Portland General Electric Company (POR)

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Portland General Electric Company (POR)

Q4 2011 Earnings Call

February 24, 2012 - 11:00 a.m. ET

Executives

Bill Valach – Director, Investor Relations

Jim Piro – President and Chief Executive Officer

Maria Pope – Senior Vice President of Finance, Chief Financial Officer and Treasurer

Analysts

Neil S. Mehta – Goldman Sachs Group, Inc.

Brian J. Russo – Ladenburg Thalmann & Company, Inc.

James L. Bellessa – D.A. Davidson & Company

Sarah Akers – Wells Fargo Advisors, LLC

Andrew Weisel – Macquarie Capital (USA), Inc.

Mark Barnett – Morningstar, Inc.

Presentation

Operator

Good morning everyone and welcome to Portland General Electric Company's fourth quarter and full year 2011 earnings results conference call. Today is Friday, February 24, 2011. This call is being recorded and as such, all lines have been placed on mute to prevent any background noise.

(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, Ann and good morning everyone. I'm pleased that you're 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 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-Qs, and the form 10-K for 2011 is available on our website 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 fourth quarter and year-end earnings were released before the market opened today, and the release is available at our website, 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 the general overview of the year's results and our strategic capital projects. Then, Maria will provide more detail around the quarterly and annual results and key regulatory proceedings. Following those prepared remarks, we will open the lines up for your questions.

And with that, it's a pleasure 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 2011 fourth quarter and year-end earnings call.

I'm very proud of our accomplishments in 2011. We effectively managed our power supply operations, taking advantage of positive regional hydro conditions, successfully upgraded our Boardman and Coyote Springs thermal plants, received final regulatory approval of our Boardman 2020 plan, saw the repeal of Senate Bill 408, and with the constructive outcome of our 2011 general rate case, we delivered a competitive return to our shareholders.

Operating performance was also strong during 2011, with our Transmission and Distribution system performing well, good generation plant availability and high levels of customer satisfaction. This reflects our ongoing focus on operational excellence and strong customer service. On today's call, I'll summarize our financial performance, initiate 2012 earnings guidance, and update you on Oregon's economy. Then I'll discuss the progress we're making on our strategic initiatives.

Following my remarks, Maria will discuss fourth quarter and annual results, several regulatory items, financing and on liquidity, and end with our outlook for 2012. So let's begin. PGE's net income for fourth quarter 2011 was $29 million or $0.38 per diluted share, compared with $25 million or $0.34 per diluted share for the fourth quarter 2010. Net income for 2011 was $147 million or $1.95 per diluted share, compared with $125 million or $1.66 per diluted share for 2010.

For 2012, PGE is initiating full-year earnings guidance of $1.85 to $2 per diluted share. 2012 guidance assumes hydro, wind and plan operations, consistent with the estimate in the Annual Power Cost Update tariff, as well as a relatively flat operating cost. Also included in guidance is load growth between 1% and 1.5% over weather-adjusted 2011 loads, excluding the loads of two large paper manufacturers. Now, let's move on to the economic outlook in our operating area.

We continue to experience customer growth, and we're pleased to see a decline in Oregon's unemployment rate, which fell nearly 2% from 2010 to 8.9% at the end of 2011. Job growth in Oregon was faster than the national average in 2011; 1.6% for total non-fund jobs, compared with 1.4% nationally; and 2.3% for the private sector, compared with 1.9% nationally, as Oregon continues to be an attractive location for technology, manufacturing and other industries.

With continued in-migration and increased employment activity, total retail energy deliveries on a weather-adjusted basis increased approximately 1.4% in 2011 compared with 2010. Excluding the loads of two large paper companies, weather-adjusted retail energy deliveries for 2011 were approximately 0.5% above 2010 levels. Both of these percentages include the effects of energy efficiency measures, which reduced load growth by approximately 0.5% between 2010 and 2011.

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