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Edited Transcript of POR earnings conference call or presentation 26-Oct-18 3:00pm GMT

Q3 2018 Portland General Electric Co Earnings Call

PORTLAND Oct 29, 2018 (Thomson StreetEvents) -- Edited Transcript of Portland General Electric Co earnings conference call or presentation Friday, October 26, 2018 at 3:00:00pm 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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* Ashar Khan

* Christopher James Turnure

JP Morgan Chase & Co, Research Division - Analyst

* Insoo Kim

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

* Julien Patrick Dumoulin-Smith

BofA Merrill Lynch, Research Division - Director and Head of the US Power, Utilities & Alternative Energy Equity Research

* 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 Third Quarter 2018 Earnings Results Conference Call. Today is Friday, October 26, 2018. This call is being recorded. (Operator Instructions) For the 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.

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

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Thank you, Heather, and good morning, everyone. I am pleased that you're 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 in 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 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. Portland General Electric's third quarter earnings were released via our earnings press release and the Form 10-Q before the market opened today, both of which are available at 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 Pope.

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

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Thank, Chris, and good morning, everyone. With the Carty settlement behind us, we're focusing our full attention on the future. In the third quarter, our offering performance from generation to transmission and distribution was strong, and we continue to see benefits from immigration and a healthy economy.

Turning to Slide 4. We reported net income of $53 million or $0.59 per share compared with net income of $40 million or $0.44 per share in the third quarter of 2017. This quarter, we recognized $10 million in proceeds from the Carty cash settlement or $0.07 per share, which partially offset previously expensed items. What is most notable about the third quarter is that we saw more volatility in the energy markets across the West than we've seen in the last decade. We are very pleased with how we managed through these market fluctuations. Not only did we maintain reliability, but we were able to control cost effectively. Jim will share more details on this later.

Turning to Slide 5. I'm pleased to share that our service area continues to experience strong economic growth, with low unemployment rate of 3.3% and population growth of 1.6%. Construction activity remains steady in Portland, with current projects focused on mixed-use and residential buildings. Our service areas low cost relative to Seattle and the Bay Area continue to make this region attractive to apparel and technology companies. And proximity to Asian markets and the enhanced fiber connections made the area particularly appealing to the access.

Now turning to Slide 6. We continue to execute on our clean energy vision and our strategy to reduce greenhouse gas emissions. Our renewable request for proposal for additional resources garners highly competitive bids, and we've recently submitted a shortlist of those proposals to the OPUC. These 6 bids from 3 bidders includes a combination of wind, solar and battery storage. Also on this shortlist is PGE's third-party joint bid for 36 average megawatts of company-owned wind resources and the power purchase agreement for another 83 average megawatts. The commission is expected to acknowledge the shortlist by early December and we expect to complete contract negotiations and announce the results shortly thereafter. We continue to work at the commission and interveners on our green tariff, a green energy product designed for municipalities and other large customers who want 100% renewable energy. Additionally, we have a number of smaller projects that we hope to grow in the future. These efforts include 3 Smart Grid projects adjacent to substations being upgraded, 6 electric avenues and a joint project with our local transit authorities as well as plans to move forward on our 5 proposed energy storage projects. PGE customers and the region continue to push for further growth in renewables and carbon-free technologies. Portland placed tenth on a recent list ranking America's 100 Greenest Cities and was just named the winner in the Bloomberg American City's Climate Challenge.

And now I'm pleased to turn the call over to Jim.

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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. As Maria mentioned, and as shown on Slide 7, we're affirming our full year 2018 earnings guidance of $2.25 to $2.40 per diluted share. We're currently expect to be towards the middle of this range.

