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Edited Transcript of POR earnings conference call or presentation 15-Feb-19 4:00pm GMT

Q4 2018 Portland General Electric Co Earnings Call

PORTLAND Feb 18, 2019 (Thomson StreetEvents) -- Edited Transcript of Portland General Electric Co earnings conference call or presentation Friday, February 15, 2019 at 4:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Christopher Liddle

Portland General Electric Company - Corporate Finance & IR Manager & Assistant Treasurer

* James F. Lobdell

Portland General Electric Company - Senior VP of Finance, CFO & Treasurer

* Maria MacGregor Pope

Portland General Electric Company - President, CEO & Director

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Conference Call Participants

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* Gregg Gillander Orrill

UBS Investment Bank, Research Division - Executive Director & Equity Research Analyst of Utilities

* Gregory Reiss

* Insoo Kim

Goldman Sachs Group Inc., Research Division - Equity Research Analyst

* Paul Patterson

Glenrock Associates LLC - Analyst

* Paul Thomas Ridzon

KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst

* Travis Miller

Morningstar Inc., Research Division - Director of Utilities Research and Strategist

* Vedula Murti

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Presentation

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Operator [1]

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Good morning, everyone, and welcome to Portland General Electric Company's Fourth Quarter 2018 Earnings Results Conference Call. Today is Friday, February 15, 2019. This call is being recorded. (Operator Instructions) For opening remarks, I will turn the conference call over to Portland General Electric's Director of Investor Relations and Treasury, Chris Liddle. Please go ahead, sir.

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Christopher Liddle, Portland General Electric Company - Corporate Finance & IR Manager & Assistant Treasurer [2]

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Thank you, Chelsea. Good morning, everyone. I'm pleased that you are able to join us today. Before we begin our discussion this morning, I'd like to remind you that we have prepared a presentation to supplement our discussion, which we'll be referencing throughout the call. The slides are available on our website at investors.portlandgeneral.com.

Referring to Slide 2, I'd like to make our customary statements regarding Portland General Electric's written and oral disclosures. There will be statements on this call that are not based on historical fact, 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 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.

Portland General Electric's fourth quarter and full year 2018 earnings were released via our earnings press release and Form 10-K before the market opened today, both of which are available on our website.

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.

Leading our discussion today are Maria Pope, President and CEO; and Jim Lobdell, Senior Vice President of Finance, CFO and Treasurer. Following their prepared remarks, we will open the lines for your questions.

Now it's my pleasure to turn the call over to Maria.

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [3]

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Thanks, Chris, and good morning, everyone. And thank you for joining us today. Welcome to Portland General Electric's 2018 earnings call. I'm pleased to share our financial results and accomplishments. We will also discuss earnings guidance as well as the Wheatridge Renewable Energy Facility, the winning bid from our renewable RFP process. We're excited about the combination of wind, solar and battery storage, a first of its scale and cost competitive in delivering carbon-free energy to customers.

Turning to Slide 4. Our full year 2018 financial results of $2.37 per diluted share were near the top end of our guidance as well as ahead of last year.

We're initiating 2019 full year earnings guidance of $2.35 to $2.50 per diluted share as well as providing long-term earnings growth guidance of 4% to 6%. Jim will provide the details on each later on the call.

Turning to Slide 5. Our service area continues to grow. Our average number of customers grew by 1.3% this year and total retail energies increased 0.4% from 2017 on a weather-adjusted basis. Strong industrial growth of 2.2%, more than offset the impact of residential and commercial energy efficiency.

Our service area remains attractive to large-scale commercial and industrial development, especially from data centers and high-tech manufacturing. Furthermore, Oregon continues to see strong in-migration and an average unemployment rate of 3.5%. In 2018, our accomplishments include advancing smart grid technologies such as our distributed energy resource test bids and laying the groundwork with electric avenues and working with our transit authorities to expand transportation electrification.

We also achieved positive outcomes on our 2019 General Rate Case and successfully resolved the Carty litigation, receiving $113 million in cash settlement proceeds.

