Portland General Electric Company : Portland General Electric Reports 2011 Financial Results and Initiates 2012 Earnings Guidance
02/24/2012| 05:05am US/Eastern
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Portland General Electric Company (NYSE: POR)today reported net
income of $147 million, or $1.95 per diluted share, for the year ended
December 31, 2011, compared to $125 million, or $1.66 per diluted share,
for 2010. Net income was $29 million, or $0.38 per diluted share, for
the fourth quarter of 2011 compared to $25 million, or $0.34 per diluted
share, for the comparable period of 2010.
"I'm very proud of PGE's accomplishments in 2011. We effectively managed
our power supply operations, taking advantage of favorable regional
hydro conditions, and successfully upgraded our Boardman and Coyote
Springs thermal plants," said Jim Piro, President and Chief Executive
Officer. "Our 2011 performance reflects our continued focus on
operational excellence, high customer satisfaction and delivering a
competitive return for shareholders."
Total retail revenues increased by $58 million for 2011 compared with
2010 reflecting a 4% increase in average retail prices and a 3% increase
in total retail energy deliveries. Residential energy deliveries
increased 4%, primarily due to cooler weather during the heating season.
Commercial and industrial energy deliveries increased 3%, primarily due
to increases in load from paper manufacturing. Excluding paper
manufacturers and adjusting for weather, retail loads for 2011 were up
approximately 0.5% from 2010.
Purchased power and fuel expense decreased by $69 million for 2011
compared with 2010 driven by favorable hydro conditions which resulted
in an abundant supply of power from hydroelectric projects and lower
wholesale power and natural gas prices, with increased energy from wind
generation resources also contributing to the decrease. Average net
variable power costs (NVPC) decreased by approximately 9% for 2011
compared to 2010. As a result of decreased NVPC, PGE recorded an
estimated refund to customers of $10 million pursuant to the power cost
adjustment mechanism (PCAM). Additionally, this reflects a 14% increase
in energy received from hydroelectric resources and PGE's economic
decision to buy low cost wholesale power instead of generating power
with its thermal plants. As a result, thermal generation represented 29%
of the Company's total system load in 2011, compared to 44% in 2010.
PGE's 2011 results were offset by unfavorable items, which are not
included in the Company's PCAM, that lowered earnings per diluted share.
These items amounted to approximately $12 million on a pre-tax basis, or
$0.10 per diluted share, and included, among other items, the
recognition of additional expense related to the Public Utility
Commission of Oregon's (OPUC's) adjustment to the Company's 2012 Annual
Power Cost Update Tariff (AUT), a decrease from lower-than-expected
gains on non-qualified benefit plan trust assets, and an increase in
costs related to certain employee benefits.
Recent Developments
PGE continues to deliver excellent operating performance, ranking high
in overall customer satisfaction. For 2011, the Company ranked in the
top decile for general business customers, third in the nation among
large key customers, and in the top quartile for residential customers.
In January, the OPUC adopted a procedural schedule for the request for
proposals (RFP) for PGE's capacity and baseload energy resources
culminating with an OPUC public meeting tentatively scheduled for June
2012. PGE submitted the draft RFP to the OPUC in January which is
subject to review and comment.
PGE continues to work with Bonneville Power Administration (BPA) and
other regional utilities to develop a transmission line to help meet
Oregon's growing energy needs. The Company's proposed Cascade Crossing
Transmission Project, a 500-kilovolt transmission line running from
Boardman to Salem, Oregon, would connect new and existing energy
generating resources east of the Cascades to the Willamette Valley.
BPA and PGE have identified terms and conditions to be addressed in
connection with their discussions concerning joint development of the
project.
In January, the Company completed construction of a $10 million, 1.75
mega-watt solar powered electric generating facility at the Baldock
Safety Rest Area on Interstate 5 south of Wilsonville. The facility is
expected to generate up to 2 million kilo-watt hours per year of
renewable energy, the equivalent of nearly 9% of the Oregon Department
of Transportation's energy requirements in the Company's operating
area.
In December 2011, the U.S. Environmental Protection Agency issued new
emissions limits under the Clean Air Act. The National Emission
Standards for Hazardous Air Pollutants (NESHAP) are intended to
regulate hazardous air pollutant emissions from coal- and oil-fired
electric generating units. These emissions limits are based on the
application of maximum achievable control technology (MACT). Based on
preliminary full-scale testing results, PGE believes Boardman should
meet the MACT requirements with the installation of currently planned
emissions controls.
