Portland General Electric announces 2018 financial results and initiates 2019 earnings guidance
PORTLAND, Ore., Feb. 15, 2019 /PRNewswire/ -- Portland General Electric Company (NYSE: POR) today reported net income of $212 million, or $2.37 per diluted share, for the year ended Dec. 31, 2018. This compares with a net income of $187 million, or $2.10 per diluted share, for the year ended Dec. 31, 2017. Net income was $49 million, or $0.55 per diluted share, for the fourth quarter of 2018. This compares with $42 million, or $0.48 cents per diluted share, for the comparable period of 2017.
"We are pleased with our strong financial results for 2018 and excited to announce the bid chosen from the Renewable RFP process," said Maria Pope, PGE president and CEO. "The first of its scale in North America, our collaboration with NextEra Energy Resources on the Wheatridge Renewable Energy Facility leverages both companies' strengths to combine wind and solar generation with energy storage at scale. We look forward to bringing the wind farm online in 2020, giving customers the benefit of the 100 percent federal production tax credit."
2018 earnings compared to 2017 earnings
Factors leading to the $0.27 per diluted share increase include the following:
-- A decrease of $0.31 per diluted share due to milder weather primarily in
the first and fourth quarters of 2018 that contributed to lower energy
demand than in the first and fourth quarters of 2017
-- An increase of $0.12 per diluted share resulting from lower purchased
power and fuel costs and an increase in wholesale sales
-- An increase of $0.09 per diluted share attributable to lower storm
restoration costs
-- An increase of $0.08 per diluted share attributable to lower plant
maintenance expenses
-- An increase of $0.11 per diluted share due to the Carty cash settlement
-- An increase of $0.19 per diluted share due to a charge in 2017 related
to the Tax Cuts and Jobs Act
-- An increase of $0.01 per diluted share from the net impact of regulatory
items including the outcomes of the Tax Cuts and Jobs Act docket (UM
1920) and Capital Deferral docket (UM 1909)
-- A decrease of $0.02 per diluted share due to other miscellaneous items
Company Updates
Wheatridge Renewable Energy Facility
After months of regulatory and competitive bidding process, PGE completed its review of the final shortlist of projects acknowledged by the Public Utility Commission of Oregon (OPUC) in Dec. 2018. PGE announced the results of this competitive bidding process on Feb. 7, 2019.
PGE is collaborating with NextEra Energy Resources to construct the Wheatridge Renewable Energy Facility. Located in Eastern Oregon, the facility will combine 300 megawatts of wind generation with 50 megawatts of solar generation and 30 megawatts of battery storage. It will be the nation's first major energy facility to co-locate and integrate these technologies at scale. PGE will own 100 megawatts of the wind project and will purchase the balance of the project's output under 30-year power purchase agreements. NextEra Energy Resources' subsidiary will operate the facility.
The wind component will be operational by Dec. 2020 and will qualify for the 100 percent federal production tax credit. Construction of the solar and battery components is planned for 2021. PGE expects to invest approximately $160 million to own its portion of the project.
General Rate Case
On Jan. 1, 2019, new customer prices went into effect pursuant to the OPUC Order which authorized a $9 million price increase. This includes return on equity of 9.5 percent; capital structure of 50 percent debt and 50 percent equity; cost of capital at 7.3 percent, and rate base of $4.75 billion. On Dec. 14, 2018, the OPUC adopted all stipulations in the case and resolved the remaining contested issues.
Tax Cuts and Jobs Act
On Dec. 22, 2017, the Tax Cuts and Jobs Act was enacted and signed into law with provisions going into effect on Jan. 1, 2018. Pursuant to an OPUC Order issued on Dec. 4, 2018, PGE began refunding $45 million to customers over a two-year period starting on Jan. 1, 2019.
Deferred Capital Project Costs
On Oct. 29, 2018, the OPUC issued an Order concluding that the Commission lacked legal authority to allow deferrals of costs related to capital investments. PGE had estimated a $12 million benefit associated with the deferral of customer information system costs in 2018 and has recorded a reserve for this amount. On Dec. 24, 2018, PGE filed for reconsideration of the Order. The OPUC has until Feb. 22, 2019 to respond to the request.
Fourth Quarter and Full-Year 2018 earnings call and webcast - Feb. 15, 2019
PGE will host a conference call with financial analysts and investors on Friday, Feb. 15, 2019, at 11 a.m. ET. The conference call will be web cast live on the PGE website at Investors.PortlandGeneral.com. A replay of the call will be available beginning at 2 p.m. ET on Friday, Feb. 15, 2019 through Friday, Feb. 22, 2019.