Turning to Slide 6. After months of regulatory competitive bidding processes, we're proud to announce our collaboration with the NextEra Energy Resources, who will construct a facility that combines 300 megawatts of wind generation, 50 megawatts of solar generation and 30 megawatts of battery storage. This project will be the nation's first major energy facility to colocate and integrate these technologies at scale. We will own 100 megawatts of the project and we'll buy the balance of the facility's output under a 30-year power purchase agreement, with a year 12 purchase option.

The wind component will be operational by December 2020 and will qualify for 100% Federal production tax credits. The solar and battery components will be completed in 2021 and will qualify for 100% of the Federal Investment Tax Credits.

As such, the overall delivered cost of energy is highly competitive, making the project extremely attractive as we work to lower our carbon impact while maintaining reliability and keeping customer prices affordable.

PGE expects to invest approximately $160 million for its owned portion of the project, and this amount is included in our updated capital expenditure forecast.

In addition, we are advancing our green tariff in order to sell 100% renewable energy to our largest commercial and municipal customers. The tariff filing has been supported by several prominent mayors, and we expect regulatory review to be complete this quarter.

We also plan to file our 2019 Integrated Resource Plan this summer. The plan will outline our long-term resource needs and is a key part of our efforts to pursue safe, reliable and affordable energy. We look forward to continuous collaboration with stakeholders. And now I'm pleased to turn the call over to Jim. Thank you.

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [4]

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Thank you, Maria. Turning to Slide 7. In December, the OPUC adopted all stipulations and resolved the remaining contested issues in our 2019 General Rate Case, approving a revenue increase of approximately $9 million that took effect January 1, 2019. This included the rate base of $4.75 billion, up from our previously authorized rate base of $4.5 billion while maintaining our 50% equity capital structure and return on equity of 9.5%. The commission also authorized an increase to our annual amount of recovery for storm restoration, incorporation of recent weather trends into our load forecast and extended decoupling through 2022. After evaluating our financial projections, we have determined that we will not file a General Rate Case for 2020 with the OPUC. And we'll continue to reevaluate the need to file on an annual basis.

Turning to Slide 8, which shows earnings drivers for 2018. First, gross margin reduced earnings by $0.19 due to a $0.31 attributable to mild weather in 2018 when compared to 2017. And that was offset by $0.12 attributable to lower purchase power and fuel costs as well as increased wholesale revenues. Second, lower storm restoration costs represent a $0.09 increase in earnings.

Next, lower plant maintenance expense contributed to an $0.08 increase in earnings, followed by Carty adding approximately $0.11 from the cash settlement. Regulatory items, including tax reform and capital deferral dockets, contributed to an increase of $0.01. And finally, a decrease of $0.02 per share due to other miscellaneous items.

On Slide 9, we've provided a summary of the company's current capital expenditure forecast from 2019 through 2023 related to investments that support our combined customer growth and development of a more efficient, reliable and secure system. Included in this forecast are capital expenditures for the Wheatridge Renewable Energy Facility, most of which will be in 2020.

Onto Slide 10. We continue to maintain a solid balance sheet, including strong liquidity and investment-grade credit ratings. As of December 31, 2018, we had first mortgage bond issuance capacity of $1 billion, cash available short-term credit and letter of credit capacity totaling $755 million, and a common equity ratio of 49.8%.

In January of 2019, we executed an amendment to our revolving credit facility of $500 million, extending the termination date to November of 2022. In December, we issued $75 million of first mortgage bonds at an interest rate of 4.47% that will mature in 2048.

In 2019, we expect to fund estimated capital expenditures with cash from operations, the issuance of debt securities up to $375 million. In April, we issued $200 million of first mortgage bond securities at an interest rate of 4.3%, maturing in 2049.

