Q4 2023 Portland General Electric Co Earnings Call
24.
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.
If you'd like to ask a question. During this time simply press Star then the number is one one on your telephone keypad.
If you would like to withdraw your question. Please press star one again.
If you do intend to ask a question. Please avoid the use of speaker phones.
For opening remarks.
I will turn the call over to Portland General Electrics manager of Investor Relations Nick White.
Please go ahead Sir.
Thank you Daniel Good morning, everyone I'm happy you can join us today.
Before we begin this morning, I would like to remind you that we have prepared a presentation to supplement our discussion.
Operator: 2013 University of Georgia College of Agricultural and Environmental Sciences UGA Extension Office of Communications and Creative Services Good morning, everyone. And welcome to Portland General Electric Company's 4th Quarter 2023 Earnings Results Conference. Today is Friday, February 6. The call is being recorded, and as such, all lines have been placed on mute to prevent any background noise.
We will be referencing throughout the call.
Okay.
Slides are available on our website at investors <unk>, Portland General Dot com.
Good morning, everyone.
Turning to slide two some of our remarks. This morning will constitute forward looking statements. We caution you that such statements involve inherent risks and uncertainties and actual results may differ materially from our expectations.
And welcome to Portland General Electric company's fourth quarter 2023 earnings results Conference call.
Today is Friday February 16th 2024.
For a description of some of the factors that could cause our actual results to differ materially. Please refer to our earnings press release and our most recent periodic reports on forms 10-K, and 10-Q, which are available on our website on our website.
This call is being recorded and as such all lines have been placed on mute to prevent any background noise.
Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the numbers 1-1 on your telephone keypad. If you would like to withdraw your question, please press star 11 again. Do you intend to ask a question? Avoid the use of for opening remarks. I will turn the call over to Portland General Electric's Manager of Investor Relations, Nick White. Please go ahead.
After the Speakers' remarks, there will be a question and answer period.
If you'd like to ask a question. During this time simply press Star then the number is one one on your telephone keypad.
Leading our discussion today are Maria Pope President and CEO, and Joe <unk> Senior Vice President of Finance and CFO.
If you would like to withdraw your question. Please press star one again.
Following their prepared remarks, we will open the line for your questions.
If you do intend to ask a question. Please avoid the use of speaker phones.
Pleasure to turn the call over to Maria.
Thank you Nick and good morning.
For opening remarks.
Thank you all for joining us today.
I'll turn the call over to Portland General Electrics manager of Investor Relations Nick White.
Beginning with slide four I'll discuss our 2023 full year and fourth quarter results and then turn to our outlook for 2024 and beyond.
Nick White: Please go ahead Sir.
Nick White: Thank you, Daniel. Good morning, everyone. I'm happy you can join us today. Before we begin this morning, I would like to remind you that we have prepared a presentation to supplement our discussion, which we will be referencing throughout the call. The slides are available on our website at investors.portlandgeneral.com. Referring to slide two, some of our remarks this morning will constitute forward-looking statements. We caution you that such statements involve inherent risks and uncertainties, and actual results may differ materially from our expectations.
Thank you Daniel Good morning, everyone I'm happy you can join us today.
For the full year, we reported GAAP net income of $228 million or $2 33 per diluted share and non-GAAP adjusted net income of $233 million or $2.
Nick White: Before we begin this morning, I would like to remind you that we have prepared a presentation to supplement our discussion, which we'll be referencing throughout the call.
Nick White: Slides are available on our website at investors <unk>, Portland General Dot com.
<unk> 38 per share.
This compares with GAAP net income of $233 million or $2 60 per share and non-GAAP adjusted net income of $245 million or $2 74 per share in 2022.
Nick White: Turning to slide two some of our remarks. This morning will constitute forward looking statements. We caution you that such statements involve inherent risks and uncertainties and actual results may differ materially from our expectations.
Nick White: For a description of some of the factors that could cause our actual results to differ materially, please refer to our earnings press release and our most recent periodic reports on Forms 10-K and 10-Q, which are available on our website. Leading our discussion today are Maria Pope, President and CEO, and Joe Terpik, Senior Vice President of Finance and CFO. 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 you, Nick, and good morning.
Nick White: For a description of some of the factors that could cause our actual results to differ materially. Please refer to our earnings press release and our most recent periodic reports on forms 10-K, and 10-Q, which are available on our website on our website.
For the fourth quarter, we reported net income of $68 million or <unk> 67 per share up from the fourth quarter of 2000 $20 million to $50 million or <unk> 56 per share.
While these are lower than expected results, we remain confident in our long term growth trajectory of 5% to 7% and.
Nick White: Leading our discussion today are Maria Pope President and CEO, and Joe <unk> Senior Vice President of Finance and CFO.
In 2024 guidance of $2 98 to $2 18 per diluted share.
Maria MacGregor Pope: Following their prepared remarks, we will open the line for your questions now, it's my pleasure to turn the call over to Maria.
To start <unk>.
Maria MacGregor Pope: Thank you Nick and good morning.
<unk> weather impacted the quarter.
Maria MacGregor Pope: Thank you all for joining us today. Beginning with slide four, I'll discuss our 2023 full year and fourth quarter results and then turn to our outlook for 2024 and beyond. For the full year, we reported gap net income of $228 million, or $2.33 per diluted share, and non-gap adjusted net income of $233 million, or $2.38 per share. This compares with gap net income of $233 million, or $2.60 per share, and non-gap adjusted net income of $245 million, or $2.74 per share, in 2022. For the fourth quarter, we reported net income of $68 million, or $0.67 per share, up from the fourth quarter of 2022 of $50 million, or $0.56 per share. While these are lower than expected results, we remain confident in our long-term growth trajectory of 5 to 7 percent and 2024 guidance of $2.98 to $2.18 per diluted share. d start. Challenging weather impacted the quarter, with mild conditions across the period and the This resulted in very low energy usage and historically low wind and hydro production.
Maria MacGregor Pope: You all for joining us today.
With mild conditions across the period and the second warmest December on record.
Maria MacGregor Pope: With slide four I'll discuss our 2023 full year and fourth quarter results and then turn to our outlook for 2024 and beyond.
This resulted in very low energy usage, and historically low wind and hydro production.
For the full year, we reported GAAP net income of $228 million or $2 33 per diluted share and non-GAAP adjusted net income $233 million or $2 38 per share.
As a result of this combination both to our revenue and purchase power and fuel expense performance fell short.
The power cost challenges, we faced in 2023 underscore the importance of risk reductions achieved as part of the 'twenty 'twenty four general rate case.
Maria MacGregor Pope: This compares with GAAP net income of $233 million or $2 60 per share and non-GAAP adjusted net income of $245 million or $2 74 per share in 2022.