Fourth Quarter Operating Results
Revenues increased $24 million, or 5%, in the fourth quarter of 2011
compared to the fourth quarter of 2010, primarily due to the net
effect of the following:
A $32 million, or 7%, increase in Retail revenues, resulting from:
A $24 million increase related to a 5% increase in average
retail prices, resulting primarily from the 3.9% overall
increase effective January 1, 2011 authorized by the OPUC in
the Company's 2011 General Rate Case and an increase effective
July 1, 2011 related to the recovery of increased depreciation
expense of Boardman over a shortened operating life;
A $19 million increase related to the regulatory treatment of
income taxes (SB 408), primarily due to the reversal in the
fourth quarter of 2010 of a collection from customers that had
been recorded through September 30, 2010. Such amount was
reversed as a result of the uncertainty around application of
the rules related to SB 408. In May 2011, SB 408 was repealed
effective beginning with 2010; and
An $11 million decrease primarily related to the regulatory
impact of various items, including a $14 million decrease
related to the deferral of Biglow Canyon Phase III in 2010
with no comparable amount in 2011. In 2011, the recovery of
Biglow Canyon is included in the average retail price increase
discussed above. This decrease was offset by a $7 million
increase due to a reduction in the fourth quarter of 2011 of
the estimated refund to customers pursuant to the Company's
PCAM for 2011 with no PCAM refund or collection recorded in
2010.
A $7 million, or 39%, decrease in Wholesale revenues, consisting
of a 37% decrease in volume partially offset by a 7% increase in
average price.
Purchased power and fuel expense decreased $1 million in the fourth
quarter of 2011 compared to the fourth quarter of 2010, due to the
combination of a 3% decrease in total system load substantially offset
by a 2% increase in average variable power cost and a $3 million
increase recorded in the fourth quarter of 2011 related to the
Company's AUT for 2012. The average variable power cost increased to
$39.91 per MWh in the fourth quarter of 2011 from $39.23 per MWh in
the fourth quarter of 2010, primarily driven by a 24% decrease in
energy received from hydroelectric resources.
Production and distribution expense increased $7 million, or 15%, due
to increased operating and maintenance costs related to PGE's
distribution system and increased costs related to employee
compensation and benefits.
Administrative and other expense increased $14 million, or 30%,
primarily due to higher costs related to customer support, including
an increase in the provision for uncollectible accounts, increased
costs related to employee compensation and benefits, and increased
legal fees.
Depreciation expense decreased $8 million, or 12%, largely due to the
amortization of the refund of tax credits from its Independent Spent
Fuel Storage Installation (ISFSI) (offset in Retail revenues) in 2011,
increase in estimated useful lives of certain long-lived assets
resulting from the latest depreciation study, and the impairment loss
recognized in the fourth quarter of 2010 related to a photovoltaic
solar power facility. These decreases were partially offset by an
increase in depreciation expense related to a shortened operating life
of Boardman.
2011 Annual Operating Results
Revenues increased $30 million, or 2%, in 2011 compared to 2010
primarily due to the net effect of:
A $58 million, or 3%, increase in Retail revenues largely due to:
A $62 million increase related to the volume of retail energy
sold, with an increase of 4% in residential energy deliveries,
driven by cooler temperatures during the heating season, and
an increase of 3% in commercial and industrial energy
deliveries; and
A $61 million increase related to changes in average retail
price that resulted primarily from the 3.9% overall increase
effective January 1, 2011 authorized by the OPUC in the
Company's 2011 General Rate Case and an increase effective
July 1, 2011 related to the recovery of increased depreciation
expense of Boardman over a shortened operating life; partially
offset by
A $68 million decrease related to the regulatory impact of
various items, including an $18 million decrease related to
ISFSI tax credits refunded to customers in 2011 with no
comparable amount in 2010 (offset in Depreciation and
amortization expense), an $18 million decrease related to the
accrual of revenue requirements for Biglow Canyon Phase III
under the 2010 Renewable Adjustment Clause, and a $10 million
decrease related to the decoupling mechanism with a $2 million
refund to customers recorded in 2011 compared to an $8 million
collection from customers recorded in 2010. Additionally, PGE
recorded an estimated refund to customers of $10 million in
2011 as a result of the PCAM compared to no amount recorded in
2010.
A $27 million, or 31%, decrease in Wholesale revenues, consisting
of 17% declines in both average price and in volume.
Purchased power and fuel expense decreased $69 million, or 8%, in 2011
compared to 2010, comprised of a 9% decrease in average variable power
cost, partially offset by a 1% increase in total system load. The
average variable power cost decreased to $35.15 per MWh in 2011 from
$38.68 per MWh in 2010, primarily driven by a shift in the mix of
energy sources. Company-owned generation represented 44% of total
system load in 2011 compared to 57% in 2010 due to an abundant supply
of lower-cost purchased power.
