Portland's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Portland General Electric Company (POR)

Q2 2012 Results Earnings Call

August 7, 2012 11:00 AM ET


Bill Valach – Director, Investor Relations,

Jim Piro – President and CEO

Maria Pope – Senior Vice President, Finance, CFO and Treasurer


Neil Mehta – Goldman Sachs

Brian Russo – Ladenburg Thalmann

Andrew Weisel – Macquarie Capital

Mark Barnett – Morningstar

Sarah Akers – Wells Fargo

Mike Bates – D.A. Davidson



Please standby, we are about to begin. Good morning, everyone. And welcome to Portland General Electric Company’s Second Quarter 2012 Earnings Results Conference Call. Today is Tuesday, August 7, 2012. This call is being recorded and as such, all lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer period. (Operator Instructions)

For opening remarks, I would like to turn the conference call over to Portland General Electric’s Director of Investor Relations, Mr. Bill Valach. Please go ahead, sir.

Bill Valach

Thank you, Anne, and good morning, everyone. I’m pleased that you’re able to join us today. Before we begin our discussion this morning, I’d like to point out that we have prepared a PowerPoint presentation to supplement our discussion today and we’ll be referencing slides throughout the call. For those of you accessing the call over the phone, you can find these slides on our website at portlandgeneral.com.

Referring to slide two, I’d like to make our customary statements regarding Portland General Electric’s written and oral disclosures and commentary. There will be statements in this call that are not based on historical facts and as such, constitute forward-looking statements under current law. These statements are subject to factors that may cause actual results to differ materially from the forward-looking statements made today.

For a description of some of the factors that may occur that could cause such differences, the company request that you read our most recent Form 10-K and Form 10-Qs. The Form 10-Q for the second quarter 2012 is available on our website at portlandgeneral.com.

The company undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise, and this Safe Harbor statement should be incorporated as part of any transcript of this call.

Portland General Electric’s second quarter earnings were released before the market opened today and the release is available at portlandgeneral.com.

Leading our discussion today are Jim Piro, President and CEO; and Maria Pope, Senior Vice President of Finance, CFO and Treasurer. Jim will begin today’s presentation by providing a general overview of the quarter’s results and our strategic capital projects. Then Maria will provide more detail around the quarterly results and following prepared remarks, we will then open the lines up for your questions.

It’s my pleasure to turn the call over to Jim.

Jim Piro

Thank you, Bill. Good morning, everyone, and thank you for joining us. Welcome to Portland General Electric’s second quarter 2012 earnings call. As slide four shows, PGE’s second quarter net income was $26 million or $0.34 per share. We are reaffirming our 2012 earnings guidance of $1.85 to $2 per share.

As you can see on slide five, today, I’ll give you an update on Oregon’s economy and discuss operational excellence, as well as the progress we’re making on our strategic initiatives, which drive business growth. Then Maria will provide a financial update, detailing PGE’s second quarter results, liquidity and our outlook for the remainder of 2012.

Now, let’s move on to the economic outlook in our operating area. Oregon’s June unemployment rate of 8.5% is 1% lower than in June of last year and the unemployment rate in our operating area is averaging 7.3%, which is also nearly 1% lower than a year ago. The Portland metro area gained 21,000 jobs between June 2011 and June 2012, which represents a 1.3% gain.

In the first six months of 2012, our new residential connects increased by 2,900, compared with 850 added during the same period last year. So far, this year our loads are up about 1% over 2011 weather adjusted levels, reflecting the growth we are seeing in all sectors.

Now on to operational excellence. We continue to deliver excellent operating performance company-wide. Our system operating extremely well, our distribution reliability metrics remain strong and generating plant availability was high.

We are also very pleased to be the top ranked investor-owned utility in the nation for residential customer satisfaction and in the top decile for business customer satisfaction in the J.D. Power and Associates 2012 Electric Utility Satisfaction studies for Residential and Business Customers. This is a great recognition of the hard work and effort of our employees, who dedicate themselves to meeting our customer’s needs.

We are continuing our benchmarking and best practices work to identify and implement process changes and technology improvements that result in efficiencies throughout the company. Right now, we are focusing on our information technology in transmission and distribution areas.

Now I will give you an update on our progress executing our integrated resource plan, action plan. Please refer to slide six. The Oregon Public Utility Commission approved our capacity and energy RFP, and it was issued for competitive bidding on June 8th.

Independent power developers and producers can bid into the RFP with purchase power agreements, build, own transfers or asset sales and they have the option to build on PGE’s benchmark site, as long as the plants are built to our specifications and would be owned and operated by us. We submitted PGE’s benchmark bids last week and all other bids are due tomorrow. We are targeted an initial short list selection in November, with a final decision in early 2013.

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