This includes 500 megawatts of hydro agreements, improving our capacity portfolio and the introduction of the reliability contingency event provision as part of the P. Chem.
Maria MacGregor Pope: For the fourth quarter, we reported net income of $68 million or <unk> 67 per share.
These are solid steps and reflecting actual power costs and extreme events.
Maria MacGregor Pope: From the fourth quarter of 2000 $20 million to $50 million or <unk> 56 per share.
We also have more work to do and look forward to working with the commission.
Maria MacGregor Pope: While these are lower than expected results, we remain confident in our long term broth trajectory of 5% to 7% and.
Other utilities and regional state card holders towards a holistic energy framework and solution.
Maria MacGregor Pope: In 2024 guidance of $2 98 to $2.18 per diluted share.
Finally, our results also reflect higher costs associated with continued capital investment to support grid resiliency customer growth and de carbonization.
Speaker Change: To start.
<unk> weather impacted the quarter with mild conditions across the period and the second warmest December on record.
Turning to slide five.
We consistently said that 2023, it would be an investment year.
Speaker Change: This resulted in very low energy usage, and historically low wind and hydro production.
Notwithstanding the challenges we faced we achieved important milestones and have set the stage for 2024, including a constructive outcome in our general rate case.
Maria MacGregor Pope: As a result, this combination, both for our revenue and purchase power and fuel expense, fell short. The power cost challenges we faced in 2023 underscore the importance of risk reductions achieved as part of the 2024 general rate case. This includes 500 megawatts of hydro agreements improving our capacity portfolio and the introduction of the Reliability Contingency Event Provision as part of the PCAM. These are solid steps toward reflecting actual power costs and extreme events. We also have more work to do, and look forward to working with the Commission, other utilities, and regional stakeholders towards a holistic energy framework and solution. Finally, our results also reflect higher costs associated with continued capital investment to support grid resiliency, customer growth, and decarbonization. Turning to slide five.
Speaker Change: As a result of this combination both to our revenue and purchase power and fuel expense performance fell short.
2024 will be a year of growth supported by three key drivers first continued load growth led by high Tech and digital customers.
Speaker Change: The power cost challenges, we faced in 2023 underscores the importance of risk reduction achieved as part of the 'twenty 'twenty four general rate case.
Second capital investment to enable this growth advance, our clean energy goals and strengthen reliability and resilience.
Speaker Change: This includes 500 megawatts of hydro agreements, improving our capacity portfolio and the introduction of the reliability contingency event provision as part of the P. Chem.
And third ongoing operational discipline across our organization.
Speaker Change: These are solid steps and reflecting actual power costs and extreme events we.
I will touch on each of these in turn.
First we expect continued strong industrial load growth supported by the state and federal policies.
Speaker Change: Also have more work to do and look forward to working with the commission.
Utilities and regional stay card holders towards a holistic energy frameworks and solutions.
Microchip was recently awarded $72 million under the federal chipset for $800 million expansion at their facility and direction.
Speaker Change: Finally, our results also reflect higher costs associated with continued capital investment to support grid resiliency customer growth and de carbonization.
This is in addition to the multibillion dollar investments by analog devices and others.
Speaker Change: Turning to slide five.
This builds on the state of Oregon appropriation of $240 million for semiconductor projects, 85% of which are in our service territory.
Maria MacGregor Pope: We consistently said that 2023 would be an investment year. Notwithstanding the challenges we faced, we achieved important milestones that have set the stage for 2024, including a constructive outcome in our general rate case. 2024 will be a year of growth supported by three key drivers. First, continued load growth led by high tech and digital customers. Second, capital investment to enable this growth, advance our clean energy goals, and strengthen reliability and resilience, and third, ongoing operational discipline across our organization. I will touch on each of these in turn. First, we expect continued strong industrial load growth supported by state and federal policies. Microchip was recently awarded $72 million under the Federal Chips Act for an $800 million expansion at their facility in Bresch.
Speaker Change: We consistently said that 2023 would be an investment year notwithstanding the challenges we faced we achieved important milestones and have set the stage for 2024, including a constructive outcome in our general rate case.
Our capital plan now includes additional strategic transmission investments.
To enable this hi tech and other customer growth as well as renewable development.
Speaker Change: 2024 will be a year of growth supported by three key drivers first continued load growth led by high Tech and digital customers.
Joe will walk you through the updates to our plan in more detail, but at a high level. Our transmission projects are largely within our service territory or adjacent.
Speaker Change: Second capital investment to enable this growth.
Speaker Change: <unk>, our clean energy goal and strengthen reliability and resilience.
Many of these lower risk projects are re conductor ing existing lines.
Speaker Change: And third on.
Related to renewable development.
Speaker Change: Ongoing operational discipline across our organization I will touch on each of these in turn.
We are currently accepting and evaluating bids for the 2023 RFP throughout the first quarter of 2024, and we will present at the shortlist later in the year.
Speaker Change: First we expect continued strong industrial load growth supported by the state and federal policies.
Coming out of our last RFP Clearwater Wind project came online in January with an impressive 45% capacity factor.
Speaker Change: Microchip was recently awarded $72 million under the federal chipset for $800 million expansion at their facility in Brescia.
Maria MacGregor Pope: This is in addition to the multi-billion dollar investments by Analog Devices and others. This builds on the state of Oregon's appropriation of $240 million for semiconductor projects, 85% of which are in our service territory. Our capital plan now includes additional strategic transmission investments to enable this high-tech and other customer growth, as well as renewable development. Joe will walk you through the updates to our plan in more detail, but at a high level, our transmission projects are largely within our service territory or adjacent. Many of these lower-risk projects are related to renewable development.
And we look forward to our battery storage projects coming online later this year and into 2025.
Speaker Change: This is in addition to the multibillion dollar investments by analog devices and others.
Speaker Change: This builds on the state of Oregon appropriation of $240 million for semiconductor projects.
Now onto slide six Utah.
Utilities across the country are dealing with increasing impacts of extreme weather.
Speaker Change: 85% of <unk>.
This January a severe storm brought powerful combination of high winds ice and snow that led to widespread damage and high power costs.
Speaker Change: Which are in our service territory.
Speaker Change: Our capital plan now includes additional strategic transmission investments to enable this hi tech and other customer growth as well as renewable development.
In the face of these extraordinary conditions, we deployed an extraordinary response.
Speaker Change: Joe will walk you through the updates to our plan in more detail, but at a high level. Our transmission projects are largely within our service territory or adjacent.
This included more than 1800 personnel crews and support staff working hard to restore power and repair critical equipment.