Turning to Slide 8, which shows earnings drivers for the quarter. First, the Carty cash settlement increased earnings $0.10 per diluted share due to a $0.07 increase related to a $10 million pretax cash settlement proceeds and a $0.03 increase related to avoided carrying costs -- our carrying and litigation costs. Second, gross margin increased earnings by $0.04 due to $0.06 increase as a result of higher wholesale electric prices and lower natural gas prices, allowing for the increased economic dispatch of our plants offset by a $0.02 decrease due to less favorable weather quarter-over-quarter, followed by a $0.01 decrease in other expenses. As Maria mentioned, in the third quarter, electricity prices in the West were extremely volatile as a result of wildfires and natural gas constraints in California due to unplanned pipeline outages and a methane leak that reduced capacity at the state's largest natural gas storage facility. Our power operations team did an excellent job managing our diverse energy portfolio and used the opportunity to lower natural -- opportunity of lower natural gas prices and higher electric wholesale prices to manage costs and help maintain the reliability of the system. In particular, this helped to mitigate minimal wind output, slightly below normal hydro production and thermal generation outages largely due to emission testing at the Colstrip Units 3 and 4. The testing has been completed and the units have been operational since September.

Moving to Slide 9. Last month, we settled all revenue requirement issues related to the 2019 general rate case. The agreement resulted in a 9.5% return on equity, a 7.3% cost of capital, a 50% debt and 50% equity capital structure and a rate base of $4.75 billion, which includes our customer information system. To the extent the rate base ends up being higher, we will manage our operating costs and provide a return in incremental capital. The average customer price increase is expected to be less than 1%, with final power costs updates due in mid-November. The remaining issues to be resolved include our proposal for full volumetric decoupling, the storm restoration balancing account and trended weather in the load forecast. Regulatory review will continue until the final order is issued, which is expected in December 2018, with new customer prices going into effect January 1, 2019.

On to Slide 10. We provide a summary of the company's current capital expenditure forecast from 2018 to 2020 related to investments to support our continued customer growth, development of a more efficient, reliable and secure system. And managing these expenditures, we are moving to a rolling, planning process that may result in more frequent updates to our capital forecast. We will continue to deliver our primary capital updates every third quarter. As shared in our previous calls, we have not included any capital expenditures in our forecast related to potential projects pursuant to our renewable RFP.

On to Slide 11. We continue to maintain a solid balance sheet, including strong liquidity and investment-grade credit ratings. As of September 30, we had cash available short-term credit and letter of credit capacity totaling $861 million, first mortgage bond issuance capacity of $1.1 billion and a common equity ratio of 50.1%. In 2018, we expect to find estimated capital requirements with cash from operations, debt issuances of $75 million and commercial paper as needed.

And now, operator, we are ready for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from Christopher Turnure with JPMorgan.

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Christopher James Turnure, JP Morgan Chase & Co, Research Division - Analyst [2]

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Could you give us an update on your dividend strategy, and perhaps, more broadly, your cash return strategy to shareholders in the event that you do not end up owning any wind in the RFP processor?

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

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Sure. Thank you, Chris, and good morning. As you know, we target our dividend payout ratio between where we expect our earnings to go over time. And we are committed to having a healthy dividend and continuing to grow our dividend into the future. As we look at our capital expenditures, you probably saw that we took up our forecast not only for 2019 but also in the outer years. And we expect to have really robust opportunities to invest in our system to be able to enhance the reliability as well as the security, prepare for environmental issues that we see and then, also, set the foundation for a smarter, a more integrated grid.

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Christopher James Turnure, JP Morgan Chase & Co, Research Division - Analyst [4]

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Got you. So it sounds like plenty of opportunities to invest. Clearly, you guys have heard the conservative side historically and providing us with CapEx updates and wanting to make sure there is visibility in your plan there. So is it fair to say that there would be no change to the dividend payout or kind of historical growth trend coming up when you typically review that in the middle part of next year?

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [5]

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You're absolutely right. We do review our dividend payout strategy generally in the springtime and make the -- and our Board makes the announcement so thereafter. And we continue to target the range of between 50% to about 70% of our earnings paydown each year.

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Christopher James Turnure, JP Morgan Chase & Co, Research Division - Analyst [6]

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Okay. And then, also a little bit of a longer-term question. Looking beyond just this year, how do you think about load growth potential? And in particular, when you're thinking about that, is it something that you have maybe more confidence in now that could help you stay out of rate cases beyond this year?

