Q2 2020 Portland General Electric Co Earnings Call
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Today's Friday July 31st 20 Twond.
This call is being recorded and as such all lines have been placed on mute to prevent any background.
After the speaker's remarks, there will be a question and answer period.
If you like to ask a question. During this time simply press Star then the number one on your telephone T. bed.
If you like to withdraw your question press the pound.
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If you do tend to ask a question. Please aboard the use of speaker phones.
For opening remarks, I will turn the conference call over to Portland General Electric's Senior director of Investor Relations you are gone out O'neil. Please go ahead Sir.
Thank you Andrew Good morning, everyone I'm pleased that you're able to join US today before we begin this morning I'd like to remind you that we've prepared presentation to supplement our discussion which will be referencing throughout the call. The slides are available on our website at investors got Portland General Dot com.
Referring to slide to some of our remarks. This morning will constitute forward looking statement. We caution you that such statements involve inherent risks and uncertainties and actual results may differ materially from our expectations.
For a description of some factors that could cause actual results could differ materially. Please refer to our earnings press release and our most recent periodic report on form 10-K, and 10-Q, which are available on our website.
Leading our discussion today, our Maria Pope President and CEO, and Jim Lobdell Senior Vice President of Finance CFO and Treasurer. Following their prepared remarks, we will open the line for your questions now, it's my pleasure to turn the call over to Maria Thank.
Thank you Jordaan and good morning, welcome to Portland General Electric's earnings call healthier, all staying safe and healthy during these unprecedented times.
Today, I'll provide an overview of our financial results.
Updates on our economy and actions we've taken in response to the Cobot 19 pandemic.
Jim will provide more detail on our financial results as well as the outlook for the remainder of the year.
Before I go through the quarter.
I want to first address the social unrest that we are experiencing in our state.
Across our country focused on racial and equities.
And the ongoing protest that have placed Portland front and center.
We reminded daily that we're living in a historic time for our community.
And country.
This tumultuous time.
Corporations have an opportunity to use their influence.
ER positive change.
PG he has committed to diversity equity inclusion.
While we are proud of our work to date and making progress towards our DNA goal.
We know that there is much more to do.
We're looking at all the way we have impact.
Two policy employee hiring promotion and retention.
As well as supporting the communities we serve.
And we will do so while working together collaboratively with customers and communities.
As we continue to provide safe.
Reliable affordable and clean energy.
Now, let's turn to the financial forecast.
And our performance.
On slide four.
Over.
On our last earnings call, we lowered our guidance to reflect the covered 19 pandemic and resulting drop in economic activity.
Our response included.
Reducing operating expenses as part of our ongoing commitment to control costs across the organization.
For the overall quarter.
Revenue was strong under the circumstances.
And was led by high Tech and digital industrial deliveries.
Severable hydro and wind conditions across the region resulted in surplus energy and low power prices.
Additionally, we were able to lower operating expenses.
Due to operational efficiencies and lower dispatch rates at our generating plants.
As a result, our second quarter 2020, net income was 39 million or 43 cents per share.
This represents an increase of 15 cents when compared to 2019.
You may recall this second quarter of 2019, we experienced the opposite condition.
Record low hydro.
In the region, and a favorable weather, which negatively impacted our gross margin.
With year to date earnings per share of $1.34.
We are more than halfway to our midpoint of our guidance.
Making a solid first half of the year.
Okay.
The second half of the year presents challenges.
The economic fall off in the petrochemical continue to impact retail revenue and wholesale market conditions.
Retail deliveries for the balance of the year, we'll also be impacted by the decoupling mechanism.
Gross margin will face additional headwinds due to more normal power market conditions.
Jim will further address both decoupling and power markets later in the call.
While the first full year financial picture presents challenges.
We continue to aggressively.
Managed cost to drive strong business results and are reaffirming our revised full year guidance of $2.20 $2.50, reflecting anticipated economic challenges that our customers and our community face.
As we move forward, we continue to pay close attention to economic conditions and the course of the pandemic.
Our first quarter forecast projected a gradual recovery into 2021.
That forecast remains largely unchanged and our outlook for the balance of 21 excuse me 2020 remains cautious.
Turning to slide five.
The economic impact of the pandemic on businesses communities and residential customers is reflected in the spike.
And the unemployment rate.
Which rose from historic lows of 3% in March.
To 14% in April and is now 11%.
In response to the economic hardships faced by our customers. We have poss collection of late fees and service Disconnections and are working with customers to implement flexible payment option.
The impact of economic conditions on energy usage.
He has been relatively consistent with our forecast.
Second quarter residential loans increased 7% on weather adjusted basis, and the number of customers increased by 1.6%.
Industrial deliveries increased 3% on a weather adjusted basis as our digital services and high Tech manufacturing customers continue their long term trend steady growth despite the pandemic.
These increases were more than offset by 16% decrease in the commercial sector.
Or declines were concentrated in hospitality government education and office buildings.
Turning to slide six.
We're on track to achieve our strategic targets.
And major capital projects.
We've had no significant supply chain or operational disruptions as a result cobot 19.
We rich and the integrated operations center remain on schedule.
In May we announced our partnership with the Douglas Kathy public utility district for a five year power purchase agreement for capacity.
That provides up to 160 megawatts of admission free hydro electric power.
As part of this partnership we will be providing both management and wholesale marketing services, leveraging our power portfolio management expertise.
Regarding future resources, we expect to issue one or more RFP for the new admitting resources.
Over the next several years.
Portland General electric in the region stage growing capacity needs as regional coal resources are retired.
We will also continue to assess the region's energy needs given long term economic consequences of the pandemic and other factors and market dynamics with that I'll turn the call over to Jim.
Thank you thank you Maria.
Good morning, everyone.
Turning to slide seven I'd like to walk through our quarter over quarter results.
Maria mentioned earlier, our earnings guidance or or earnings per diluted share of 43 cents is up the team from the same period in 2019.
Starting in 28 cents in the second quarter of 2019 on the slide.
First gross margin increased earnings a total of four cents per diluted share. This increases the result of a once a decrease the retail revenues, which includes a negative impacts of weather for the quarter and the effect of customer class composition on retail deliveries and a five.
An increase in net variable power costs, which includes higher wholesale revenues driven by a surplus of hydro and wind in the region.
Next an eight cents increase from lower operating and maintenance expense, which consists of a six us from reduced maintenance.
At our Boardman facility and a reduction in operating expenses for other fleet assets, a seven cents benefit from lower administrative expenses from savings and outside services and lower incentives and apply some decrease from higher bad debt expense associated with Cobas 19.