As shown on Slide 11, we're initiating full year 2019 guidance of $2.35 to $2.50 per diluted share, which assumes an increase in retail deliveries of approximately 0.5%, weather adjusted; average hydro conditions for the year; wind generation for the year based on 5 years of historical levels or forecast studies when historical data is not available; normal thermal pant operations; operating and maintenance cost between $585 million and $605 million; and depreciation and amortization between $400 million and $420 million. In 2019, we are forecasting an effective tax rate between 10% to 15%, which will be slightly higher than in 2018 due to fewer production tax credits and higher pretax book income.

We're also forecasting an average CWIP balance of $250 million. Because we are not filing a 2020 General Rate Case, we wanted to be able to provide you with some additional guidance around earnings of the company. Therefore, we're providing earnings guidance of 4% to 6% earnings per share growth rate on average for the period 2018 through 2021.

We will get there through a combination of 3 factors. First, continued investments in our system driving efficiencies in our cost structure. For example, investments in our distribution system, including substation upgrades and replacement of underground cables prior to failures, avoid the cost of break fixes.

Second, strong economics in our service territory, which drive both investment and growth in demand help to offset operational costs.

And third, investments in renewable and energy storage, including the receivable Renewable Energy Facility and our pilot energy storage projects.

And now operator, we're ready for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question will come from the line of Insoo Kim with Goldman Sachs.

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Insoo Kim, Goldman Sachs Group Inc., Research Division - Equity Research Analyst [2]

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Just a question on the, I guess, the rate case as you're not planning on following a 2020 Rate Case and with Wheatridge expected to come online by the end of 2020 for the wind. Does that imply that you'll be filing a rate case, I guess, in the beginning of our '20 for the 2021 time period? Or is there a separate filing you can make for just that project that wouldn't require a base rate case?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [3]

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In Oregon, Insoo, because of the RPS that we have here, we have a mechanism we call the Renewable Adjustment Clause. That clause allows us outside of a General Rate Case to make a filing to bring renewables into customer prices associated with those resources that meet the renewable portfolio standard. And so it's almost like a rifle shot type of a general Rate Case associated with it. So we'll track it into customer prices that way.

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Insoo Kim, Goldman Sachs Group Inc., Research Division - Equity Research Analyst [4]

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Understood. And then in terms of the 100% PTC associated with the project, does that build on the deferred income tax line? So from a rate base perspective, that will have some kind of offset to rate base? Or is there a more immediate reduction to customer build as a result of that?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [5]

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Yes, that will continue to build.

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Insoo Kim, Goldman Sachs Group Inc., Research Division - Equity Research Analyst [6]

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Understood. And then finally for me, the 4% to 6% growth rate for the '18 to '21 time period, is that the '18 actual result that's you guys filed today? And does the midpoint assume continued 0.5% retail growth rate?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [7]

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Yes. In the long term, growth rate that we've mentioned out there before beyond the next few years is still 1%.

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Operator [8]

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And our next question comes from the line of Paul Ridzon with KeyBanc.

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Paul Thomas Ridzon, KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst [9]

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What was the EPS impact of weather versus normal for the year?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [10]

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For the entire year, it was $0.07.

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Paul Thomas Ridzon, KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst [11]

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Versus normal? And then $0.31 versus '17?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [12]

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Year-over-year. Yes.

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Paul Thomas Ridzon, KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst [13]

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What should we look -- I'm a little confused about the renewable adjustment clause versus AFUDC. Will you be booking AFUDC on this wind asset?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [14]

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Yes, we will be.

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [15]

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The renewable adjustment clause is really just a way that we're able to prevent any regulatory lag associated with renewables and not have to have multiple rate cases in terms of bringing that investment into customer prices. We would enter into that -- those agreements with the PUC after the completion of the facility. And that would include the AFUDC that we would be accumulating while the construction is taking place.

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Paul Thomas Ridzon, KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst [16]

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So we should look for the AFUDC line to trend up this year?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [17]

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Mostly it'd in 2020.

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [18]

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Yes.

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Paul Thomas Ridzon, KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst [19]

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Can you split that $160 million between '19 and '20?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [20]

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Most of it will be in 2020. I can't give you an exact number right now, Paul, but the balance of it will be in that particular year, with a small amount trickling into 2021.