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [7]

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So -- and that's a terrific question. We have talked in the last couple of quarters about our load growth. And as we've noted, we're in a really admirable position to be in with regard to actually having load growth in the utility and we expect to actually have more going forward. Right now, we're looking at roughly about flat load and expect to return toward more normal rate of about 1%, largely due to the very robust immigration we have in our region and in the state. The state is growing at about 1.3%, and we're seeing immigration in our service territory of about 1.6%. We continue to see also growth at businesses coming into this area and are very pleased with the types of companies coming here.

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Christopher James Turnure, JP Morgan Chase & Co, Research Division - Analyst [8]

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Okay. And it is the nature of that growth that you're referring to something that would allow you to benefit with the current partial decoupling mechanism? Or is it something that would kind of be accrued to customers?

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [9]

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No. We generally accrued to customers. What our growth does is it really does offset some of the energy efficiency that we see on a regular basis. The current decoupling mechanism that we have really relates more to weather.

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

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The other thing to keep in mind, Chris, a lot this growth that we're looking at on a future basis has to do with industrial loads.

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [11]

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Yes. Very good point.

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Operator [12]

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Your next question comes from Julien Dumoulin-Smith with Bank of America.

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Julien Patrick Dumoulin-Smith, BofA Merrill Lynch, Research Division - Director and Head of the US Power, Utilities & Alternative Energy Equity Research [13]

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I wanted to follow up on a handful of items here. Quickly, if you can, just in the context of the new CapEx. What exactly is reflected? And I suppose I'm asking that first with a guy -- with an eye towards the typical third quarter updates that you all provided around substations and distributional upgrades? And then secondly, you include a comment on the side of Slide 10 with respect to upgrades and replacing of aging generation. Does that reflect anything with respect to the wind RFP? I suspect not, but, I want to reconcile that and also with respect to the storage docket as well. I just want to make sure we're clear about the $500 million in '18, '19, too.

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

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So How many questions was that, Chris -- or Julien. I'm sorry. No worries. Just teasing you. So as Maria had pointed out earlier, we take the CapEx budget to the board every third quarter. And we've updated that and updated the disclosures associated with it. Where we're -- what we're trying to do is provide you more visibility into what we think things look like on a long-term basis. And in doing that, it is into the items that we have continued to talk about. It is -- we've got a tremendous amount of customer growth that is going on in our system, so we're investing in that; those line extensions, those new substations that are required to support though -- that industrial load that has been coming into our area. Yes, it's adding more capacity into the system to be able to deliver to those particular points where all the growth is continuing. We're continuing to invest in the environmental side of our infrastructure. As we've talked about before, we've got a lot of transformers and some switchgear out there with PCBs in it that we're trying to reduce their existence in our service territory. We are continuing to focus on the rest of the aging infrastructure that exists out there. We've got thousands of miles worth of underground cable that we need to remove that are causing faults, that are increasing our O&M expenditures for the company. So the time our crews are out there chasing these type of faults. So we're spending a lot of time and effort on those. We're also spending a lot of focus on resiliency of the system. From a cyber perspective, so on the IT side, from being the systems that are in our offices to the systems that are out into the field. And then it's from a seismic perspective, the fact that we are in a Cascadia subduction zone. And just recently, there were additional faults that were identified under Mount Hood that will impact our service territory as well. So a lot of continual capital focus on the items that we have talked about before, along with trying to move forward what we call an interoperable grid. So it's the ability to not only move energy in one particular direction out to our customers but be able to integrate with technology that will be out in the field, whether it's on our side in the operations or resiliency of the system or over on the customer side as far as energy management and distributive resources.

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

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So Julien, with regards to your specific question on generation, that relates to our Westside hydro projects. Jim mentioned seismic and related upgrades, and that is included in the generation area. Many of those facilities are 100 years old or more. And we have been on a program to reassess there and are looking at repowering one of those facilities. The winds of RFP is not included in the capital forecast. However, the storage projects that we have been talking about for the last couple of quarters are included.