A once a decrease from higher depreciation and amortization expense due to greater plant in service in 2020.
One cents increase from other items, including higher returns on nonqualified benefit plan assets.
And finally, a three cents increase from lower tax expense, primarily due to PTC generation from strong wind production.
On the slide eight we're continuing to monitor or liquidity as economic conditions of all our balance sheet remains strong following actions taken earlier this year to improve our liquidity and ensure that we can continue to best serve our customers.
We expect to fund 2020 capital requirements with cash from operations issuance of debt securities and the issuance of commercial paper as needed.
Earlier this week, our board approved a dividend increase of nine cents per share on an annualized basis, which represents a 5.8% increase.
This increase follows the decision to hold the dividend slot in the first quarter as we assess the potential impact as a pandemic and is consistent with our long term dividend guidance.
In regulatory matters last quarter, we filed with the Oregon Public utility Commission to defer expenses associated with the impact of covered 19 for potential recovery.
The commission is conducting a process to determine the next steps and we have yet to defer any cobot 19 related costs.
Last month Commissioner Lisa timing was reappointed to the Oregon Commission and we're pleased that she continues to represent our customers.
Moving to slide nine which shows our updated capital forecast for 2020 through 2024, we're continuing to focus our investments on the reliability and resiliency of our system, while minimizing the impact on customer prices.
We're on track to execute our planned capital projects for the year and believe the adjustments to our liquidity and capital plan made last quarter were one time events.
Finally, I'll cover earnings outlook for the remainder of 2020.
We expect continued impacts from the pandemic on the economy and the regional power picture.
As Maria mentioned, we achieved $1.30 foreign earnings today was one dollar remaining to reach the midpoint of our earnings guidance I would like to cover a few considerations to.
Despite strong gross margin through the first half of year and retail revenue above expectations, we expect lower gross margin in the second half of the year.
We also anticipate a similar load composition to the second quarter and as such we're raising our full year load guidance assumption to flat on a weather adjusted basis.
Our commercial customers continue to face risks associated with economic with economic impact of the pandemic in Oregon.
But the strength of residential and industrial energy deliveries has mitigated this.
Despite this upward revision and demand we are maintaining guidance due to the structure of the decoupling mechanism residential customer usage on a weather adjusted basis that is above the established baseline is refunded the customers for the commercial decoupling collections are capped at 2% of revenue.
For the commercial customer class.
We're also experiencing unique year in the power markets.
Currently 38 million below the PGM baseline year to date due to favorable wind and hydro conditions in the region.
We estimate that we will continue to remain below the baseline at year end, but within the established did that range.
This increase in power costs for the balance of the year.
As a result at the interaction of lower power prices in the region and our forward power positioned to serve anticipated low.
Additionally, as Maria mentioned, we are reaffirming our full year earnings guidance of $2 in 20 to $2 in 50 cents per share based on the assumptions outlined in our press release, and our long term EPS growth target of 4% to 6% overtime.
And now operator, we're ready for questions.
Thank you.
As a reminder to ask a question you will need to press star one on your telephone.
So withdraw your question first the balance sheet. Please standby, while we compile the Q1 new roster.
Your first question comes from the line of Insoo, Kim with Goldman Sachs.
Good morning answer.
Morning, Thank you and I Hope you guys are doing our instincts acres, while these crazy targets.
Just a question on the guidance and thank you for.
The detailed on the decoupling mechanism might pick up I was something that we have talked about last quarter as well, but given just that year to date result, and I think some of the benefit you had realized from certainly better than expected demand trends.
Where it was the second half you know impact as a decoupling mechanism parties somebody anticipated and if that was so.
No. It all else being equal are you looking at something more at the upper half of the range.
Or are there some other considerations beyond the de coupling that we should be considered.
So thanks and so.
So first of all yes, we did anticipate the decoupling mechanism when we reaffirmed our guidance.
This quarter, but then also when we lowered guidance.
Last quarter and so we were looking at not only the economic impact of the pandemic, but our regulatory environment as we move forward. Let me, let Jim walk you through a little bit in more detail on how the decoupling mechanism works.
Thanks, Brad.
Enzo is mentioning.
In my statement when we looked at the residential customers there are actually up more than what we originally anticipated but at the same time, we're seeing more of a downside on the commercial side than expected and were continuing to see strength in the industrial side. So.
Residential thus being completely decoupled away on the commercial as Ed mentioned earlier once you hit that 2% then effectively you can no longer collect from customers as future point in time associated with that and then the industrial is helping to offset some of what we're experiencing on the commercial side as far as.
So on recovery.
Right. So just from what you recorded in the second quarter. The residential benefit that you received than that you saw into second quarter from an income statement. Our earnings purposes were affiliate benefit to to earnings already or is there actually timing component where.
That was reflected in second quarter, but then you actually have to adjust that into the later quarters.
No. These are reflected in the second quarter any the refund to customers that would occur associated with amounts over the weather adjusted based upon the was set in our January 2019 generated will be refunded back to customers in the 2022 time.
I've got to correctly.
Okay.
Understood.
And in terms of the Capex that you had deferred whether its 2020 or 2021.
Last quarter.
I know you didn't really change that for now and then you spoke on being more cautious if things.
Start to slowly improve throughout the balance of the year into early into next year could you see a a bulk of that coming back into 2021 timeframe and.
At this point for 2020 do not anticipate any re upping of of capital for the rest of the year.
So as you know until we have a regular capital forecasting process that we filed at the company and will remain disciplined on our spending on given.
Our cautious stance with regard to the economy and the length of time that we could be in a recessionary environment.
One of the things we noted on the prior call was our positive growth in the high Tech sector and if there are new customers that come into our area and there are some in current conversations with us around additional capital investment they may need, let's say for new sub stations or for other builders particular to their operate.
Since then that would be an upside.
Got it thank you so much.
Thanks Vincent.
Thank you. Your next question comes from the line of Julien Smith with Bank of America.
Morning June money doing.
Hey, good morning bits of various love me on for Julian actually.
Just a quick one here can you you will we get you hardly hear you.
I apologize is it better.
Got it as much better thank you.
Okay, sorry about that this is Barry is logging on for Julien just a quick one on your.
Expectations for your average CWIP balance for the year I was wondering if you could speak to that hurdle.
Yes, it's unchanged.
Okay excellent okay. Thank you that's it for me.
Thank you. Thank you.
Thank you.
Next question comes from a lot of Brian Russo with Sidoti and company.