Production and distribution expense increased $27 million, or 16% , in
2011 compared to 2010 primarily due to an increase in operating and
maintenance expenses at the Company's thermal generating plants
(including extensive work performed during their planned annual
maintenance outages in the second quarter) and at Biglow Canyon, the
final phase of which was completed in August 2010. Increased operating
and maintenance costs related to PGE's distribution system and
increased costs related to employee compensation and benefits
contributed to the increase in production and distribution expense in
2011 compared to 2010.
Administrative and other expense increased $32 million, or 17%, in
2011 compared to 2010 primarily due to increased costs related to
employee compensation and benefits, increased expenses related to
legal matters, including reserves for asserted claims, and higher
costs related to customer support, including an increase in the
provision for uncollectible accounts.
Depreciation and amortization expense decreased $11 million, or 5%, in
2011 compared to 2010 largely due to the amortization of the refund of
ISFSI tax credits (offset in Retail revenues) in 2011 and the impacts
from the latest depreciation study. These decreases were partially
offset by an increase in depreciation expense related to the shortened
operating life of Boardman, the August 2010 completion of Biglow
Canyon Phase III, and other capital additions in late 2010 and 2011.
Taxes other than income taxes increased $9 million, or 10%, in 2011
compared to 2010 primarily due to higher property taxes, resulting
from both increased property values and tax rates, and higher city
franchise fees related to increased Retail revenues.
Other income, net decreased $11 million, or 65%, in 2011 compared to
2010 primarily due to an $8 million decrease in the allowance for
equity funds used during construction, as a result of lower
construction work in progress balances during 2011 related primarily
to the August 2010 completion of Biglow Canyon Phase III.
Additionally, a nominal loss was recorded in 2011 related to a
decrease in the fair value of the non-qualified benefit plan trust
assets, compared to a $5 million gain recorded in 2010.
Income taxes increased $5 million, or 9%, in 2011 compared to 2010
primarily due to higher taxable income in 2011. An increase in
production tax credits, related to the increased production from
Biglow Canyon Wind Farm, was largely offset by an increase in the
state income tax rate and a reduction in state tax credits.
2012 Earnings Guidance
PGE is initiating full-year 2012 earnings guidance of $1.85 to $2.00 per
diluted share. Guidance is based on the following:
1.0% to 1.5% load growth over weather adjusted 2011 which excludes two
large paper manufacturers;
Normal hydro conditions and plant operations;
Wind estimates based on wind studies completed in connection with the
permitting process of the wind farm; and
Operating and maintenance costs comparable to 2011.
Fourth Quarter 2011 Earnings Call and Web cast -- February 24, 2012
PGE will host a conference call with financial analysts and investors on
Friday, February 24, 2012, at 11 a.m. EST. 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 2 p.m. EST on
Friday, February 24, 2012 through Friday, March 2, 2012.
Jim Piro, President and CEO; Maria Pope, Senior Vice President, 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 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 822,000 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 PGE's website at www.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;
statements regarding the outcome of any legal or regulatory proceeding;
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;
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
(In millions, except per share amounts)
(Unaudited)
Three Months Ended
Years Ended
December 31,
December 31,
2011
2010
2011
2010
Revenues, net
$
479
$
455
$
1,813
$
1,783
Operating expenses:
Purchased power and fuel
215
216
760
829
Production and distribution
54
47
201
174
Administrative and other
60
46
218
186
Depreciation and amortization
57
65
227
238
Taxes other than income taxes
24
22
98
89
Total operating expenses
410
396
1,504
1,516
Income from operations
69
59
309
267
Other income:
Allowance for equity funds used during construction
2
1
5
13
Miscellaneous income, net
2
3
1
4
Other income, net
4
4
6
17
Interest expense
28
28
110
110
Income before income taxes
45
35
205
174
Income taxes
16
13
58
53
Net income
29
22
147
121
Less: net loss attributable to noncontrolling interests
--
(3
)
--
(4
)
Net income attributable to Portland General Electric Company
$
29
$
25
$
147
$
125
Weighted-average shares outstanding (in thousands):
Basic
75,346
75,299
75,333
75,275
Diluted
75,364
75,318
75,350
75,291
Earnings per share--Basic and diluted
$
0.38
$
0.34
$
1.95
$
1.66
Dividends declared per common share
$
0.265