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Julien Patrick Dumoulin-Smith, BofA Merrill Lynch, Research Division - Director and Head of the US Power, Utilities & Alternative Energy Equity Research [16]

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And just to reconcile or clarify, rather. The typical distribution CapEx update cycle that you've done historically with third quarter, is that also reflected? Or should we be expecting something more robust for the fourth quarter here as well?

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [17]

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No. That's included now.

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [18]

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Yes. What we'll see is more visibility inside the company than we had in the past.

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Operator [19]

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Your next question is from Insoo Kim with Goldman Sachs.

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Insoo Kim, Goldman Sachs Group Inc., Research Division - Equity Research Analyst [20]

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Turning to the CapEx plan that you guys have. I know the RFP is not currently in there, but if it were to be -- if one of the Portland plans were to be selected would the associated CapEx be purely incremental to what's shown in '19 and '20? Or would there be some reshuffling potentially to get to a level that's not purely additive?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [21]

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Insoo, that would be incremental to that plan.

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Insoo Kim, Goldman Sachs Group Inc., Research Division - Equity Research Analyst [22]

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Got it. And then, could you just provide a little bit more color on the, I guess, on the mix of the PPA-owned renewable capacity that you guys had in your proposals? And what kind of factors went into that mix?

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

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Sure. So we have a partner that we have been working with for some time on wind project development that also includes solar and battery storage. And we have a mix, roughly, where we are doing about 36 megawatt -- average megawatts and they are doing the balance or about 80-some-odd megawatts. It's been a terrific partnership and has resulted in a competitive bid. I would say that we have received several competitive bids and the process remains ongoing.

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Operator [24]

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Your next question comes from Paul Ridzon with KeyBanc.

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Paul Thomas Ridzon, KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst [25]

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Quick question. Thank you for the CapEx update, and we appreciate the more frequent dialogue. Do you envision maybe giving more granularity as to kind of the buckets that this capital is going into?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [26]

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Not at this particular point in time, Paul.

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Paul Thomas Ridzon, KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst [27]

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And then, Jim, I think you said you kind of felt comfortable with the middle of guidance. That implies kind of a weak fourth quarter. What are some of the things that are going to hit the fourth quarter?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [28]

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Well, it kind of goes back to the comments that Maria had made and I had made regarding power costs going into the fourth quarter. You've got the Enbridge gas issue up in Canada that is derating the amount of gas coming down the I-5 corridor. So that's causing power prices to be a bit higher, and it's causing the gas prices and the I-5 corridor to be significantly higher. I mean, gas I think for tomorrow or for -- for tomorrow is like $10 for the Sumas. And so that's going to be an issue. That -- and we are going into the winter season, so storm restoration. We're expecting that to be a little bit of a challenge. And we just got a few things to get done before we get to the end of the year.

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [29]

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One things I wouldn't under appreciate is given the volatility we saw in energy markets in late July and early August, we took early action to drive to an earnings results and worked hard on our O&M under Jim's direction. Give-- that was possible largely because of the hard work that everyone put into it but also, the pretty good weather that we had. And as we head into much more challenging November and December for weather, situation will have a lot higher storm restoration and other costs, which are more typical of a fourth quarter.

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Paul Thomas Ridzon, KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst [30]

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O&M was down markedly this quarter. Was that planned outage time? What drove that?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [31]

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It was driven by -- it's not just in the quarter but it was driven by the planned outages there. You got to keep in mind that we had the recorded the change in -- or not the change, but the settlement associated with Carty at the same time.

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Paul Thomas Ridzon, KeyBanc Capital Markets Inc., Research Division - VP and Equity Research Analyst [32]

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And lastly, staff commented on your process in the RFP and had some questions. Kind of what's the next step there?

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

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So the next step is for us to work through the process of the short list. We are also beginning negotiation all of the parties because we need to be able to conclude by the end of the year to be able to fully incorporate all of the PTCs into these projects.