Speaker Change: Many of these lower risk projects are re conductor in existing lines.
I want to take a moment to acknowledge and thank our teams and partners for all of their hard work in very challenging conditions.
Speaker Change: Related to renewable development.
Maria MacGregor Pope: We are currently accepting and evaluating bids for the 2023 RFP throughout the first quarter of 2024, and we'll present the shortlist later in the year. Coming out of our last RFP, Clearwater Wind Project came online in January with an impressive 45% capacity factor, and we look forward to our battery storage projects coming online later this year and into 2025. Now on to slide six.
Speaker Change: We are currently accepting and evaluating bids for the 2023 RFP throughout the first quarter of 2024 and will present the shortlist later in the year.
The storm came in multiple phases of severe weather and single digit temperatures.
In the course of about a week crews restore power to over half a million customers.
Joe: Coming out of our last RFP Clearwater Wind project came online in January with an impressive 45% capacity factor.
This is a great example of how our teams are working together efficiently to deliver for customers when they need us most.
Joe: And we look forward to our battery storage projects coming online later this year and into 2025.
Our response was informed by lessons learned from the severe storms, we experienced in 2021, and we're continuing to improve and what used to be one in a decade events.
Joe: Now onto slide six.
Maria MacGregor Pope: Utilities across the country are dealing with the increasing impact of extreme weather. This January, a severe storm brought a powerful combination of high winds, ice, and snow that led to widespread damage and high power costs. In the face of these extraordinary conditions, we deployed an extraordinary response.
Joe: Utilities across the country are dealing with increasing impacts of extreme weather.
Joe: This January severe storm.
This operational focus is showing up in other ways as well.
Joe: <unk> powerful combination of high winds ice and snow that led to widespread damage and high power costs.
Our results in 2023 reflects our strong execution on cost management. Thanks to the extraordinary efforts of our team to streamline processes leverage technology and improved productivity.
In the face of these extraordinary conditions, we deployed an extraordinary response.
Maria MacGregor Pope: This included more than 1,800 personnel, crews, and support staff working hard to restore power and repair critical equipment. I want to take a moment to acknowledge and thank our teams and partners for all of their hard work in very challenging conditions. The storm came in multiple phases of severe weather and single-digit temperatures.
This included more than 1800 personnel crews and support staff working hard to restore power and repair critical equipment.
As we look to 2024, we continue to build on this progress.
To reiterate.
Joe: I want to take a moment to acknowledge and thank our teams and partners for all of their hard work in very challenging conditions.
We're focused on three main areas to achieve growth in the coming year and beyond.
First exceptional customer growth.
Second execution of our capital plan and third ongoing operational discipline.
Joe: The storm came in multiple phases of severe weather and single digit temperatures.
Maria MacGregor Pope: In the course of about a week, Cruz restored power to over half a million customers. This is a great example of how our teams are working together efficiently to deliver power to customers when they need us most. Our response was informed by lessons learned from the severe storms we experienced in 2021, and we're continuing to improve in what used to be one in a decade of epic failure. This operational focus is showing up in other ways as well. Our results in 2023 reflect our strong execution on cost management, thanks to the extraordinary efforts of our team to streamline processes, leverage technology, and improve productivity. As we look to 2024, we continue to build on this progress. To reiterate, we're focused on three main areas to achieve growth in the coming year and beyond. First, Exceptional Customer Gr, second, execution of our capital plan, and third, ongoing operational discipline. As such, we're well positioned to achieve 5 to 7% long-term earnings growth. With that, I'll turn it over to Joe, who will walk you through our financial results. Thank you. Thank you, Maria. And good morning, everyone.
As such.
Joe: In the course of about a week crews restore power to over half a million customers.
We're well positioned to achieve 5% to 7% long term earnings growth.
With that I'll turn it over to Joe who will walk you through our financial results. Thank you.
Joe: This is a great example of how our teams are working together efficiently to deliver for customers when they need us most.
Thank you Maria and good morning, everyone before I walk through the results and outlook I want to acknowledge that we did not file our 10-K. This morning in line with our typical practice. We are just finalizing the required documentation for the 10-K and completing associated compliance procedures.
Joe: Our response was informed by lessons learned from the severe storms, we experienced in 2021, and we're continuing to improve and what used to be one in a decade events.
You May know, we finished the new ERP software implementation in the fourth quarter with the holiday on Monday, you will see our filing posted with the SEC on Tuesday morning.
Joe: This operational focus is showing up in other ways as well.
Joe: Our results in 2023 reflects our strong execution on cost management. Thanks to the extraordinary efforts of our team to streamline processes leverage technology and improved productivity.
Now turning to slide seven.
Our 2023 results reflect continued industrial load growth dynamic weather and power cost conditions execution of our capital plan and strengthening our growth Foundation.
Joe: As we look to 2024, we continue to build on this progress.
Weather had a meaningful impact on 2023 results, particularly in the second half of the year, we saw 11% fewer cooling degree days and 13% fewer heating degree days compared to 2022 Q4 had historically moderate stretches with our regions seeing the second warmest December on record overall, we experienced 15%.
Joe: To reiterate.
Joe: We're focused on three main areas to achieve growth in the coming year and beyond.
Joe: First exceptional customer growth.
Second execution of our capital plan and third ongoing operational discipline.
<unk> fewer heating degree days than the 15 year average.
Joe: As such.
Joe: We're well positioned to achieve 5% to 7% long term earnings growth.
Customer usage was affected by these conditions.
The power costs were also challenged as renewables production was significantly impacted during these mild periods.
Joe: With that I'll turn it over to Joe who will walk you through our financial results. Thank you.
Joe: Thank you Maria and good morning, everyone before I walk through the results and outlook I want to acknowledge that we did not file our 10-K. This morning in line with our typical practice. We are just finalizing the required documentation for the 10-K and completing associated compliance procedures. As you May know we finished the new ERP software implementation in the fourth quarter with the holiday.
Pgd's wind farms generated 23% less energy in Q4 2023 in Q4 2022, requiring generation it pge's thermal fleet to make up much of the shortfall. Ultimately these dynamics were a significant headwind in achieving the level of power cost favorability expected for the year.
Joe Terpik: Before I walk through the results and outlook, I want to acknowledge that we did not file our 10-K this morning in line with our typical practice. We are just finalizing the required documentation for the 10-K and completing associated compliance procedures. As you may know, we finished a new ERP software implementation in the fourth quarter. With the holiday on Monday, you will see our filing posted with the SEC on Tuesday morning.
2023 loads increased by <unk>, 9% or one 4% weather adjusted compared to 2022.
Joe: On Monday, you will see our filing posted with the SEC on Tuesday morning.
