable PGE generation portfolio with five-year average availability of 94%(1) Strong power supply operations to stabilize and optimize power costs Progressive approach to reduce coal Effective generation – Boardman 2020 Plan Utility Operations On
Slide 16: 4. Financial Performance
4. Financial Performance Net Income, Earnings per Share, and ROE 2010 – 2014E (NI in millions) $2.202.3 $2.10 2.1 $1.95 $1.87 1.9 $1.84 $1.66 $142 EPS 1.7 1.5 (2) $1.35 1.3 $168- $125 $147 $141 $105(2) $176 NI 1.1 2010 2011 2012 2013 2014E ROE 8.0% 9.0% 8.3% 7.9% 9.1% - 9.4% 2010 2011 2012 2013 (1)
Slide 17: 4. Consistent Dividend Growth
4. Consistent Dividend Growth 3% 1 CAGR $1.09 $1.07 0.9 $1.05 $1.03 $1.00 0.8 $0.96 0.7 $0.92 Target Payout Ratio 70% 0.6 50% 0.5 0.4 0.3 2007 2008 2009 2010 2011 2012 2013 Actual Payout Ratio Target Payout Ratio 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 credit ratings S&P Moody’s Senior Secured A- A1 Available Total Senior Unsecured BBB A3 Credit Credit + Cash Outlook Stable Stable Facilities $760 $793 Manageable debt maturities Cash
Slide 19: Strong Platform. Executing our Growth.
PGE INVESTMENT THESIS Strong Platform. Executing our Growth. The Company The Strengths The Execution 19
Slide 20: Load-Resource Forecast
Load-Resource Forecast MWa Load-Resource Forecast - Energy (1) 3000 2500 New Generation: RFP Projects 2000 Incremental Energy Efficiency Long-Term Contracts 1500 1000 PGE Generation 500 0 2014 2015 2016 2017 2018 2019 2020 2021 1) Load-resource forecast as included in the 2013 IRP in March 2014; ass
Slide 21: New Generation: Capacity Resource
New Generation: Capacity Resource Port Westward Unit 2 Project Location Clatskanie, OR Capacity / Fuel 220 MW / Natural Gas 12 Natural Gas Wärtsilä Reciprocating Technology Engines EPC Contractor Black & Veatch, Harder Mechanical Estimated In-Service Date Q1 2015 Customer Price Impact ~2.8% ▪ Final
Slide 22: New Generation: Renewable Resource
New Generation: Renewable Resource Tucannon River Wind Farm Project Location Columbia County, WA Capacity / Fuel 267 MW / Wind Technology 116 2.3 MW Siemens Turbines EPC Contractor RES Americas Estimated In-Service Date December 2014 - Early Q1 2015 Customer Price Impact ~2.4% ▪ Turbine testing Next
Slide 23: New Generation: Baseload Resource
New Generation: Baseload Resource Carty Generating Station Project Location Boardman, OR Capacity / Fuel 440 MW / Natural Gas Technology Mitsubishi Turbine EPC Contractor Abener/Abengoa Estimated In-Service Date Mid 2016 Customer Price Impact ~4-6% ▪ Continued foundation work ▪ Equipment delivery Ne
Slide 24: Expected Rate Base and Capital Expenditures
Expected Rate Base and Capital Expenditures $1.4B of Expected Increase in Rate Base $4.5B 10% CAGR $3.1B 2013 2017 Expected Capital Expenditures (in millions) 2013 2014E 2015E 2016E 2017E 2018E TOTAL Base Capital Spending(1) $335 $350 $389 $346 $324 $281 $2,025 Port Westward Unit 2 $155 $128 $13 $29
Slide 25: PGE Value Proposition
PGE Value Proposition Strong financial position High quality utility operations Strong Platform executing Sustained Attractive service area Growth New resources drive rate-base growth 25
Slide 26: PGE Investor Relations Team
PGE Investor Relations Team Director, Investor Relations William J. (503) 464-7395 Valach [email protected] Analyst, Investor Relations Peter E. (503) 464-8586 Danielson [email protected] Portland Investors.PortlandGeneral.com 121 S.W. Salmon Street General Suite 1WTC0509 Electric Portlan
Slide 27: Appendices
Portland General Electric Appendices
Slide 28: Diversified Resource Mix
Diversified Resource Mix Resource Capacity (at 12/31/13)(1) Power Sources as a Capacity in MW % of Total Capacity Percent of Retail Load Hydro(1) (2013 Actuals) Deschutes River Projects 310 7% Clackamas/Willamette River Projects 191 4 Total = 18,900 MWh Hydro Contracts 603 14 1,104 25 Natural Gas/Oi
Slide 29: Changing Generation Portfolio
Changing Generation Portfolio 2014 Power Sources as a 2017 Power Sources as a Percent of Retail Load(1) Percent of Retail Load(2) Purchased Purchased Power Hydro Hydro Power 6% 20% 23% 20% Natural Gas Wind & Solar Wind & Solar 39% Natural Gas 12% 9% 25% Coal Coal 23% 23% New Resources Driving Change
Slide 30: Financing Activity
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 June 2013 1.7 million $46 million Un
Slide 31: Generation Plant Operations
Generation Plant Operations Track record of high availability 2008 2009 2010 2011 2012 2013 PGE Thermal Plants 89% 84% 94% 90% 92% 84% PGE Hydro Plants 99% 99% 99% 100% 99% 100% PGE Wind Farm 92% 97% 96% 97% 98% 98% PGE Average 93% 93% 96% 96% 96% 89% Colstrip Unit 3 & 4 97% 68% 95% 84% 93% 66%
Slide 32: 2013 Integrated Resource Plan
2013 Integrated Resource Plan 2013 IRP was verbally acknowledged by the OPUC on 11/12/14 and PGE is awaiting written confirmation on stipulations to incorporate into the 2016 IRP development Proposed Action Plan Resource Additions 2014 through 2017 • No new long-term supply side resources proposed i
Slide 33: 2016 Integrated Resource Plan
2016 Integrated Resource Plan 2016 IRP • PGE will start preparing the 2016 IRP in late 2014 and in 2015 • Action plan timeframe: 2 – 4 years after plan acknowledgement • Areas of focus: • Boardman replacement • 2020 Renewable Portfolio Standard requirement of 20% • Evaluate need for additional capac
Slide 34: GRC Overview – 2015 Test Year
GRC Overview – 2015 Test Year Annual Revenue Increase ($mm) As Filed Depreciation Other As Revised Additional As Revised Date 2/13/2014 Stipulation(1) Updates and 7/16/2014 9/2/2014(4) Stipulations(2) Stipulations(3) New Generation Plants: Port Westward 2 $51 ($5) $3 $49 ($1) $48 Tucannon River $47
Slide 35: Recovery of Power Costs Return on Equity
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 36: 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 Year Renewa
Slide 37: Average Retail Price Comparison
Average Retail Price Comparison Residential and Commercial – Winter 2014 Residential Electric Service Prices Commercial Electric Service Prices Northwestern Investor-Owned and Public Northwestern Investor-Owned and Public Utilities Utilities 1000 kWh per Month 40 kW Demand - 14,000 kWh per Month (ce
Slide 38: Average Retail Price Comparison
Average Retail Price Comparison Small and Large Industrial – Winter 2014 Small Industrial Electric Service Prices Large Industrial Electric Service Prices Northwestern Investor-Owned and Public Northwestern Investor-Owned and Public Utilities Utilities 1,000 kW Demand - 400,000 kWh per Month, Primar
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