Portland General Electric Company (POR)

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Portland General Electric Company (POR)

Q3 2010 Earnings Call

October 28, 2010 11:00 a.m. ET

Executives

Bill Valach - Director of IR

Jim Piro - President & CEO

Maria Pope - SVP of Finance, CFO & Treasurer

Analysts

Brian Russo - Ladenburg Thalmann

Jennifer Sokoloff – McAdams, Wright, Ragen

James Bellessa – DA Davidson & Co.

Sarah Pegors – Wells Fargo

Presentation

Operator

Good morning, everyone and welcome to Portland General Electric Company third quarter 2010 earnings results conference call. Today is Thursday, October 28, 2010.

This call is being recorded and as such all lines has been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer period. (Operator Instructions).

For opening remarks I would like to turn the conference call over to Portland General Electric's Director of Investor Relations, Mr. Bill Valach. Please go ahead, sir.

Bill Valach

Thank you, Catina, and good morning everyone. We are very pleased that you are able to join us today.

Before we begin our discussion this morning I'd like to make our customary statements regarding Portland General Electric's written and oral and disclosures and commentary. That there will be statements in this call that are not based on the historical facts and as such constitute forward-looking statements under current law.

These statements are subject to factors that may cause actual results to differ materially from the forward-looking statements made today. For a description of some of the factors that may occur that could cause such differences, the company requests that you read our most recent Form 10-K and Form 10-Q's.

The Form 10-Q for the third quarter of 2010 was available this morning at portlandgeneral.com. The company undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise. And this Safe Harbor statement should be incorporated as part of any transcript of this call.

Portland General Electric's second quarter earnings were released before the market opened today and the release is also available at portlandgeneral.com.

Leading our discussion today are Jim Piro, President and CEO; and Maria Pope, Senior Vice President of Finance, CFO and Treasurer. Jim will begin today's discussion by providing an overview of the quarter's results and our strategic capital projects. Then Maria will provide more detail around the quarterly results and key regulatory proceedings. Following prepared remarks, we will open the lines up for your questions.

And I’m pleased to turn the call over to Jim, this morning.

Jim Piro

Thank you, Bill. Good morning and thank you for joining us. Welcome to Portland General Electric’s third quarter 2010 earnings call. PGE’s net income for third quarter 2010 was $49 million or $0.65 per diluted share, compared to $32 million or $0.43 per diluted share for the third quarter of 2009.

We are increasing our full-year 2010 earnings guidance by $0.25, from the prior guidance of $1.40 to $1.55 per share, to $1.65 to $1.80 per diluted share. The key driver to the increase in quarterly earnings and the revised guidance is the effects of the newly passed Federal Legislation regarding 2010 bonus depreciation on the Senate Bill 408 tax calculation. Senate Bill 408 accounts for approximately $0.20 per share increase in the 2010 guidance and approximately $0.16 per share increase in the third quarter results. Maria will provide more details later in the call.

We will initiate 2011 earnings guidance on the fourth quarter earnings call in late February next year. By waiting until the next quarter we will have more information to base our earnings forecast on, including initial Hydro conditions and customer retail demand. This timeframe also puts us more in line with our peers for initiating guidance.

I am very pleased with our strong operational performance during the third quarter as well as the productive regulatory process for the 2011 general rate case. Let me give you a few highlights on both.

We continue to deliver excellent operating performance company wide. Our system operated well, our distribution metrics remain strong, and plant availability was high at our generating facilities.

The 2011 general rate case process has been constructive. If the settlements we have reached with all parties are proved by the commission, it will result in an outcome that is fair and reasonable for customers and shareholders. We have aligned our customer prices with our cost structure and have updated our load forecast. We have agreed upon several mechanisms that reduce volatility, including modification to the power cost adjustment mechanisms, continuation of decoupling, and a tariff for recovery of our remaining investments in Boardman.

These mechanisms are in lined with the stipulated ROE of 10%, and will provide the company with an opportunity to earn a fair return in 2011. Now, let’s move on to the economic outlook in our operating area.

While we experienced customer growth of a half of a percent quarter-on-quarter, total retail energy deliveries on a weather adjusted basis were essentially flat. The continued effect of the slow economy and energy efficiency initiatives resulted in a decrease in energy deliveries to residential and commercial customers.

We did however, see an increase in energy deliveries to our large industrial customers. Oregon’s unemployment rates remain 10.6% in September, essentially unchanged since December 2009. Through September the rate at which Oregon added new jobs, was slower than the overall U.S. economy. There are some positive economic signs in our service area including Intel’s recent announcement last week that it plans to invest multi billion dollars in new facilities at their Hillsboro, Oregon site.

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