More Brian Hi, Hi, good morning.
Hey, this is nice to see.
Did that dividend increase so just curious if you could just elaborating on.
What factors the board's considered.
When raising the dividend now in July versus.
In April when it was helpful.
Sure. So first of all we recognize that our dividend is an important component of our shareholder returns and being a steady and financially healthy company. It's really important that as we invest for the long term an infrastructure to maintain a safer.
Liable.
System, that's having a financial pretty healthy utility is critically important.
During the early days of the pandemic there're a lot of unknowns with regards to our economic environment.
And we remain to ticket it taking a cautious stance, but we announced at that point in time that we would continue to reassess our dividend.
Engaged with the board on the discussion.
And what we're doing is proceeding with what otherwise would have been sort of our normal course in terms of maintaining.
Healthy financial environment.
Hello.
Brian did.
I'm sorry.
I can hear you now.
Yes, thanks for that and I guess it tends to be forces your confidence in your EPS CAGR just based on your target payout.
Ratio.
Yes, one other things that we have moved very aggressively on this cost reductions across our company.
On the Elwyn avenues, you know, we just spoke about we've also reduced our capital spending we've brought in additional debt financing into the company to maintain a stable and healthy balance sheet.
To ensure that we can weather what comes our way in the future.
Well as controller on destiny by maintaining a reliable and safe utility system.
Okay, Great and then just on the additional financing when I look at the last disclosures versus the updated disclosures.
It looks like you're now is not forecasting any debt issuances in this third quarter versus previously you were assuming.
35 million of debt issuances.
So when you sum it all up it looks like.
Can issue hundred 25 million less debt in 2020 than previously.
Forecasted.
So Jim I'll give you all the details one of things I I want to make sure. We recognizes that we have been very successful at pulling back our capital expenditures and more importantly movie Ben.
Successful in lowering our operating cost during this very challenging times, we've used the crisis in many ways to accelerate our use of technology to reduce cost and to really focus on what matters to customers.
And we probably exceeded some of our expectations and our ability to move quickly and we still have while we still having a tremendous amount of work to do.
And Brian I'll add to that.
No we took out.
Tenure for first mortgage bond earlier this year and then we did a.
Bank loan that helps shore up the fund answer to the company because obviously, we didnt know where things are going to go from.
Coded economic impact perspective, and so as we're looking at our financing for the balance of year, given the fact that FERC is come out with a waiver on the imputation or the implications.
Short term debt in the CDC crediting rate.
We are looking at how we're going to.
Time, the repayment of that bank loans, and whether the timing associated with additional long term debt, we would take out in that in and probably Q4 of the year around $190 million, possibly.
Overall, we remain a net borrower for the year.
Okay understood Stephens system, and the net variable power costs into PJM, just remind me real quickly how how it works you were at 30 million below the baseline.
The first quarter.
Each.
It looks like you're now.
Thank you.
30 to 38 meters. So there was 18 million acre positive benefit in the second quarter is that in the five cents.
I'll be your gross margin benefits that you discussed even.
The baseline and it's within the night 10 sharing because that calculation isn't made with the two year end is that the simplistic way to think about it.
Yes that is you got to keep in mind that a 38 million and getting to within the dead band is for the balance of the year. So it gives you an indication is what we're expecting in the power markets.
Okay. So at the very least you're expecting an 8 million reversals.
Well or entirely incremental costs.
To get back to that baseline.
Second flow.
Brian were $38 million below the baseline right now is the dead band is $15 million below so it'd be moving from 38 into the $15 million range.
Okay got it alright, thank you very much thanks, Brian.
Thank you and our next question comes from the line of Chris Ellinghaus with Bert will use.
Good morning, Chris everybody how are you.
Chris.
Maria you talked about being cautious can you give us a little more color on what you're cautious about is it.
Just the economic recovery is it.
Well the pandemic will behave for the rest of the year and how that affects the economy would be what are your thoughts there.
Yeah, Chris I think it's all of the above.
As an essential service provider during these extraordinary time.
Delivering consistent reliable power services to our customers is our highest priority ensuring the continuity of our generation fleet.
The interaction and our capabilities.
Power markets.
Hey, transmitting if that power in distributing it to our customers day in day out is our highest priority and I can tell you with the stress that families.
And customers and communities that we serve are going through and ensuring that weve minimized outages.
Create payment plans that work for them.
Access like Keith in Oregon heat funds to support those are they're struggling.
Is that takes a non enormous amount of focus and and also we're as I mentioned, we're using this period of time to really focus on our cost structure accelerating our use of technology, simplifying our processes and procedures to ensure that everything that we do is meaningful to our CFO.
Customers and the communities that we serve we have a long ways to go with regards to on this economic recovery and there's a tremendous amount of uncertainty and we will remain focused on investing in our system prudently and to ensure reliability.
All of US have aging assets, we also have the opportunities to reduce cost through technology.
Okay. Thanks.
Maria can we assume that that the company, we'll plan to revert to the April date for the dividend.
No. That's a really good question, Chris and we're going to assess out as we go forward.
One of the things that we have noted in this process is that we're one of the early companies and announcing our dividends and we're going to think about what's the most.
Prudent and and a practical thing to do as we move forward. We do recognize that is dividend tenant and a solid dividend policy is important to investors.
And helps create financial stability for the company as we continue to move forward into the future.
Yeah.
Jim have you got.
Sort of in net impact number for Tovey 19 for the quarter.
No we don't Chris.
Okay.
Did I hear you right when you set a bad debt was was a nickel.
Bad debt is estimated to be about $15 million when we get to year end.
Okay.
Hey, Chris you don't want things you know I couldn't be more proud of how we have shown up during the pandemic.
With people working from home six feet apart.
We have maintained.
Reliability and safety of our system.
And our employees it really showing up in a remarkable way. We've also worked collaboratively with the communities we serve.
To enhance our ability to work in the right away.
And lower our cost in some instances in in serving customers are we will continue to do that but it's so were really working hard to minimize our cost increases due to the pandemic and use this period of time as I've talked about.
To accelerate our opportunity for success as we go for through lowering costs.
Because we know that affordability is that much more important to customers today than it ever happen.
Right.
In that whole nm number.
Is it fair to say that some.
Of the reduction was.
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Passive in the sense that some things went down because of Cove is and so it is some of that the active component in some things like like medical expenses and in some work it might have been deferred because of customer behaviors.
What was the more passive elements can you talk about that.