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [21]

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If you think about a wind farm and construction projects like this, the vast majority of the early work in civil work, and there is not a lot of capital spending until you get at least midway through the project.

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Paul Thomas Ridzon, KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst [22]

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How is the wind resource in '18 versus normal?

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [23]

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We were slightly under by about 2 percentage points. What we have seen in the past is actually greater differentials. But we forecast about 32% between our -- all of our wind resources, and when we came in right at about 30%. So a pretty negligible difference all considering.

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Paul Thomas Ridzon, KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst [24]

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And as far as equity, just kind of the normal jump in employee programs for the year?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [25]

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Yes, we don't plan on issuing any equity.

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Paul Thomas Ridzon, KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst [26]

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And then lastly, I don't remember where I saw it, but some discussion about pushing construction of the solar and battery component of this to '23?

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [27]

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No, that's not accurate. It should -- the entire project will be finished by the end of 2021.

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Paul Thomas Ridzon, KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst [28]

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Do you know where that came from? Was that some proposal somewhere, or?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [29]

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I haven't heard that.

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [30]

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I have no idea where you saw it.

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Operator [31]

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And our next question comes from the line of Travis Miller with Morningstar.

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Travis Miller, Morningstar Inc., Research Division - Director of Utilities Research and Strategist [32]

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A question again on the Wheatridge project. How much was the economics beneficial or improved by that integration, having all 3 of those battery, solar, wind versus what you saw in terms of just wind or just solar projects? How much of that integration helped the economics, if at all?

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [33]

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That's a really good question. First of all, this was a competitive bidding process that was highly competitive. There were a number of bidders into the process. And we saw equipment costs that have been coming down steadily over the last couple of years and pretty commensurate with some of the things you hear around the rest of the country. So very good in terms of just overall competitiveness in each of the components on a stand-alone basis. What the combination does is it allows you to utilize a little bit more of the transmission resources as the wind farm is in the eastern part of the state and transmission is one of our higher cost. So that's where you get the incremental increase in economics over time.

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Travis Miller, Morningstar Inc., Research Division - Director of Utilities Research and Strategist [34]

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Okay. Was there any consideration of kind of the qualitative aspect of this? Or perhaps, you'd get more capacity credit not capacity in terms of what's out there capacity, but in terms of available capacity out of this just by having those 3, perhaps, solar helping charge the battery, wind's using that battery? However you think about it. Because there are qualitative performance...

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [35]

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Absolutely, and that allows us to essentially generate more wind and solar energy storage and then be able to transmit it into load region of Portland and our service territory at higher rates than we otherwise would be able to do so. You're absolutely right.

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [36]

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Yes, think about it as solar shifting. Pulling in energy during the peak hours of the day, and we're are able to shift it. Because typically what happens as the sun goes down before we get to our peak load and the battery is going to allow us to be able to shift some of that energy to better meet that peak.

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Travis Miller, Morningstar Inc., Research Division - Director of Utilities Research and Strategist [37]

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And then the winds would also supplement then?

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [38]

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Absolutely, it all works together.

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Travis Miller, Morningstar Inc., Research Division - Director of Utilities Research and Strategist [39]

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Okay. And on another topic, how much are you guys watching what's going on directly to the south with PG&E? How close are you watching it? Do you think there's any kind of industry-wide or even specifically to Oregon? Any kind of precedent that could come out of the, say, out of the whole situation, however long it takes? Just wondering your thoughts on that.

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [40]

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Well, obviously, what's happening in California is very complex and the fires that they've had have been truly tragic. We have some very significant differences in Oregon law versus California law. We do not have anything that looks like inverse condemnation in this state, and most states do not. We also operate in a significantly different type of climate. A wet belt with largely different species of vegetation and different types of forests. That being said, everyone in the industry is making sure that all of our tree trimming and vegetation management, all of our equipment is not subject to some of the same things that they've seen in California. And we have always taken the health and safety of our system and the safety of our customers and the communities we serve at the highest priority. So this is really just an extension of what we've always been doing as a utility.