Joe Terpik: Now turning to slide seven, our 2023 results reflect continued industrial load growth, dynamic weather and power cost conditions, execution of our capital plan, and strengthening our growth foundation. Weather had a meaningful impact on our 2023 results, particularly in the second half of the year. We saw 11% fewer cooling degree days and 13% fewer heating degree days compared to 2022. Q4 had historically moderate stretches, with our region seeing the second warmest December on record. Overall, we experienced 15% fewer heating degree days than the 15-year average.
Speaker Change: Now turning to slide seven.
Speaker Change: Our 2023 results reflect continued industrial load growth dynamic weather and power cost conditions execution of our capital plan and strengthening our growth Foundation.
2023 residential load decreased one 7% year over year.
5% weather adjusted driven by mild weather and energy efficiency residential customer count increased 8% for the year <unk>.
Speaker Change: Weather had a meaningful impact on 2023 results, particularly in the second half of the year, we saw 11% fewer cooling degree days and 13% fewer heating degree days compared to 2022 Q4 had historically moderate stretches with our regions seeing the second warmest December on record overall, we experienced 15%.
Commercial loans decreased slightly down <unk>, 3% or 2% weather adjusted versus 2022, largely driven by energy efficiency.
Healthy industrial load growth continued in 2023, increasing five 9% over the last five years, we've observed a seven 5% compound annual growth rate and industrial load as high Tech investments in AI expansion have driven semiconductor and data center demand growth.
Speaker Change: Fewer heating degree days than the 15 year average.
Joe Terpik: Customer usage was affected by these conditions, but power costs were also challenged as renewable energy production was significantly impacted during these mild periods. PGE's wind farms generated 23% less energy in Q4 2023 than in Q4 2022, requiring generation at PGE's thermal fleet to make up much of the shortfall. Ultimately, these dynamics were a significant headwind in achieving the level of power cost favorability expected for the year. 2023 loads increased by 0.9% or 1.4% weather adjusted compared to 2022. 2023 residential load decreased 1.7% year over year, or 0.5% weather adjusted. Driven by mild weather and energy efficiency, the residential customer count increased 0.8% for the year.
Speaker Change: Customer usage was affected by these conditions.
Speaker Change: Power costs were also challenged as renewables production was significantly impacted during these mild periods.
While total loads in 2023 were below our expectations, our service territory fundamentals and our load outlook remained strong unemployment in our region of three 4% trailing the national average of three 7% and we continue to see other public positive indicators public and private sector investment points to broader economic.
Speaker Change: Pgd's wind farms generated 23% less energy in Q4 2023 in Q4 2022, requiring generation it pge's thermal fleet to make up much of the shortfall. Ultimately these dynamics were a significant headwind in achieving the level of power cost favorability expected for the year.
Speaker Change: 2023 load increased by 9% or one 4% weather adjusted compared to 2022.
<unk> and continued load growth in 2024 and beyond.
I'll now cover our financial performance year over year.
Speaker Change: 2023 residential load decreased one 7% year over year.
We experienced a 14th and decrease in revenues, excluding power costs and regulatory program collections, driven by a 13th increase due to the <unk> nine increasing deliveries in 2007 <unk> decrease due to changes in the average prices of deliveries from higher industrial load and lower residential and commercial loans.
Speaker Change: 5% weather adjusted driven by mild weather and energy efficiency residential customer count increased 8% for the year.
Joe Terpik: Commercial load decreased slightly, down 0.3% or 0.2% weather adjusted versus 2022, largely driven by energy efficiency. However, healthy industrial load growth continued in 2023, increasing 5.9%. Over the last five years, we've observed a 7.5% compound annual growth rate in industrial load, as high tech investments and AI expansion have driven semiconductor and data center demand growth. While total loads in 2023 were below our expectations, our service territory fundamentals and our load outlook remain strong. Unemployment in our region of 3.4 percent trails the national average of 3.7 percent, and we continue to see other public positive indicators.
Speaker Change: Commercial loans decreased slightly down <unk>, 3% or 2% weather adjusted versus 2022, largely driven by energy efficiency.
Power costs drove a 25% increase in EPS driven by a 29 cents EPS increase due to the power cost headwinds in 2022 that reversed for this comparison and a <unk> <unk> EPS decrease from higher power costs than anticipated in the annual update tariff.
Speaker Change: Healthy industrial load growth continued in 2023, increasing five 9% over the last five years, we've observed a seven 5% compound annual growth rate and industrial load as high Tech investments in AI expansion have driven semiconductor and data center demand growth.
Serving load during the August heat event and the impact of mild weather on Q4 renewable generation were the key factors opt.
Speaker Change: While total loads in 2023 were below our expectations, our service territory fundamentals and our load outlook remained strong unemployment in our region of three 4% trails. The national average of three 7% and we continue to see other public positive indicators public and private sector investment points to broader economic.
Operating expenses.
Net of deferral related items drove a <unk> <unk> decrease our efficiency and cost management efforts, particularly in Q4 allowed us to keep.
Joe Terpik: Public and private sector investment points to broader economic development and continued load growth in 2024 and beyond. I'll now cover our financial performance year over year. We experienced a 14 cent decrease in revenues, excluding power costs and regulatory program collections, driven by a 13 cent increase due to the 0.9 increase in deliveries and a 27 cent decrease due to changes in the average prices of deliveries due to higher industrial load and lower residential and commercial load.
Base O&M nearly flat year over year.
Speaker Change: Ohmic development and continued load growth in 2024 and beyond.
Next a handful of impacts driven by the execution of our long term capital strategy, including 19% decrease from higher depreciation and amortization at <unk> decreased due to higher interest expenses expenses, a 10% increase from higher AFDC driven by ongoing investment including the recent.
I'll now cover our financial performance year over year.
Speaker Change: We experienced our 14th and decreasing revenues, excluding power costs and regulatory program collections, driven by a 13% increase due to the <unk> nine increase in deliveries in 2007 decreased <unk>.
We completed Clearwater wind development, and a 22% decrease due to the dilutive impacts of drug on the equity forward sale in 2023.
Speaker Change: Changes in the average prices of deliveries from higher industrial load and lower residential and commercial loans.
Joe Terpik: Power costs drove a 25 cent increase in EPS, driven by a 29 cent EPS increase due to power cost headwinds in 2022 that reversed for this comparison and a 4 cent EPS decrease from higher power costs than anticipated in the annual update tariff. Serving low during the August heat event and the impact of mild weathering on Q4 renewable generations were the key factors. Operating expenses, net of deferral-related items, drove a one cent decrease.