Well, there's theres all different types of components embedded in the change in all of them. I mean, there are some onetime items the structural in nature that occurred mainly we did mention that incentives have gone down for as a company given the change in the EPS target for us.
There are items that well have too many employees are jumping on airplanes actually I can I can't imagine anybody jumping on airplane for us.
We are maintaining our headcount and trying to reduce it as Maria Ed mentioned, we are using more and more technology to be able to find operational efficiencies in processes that we have in the company and we've got 2000 employees are now.
Now working from home.
So.
We're doing that very effectively and we're evaluating what the next normal looks like on a going for basis for our company.
Okay, one last thing.
In the other buckets.
The equity returns for the quarter were great extraordinary.
Were there any offsets to the equity return benefit in that other bucket.
So what you're referring to is our pension returns and other investment returns yes.
Yeah.
Not that.
I wouldn't really classified as me.
Incremental interest expense that we incurred associated with the additional liquidity that we brought into our balance sheet, but that's about it.
Okay, great. Thanks for your color appreciate its they said guys. Thank you too.
Thank you. Our next question comes from the line of David Peters Wolfe Research.
Hey, good morning.
Initiative.
You guys reiterate the 1% load growth expectation over the long term I'm, just wondering given expectation of how that might shape looking into next year versus flat this year.
Turning now do you expect things to kind of rebound to that level or should we interpret that is more long dated.
I think issue richer interpret it is long dated.
And we feel very fortunate to operate in a region, where people want to move and locate their businesses here.
We're forecasting a pretty modest to almost flat.
A rise in residential deliveries.
We are hoping that a commercial we're certainly.
Come back and we talked a little bit in our prepared remarks around what we're expecting in terms of our forecast long term half a percent increase in our commercial deliveries as is our expectation and where we really benefit and we've been talking about for quite awhile.
Is the growth in high Tech and digital manufacturing in our region and we're looking at just under 2% positive ongoing growth in that area, So where we're very fortunate to again.
Operate in an area, where people want to live in locate their businesses and that gives us the opportunity to continue to serve.
The migration is still a positive for the state and we continued to grow faster than other spaces.
Great.
Then did a fertile docket sitting at the commission.
You have any sense when the when they might look to act on that it has there been any sort of procedural schedule puts worse.
Is there anything that would give you guys comfort and deferring some of those costs as you kind of work through this.
Well David No schedule has been so this particular point in time continuing to go to work through the process makes sure that we've got all the information on the table, we're working collaboratively with with all the other parties. We are concerned as we move is this process takes longer we start getting closer and closer to the way.
Winter time period, which will have bills that are at higher levels. So we're trying to move everybody along.
Okay.
And then lastly, just you know given everything is transpire. This fall was coded and wanting to demand pool customers.
Has it shifted all how you might think about the timing for your next rate case filing.
No. It's still we're looking at the base economics of the company.
Yes, we having some reduction in operating cost that's helping US is our consideration we're still investing in as Maria talked about in reliability, the system and with new Emily or master or minimum load agreements, we've been entering into with customers and so and so forth.
We are making capital additions we also have.
The wheat ridge facility coming in but that will come in through renewable adjustment clause and then we're making to the point of reliability of our system, especially we design. This facility for an earthquake and now we're dealing which you know who knows with no it's going to happen.
But it's key to the recovery of state in our communities that we serve but now we're dealing with something else, we didnt predict and that's a pandemic. So it just increases the importance of completing that integrated operating center.
To be able to support our or customers our communities.
Great. Thanks, guys.
Right yes.
Thank you.
Your next question comes from a lot of Travis Miller with Morningstar.
Morning, Travis good morning.
I was wondering real quick back to the Oh, one how does that eight cents of savings in the quarter relate to the 570 that fiveninety guidance range does that put you.
Is that already incorporated in that range does that put you at a high or low end or that you had mentioned some onetime items in there and just wondering.
Where that fits in terms of the full year outlook.
Oh, let's say traverses.
When we get to year end, we anticipate being within that range.
So that's where all continue the guidance to be based on everything that we've been able to do.
From one time to structural to timing, we believe that we will be in that guidance range.
Okay cost reduction Burke and focus on OEM is a really important component to what staying in that range for the balance of the year.
Okay. So that five somebody to 590 would include.
What you had called some one time.
Adam.
Net any other onetime item here or other changes and use one three and four so Ted credit growth.
Okay, correct as well as the ongoing work to keep our cost under control sure. Okay.
Real quick just high level wondering if you're seeing is seeing any additional.
Battery or storage in general.
Opportunities, what the pipeline or backlog might look like in that area anything.
Going forward or change from the last.
Couple of quarters apart from reading the other smaller yep.
Yeah, so in terms of.
Oh projects that we have going on that we're taking to into our capital forecast in the near term no. However, there's no question.
We are seeing an acceleration in the interest of our customers in renewable energy and a clean energy future. We're seeing an acceleration of interest in electric vehicles and battery storage.
And we are really excited about the long term opportunities.
Which we think will come at us at a faster pace than they otherwise would have if not but for the pandemic.
And so the focus a across all sectors.
Technology, and using technology better to solve problems for our company as well as for society in General.
We're going to be installing batteries in some of our residential customer homes in order to test out the capability and benefits associated with that along with putting batteries and one of our substation and then also next to one of our generating stations in order to help with black start and with.
Variations from the renewable energy resources that are on our system.
So we're really looking forward to this is going to be an exciting time.
With all these be rate base opportunities.
Yes, we believe so if there yes, they're all to serve customers. Okay. And then sorry, just one quick follow up on that is there any gating period I know you go through the though our European such is there any next.
Period, where we might see as large.
Battery or storage commitment show up in some of the Capex numbers.
Or is it will this be something that's just incremental quarter to quarter depending on.
Opportunities out there you get my parents bigger my just Sir yes, no absolutely and.
We just received acknowledgement in may on our IR PNR action plan, we've entered into a contract with Douglas PD.
We will be filing an update to that I RP.
And then also at the tail end of this year and into next year, we will be issuing RFP first step in that process will be the selection of and independent evaluator and overall, our focus on capital additions on the generation or storage side are focused on.
Non admitting resources.
Okay, great appreciate it.
Thanks, Travis Thank you Brad.
Thank you I would now like to turn the call over its a president and CEO Maria Pope for closing remarks.
Thank you very much for joining us today. We appreciate that these are extraordinary times and we value your interest in Portland General Electric and we hope to connect with you virtually on in the future. Thank you very much and have a great that.
Ladies and gentlemen, this concludes todays conference call. Thank you for participating and you may now disconnect.