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Operator [41]

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And our next question comes from the line of Paul Patterson with Glenrock Associates.

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Paul Patterson, Glenrock Associates LLC - Analyst [42]

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Just on the -- not filing the rate case, is it just because of the renewable track or what have you that you don't have to file? Or is there anything else in terms of, so, the O&M outlook or how CapEx is working within your system that -- is there anything else we should be thinking about that is allowing you not to go in for a rate case? Or is there any change in trajectory there?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [43]

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No. It's back to what I said in my prepared remarks, Paul. It's looking at the overall investments and then the value that those investments are taking. From an OpEx perspective, it's the growth in our service territory and our customers because of the strong economy that we have out there. So those and some other items are helping us focus on trying to stay out and trying to make sure that we keep our prices low for our customers. We continue to be a very competitive company.

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Paul Patterson, Glenrock Associates LLC - Analyst [44]

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Great. And is there -- and do you have an idea when you might be going back in again or?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [45]

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No, we'll evaluate that on an annual basis, Paul.

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Paul Patterson, Glenrock Associates LLC - Analyst [46]

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Okay, great. And then with respect to -- just a sort of follow-up on Travis's question. Is there a sort of a capacity value sort of quantitatively that's associated with this Wheatridge project, if you follow me? If you look at all the megawatts and what you, how do we think about sort of the firm capacity that it provides because of battery -- because of the combination, if you follow me? Is there a key number with that?

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [47]

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Yes, that's a really good question. This was an RFP for energy, and as we begin to study and work with the battery and solar components, we will know a lot more going forward. As we indicated in some of the press materials, this is a first of its kind in the country at this kind of scale. And so we have a lot to learn, and we're very much looking forward to being able to understand the capacity values. But this was an energy RFP.

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Paul Patterson, Glenrock Associates LLC - Analyst [48]

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Okay. So the capacity value that one would assume with the combinations there, that's not really factored into the economic sell-out to win the RFPs. Is that appropriate to say?

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [49]

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It's all factored in but it's factored in on a much more of an energy basis because that was the criteria of the RFP.

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Paul Patterson, Glenrock Associates LLC - Analyst [50]

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Okay. And you said it was extremely competitive. Can you quantify any more than that?

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [51]

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No, unfortunately we can't.

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Paul Patterson, Glenrock Associates LLC - Analyst [52]

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Okay. And then just finally, there is -- I think there might be some legislation that comes. Any outlook on legislation in carbon outlook and that might mean for you guys? Have you -- can you elaborate a little bit on that?

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [53]

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Sure. And just for others who may not be aware, one of our governor's top priorities is a cap and trade legislation. It's consistent with the state's targets to reduce emissions, carbon emissions, by 80% from 1990 levels by 2050. And it's also consistent with the plans that we've been talking about as a utility for a while and our decarbonization studies that we did ourselves. At present, we are looking very closely at the legislation, which has just been in detail for about 10 days now, and working collaboratively with legislators and the governor's office. Our main interest is making sure that customers don't pay twice as we reduce the carbon impact of our generation, and that we continue the trajectory of adding renewables and producing less carbon-emitting electricity as we go forward.

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Operator [54]

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And our next question comes from the line of Gregg Orrill with UBS.

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Gregg Gillander Orrill, UBS Investment Bank, Research Division - Executive Director & Equity Research Analyst of Utilities [55]

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I was wondering, is the basis for the growth rate guidance $2.37 in '18?

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [56]

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So -- yes, in $2.37, one thing you should recognize is that we do have the onetime gain from the Carty Settlement, which is a nonoperational item.

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Gregg Gillander Orrill, UBS Investment Bank, Research Division - Executive Director & Equity Research Analyst of Utilities [57]

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And that's the only adjustment?

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [58]

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Yes.

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Operator [59]

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And our next question comes from the line of Vedula Murti with Avon Capital.