Speaker Change: Power costs drove a 25% increase in EPS driven by a 29% EPS increase due to power cost headwinds in 2022 that reversed for this comparison and a <unk> <unk> EPS decrease from higher power cost and anticipated in the annual update tariff server.
We had a <unk> <unk> increase from other items, including higher returns on benefit plan assets and regulatory interest partially offset by benefit plan buyout in 2022 that did not recur.
Lastly, a <unk> <unk> decrease the GAAP EPS, resulting from the Boardman settlement refund, bringing bringing us to our GAAP EPS of $2 33 per diluted share after adjusting for this <unk> impact we reach our 2023 non-GAAP EPS of $2 38 per diluted share.
Speaker Change: Load during the August heat event, and the impact of mild weather on Q4 renewable generation were the key factors.
Speaker Change: Operating expenses.
Speaker Change: Net of deferral related items drove a <unk> <unk> decrease our efficiency and cost management efforts, particularly in Q4 allowed us to keep.
Turning to slide eight.
Joe Terpik: Our efficiency and cost management efforts, particularly in Q4, allowed us to keep Base O&M nearly flat year over year. Next, a handful of impacts driven by the execution of our long-term capital strategy, including a $0.19 decrease from higher depreciation and amortization, a $0.16 decrease due to higher interest expenses, a $0.10 increase from higher AFUDC driven by ongoing investments, including the recently completed Clearwater wind development, and a $0.22 decrease due to dilutive impacts of draws on the equity forward sale in 2020. We had a one cent increase from other items, including higher returns on benefit plan assets and regulatory interest, partially offset by a benefit plan buyout in 2022 that did not recur. Lastly, a $0.05 decrease in GAAP EPS resulting from the Boardman's Settlement Refund, bringing us to our GAAP EPS of $2.33 per diluted share.
Which shows our latest five year capital forecast 2020.
Or through 2027 estimates are now upsized by $1 2 billion as we look to maximize customer value with system wide improvements and emerging transmission investments.
Speaker Change: Base O&M nearly flat year over year.
Speaker Change: Next a handful of impacts driven by the execution of our long term capital strategy, including <unk> 19 decrease from higher depreciation and amortization, a 16% decrease due to higher interest expenses.
These transmission projects will focus on network improvements meant to alleviate congestion.
Prove adequacy and reliability enabled de carbonization and address customer growth.
Speaker Change: Senses, a 10% increase from higher AFDC, driven by ongoing investment, including the recently completed Clearwater wind development and a 22% decrease due to the dilutive impacts of draws on the equity forward sale in 2023.
2028 transmission projections also include PGE.
<unk> contribution to the Bethel round Butte transmission line upgrade which will be undertaken with our longtime partner the confederated tribes of the warm Springs. This project will be assisted by the previously disclosed $250 million U S. Doe grant awarded to the tribes.
Speaker Change: We had a <unk> increase from other items, including higher returns on benefit plan assets and regulatory interest partially offset by benefit plan buyout in 2022 that did not recur.
As planning and scoping or finalized for this and other grant related projects, we will update our estimates in <unk> and.
Speaker Change: Lastly, a <unk> <unk> decrease the GAAP EPS, resulting from the Boardman settlement refund, bringing bringing us to our GAAP EPS of $2 33 per diluted share after adjusting for this <unk> impact we reach our 2023 non-GAAP EPS of $2.38 per diluted share.
And reflect in future forecast.
We have also refined our expectations for base capital spend to support grid monetization system hardening and technology investments.
Joe Terpik: After adjusting for this $0.05 impact, we reach our 2023 non-GAAP EPS of $2.38 per diluted share. Turning to slide eight, which shows our latest five-year capital forecast. Our 2024 to 2027 estimates are now upsized by 1.2 billion as we look to maximize customer value with system-wide improvements and emerging transmission investments. These transmission projects will focus on network improvements meant to alleviate congestion, improve adequacy and reliability, enable decarbonization, and address customer growth. 2028 transmission projections also include PGE's estimated contribution to the Bethel-Roundview transmission line upgrade, which will be undertaken with our longtime partner, the Confederated Tribes of the Warm Springs. This project will be assisted by the previously disclosed $250 million U.S. DOE grant awarded to the tribes.
As a reminder, this chart does not reflect capex related to the possible ownership from the recently launched 2023, RFP, which went to the market on February the.
Speaker Change: Turning to slide eight.
Speaker Change: Which shows our latest five year capital forecast 2020.
The competitive bidding process schedule, which is included in our RFP website anticipates bid submission final short short list selection and shortly submission to the <unk> by mid 2024.
Speaker Change: Or through 2027 estimates are now upsized by $1 2 billion as we look to maximize customer value with system wide improvements and emerging transmission investments.
Speaker Change: These transmission projects will focus on network improvements meant to alleviate congestion improve adequacy and reliability enabled de carbonization and address customer growth.
Project selection is expected in Q3 or Q4.
This timeline is dependent on the volume and complexity of the bids and.
And we will update you as the competitive process continues.
Speaker Change: 2028 transmission projections also include PGE.
While we are continuing to evaluate timing increased base capex to deliver customer benefits and the incoming battery projects to improve flexibility put weight on the scale for a near term rate case filing in line with our standard process. We will keep you informed of any actions regarding a rate case filings.
Speaker Change: <unk> contribution to the Bethel round Butte transmission line upgrade which will be undertaken with our longtime partner the confederated tribes of the warm springs.
Speaker Change: This project will be assisted by the previously disclosed $250 million U S. Dod grant awarded to the tribes.
Joe Terpik: As planning and scoping are finalized for this and other grant-related projects, we will update our estimates and reflect them in future forecasts. We have also refined our expectations for base capital spent to support grid modernization, system hardening, and technology investment. As a reminder, this chart does not reflect CapEx related to possible ownership from the recently launched 2023 RFP, which went to the market on February 2nd. The competitive bidding process schedule, which is included on our RFP website, anticipates bid submission, final shortlist selection, and shortlist submission to the OPUC by mid-2024.
Speaker Change: As planning and scoping or finalized for this and other grant related projects, we will update our estimates.
On to slide nine.
For our liquidity and financing summary.
Total available liquidity at December 31 is $969 million, our strong balance sheet investment grade credit ratings and stable credit outlook remains unchanged from our previous disclosures.
Speaker Change: And reflect in future forecast.
Speaker Change: We have also refined our expectations for base capital spend to support grid monetization system hardening and technology investments.
Through December 2023, we've entered into forward sale agreements grew $78 million of the $300 million available under the ATM.
Speaker Change: As a reminder, this chart does not reflect capex related to the possible ownership from the recently launched 2023, RFP, which went to the market on February <unk>.
There have not been any draws on these forward agreements thus far.