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Good morning, everyone welcome.
I'll, let you called <unk>.
Order 2020 earnings results conference call.
Today's Friday July 31st 20 Twond.
This call is being recorded enough such that we placed on mute to prevent any background.
The speakers remarks, there will be a question and answer theory.
If you like to ask a question during this time.
The press Star then the number one on your telephone keypad.
Do you like to withdraw your question that's the Pokey all your telephone keypad.
If you do tend to ask a question please aboard the use of speaker.
Opening remarks, I will turn the conference call over to Portland General Electric's Senior director of Investor Relations yard Dog automobile. Please go ahead Sir.
Thank you Andrew Good morning, everyone I'm pleased that you're able to join US today before we begin this morning I'd like to remind you that we've prepared a presentation to supplement our discussion which will be referencing throughout the call.
Well on our website at investors Dot Portland General Dot com.
Referring to slide to some of our remarks. This morning will constitute forward looking statement. We caution you that such statements involve inherent risks and uncertainty and actual results may differ materially from our expectation.
For a description of some factors that could cause actual results could differ materially. Please refer to our earnings press release and our most recent periodic reports on form 10-K, and 10-Q, which are available on our website.
Leading our discussion today.
Area, Pope President and CEO, and Jim Lobdell, Senior Vice President of Finance CFO and Treasurer.
Following their prepared remarks, well open the line for your question now it's my pleasure to turn the call over to Maria Thank.
Thank you Teradata and good morning, welcome to Portland General Electric's earnings call.
I hope that you're all stay safe and healthy during these unprecedented times.
Today I'll provide an overview of our financial result.
Updates on our colleagues and actions we've taken in response to the Cobot 19 pandemic.
Jim will provide more detail on our financial results as well the outlook for the remainder of the year.
Before I go through the quarter.
I want to first address.
Social unrest that we're experiencing in our state.
Across our country focused on racial and equities.
Ongoing protests that have placed Portland front and center.
We reminded daily.
We're living in a historic time community and country.
This to multiple as time.
Corporation have an opportunity to use their influence.
The positive change.
PG he is committed to diversity.
Equity inclusion.
Well, we are proud of our work to date and making progress towards our deny goal.
We know that there is much more to do.
We're looking at all the way we have impact.
Policy employee hiring promotion and retention.
As well as supporting the communities we serve.
And we will do so well working together.
I would definitely customers and communities.
As we continue to provide safe.
Reliable affordable.
[music].
Now, let's turn to the financial forecast.
And our performance.
On slide four.
Over.
On our last earnings call, we lowered our guidance to reflect covered 19 pandemic and resulting drop in economic activity.
Our response included.
Reducing operating expenses as part of our ongoing commitment to control costs across the organization.
For the overall corridor.
Revenue was strong under those circumstances.
And was led by high Tech and digital industrial deliveries.
Favorable hydro and wind conditions across the region resulted in surplus energy and low power prices.
Additionally, we were able to lower operating expenses.
Due to operational efficiencies and lower dispatch rate at our generating plants.
As a result, our second quarter 2020, net income was 39 million or 43 cents per share.
This represents an increase of 15, so when compared to 2019.
You may recall this second quarter 2019, we experienced the opposite conditions.
Record low hydro.
In the region, and a favorable weather, which negatively impacted our gross margin.
With year to date earnings per share of the dollar 34.
We are more than halfway to our midpoint of our guidance.
Making a solid first half a year.
Okay.
The second half of the year presents challenges.
The economic fall off when the petrochemical continue to impact retail revenue.
So market conditions.
Retail deliveries for the balance of the year well also be impacted by the decoupling mechanism.
Gross margin will face additional headwinds due to more normal power market conditions.
Jim will further address both decoupling and power markets later in the call.
While the first full year financial picture presents challenges.
We continue.
To aggressively manage costs to drive strong business results and are reaffirming our revised full year guidance of $2.20 to $2.50, reflecting anticipated economic challenges that our customers and our community face.
As we move forward, we continue to pay close attention to economic conditions and the course of the pandemic.
Our first quarter forecast projected a gradual recovery into 2021.
That forecast remains largely unchanged and our outlook for the balance of 21 excuse me 2020 remains cautious.
Turning to slide five.
The economic impact to the pandemic of businesses communities and residential customers.
Flux is in the spike in the unemployment rate.
Which rose from historic lows of 3% in March.
A 14% in April and is now 11%.
In response to the economic hardships phase for our customers. We have costs collection of late fees and service disconnection and are working with customers to implement flexible payment options.
The impact of economic conditions on energy usage.
Has been relatively consistent with our forecast.
Second quarter residential loans increased 7% on the weather adjusted basis, and the number of customers increased by 1.6%.
Industrial deliveries increased 3% on the weather adjusted basis, as our digital services and high Tech manufacturing customers continue their long term trend steady growth.
Despite the pickup.
These increases were more than offset by 16% decrease in the commercial sector.
Or declines were concentrated in hospitality government education at office buildings.
Turning to slide six.
We're on track to achieve our strategic targets.
Major capital projects.
We've had no significant supply chain or operational disruptions as a result cobot 19.
Rich and the integrated operations center remain on schedule.
In may.
We announced a partnership what that Douglas Kathy public utility destruction for a five year power purchase agreement for capacity.
That provides up to 160 megawatts of admission free hydro electric power.
As part of this partnership will be providing both management and wholesale marketing services, leveraging our power portfolio management expertise.
Regarding future resources, we expect to issue one or more RFP.
For the new admitting resources.
Over the next several years.
Selling general lots in the region phase growing capacity needs as regional coal resources are retired.
We will also continue to assess the region's energy needs given long term economic consequences of a pandemic and other factors of market dynamics with that I'll turn the call over to Jim.
Thank you. Thank you Maria and good morning, everyone.
Turning to slide seven I'd like to walk through our quarter over quarter results as Maria mentioned earlier.
Our earnings guidance or earnings per diluted share of 43 cents as the team from the same period in 2019.
Starting at 28 cents in the second quarter of 2019 on the slide first gross margin increased earnings a total of four cents per diluted share. This increases the result of a one cent decrease and retail revenues, which includes the negative impacts of weather for the quarter and the effects of.
Customer class top position on retail deliveries and a five cents increase in net variable power costs, which includes higher wholesale revenues driven by a surplus of hydro and wind in the region.
Next an eight cents increase from lower operating and maintenance expense, which consists of a six cents from reduced maintenance.