Maria Pope, president and CEO; Jim Lobdell, senior vice president of finance, CFO, and treasurer; and Chris Liddle, director, investor relations and treasury, will participate in the call. Management will respond to questions following formal comments.
The attached unaudited consolidated statements of income, 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 885,000 residential, commercial and industrial customers in the Portland/Salem metropolitan area of Oregon. The company's headquarters are located at 121 S.W. Salmon Street, Portland, Oregon 97204. Visit PGE's website at PortlandGeneral.com/CleanVision.
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, wind 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; 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 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; failure to complete capital projects on schedule or within budget, or the abandonment of capital projects which could result in the company's inability to recover project costs; 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 expressly disclaims any current intention to update publicly any forward-looking statement after the distribution of this release, whether as a result of new information, future events, changes in assumptions or otherwise. Prospective investors should also review the risks, assumptions and uncertainties listed in the company's most recent annual report on form 10-K and in other documents that we file 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
Source: Portland General Company
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)
(Unaudited)
Years Ended
December 31,
2018 2017
---
Revenues:
Revenues, net $
1,988 $
2,009
Alternative revenue programs, net of
amortization 3
Total Revenues 1,991 2,009
Operating expenses:
Purchased power and fuel 571 592
Generation, transmission and distribution 292 309
Administrative and other 271 260
Depreciation and amortization 382 345
Taxes other than income taxes 129 123
Total operating expenses 1,645 1,629
Income from operations 346 380
Interest expense, net 124 120
Other income:
Allowance for equity funds used during
construction 11 12
Miscellaneous income (expense), net (4) 1
Other income, net 7 13
Income before income taxes 229 273
Income taxes 17 86
Net income $
212 $
187
Weighted-average shares outstanding (in thousands):
Basic 89,215 89,056
Diluted 89,347 89,176
Earnings per share:
Basic $
2.38 $
2.10
Diluted $
2.37 $
2.10
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
As of December 31,
2018 2017
---
ASSETS
---
Current assets:
Cash and cash equivalents $
119 $
39
Accounts receivable, net 193 168
Unbilled revenues 96 106
Inventories, at average cost:
Materials and supplies 53 52
Fuel 31 26
Regulatory assets-current 61 62
Other current assets 90 73
Total current assets 643 526
Electric utility plant:
Generation 4,600 4,667
Transmission 580 547
Distribution 3,838 3,543
General 611 550
Intangible 715 607
Construction work-in-progress 346 391
Total electric utility plant 10,690 10,305
Accumulated depreciation and amortization (3,803) (3,564)
Electric utility plant, net 6,887 6,741
Regulatory assets - noncurrent 401 438
Nuclear decommissioning trust 42 42
Non-qualified benefit plan trust 36 37
Other noncurrent assets 101 54
Total assets $
8,110 $
7,838
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
As of December 31,
2018 2017
---
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $
168 $
132
Liabilities from price risk management activities-
current 55 59
Current portion of long-term debt 300
Accrued expenses and other current liabilities 268 241
Total current liabilities 791 432
Long-term debt, net of current portion 2,178 2,426
Regulatory liabilities-noncurrent 1,355 1,288
Deferred income taxes 369 376
Unfunded status of pension and postretirement
plans 307 284
Liabilities from price risk management activities-
noncurrent 101 151
Asset retirement obligations 197 167
Non-qualified benefit plan liabilities 103 106
Other noncurrent liabilities 203 192
Total liabilities 5,604 5,422
Commitments and contingencies (see notes)
Shareholders' equity:
Preferred stock, no par value, 30,000,000 shares
authorized; none issued and outstanding -
Common stock, no par value, 160,000,000 shares
authorized; 89,267,959 and 89,114,265 shares
issued and outstanding as of December 31, 2018
and 2017, respectively 1,212 1,207
Accumulated other comprehensive loss (7) (8)
Retained earnings 1,301 1,217