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Vedula Murti, [60]

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Just to follow up on Gregg's question, and as I recall it, I think the -- that onetime gain was a $0.12, if I recall. So actually the 46% should be off of a $2.25 number, is that correct?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [61]

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No, a $2.37 base.

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Vedula Murti, [62]

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Even with...

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [63]

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The year-over-year associated with that, again, was $0.11.

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Vedula Murti, [64]

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Okay, so the $2.37 is the correct base?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [65]

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Yes.

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Vedula Murti, [66]

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Okay. And I see, obviously, with the elevated capital spend, rate base is growing at a rate that would tend to support 46%. When you go back out to 2022 and 2023, back to $500 million given DT days at $400 million plus right now, the rate base growth slows back down again. So I'm wondering if you can discuss a little bit about any backfill opportunities and potential magnitudes there that you're evaluating at this point in terms of rate base.

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [67]

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Thank you for your question. As you know, we take a look at our capital on a regular basis and have tradition of updating it pretty substantially in the fall. At this point in time, we will -- we have a lot on our plate, and we'll be looking at those outer years as we move forward. So there's nothing to update you on right now.

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Vedula Murti, [68]

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Okay. And at this point, given that the tracker mechanism will put in the RFP assets into rates, should we then assume that post '21 that you'd still be able to, because of growth and efficiencies, be able to continue to stay out?

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [69]

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Yes -- oh.

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [70]

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We -- as I mentioned earlier, we are looking at it and an annual basis as to whether we will need to file a General Rate case or not.

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [71]

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But we remain very enthusiastic about the growth of our region. We have a number of industries that are finding the -- this area very attractive for a variety of reasons.

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Vedula Murti, [72]

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Do you believe that you can sustain the growth that you just highlight here for the '18 through '21 period, beyond '21?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [73]

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We're not giving any guidance beyond '21 time period at this particular point.

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Operator [74]

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Our next question is a follow-up question from Paul Ridzon with KeyBanc.

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Paul Thomas Ridzon, KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst [75]

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Getting pinged with a little bit of what I think is some confusion. What was the Carty gain? And just to clarify, the base for the 4% to 6% is $2.37?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [76]

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Yes. You got that right. The gain on Carty was $0.11. That's the year-over-year.

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Paul Thomas Ridzon, KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst [77]

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So that is the drop-off of some expenses in '17? And then the cash payment?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [78]

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Yes.

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Paul Thomas Ridzon, KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst [79]

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And then what was the average CWIP balance in 2018?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [80]

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About $250 million.

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Operator [81]

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Our next question comes from the line of Greg Reiss with Centenus.

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Gregory Reiss, [82]

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Yes, I wanted to clarify the base here, but it seems like you guys are saying it's $2.37 and you don't have to strip anything out of that number?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [83]

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Yes. That's right, Greg.

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [84]

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Correct.

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [85]

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That's right, Greg.

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Gregory Reiss, [86]

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And then another question. Just on the $45 million that you guys reserved to give back for tax reform, is that sitting in cash on balance sheet or is there like a regulatory liability on the balance sheet for it?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [87]

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There is regulatory liability. We'll be passing it back to customers over the next 2 years.

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Gregory Reiss, [88]

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And does that flow into rate base? Or is that -- or was the [aided] portion a different number?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [89]

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That's a good question. Greg, I'll get back to on that one. I think it's the rate base, but I want to make sure I give you the right answer. I'll have Chris follow-up with you.

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Operator [90]

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And we have a follow-up question from Paul Ridzon with KeyBanc.

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Paul Thomas Ridzon, KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst [91]

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Is there a reason you're not backing that $0.11 out? Does it offset some of it, or...

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [92]

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No.

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [93]

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Thanks, Paul. And thank you, everyone, we appreciate your questions and interest, and joining us for today's call. For those who are attending the Bank of America Merrill Lynch or Williams conferences in March, we look forward to seeing you. And we also invite everyone else to join us for our first quarter call in late April. Thank you very much, and have a good day.

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Operator [94]

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Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect. Everyone, have a great day.