At our Boardman facility and a reduction in operating expenses for other fleet assets, a seven cents benefit from lower administrative expenses from savings and outside services and lower incentives and apply some decrease from higher bad debt expense associated with cobot 19.
Hey, one cent decrease from higher depreciation and amortization expense due to greater plant in service in 2020.
A one cents increase from other items, including higher returns on non qualified benefit plan assets.
Finally, a three cents increase from lower tax expense, primarily due to PTC generation from strong wind production.
On the slide eight we are continuing to monitor or liquidity as economic conditions of all our balance sheet remains strong following actions taken earlier this year to improve our liquidity and ensure that we can continue to best serve our customers.
We expect to fund 2020 capital requirements with cash from operations issuance of debt securities and the issuance of commercial paper as needed.
Earlier this week, our board approved a dividend increase of nine cents per share on an annualized basis, which represents a 5.8% increase.
This increased follows the decision to hold the dividend flat in the first quarter as we assess the potential impact as a pandemic and is consistent with our long term dividend guidance.
And regulatory matters last quarter, we filed with the Oregon Public utility Commission to defer expenses associated with the impact of cobot 19 for potential recovery.
The commission is conducting a process to determine the next steps and we have yet to defer any cobot 19 related costs.
Last month Commissioner Lisa timing was reappointed through the Oregon Commission and we're pleased that she continues to represent our customers.
Okay.
Moving to slide nine which shows our updated capital forecast for 2020 through 2024, we're continuing to focus our investments on the reliability and resiliency of our system, while minimizing the impact on customer prices.
We are on track to execute our planned capital projects for the year unbelievably adjustments to our liquidity and capital plan made last quarter were one time events.
Finally, I'll cover our earnings outlook for the remainder of 2020.
We expect continued impacts from the pandemic on the economy and the regional power picture.
As Maria mentioned, we achieved $1.34 and earnings today with one dollar remaining to reach the midpoint of our earnings guidance I would like to cover a few considerations.
Despite strong gross margin through the first half of year and retail revenue above expectations, we expect lower gross margin in the second half of the year.
We also anticipate a similar load composition to the second quarter and as such we're raising our full year load guidance assumption to flat on a weather adjusted basis.
Our commercial customers continue to face risks associated with economic with economic impact of the pandemic in Oregon.
But the strength of residential and industrial energy deliveries has mitigated this.
Despite this upward revision that demand we are maintaining guidance due to the structure of the decoupling mechanism residential customer usage on a weather adjusted basis that is above the established baseline is refunded the customers while the commercial decoupling collections are capped at 2% of revenue.
For the commercial customer class.
We're also experiencing units here in the power markets.
Currently 38 million below the PGM baseline year to date due to favorable wind and hydro conditions in the region.
We estimate that we will continue to remain below the baseline at year end, but within the established dead that range.
This increase in power costs for the balance of the year.
As a result at the interaction of lower power prices in the region and our horse power positioned to serve anticipated low.
Additionally, as Maria mentioned, we are reaffirming our full year earnings guidance of $2 in 20 to $2.50 per share based on the assumptions outlined in our press release, and our long term dps growth target of 4% to 6% overtime.
And now operator, we're ready for questions.
Thank you.
As a reminder to ask questions you will need to press star one on your telephone.
Withdraw your question first the balance sheet.
Please standby, while we compile the Q1 a roster.
Your first question comes from the line of Insoo, Kim with Goldman Sachs.
Good morning answer.
Good morning, Thank you and I Hope you guys are doing thanks as well these crazy.
Just a question on the guidance and thank you for.
A detailed on the decoupling mechanism, Mike I was something that we've talked about last quarter as well, but given that that year to date result, and I think some of the benefit you had realized from.
Yes, better than expected demand trends.
Where it was the second half no impact is that decoupling mechanism already somewhat anticipated and if that was so.
No. It all else being equal are you looking at something more at the upper half of the range.
Or are there some other considerations beyond the de coupling that which.
Correct.
So thanks and so.
So first of all yes, we did anticipate the decoupling mechanism when we reaffirmed our guidance.
This quarter, but then also when we lowered guidance.
Last quarter and so we were looking at not only the economic impact of the pandemic, but our regulatory environment as we move forward, Let me, let Jim to walk you through a little bit in more detail how the decoupling mechanism works, yes. Thanks Brent.
Enzo is though is mentioning.
In my statement when we looked at the residential customers there are actually up more than what we originally anticipated but at the same time, we're seeing more of a downside on the commercial side the expected and were continuing to see strength in the industrial side. So.
Residential that's being completely decoupled away on the commercial as Ed mentioned earlier once you hit that 2% then effectively you can no longer collect from customers in the future point in time associated with that and then the industrial is helping to offset some of what we're experiencing on the commercial side as far as.
So on recovery.
Right. So just from what you recorded in the second quarter, our residential benefit that you received that you saw the second quarter.
Statement or earnings purposes was really a benefit to to earnings or or is there actually timing component where.
That was reflected in second quarter, but then you actually have to adjust that into the later quarters.
No. It's all reflected in the second quarter any the refund to customers that would occur associated with amounts over the weather adjusted based upon the was set in our job or 2019 general rate case will be refunded back to customers in the 2022 time.
I've got to correctly.
Understood.
And in terms of the Capex that you had deferred whether its 2020 or 2021.
Last quarter I.
I know you didn't really change that for now and then you spoke on being more cautious extinguished.
Start to slowly improve throughout the balance of the year and early into next year could you see a bulk about coming back into 2021 type training and.
At this point for 2020 do not anticipate any re upping us of capital for the rest of the year.
So as you now and so we have a regular capital forecasting process that we filed at the company and will remain disciplined on our spending given.
Our cautious stance with regard to the economy.
And the length of time that we could be in a recessionary environment.
One of the things we noted on the prior call was our positive growth in the high Tech sector and if there are new customers that come into our area and there are some and current conversations with us around additional capital investment they may need, let's say for new sub stations or for other bill asked particular to their operate.
Since then that would be an upside.
Got it thank you so much.
Thanks and soon.
Thank you next question comes from the line of Julien.
With bank of America.
Lauren good morning Julien.
Hey, Good morning. This is Gary if love me on for Julian actually.
Just a quick one here can you.
What you hardly hear you.
I apologize is it better.
Got it is much better thank you.
Okay, sorry about that this is there is lot me up for Julien just a quick one on your.
Expectations for your average CWIP balance for the year I was wondering if you could speak to that hurdle.
Okay.
Yes, it's unchanged.
Okay excellent okay. Thank you that's it for me.
