Portland General Electric Company (POR)

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Portland General Electric Company (POR)

Q4 2010 Earnings Conference Call

February 25, 2011, 11:00 am ET


Bill Valach – Director, IR

Jim Piro – President and CEO

Maria Pope – SVP-Finance, CFO and Treasurer


Brian Russo – Ladenburg Thalmann

Jennifer Sireklove – McAdams Wright Ragen

Ashar Khan – Visium Asset Management

Sarah Akers – Wells Fargo

Jim Bellessa – D.A. Davidson & Company

Paul Patterson – Glenrock Associates



Good morning, everyone, and welcome to the Portland General Electric Company fourth quarter and fiscal year 2010 earnings results conference call. Today is Friday, February 25, 2011. This call is being recorded, and as such, all lines have 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 over to Portland General Electric's Director of Investor Relations, Mr. Bill Valach. Please go ahead, sir.

Bill Valach

Thank you, Nancy. And good morning, everyone. We are 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 disclosures and commentary. There will be statements in this call that are not based on 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 discussion 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-Qs.

The Form 10-K for 2010 is 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. This Safe Harbor statement should be incorporated as part of any transcript of this call. Portland General Electric's fourth quarter and year-end earnings were released before the market opened today, and the release is 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 presentation by providing a general overview of the year’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’d like to turn the call over to Jim.

Jim Piro

Thank you, Bill. Good morning and thank you for joining us. Welcome to Portland General Electric’s 2010 year-end and fourth quarter earnings call. I’m very proud of our strong operating performance during 2010. Our generating facilities and T&D system performed very well, and we maintained high levels of customer satisfaction.

We also achieved constructive outcomes in three regulatory processes. First, our 2011 general rate case reserves were fair and reasonable, and provided us with the opportunity to earn a competitive return in 2011. Second, the Oregon Public Utility Commission acknowledged our 2009 integrated resource plan, allowing us to move forward with three separate competitive bidding processes and implementation of other items outlined in the action plans. And third, our Boardman 2020 plan was approved by the Oregon Environmental Quality Commission and is now before the Environmental Protection Agency for approval.

On today’s call, we will provide details around the key drivers of our financial performance, we will initiate earnings guidance for 2011, I’ll update you on Oregon’s economy, and finally, I’ll discuss the progress we are making on our strategic initiatives. Later, Maria will provide details on fourth quarter and annual results, provide a regulatory update, as well as discuss financing and liquidity. So let’s begin.

PGE’s net income for 2010 was $125 million or $1.66 per diluted share compared to $95 million or $1.31 per diluted share for 2009. For 2011, PGE is initiating full year earnings guidance of $1.80 to $1.95 per diluted share. 2011 guidance assumes normal hydro and plant operations, with operating costs aligned with the company’s 2011 general rate case. Also embedded in guidance is modest load growth for 2011 over weather-adjusted 2010, which is expected to be offset by our customers’ energy efficiency efforts.

Now let’s move on to the economic outlook in our operating area. In 2010, we added approximately 5,000 new customers, representing growth of 0.5% over 2009. Oregon continued to attract new residence, ranking second in the nation for in migration in both 2009 and 2010. I’m pleased that Oregon continues to be a place where people want to live and work. This growth provides an attractive workforce for existing companies, taking to expand and for new businesses locating here.

This in-state migration does impact Oregon’s seasonally adjusted unemployment rate, which was 10.2% in December compared to the US average of 9.4% for the same time period. Even with modest customer growth, total retail energy deliveries on a weather-adjusted basis decreased approximately 1.4% compared to 2009. We experience decreases in deliveries to residential and commercial customers, which was partially offset by an increase in deliveries to our industrial customers.

The weather-adjusted decrease in load was impacted by the continued effects of the slow economy and energy efficiency initiatives. We estimate that approximately one-half percent of the decline in load was attributable to the economy and the other half to energy efficiency. Employers in Oregon, particularly private employers, began to add jobs in the second quarter. I am encouraged to see that the growth of high-tech and solar manufacturing companies continues.

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