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Portland General Electric Reports Second Quarter 2012 Financial Results

Stocks in this article: POR

“I’m pleased with PGE’s performance this quarter,” said Jim Piro, President and Chief Executive Officer. “Our operating performance remains strong, keeping us on track to meet our financial and operating objectives for the year. In addition, we issued a request for proposals for capacity and energy resources and submitted a final draft renewable RFP to the OPUC for approval.”

Second Quarter Highlights

  • Issued a request for proposals (“RFP”) seeking 300 to 500 megawatts of baseload electric power generating resources, approximately 200 megawatts of year-round flexible and peaking resources, and two seasonal peaking resources to help meet PGE’s capacity and its customers’ energy requirements. PGE plans to submit self-build proposals and will own and operate any resources developed by third parties on the Company’s sites.
  • Submitted a draft of a renewable energy RFP to the Public Utility Commission of Oregon for approval to proceed with the issuance of the RFP to the public. The RFP is expected to be issued later this year and will seek renewable generating resources, consisting of approximately 100 average megawatts, to help PGE comply with Oregon’s renewable energy standard. The Company is targeting 2015 to bring this renewable resource online.
  • Declared a quarterly dividend of $0.27 per share, an increase of approximately 2% from the preceding quarter. Since becoming a public company in early 2006, PGE has annually increased its dividend in the approximate range of 2% to 4%.
  • Moody’s Investors Service (Moody’s) affirmed the ratings of PGE (Baa2 for senior unsecured debt and Prime-2 for commercial paper) and changed the Company’s rating outlook to ‘positive’ from ‘stable.’ The change in the outlook reflects Moody’s expectation that, over the intermediate term, PGE’s financial metrics will improve to levels more commensurate with the Baa1 rating category.

Second Quarter Operating Results

Net income for the second quarter of 2012 was $26 million, up 18% from $22 million for the comparable period of 2011, primarily due to favorable power supply operations, including an 8% decline in average variable power cost, partially offset by a decline in the volume of retail energy deliveries.

Total revenues for the second quarter of 2012 were $413 million compared with $411 million for the comparable period of 2011.

Retail revenues were $394 million for the second quarter of 2012, an increase of $4 million from the comparable period of 2011. The increase was primarily due to the net effect of: an $8 million increase related to an estimated refund to customers recorded in 2011 pursuant to the Company’s Power Cost Adjustment Mechanism (“PCAM”), while no collection or refund was recorded in 2012; a $5 million increase due to changes from various other items, including the decoupling mechanism; a $4 million increase related to the refund to customers of the PGE’s Independent Spent Fuel Storage Installation (“ISFSI”) tax credits in the second quarter of 2011; a $9 million net decrease resulting from changes in the volume of energy deliveries to retail customers; and a $5 million decrease resulting from an overall decline in the average retail price, primarily driven by a decrease in projected power costs for 2012.

Wholesale revenues in the second quarter of 2012 declined 25%, compared with the second quarter of 2011, due to a 34% decrease in average price, partially offset by a 19% increase in sales volume. Lower wholesale power prices were driven by low natural gas prices.

Purchased power and fuel expense for the second quarter of 2012 was $156 million, a decrease of $13 million, or 8%, compared with the second quarter of 2011, primarily driven by a 19% decrease in the average variable cost of purchased power, partially offset by reductions in hydro and wind generation of 10% and 12%, respectively. During the second quarter of 2012, a substantial amount of lower-cost purchased power economically displaced thermal generation. Despite declines in energy received from both hydroelectric and wind resources during the second quarter of 2012, the average variable power cost declined 8% from the second quarter of 2011 primarily driven by lower natural gas prices.

Energy received from hydroelectric resources, including that purchased from mid-Columbia projects, in the second quarter of 2012 decreased 30% from the second quarter of 2011, and was 16% above the levels projected in PGE’s 2012 annual power cost update tariff (“AUT”) for the current quarter, compared with 19% above the levels projected in the 2011 AUT for the second quarter of 2011. Energy received from the Company’s Biglow Canyon wind farm decreased 12%, from less favorable wind conditions during the second quarter of 2012 relative to the second quarter of 2011.

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