Thank you. Thank you.
Thank you.
Next question comes from a lot of Brian Russo with Sidoti and company.
More Brian Hi, Hi, good morning.
Hey, so it's nice to see.
Did the dividend increase was just curious if you could just elaborate on.
What factors the board considered.
When raising the dividend.
Now in July versus.
When it was helpful.
Sure. So first of all we recognize that our dividend.
An important component of our shareholder return and being a steady and financially healthy company. It's really important that as we invest for the long term an infrastructure to maintain a safe reliable.
System.
Having a financial pretty healthy utility is critically important.
During the early days of the pandemic there're a lot of unknowns with regards to our economic environment.
And we remain the ticket it taking a cautious stance.
But we announced at that point in time that we would continue to reassess our dividend.
Engage with the board on the discussion.
And what we're doing is proceeding with what otherwise would have been sort of our normal course in terms of maintaining.
Healthy financial environment.
Hello.
Right.
I'm sorry.
I can hear you now.
Yeah, Thanks for that and I guess, you kind of police forces your confidence year EPS CAGR just based on your target payout.
Ratio.
Yes, one other things that we have moved very aggressively on this cost reductions across our company.
On the Elwyn avenues, you know, we just spoke about we've also reduced our capital spending we brought in additional debt financing into the company to maintain a stable and healthy balance sheet.
To ensure that we can weather what comes our way in the future.
Well as controller on destiny by maintaining a reliable and safe utility system.
Okay, Great and then just on the additional financing and I look at the last disclosures versus the updated disclosures.
It looks like you're now.
Not forecasting any debt issuances in this third quarter versus previously you were assuming.
35 million of debt issuances.
So when you sum it all up it looks like.
Issued 125 million less debt in 2020 and previously.
Forecast.
So Jim I'll give you all the details one of things I I want to make certainly recognizes that we have been very successful at pulling back our capital expenditures and more importantly, Ben.
Successful in lowering our operating cost during this very challenging time, we've used the crisis in many ways to accelerate our use of technology to reduce cost and to really focus on what matters to customers.
And we probably exceeded our expectations and our ability to move quickly and we still have while we still having a tremendous amount of work to deal.
And Brian I'll add to that.
You know we took out.
Tenure for first mortgage bond earlier this year and then we did a.
Bank loan that helps shore up the finance as a company because obviously, we didnt know where things are going to go from up.
Co Ed economic impact perspective, and so as we're looking at our financing for the balance of year, given the fact that FERC has come out with a waiver on the imputation or the implications.
Short term debt in the CDC crediting rate.
We are looking at how we're going to.
Time, the repayment of that bank loan.
On whether the timing associated with additional long term debt, we would take out in that in the.
Probably Q4 of the year around $190 million, possibly.
Overall, we remain a net borrower for the year.
Okay understood Stephens system.
Variable cost and the PJM just remind me real quickly how how it works you were at 30 million below the baseline at CN into first quarter.
Okay.
It looks like you're now.
Good.
Thanks.
30 to 38.
So it was 18 million incremental positive benefit in the second quarter is that in the five cents of year over year gross margin benefits that you discussed.
The baseline and it's within the night 10 sharing because that calculation maybe to year end is that the simplistic way to think about it.
Yes that is you got to keep in mind that 38 million and getting to within the dead band is for the balance of the year. So it gives you an indication is what we're expecting the power markets.
Okay. So.
It's a very lease you're expecting and 8 million.
Sure.
Well or.
Mental costs.
Getting back to that baseline in the second flow.
Ryan were $38 million below the baseline right now is that debt that is $15 million below so it'd be moving from 38.
Into the $15 million range.
Okay got it alright, thank you very much thanks, Brian.
Thank you.
Our next question comes from a lot of Chris Ellinghaus with Bert Williams.
And Chris everybody how are you.
Hi, Chris.
Maria you talk about being cautious can you give us a little more color on what you're cautious about it.
Just the economic recovery is it.
Although pandemic will behave for the rest of the year now that that affects the economy Whitney what are your thoughts there.
Chris I think it's all on the above.
As an essential service provider during these extraordinary times.
Delivering consistent reliable power services to our customers is our highest priority ensuring the continuity of our generation fleet.
The interaction and our capabilities.
Power markets.
The transmitting as our power in distributing it to our customers day in day out is our highest priority and I can tell you with the stress that families.
Customers in the communities that we serve are going through.
Ensuring that weve minimized outages.
Create payment plans that work for them.
Access like Heath, and Oregon, he funds to support those are they're struggling.
Is that takes a non enormous amount of focus and and also we're as I mentioned, we're using this period of time.
Really focus on our cost structure accelerating our use of technology, simplifying our processes and procedures to ensure that everything that we do is meaningful to our customers and the communities that we serve we have a long ways to go with regards to this economic recovery and their spectrum.
And this amount of uncertainty and we will remain focused on investing in our system prudently and to ensure reliability all of us have aging assets. We also have the opportunities to reduce cost through technology.
Okay. Thanks.
Maria can we assume that the company, we'll plan to revert to the April date for the dividend.
Yes, that's a really good question, Chris and we're going to OSAT as we go forward.
One of the things that we have noted in this process is that we're one of the early companies and announcing our dividends and we're going to think about what's the most.
Prudent and.
Practical thing to do as we move forward, we do recognize that a dividend and a solid dividend policy is important to investors.
And helps create financial stability for the company as we continue to move forward into the future.
Okay.
Jim If you got.
Sort of a net impact number for covert 19 for the quarter.
No we don't Chris.
Okay.
Did I hear you right when you said.
Net debt was was a nickel.
Bad debt is estimated to be about $15 million, where we get to year end.
Okay.
Hey, Chris one thanks, I couldn't be more proud of how we have shown up during the pandemic.
People working from home six feet apart.
We have maintained.
Reliability and safety of our system.
And our employees have really showing up in a remarkable way. We've also worked collaboratively with the communities we serve up to enhance our ability to work in the right away.
And lower our cost in some instances in serving customers.
We will continue to do that but it so were really working hard to minimize our cost increases due to the pandemic and use this period of time as I've talked about.
To accelerate our opportunity for success as we go far through lowering costs.
Because we know that affordability is that much more important to customers today than it ever has that.
Right.
In that whole nm number.
Is it fair to say that some.
Of the reduction was.
Passive in the sense that some things went down because of coal.
And so some of that the active component in some things like like medical expenses and and some work that might have been deferred because of customer behaviors.
It was a more passive elements can you talk about that.