Speaker Change: The competitive bidding process schedule, which is included in our RFP website anticipates bid submission final shorts short list selection and shortly submission to the <unk> by mid 2024.
As we look to the remainder of 2024, we anticipate debt issuances of up to $730 million for the year and we plan to continue our practice of issuing under our green financing framework where possible.
Joe Terpik: Project selection is expected in Q3 or Q4. This timeline is dependent on the volume and complexity of the bids, and we will update you as the competitive process continues. While we are continuing to evaluate timing, increased base CapEx to deliver customer benefits and the incoming battery projects to improve grid flexibility put weight on the scale for a near-term rate case filing. In line with our standard process, we will keep you informed of any actions regarding a rate case filing on page nine of our Liquidity and Financing Summary. The total available liquidity at December 31st was $969 million.
On the equity front capacity under the ATM remains sufficient for our base capital financing needs, including the battery projects currently underway. The ATM provides a helpful. Mitch.
Speaker Change: <unk> selection is expected in Q3 or Q4.
Speaker Change: This timeline is dependent on the volume and complexity of the bids.
Speaker Change: And we will update you as the competitive process continues.
The mix of capital access and dilution management that supports our ongoing base capital plan.
Speaker Change: While we are continuing to evaluate timing increased base capex to deliver customer benefits and the incoming battery projects to improve grid flexibility put weight on this scale for a near term rate case filing in line with our standard process. We will keep you informed of any actions regarding a rate case filing.
Continued management of our capital structure and trending towards our authorized 50 50 ratio overtime remains a key priority.
We maintained flexibility in financing options and remain confident in competitively accessing both debt and equity markets when necessary as.
Speaker Change: On to slide nine.
As additional capital investment opportunities mature, including from the RFP, We will continue to evaluate our strategy and update you on our financing plans.
Speaker Change: For our liquidity and financing summary.
Speaker Change: Total available liquidity at December 31 is $969 million, our strong balance sheet investment grade credit ratings and stable credit outlook remains unchanged from our previous disclosures.
Joe Terpik: Our strong balance sheet, investment grade credit ratings, and stable credit outlook remain unchanged from our previous disclosure. Through December 2023, we've entered into forward sale agreements for 78 million of the 300 million available under the ATM. However, there have not been any draws in these forward agreements thus far.
Turning to slide 10.
We are initiating full year 2024, adjusted earnings guidance of $2 98 to $3 18.
Speaker Change: Through December 2023, we've entered into forward sale agreements grew $78 million of the $300 million available under the ATM.
Per diluted shares.
As Maria noted earlier the January.
Speaker Change: They have not been any draws on these forward agreements thus far.
Storm system had a meaningful impact on our service territory and we are continuing to work through the implications of the multi day event.
Joe Terpik: As we look to the remainder of 2024, we anticipate debt issuances of up to $730 million for the year, and we plan to continue our practice of issuing under our green financing framework where possible. On the equity front, capacity under the ATM remains sufficient for our base capital financing needs, including the battery projects currently underway. The ATM provides a helpful mix of capital access and dilution management that supports our ongoing base capital.
Speaker Change: As we look to the remainder of 2024, we anticipate debt issuances of up to $730 million for the year and we plan to continue our practice of issuing under our green financing framework where possible.
Currently we estimate storm restoration operating expenses of $35 million to $45 million and approximately $15 million of capital cost to repair impacted assets.
Speaker Change: On the equity front capacity under the ATM remains sufficient for our base capital financing needs, including the battery projects currently underway. The ATM provides a helpful. Mitch.
Earlier this month, we filed a deferral of these costs understanding emergency restoration deferral.
The mix of capital access and dilution management that supports our ongoing base capital plan.
The conditions to trigger the first reliability contingency event treatment under the updated power cost recovery framework format.
Joe Terpik: Continued management of our capital structure and trending towards our authorized 50-50 ratio over time remains a key priority. We maintain flexibility in financing options and remain confident in competitively accessing both debt and equity markets when necessary. As additional capital investment opportunities mature, including from the RFP, we will continue to evaluate our strategy and update you on our financing. Turn to slide 10.
Speaker Change: Continued management of our capital structure and trending towards our authorized 50 50 ratio overtime remains a key priority.
As the region saw a market price spikes balancing authority alerts and resource adequacy constraints on PGE system.
Speaker Change: We maintained flexibility in financing options and remain confident in competitively accessing both debt and equity markets when necessary as.
Under the <unk> mechanism PGE is allowed to pursue recovery of 80% of the cost for the RC above the amounts forecasted in the AUT with the remaining 20% flowing through the existing PJM.
Speaker Change: As additional capital investment opportunities mature, including from the RFP, We will continue to evaluate our strategy and update you on our financing plans.
We are currently estimating the rte costs between $85 million and $100 million. These impacts are still being finalized, but we will be able to provide more detail. When we report Q1 2024 results.
Speaker Change: Turning to slide 10.
Joe Terpik: We are initiating full year 2024 adjusted earnings guidance of $2.98 to $3.18 per diluted share. As Maria noted earlier, the January storm system had a meaningful impact on our service territory, and we are continuing to work through the implications of the multi-day event. Currently, we estimate storm restoration operating expenses of $35 million to $45 million and approximately $15 million of capital costs to repair impacted assets.
Speaker Change: We are initiating full year 2024, adjusted earnings guidance of $2 98 to $3 18.
Speaker Change: Per diluted shares.
Speaker Change: As Maria noted earlier the January storm system had a meaningful impact on our service territory and we are continuing to work through the implications of the multi day event.
Given the extraordinary any irregular nature of the storm last month the effects are excluded from our 2020 for guidance.
And will be excluded from our 2024 adjusted non-GAAP results to improve the comparability of earnings and to better reflect our ongoing financial performance.
Speaker Change: Currently we estimate storm restoration operating expenses of $35 million to $45 million and approximately $15 million of capital cost to repair impacted assets.
We expect this to involve the exclusion of the non recoverable, 20% portion of the <unk> cost and any operating costs, which have been determined non recoverable under existing mechanisms.
Joe Terpik: Earlier this month, we filed a deferral of these costs under a standing emergency restoration deferral. The conditions to trigger the first reliability contingency event treatment under the updated power cost recovery framework were met as the region saw market price spikes, balancing authority alerts, and resource adequacy constraints on PGE systems. Under the RCE mechanism, PGE is allowed to recover 80% of the cost for the RCE above the amounts forecasted in the AUT, with the remaining 20% flowing through the existing PCAM. We are currently estimating the RCE cost between $85 million and $100 million.
Speaker Change: Earlier this month, we filed a deferral of these costs understanding emergency restoration deferral.