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Operator [34]

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Your next question comes from Travis Miller with MorningStar.

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Travis Miller, Morningstar Inc., Research Division - Director of Utilities Research and Strategist [35]

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Just a real quick clarification on the RFP. Would you guys have any kind of involvement in that battery or storage part of either CapEx or some kind of supporting infrastructure or is it just that 36 megawatts of wind?

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [36]

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So the battery storage part is inclusive of the PPA section, but we're working collaboratively with our partner. And we have other battery storage projects that are ongoing at the company. Total of about $44 million investment going forward.

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [37]

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In that case we're looking about battery storage in residential as a testing in it. We're looking at battery storage in our substations, microgrids and then, at our -- one of our generating plants.

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Travis Miller, Morningstar Inc., Research Division - Director of Utilities Research and Strategist [38]

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Okay. And that would be separate from this renewable RFP?

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [39]

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Yes. It is separate.

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Travis Miller, Morningstar Inc., Research Division - Director of Utilities Research and Strategist [40]

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And then, following up on a previous question that I was going to ask about. The split in that $500 million either 2021 or 2022 in terms of distribution, generation, transmission. Is that something that you're not going to break out? Is that how we understood you answered the other previous question?

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [41]

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Yes. We're not breaking it out at this point in time. The vast majority of our incremental capital expenditures are in our transmission and distribution areas as we go forward. We're seeing -- as Jim has mentioned, we're seeing substantial customer growth. We also have catch up to do in terms of our resiliency, environmental expenditures, and really beginning to do the incremental steps around smart bi-directional grid is really where we're focused our spending.

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Travis Miller, Morningstar Inc., Research Division - Director of Utilities Research and Strategist [42]

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Okay. And then one higher level. As you looked out to 2022, you're putting together that CapEx budget and even more operational spending -- I imagine you're looking out there. Was there a specific allocation on your thoughts around electric vehicles playing a role there? And they like play a role throughout all the CapEx, but just wondering if it was large enough in your view looking out that far to actually be a specific allocation or some material amount directly related to...

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [43]

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That's a really good question, and we are doing a lot with regards to electric vehicles. We have the electric avenues that we are working collectively with our municipal partners on, and creating additional charging opportunities for customers. We're doing a lot around education and working with car manufacturers and distributors as partners. And are really excited about the partnerships that we have with our local -- several of our local transit authorities. But none of that capital amounts to a significant amount to completely separate it out at this point in time. We might get there in the future, but I think this will be when we'll see all sorts of parties come together to make electric transportation really happen within our service area.

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Operator [44]

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Your next question comes from Ashar Khan with Verition.

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Ashar Khan, [45]

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Can I just ask, as we take the midpoint of the guidance, can we assume that this is a pretty normalized year in terms of takes and ask? I mean, would this assume that weather was normal for the year? I mean, you had weak weather in the beginning and all strong weather in the third, but is now like weather 0? I was just trying to get a better sense of what a good normalized number would be for this year, if you can help on that.

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [46]

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Well, the big difference, Ashar is. Carty cash settlement that we had. I mean, that brought in a $130 million, and a $10 million reduction. And our A&G cost was partially offset some of the cost of chasing those settlements. Outside of that, loads weren't off that much; power costs were not normal. For this particular year given what we have seen, we had an outage in the Boardman Plant and outage associated with Colstrip Units 3 and 4 and then, as we were mentioning earlier, we have the Enbridge gas situation in the Pacific Northwest.

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Ashar Khan, [47]

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Could you quantify how much off normal would that end up in the year as we look at it right now in your forecast for the year? How much do you think you can offer?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [48]

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No. I couldn't do that off top of my head.

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

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I wonder, given the volatility that we've seen in gas prices and in energy prices this year but also energy prices last year, whether they are ever is going to be something as truly normal in terms of weather in our region. And it's one of the reasons in the rate case that we're looking for additional decoupling mechanisms that are more typical of what you see in other states across the country.

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [50]

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And trended weather as well, trying to shorten that out, given climate change.