Well, there's theres all different types of components in that it in the change in all of them. I mean, there are some one time items the structural in nature that occurred mainly we did mention that incentives have gone down for the company given the change in EPS target for us.
There are items that well have Germany employees are jumping on airplanes actually I can I can't imagine anybody jumping on an airplane for us.
We are maintaining our headcount and trying to reduce it.
Maria's Ed mentioned, we are using more and more technology to be able to find operational efficiencies and processes that we have in the company and we've got 2000 employees are now working from home so.
We're doing very effectively and we're evaluating what the next normal looks like on a going forward basis for our company.
Okay, one last thing.
And the other bucket.
The equity returns for the quarter were quite extraordinary.
[music].
Were there any offsets to the equity return benefit in that other bucket.
So what you're referring to is our pension returns and other investment returns yes.
Yeah.
Not the.
I wouldn't really classified as the incremental interest expense that we incurred associated with the additional liquidity that we brought into our balance sheet, but thats about it.
Okay, great. Thanks for the color appreciate it guys. Thank you.
Thank you. Our next question comes from the line of David Peters Wolfe Research.
Hey, good morning.
Good morning.
You guys reiterate the 1% load growth expectation over the long term I'm, just wondering given expectation of how that might shape looking into next year versus flat. This year, meaning do you expect things to kind of rebound to that level or should we interpret that as more long dated.
I think you should return to interpret it as long dated.
And we feel very fortunate to operate in a region, where people want to move and locate their businesses here.
We're forecasting pretty modest to almost flat.
A rise in residential deliveries.
We are hoping that commercial we're certainly.
Come back and we talked a little bit in our prepared remarks around what we're expecting in terms of our forecast long term half a percent increase in our commercial deliveries is it's our expectation and where we really benefit and we've been talking about for quite awhile.
Is the growth in high Tech and digital manufacturing in our region. We're looking at just under 2% sort of ongoing growth in that area, So where we're very fortunate to again.
Operate in an area, where people want to live and locate their businesses and that gives us the opportunity to continue to serve.
The migration is still a positive for the state and we continued to grow faster than other states.
Great.
Then the deferral docket sitting at the commission.
Do you have any sense when the when they might look to act on that it has there been any sort of procedural schedule calls for us.
And is there anything that will give you guys comfort and deferring some of those costs as you've done to work through this.
David No schedule has been so at this particular point in time continuing to go to work through the process make sure that we've got all the information on the table, we're working collaboratively with with all the other parties. We are concerned that as we move this process takes longer we start getting closer and closer to the way.
In their time period, which will have bills that are at higher levels. So what we're trying to move everybody along.
Okay.
And then lastly, just given everything has transpired this fall was coded and wanting to be mindful of customers.
Has it shifted all how you might think about the timing for your next rate case filing.
No. It's still we're looking at the base economics of the company.
Yes, we are having some reduction in operating cost that's helping US is our consideration we're still investing in as Maria talked about in the reliability of the system and with new M.L.A. or master our minimum load agreements that we have been entering into with customers and so on.
Fourth we are making capital additions we also have.
The wheat rich facility coming in but that will come in through a renewable adjustment clause and then we're making through the point of reliability of our system, especially we design. This facility for an earthquake and now we're dealing which.
Who knows what now it's going to happen.
But it's key to the recovery at the state in the communities that we serve but now we're dealing with something else, we didnt predict and Thats a pandemic. So it just increases the importance of completing that integrated operating center.
To be able to support our our customers our communities.
Great. Thanks, guys.
Thank you.
Thank you.
Your next question comes with a lot of Travis Miller with Morningstar.
Morning, Travis good morning.
I was wondering real quick back to the Owen.
How does that eight cents of savings in the quarter relate to.
The 570 that Fiveninety guidance range does that put you.
Is that already incorporated in that range does that put you at a high or low end or that you had mentioned some one time items in their interest wondering kind of where that fits in terms of the full year outlook.
So all say traverses.
When we get to year end, we anticipate being within that range.
So thats, where all continue the guidance to be based on everything that we've been able to do.
From one time to structural to timing, we believe that we will be in that guidance range.
Okay cost reduction Burke and focus on our NIM is a really important component to what staying in that range for the balance at the year.
Okay. So the five somebody to Fiveninety would include.
What you had called some one time.
Items.
Net any other onetime item here or other changes and gives one three and four.
That's correct.
Okay, correct as well as the ongoing work to keep our cost under control sure. Okay. And then real quick just high level wondering if you're seeing seeing any additional.
Battery or storage in general.
Opportunities, what the pipeline or backlog might look like in that area anything.
Going forward or change from the last.
Couple of quarters apart from what you're going the other smaller.
Yes, so in terms of.
Projects that we have going on that we're taking to into our capital forecast in the near term no.
However, theres no question.
That we are seeing an acceleration in the interest of our customers in renewable energy and a clean energy future. We're seeing an acceleration of interest in electric vehicles and battery storage.
And we are really excited about the long term opportunities.
Which we think will come at us at a faster pace than they otherwise would have if not but for the pandemic.
And so the focus across all sectors on technology, and using technology better to solve problems for our company as well as for society in General.
We're going to be installing batteries and some of our residential customer homes in order to test out the capability and benefits associated with that along with putting batteries and one of our substation and then also an extra one of our generating stations in order to help with black start and with.
Variations from the renewable energy resources that are on our system. So we're really looking forward to this is going to be an exciting time.
With all these fee rate base opportunities.
Yes, we believe so if there yes, they're all to serve customers, Okay and I'm sorry, just one quick follow up on that is there any gating period I know you go through the European Fletcher is there any next.
Period, where we might see large.
Battery or storage commitment show up in some of that Capex numbers.
Or is it will this be something thats, just incremental quarter to quarter, depending on opportunities out there. If you get my parents bigger my just Sir yes, no absolutely and.
We just received acknowledgment and may on our IR PNR action plan, we've entered into a contract with Douglas PD, we will be filing an update to that I RP.
And then also at the tail end of this year and into next year, we will be issuing.
RFP.
First step in that process will be the selection of.
Independent evaluator and overall, our focus on capital additions on the generation or storage side are focused on non admitting resources.
Okay, great appreciate it.
Thanks, Travis Thank you Beth.
Thank you I would now like to turn the call over to President and CEO Maria Pope for closing remarks.
Thank you very much for joining us today. We appreciate that these are extraordinary time and we value your interest in Portland General Electric and we hope to connect with you virtually in the future. Thank you very much and have a great day.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating in you may now disconnect.