Speaker Change: The conditions to trigger the first reliability contingency event treatment under the updated power cost recovery framework for Matt as the region saw a market price spikes balancing authority alerts and resource adequacy constraints on PGE system.
I will now touch on the other drivers of 2020 for guidance.
As I said earlier, our confidence in our service territory remains strong highlighted by continued low growth from industrial customers and modest increases in the residential and commercial classes combined we assume a 2% to three 3% weather adjusted retail load growth for 2024, these load dynamics as well.
Speaker Change: Under the <unk> mechanism PGE is allowed to pursue recovery of 80% of the cost for the RC above the amounts forecasted in the AUT with.
Speaker Change: With the remaining 20% flowing through the existing PJM.
As continued regional investment and a pipeline of incoming projects give.
Speaker Change: We are currently estimating the rte costs between $85 million and $100 million. These impacts are still being finalized, but we will be able to provide more detail. When we report Q1 2024 results.
Give us continued confidence in our long run load assumptions expected expectations sorry.
Joe Terpik: These impacts are still being finalized, but we will be able to provide more detail when we report Q1 2024 results. Given the extraordinary and irregular nature of the storm last month, the effects are excluded from our 2024 guide and will be excluded from our 2024 adjusted non-GAAP results to improve the comparability of earnings and to better reflect our ongoing financial performance. We expect this to involve the exclusion of the non-recoverable 20% portion of the RCE cost and any operating costs which have been determined non-recoverable under existing mechanisms. I will now touch on other drivers of the 2024 guide. As I said earlier, confidence in our service territory remains strong, highlighted by continued low growth from industrial customers and modest increases in the residential and commercial classes. Combined, we assume a 2% to 3% weather-adjusted retail load growth for 2024.
As such we are reiterating our long term load growth guidance of 2% through 2027.
Speaker Change: Given the extraordinary any regular nature of this storm last month the effects are excluded from our 2020 for guidance.
We anticipate O&M expense ranging from $815 million to $840 million, which includes $165 million of earnings neutral regulatory deferral, amortizations wildfire mitigation and vegetation management costs and other offsetting items.
Speaker Change: And we will be excluded from our 2024 adjusted non-GAAP results to improve the comparability of earnings and to better reflect our ongoing financial performance.
Net of these items the midpoint.
Speaker Change: We expect this to involve the exclusion of the non recoverable, 20% portion of the <unk> cost and <unk>.
Of our O&M range represents a 3% compound annual growth rate compared to 2022 base O&M net of similar offsets.
Any operating costs, which have been determined non recoverable under existing mechanisms.
We remain committed to deploying the right tools to optimize productivity and provide the highest quality customer service, while also managing operating costs.
Speaker Change: I will now touch on the other drivers of 2020 for guidance.
As I said earlier, our confidence in our service territory remains strong highlighted by continued low growth from industrial customers and modest increases in the residential and commercial classes.
This philosophy, coupled with Derisking accomplishments and critical investments made in 2023 gives us continued confidence.
Speaker Change: Combined we assume a 2% to three 3% weather adjusted retail load growth for 2024 these load dynamics.
Our growth plan as such we are reiterating our long term earnings growth and dividend growth guidance of 5% to 7%.
Joe Terpik: These load dynamics, as well as continued regional investment in a pipeline of incoming projects, give us continued confidence in our long-run load assumptions—expectations, sorry. As such, we are reiterating our long-term load growth guidance of 2% through 2027. We anticipate O&M expense rising from $815 million to $840 million, which includes $165 million of earnings-neutral regulatory deferral amortizations, wildfire mitigation, and vegetation management costs and other offsetting items.
As our attention shifts to the year ahead, our core focus remains unchanged.
As well as continued regional investment and a pipeline of incoming projects.
Speaker Change: Give us continued confidence in our long run load assumptions expected expectations sorry.
<unk> clean reliable and affordable energy, while providing value to our communities our customers and our shareholders.
Speaker Change: As such we are reiterating our long term load growth guidance of 2% through 2027.
And now operator, we are ready for questions.
As a reminder to ask a question. Please press star one on your telephone.
Speaker Change: We anticipate O&M expense ranging from $815 million to $840 million, which includes $165 million of earnings neutral regulatory deferral, amortizations wildfire mitigation and vegetation management costs and other offsetting items.
Wait for your name to be announced.
Draw. Your question. Please press star one again.
Please standby, while we compile the Q&A roster.
Speaker Change: Net of these items the midpoint of our O&M range represents a 3% compound annual growth rate compared to 2022 base O&M net of similar offsets.
Joe Terpik: Net of these items, the midpoint of our O&M range represents a 3% compound annual growth rate compared to 2022 base O&M net of similar offsets. We remain committed to deploying the right tools to optimize productivity and provide the highest quality customer service while also managing operating costs. This philosophy, coupled with de-risking accomplishments and critical investments made in 2023, gives us continued confidence in our growth plan. As such, we are reiterating our long-term earnings growth and dividend growth guidance of 5 to 7 percent.
And our first question comes from Nicholas Campanella with Barclays. Your line is now open.
Speaker Change: We remain committed to deploying the right tools to optimize productivity and provide the highest quality customer service, while also managing operating costs.
Hey, Thanks, so much for taking my question Happy Friday.
Good morning, I guess, just pretty material increase in the base Capex plan here. So can you just help us understand.
Speaker Change: This philosophy, coupled with Derisking accomplishments and critical investments made in 2023 gives us continued confidence in our growth plan as such we are reiterating our long term earnings growth and dividend growth guidance of 5% to 7%.
Are there additional equity requirements beyond kind of the $300 million ATM that you highlighted in the slides and then.
Maybe I'll, maybe I'll just leave it there for now and then where do you kind of stand.
And that 5% to 7% EPS CAGR with this new Capex plan. Thank you.
Speaker Change: As our attention shifts to the year ahead, our core focus remains unchanged safely serving clean reliable and affordable energy, while providing value to our communities our customers and our shareholders.
Sure well, thank you very much.
So first one of the additions that you are seeing and we pull it out and separated it from what we had shown you in the past is our transmission investment plan and that will continue to probably increase as we move forward as well.
Operator: As our attention shifts to the year ahead, our core focus remains unchanged, safely serving clean, reliable, and affordable energy while providing value to our communities, our customers, and our shareholders. And now, operator, we are ready for questions. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.
And now operator, we are ready for questions.
Speaker Change: As a reminder to ask a question. Please press star one on your telephone and wait.
And it further cars to your question is on.
Speaker Change: For your name to be announced.
To withdraw your question. Please press star one again.
Our equity offerings.
Or where are we looking for the ATM. The ATM will cover what we need for the foreseeable future, including the batteries.