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Ashar Khan, [51]

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Okay. And so then, can I just follow-up. If I read the Q correctly, you booked like $8 million and $1 million related to Carty before you stopped it -- at least, it said year to date. So can I take then that $9 million or so and after-tax, if that's your, you know, 20% rate or something like that, which kind of gives you like $0.06 or $0.07 cents that we booked negative $0.06 or $0.07 this year related to Carty that was in it but then we got a positive, what is it, $0.10 or $0.12, right? Am I correct? So in the net, the Carty really helped the year by about $0.03 or $0.04 overall. Is that the right way to look at it or am I doing my math wrong?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [52]

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Well, we -- what we had was the $130 million settlement. And after we looked at what was still on the books at above the $514 million that we had agreement with and commission on, that left us with eventually $10 million. And we applied that $10 million to the A&G. Now what that did, from an EPS perspective, is that we had a onetime change of $0.07 and we avoided about $0.03 of additional costs going forward as we were continuing -- or we would have had to have continued to chase that litigation absent the settlement.

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Ashar Khan, [53]

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Okay, okay. I kind of get it. And then can I just ask a better sense on depreciation? I mean, depreciation increased by like $30 million or so from $17 million to $18 million. Is that the kind of run rate one should expect going forward as a predefined number? But I thought just check in if you could give some anything on that regard.

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [54]

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That's -- it is a little bit of an anomaly in there -- in that. Not only -- you're seeing 2 things: one thing is you're seeing that capital addition is a little higher than what the retirements would be; the other thing is that in there we were collecting, over a 3-year period, about $52 million associated with the Trojan spent fuel decommissioning trust. So we were crediting back about $17 million annually or $52 million total. So it showed up as a reduction in depreciation in the past and it was also reflected in the revenue line as well. Well, that's now run as course, and so that's why you're seeing a bit of a jump up in depreciation year-over-year.

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Ashar Khan, [55]

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So the depreciation is more its normal level what you're saying, is that what you're saying?

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James F. Lobdell, Portland General Electric Company - Senior VP of Finance, CFO & Treasurer [56]

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Yes.

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Ashar Khan, [57]

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Okay. Okay because it was bent down because of them. It's not -- okay.

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Operator [58]

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(Operator Instructions) Your next question comes from Vedula Murti with Avon Capital.

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Vedula Murti, [59]

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Couple of things. One, can you remind me, since the capital program slide does not include the potential wind RFP spending, that if that were come to pass, how that would be allocated? How much in -- how much that is spread out?

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [60]

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Sure. You could be looking at anywhere between $150 million and $200 million over 2019 and 2020.

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Vedula Murti, [61]

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Will I do that pro rata? Or would that be back-end loaded or how should I -- how would I want to spread that?

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [62]

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At this point in time, it is too premature to speculate. I would just follow your own judgment.

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Vedula Murti, [63]

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Okay. And also I'm wondering, if we just take a look at the capital program as it is, relative to depreciation of the gives and takes, what has been translated into net rate based growth over on an annual basis if depreciation is running like $380 million or something like that at least as of now and CapEx is in the -- as it's shown here right now. What does that translate to in terms of rate base growth?

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [64]

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Well, we don't disclose exactly our long-term rate based growth or our long-term earnings growth forecast. We'll leave that up to you to do the math as we go forward.

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Vedula Murti, [65]

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Well, I mean, would it be incorrect then to take, say $500 million of capital in 2020 -- and I see a depreciation of $380 million that -- that would translate to $120 million of net rate base growth.

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [66]

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That's roughly how you would do the math.

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Operator [67]

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I'm showing no further questions at this time. I'd like to turn the call back over to Maria Pope for closing remarks.

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Maria MacGregor Pope, Portland General Electric Company - President, CEO & Director [68]

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Thank you. We very much appreciate your interest in Portland General, and we invite you to join us when we next report our earnings and the fourth quarter results in February of 2019. So thank you very much, and have a great weekend, everyone.

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Operator [69]

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