Total shareholders' equity 2,506 2,416
Total liabilities and shareholders' equity $
8,110 $
7,838
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Years Ended December 31,
2018 2017 2016
---
Cash flows from operating activities:
Net income $
212 $
187 $
193
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 382 345 321
Deferred income taxes (17) 70 37
Allowance for equity funds used
during construction (11) (12) (21)
Pension and other postretirement
benefits 30 24 28
Decoupling mechanism deferrals, net
of amortization (2) (22) (6)
Deferral of net benefits due to Tax
Reform 45
Other non-cash income and expenses,
net 21 31 12
Changes in working capital:
(Increase) in receivables and
unbilled revenues (29) (3) (9)
(Increase) decrease in margin
deposits (5) (3) 25
Increase in payables and accrued
liabilities 51 5 15
Other working capital items, net (11) 1 (4)
Contribution to non-qualified
employee benefit trust (11) (8) (10)
Contribution to pension and other
postretirement plans (12) (5) (2)
Other, net (13) (13) (17)
Net cash provided by operating
activities 630 597 562
Cash flows from investing activities:
Capital expenditures (595) (514) (584)
Purchases of nuclear decommissioning
trust securities (12) (18) (25)
Sales of nuclear decommissioning
trust securities 15 21 27
Proceeds from Carty Settlement 120
Other, net 1 (3) (3)
Net cash used in investing activities (471) (514) (585)
Cash flows from financing activities:
Proceeds from issuance of long-term
debt 75 225 290
Payments on long-term debt (24) (150) (133)
(Maturities) issuances of commercial
paper, net - (6)
Dividends paid (125) (118) (110)
Other (5) (7) (16)
Net cash (used in) provided by
financing activities (79) (50) 25
Increase in cash and cash equivalents 80 33 2
Cash and cash equivalents, beginning
of year 39 6 4
Cash and cash equivalents, end of
year $
119 $
39 $
6
Supplemental disclosures of cash flow information:
Cash paid for:
Interest, net of amounts capitalized $
117 $
110 $
104
Income taxes 25 18 16
Non-cash investing and financing activities:
Accrued capital additions 61 53 50
Accrued dividends payable 34 31 30
Assets obtained under leasing
arrangements 24 87 78
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
SUPPLEMENTAL OPERATING STATISTICS
(Unaudited)
Years Ended
December 31,
2018 2017
---
Revenues (dollars in millions):
Retail:
Residential $
948 $
969
Commercial 647 652
Industrial 185 192
Direct Access 43 37
Subtotal 1,823 1,850
Alternative revenue programs, net of
amortization 3
Other accrued (deferred) revenues, net (45) 10
Total retail revenues 1,781 1,860
Wholesale revenues 159 105
Other operating revenues 51 44
Total revenues $
1,991 $
2,009
Energy sold and delivered (MWh in thousands):
Retail energy sales:
Residential 7,416 7,880
Commercial 6,783 6,932
Industrial 2,987 2,943
Total retail energy sales 17,186 17,755
Direct access retail deliveries:
Commercial 647 623
Industrial 1,389 1,340
Total direct access retail deliveries 2,036 1,963
Total retail energy sales and direct access
deliveries 19,222 19,718
Wholesale energy deliveries 4,290 3,193
Total energy sold and delivered 23,512 22,911
Average number of retail customers:
Residential 772,389 762,211
Commercial 108,570 107,364
Industrial 203 199
Direct access 604 559
Total 881,766 870,333
Heating Degree-days Cooling Degree-days
2018 2017 Average 2018 2017 Average
First
quarter 1,766 2,171 1,813
Second
quarter 471 686 656 116 129 85
Third
quarter 69 78 75 575 571 426
Fourth
Quarter 1,396 1,623 1,573 1 3
Year-
to-
date 3,702 4,558 4,117 692 700 514
Note: "Average" amounts
represent the 15-year
rolling averages provided
by the National Weather
Service (Portland
Airport).
PORTLAND GENERAL ELECTRIC COMPANY AND SUBSIDIARIES
SUPPLEMENTAL OPERATING STATISTICS, continued
(Unaudited)
Years Ended
December 31,
2018 2017
---
Sources of energy (MWh in thousands):
Generation:
Thermal:
Natural gas 7,515 6,228
Coal 3,106 3,344
Total thermal 10,621 9,572
Hydro 1,474 1,774
Wind 1,875 1,641
Total generation 13,970 12,987
Purchased power:
Term 6,714 7,192
Hydro 1,603 1,648
Wind 286 264
Total purchased power 8,603 9,104
Total system load 22,573 22,091
Less: wholesale sales (4,290) (3,193)
Retail load requirement 18,283 18,898
Media Contact: Investor Contact:
Andrea Platt
Chris Liddle
Corporate Communications Investor Relations
Phone: 503-464-7980 Phone: 503-464-7458
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SOURCE Portland General Company