$
0.260
$
1.055
$
1.035
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
As of December 31,
2011
2010
ASSETS
Current assets:
Cash and cash equivalents
$
6
$
4
Accounts receivable, net
144
137
Unbilled revenues
101
93
Inventories
71
56
Margin deposits
80
83
Regulatory assets - current
216
221
Other current assets
98
67
Total current assets
716
661
Electric utility plant, net
4,285
4,133
Regulatory assets - noncurrent
594
544
Nuclear decommissioning trust
37
34
Non-qualified benefit plan trust
36
44
Other noncurrent assets
65
75
Total assets
$
5,733
$
5,491
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
111
$
102
Liabilities from price risk management activities - current
216
188
Short-term debt
30
19
Current portion of long-term debt
100
10
Regulatory liabilities - current
6
25
Accrued expenses and other current liabilities
151
145
Total current liabilities
614
489
Long-term debt, net of current portion
1,635
1,798
Regulatory liabilities - noncurrent
720
657
Deferred income taxes
529
445
Liabilities from price risk management activities - noncurrent
172
188
Unfunded status of pension and postretirement plans
195
140
Non-qualified benefit plan liabilities
101
97
Other noncurrent liabilities
101
78
Total liabilities
4,067
3,892
Total equity
1,666
1,599
Total liabilities and equity
$
5,733
$
5,491
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Years Ended December 31,
2011
2010
Cash flows from operating activities:
Net income
$
147
$
121
Depreciation and amortization
227
238
Other non-cash income and expenses, net included in Net income
132
66
Changes in working capital
(5
)
17
Other, net
(48
)
(51
)
Net cash provided by operating activities
453
391
Cash flows from investing activities:
Capital expenditures
(300
)
(450
)
Other, net
1
20
Net cash used in investing activities
(299
)
(430
)
Cash flows from financing activities:
Net (payments) issuances of long-term debt, including premiums paid
or issuance costs incurred
(80
)
61
Net proceeds of short-term debt
11
19
Dividends paid
(79
)
(78
)
Noncontrolling interests' capital (distributions) contributions
(4
)
10
Net cash (used in) provided by financing activities
(152
)
12
Change in cash and cash equivalents
2
(27
)
Cash and cash equivalents, beginning of year
4
31
Cash and cash equivalents, end of year
$
6
$
4
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
SUPPLEMENTAL OPERATING STATISTICS
(Unaudited)
Three Months Ended
Years Ended
December 31,
December 31,
2011
2010
2011
2010
Revenues (dollars in millions):
Retail:
Residential
$
242
$
225
$
877
$
803
Commercial
161
152
635
601
Industrial
58
58
226
221
Subtotal
461
435
1,738
1,625
Other accrued revenues, net
2
(4
)
(16
)
39
Total retail revenues
463
431
1,722
1,664
Wholesale revenues
11
18
60
87
Other operating revenues
5
6
31
32
Total revenues
$
479
$
455
$
1,813
$
1,783
Energy sold and delivered (MWh in thousands):
Retail energy sales:
Residential
2,128
2,095
7,733
7,452
Commercial
1,774
1,768
7,070
6,945
Industrial
887
891
3,554
3,286
4,789
4,754
18,357
17,683
Delivery to direct access customers:
Commercial
85
81
349
332
Industrial
151
186
639
718
236
267
988
1,050
Total retail energy sales and deliveries
5,025
5,021
19,345
18,733
Wholesale energy deliveries
293
465
2,142
2,580
Total energy sold and delivered
5,318
5,486
21,487
21,313
Number of retail customers at end of period:
Residential
720,269
719,031
Commercial
101,714
101,180
Industrial
240
247
Direct access
243
218
Total retail customers
822,466
820,676
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
SUPPLEMENTAL OPERATING STATISTICS, continued
(Unaudited)
Three Months Ended
Years Ended
December 31,
December 31,
2011
2010
2011
2010
Sources of energy (MWh in thousands):
Generation:
Thermal:
Coal
1,417
1,381
4,125
4,984
Natural gas
1,080
1,295
2,138
4,460
Total thermal
2,497
2,676
6,263
9,444
Hydro
409
475
1,933
1,830
Wind
191
171
1,216
833
Total generation
3,097
3,322
9,412
12,107
Purchased power:
Term
1,195
1,040
6,252
3,984
Hydro
407
593
2,897
2,417
Wind
66
47
269
297
Spot
563
491
2,763
2,618
Total purchased power
2,231
2,171
12,181
9,316
Total system load
5,328
5,493
21,593
21,423
Less: wholesale sales
(293
)
(465
)
(2,142
)
(2,580
)
Retail load requirement
5,035
5,028
19,451
18,843
Heating Degree-days
Cooling Degree-days
2011
2010
2011
2010
1st Quarter
1,974
1,629
--
--
Average
1,845
1,849
--
--
2nd Quarter
946
861
16
18
Average
698
684
69
73
3rd Quarter
51
117
346
296
Average
87
82
393
398
4th Quarter
1,679
1,580
--
--
Average
1,589
1,577
2
2
Annual total
4,650
4,187
362
314
Annual total average
4,219
4,192
464
473
Note: "Average" amounts represent the 15-year rolling averages
provided by the National Weather Service (Portland Airport).
Portland General Electric Company Media: Gail Baker,
503-464-8693 Director, Corporate Communications or Investors: Bill
Valach, 503-464-7395 Director, Investor Relations
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