Speaker Change: Please standby, while we compile the Q&A roster.
We're waiting to see where we end up with the RFP projects that could be coming in and that could potentially require additional capital.
Speaker Change: And our first question comes from Nicholas Campanella with Barclays. Your line is now open.
Operator: Stand by while we compile the Q&A. And our first question comes from Nicholas Campanella with Barclays. Your line is now open. Hey, thanks so much for taking my question. Happy Friday.
We remain confident in our 5% to 7% growth rate.
Nicholas Campanella: Hey, Thanks, so much for taking my question Happy Friday.
Nicholas Campanella: Good morning. So I guess a pretty material increase in the base CapEx plan here. So can you just help us understand... Are there additional equity requirements beyond kind of the 300 million ATM that you've highlighted in slides? And then maybe, maybe I'll just leave it there for now. And then where do you kind of stand?
And you'll see that moving forward.
Nicholas Campanella: Good morning, I guess, just pretty material increase in the base Capex plan here. So can you just help us understand.
With confidence as we look to 2024, which is a really solid year for us given the outcome of a rate case customer growth and the capital plan that we just discussed.
Nicholas Campanella: Are there additional equity requirements beyond kind of the $300 million ATM that you highlighted in the slides and then.
Okay. So on the on the base plan today, it's just the current equity funding needed to do the base plan today, obviously that can change as this RFP comes through and we'll see how much you can own versus not the right message.
Speaker Change: Maybe I'll, maybe I'll just leave it there for now and then where do you kind of stand.
Maria MacGregor Pope: in that 5-7 EPS CAGR with this new CapEx plan. Thank you. Sure. Well, thank you very much.
Speaker Change: And that 5% to 7% EPS CAGR with this new Capex plan. Thank you.
Speaker Change: Sure well, thank you very much.
Maria MacGregor Pope: So first, one of the additions that you're seeing, and we've pulled it out and separated it from what we had shown you in the past, is our transmission investment plan. And that will probably continue to probably increase as we move forward as well. In regards to your questions on our equity offerings, or where we are looking for the ATM, the ATM will cover what we need for the foreseeable future, including the batteries.
Speaker Change: So first one of the additions that you are seeing and we pull it out and separated it from what we had shown you in the past is our transmission investment plan and that will continue to probably increase as we move forward as well.
Yes, that's correct Nick Thanks.
Okay. Thank you and then just.
I guess just on the the storm expenses.
Understanding that you're you're deferring a portion of it you kind of talked about this $35 million to $40 million bucket, and then $85 to $100 million for the <unk> costs, just simplistically like how much is actually being deferred versus at versus excluded from the non-GAAP number in 'twenty four.
Speaker Change: And frankly, our cars to your question is on.
Speaker Change: Our equity offerings.
Speaker Change: Or where are we looking for the ATM. The ATM will cover what we need for the foreseeable future, including the batteries.
So let me, let Joe take that on and one thing I want to recognize that this was truly an extraordinary event.
Maria MacGregor Pope: We are waiting to see where we end up with the RFP projects that could be coming in, and that could potentially require additional capital. However, we remain confident in our 5 to 7% growth rate. And you'll see that moving forward with confidence as we look to 2024, which is a really solid year for us, given the outcome of our rate case, customer growth, and the capital plan that we just discussed. Okay, so on the base plan today, it's just the current equity funding needed to do the base plan today. Obviously, that can change as this RFP comes through, and we'll see how much you can own versus not. Is that the right message?
Speaker Change: We're waiting to see where we end up with the RFP projects that could be coming in.
Not only for the restoration efforts with regards to customer outages, but bejan wide the energy markets were really insignificant disarray.
Speaker Change: Potentially require additional capital.
Speaker Change: We remain confident in our 5% to 7% growth rate.
Speaker Change: And you'll see that moving forward with.
And so Nick two to all sort of answered this a bit in reverse so as it relates to the costs.
Speaker Change: With confidence as we look to 2024, which is a really solid year for us given the outcome of a rate case customer growth and the capital plan that we just discussed.
The amount that we would expect not to be deferred that would would be the operating the exclusion would be between 10, and 15 and everything else that we talk to would be deferred within one of the two mechanisms that we've mentioned previously.
Speaker Change: Okay. So on the on the base plan today, it's just the current equity funding needed to do the base plan today, obviously that can change as this RFP comes through and we'll see how much you can own versus not.
That's helpful. Thank you so much.
Speaker Change: Right message.
Maria MacGregor Pope: Yes, that's correct, Nick. Thanks. Okay, thank you. And then just, I guess, just on the storm expenses, just understanding that you're deferring a portion of it, you kind of talked about this 35 to 40 million bucket, and then this, you know, 85 to 100 million for the RCE costs, just simplistically, like how much is actually being deferred versus at versus excluded from the non-gap number and 24. Sure, let me let Joe take that on. And one thing I want to recognize is this was truly an extraordinary event, not only for the restoration efforts with regard to customer outages, but region-wide, the energy markets were really in significant disarray. Joe?
Okay.
Speaker Change: Yes, that's correct Nick Thanks.
Thank you.
Speaker Change: Okay. Thank you and then just.
One moment for our next question.
Speaker Change: I guess just on the the storm expenses.
Speaker Change: Understanding that you're you're deferring a portion of it you kind of talked about this $35 million to $40 million bucket and then <unk>.
Yes.
And our next question comes from share.
Speaker Change: $85 million to $100 million for the <unk> costs, just simplistically like how much is actually being deferred versus app versus excluded from the non-GAAP number in 'twenty four.
With Guggenheim Partners. Your line is now open.
Hi, Good morning, it's actually James for Shar. Good morning, good morning.
Good morning.
So if I can start on the loan side.
Speaker Change: So let me, let Joe take that on in one of the things I want to recognize that this was truly an extraordinary event.
Yes part of the backdrop.
So our tortillas.
A lot of companies involved.
Let me conductor manufacturing.
Joe: Only for the restoration efforts with regards to customer outages.
Specific data centers.
Can you just give us some color on how AI is providing growth across the customer classes as you can see it.
Joe: BJ wide the energy markets were really insignificant disarray.
And also any detail on what kind of incremental generation or transmission opportunities are being created.
Joe: And so Nick two to all sort of answered this a bit in reverse so as it relates to the Cogs.
Joe Terpik: And so Nick, I'll sort of answer this a bit in reverse. So as it relates to the cost, the amount that we would expect not to be deferred that would be the operating the exclusion would be between 10 and 15 cents, meaning everything else that we talked about would be deferred within one of the two mechanisms that we've mentioned previously. That's helpful. Thank you so much.
In the longer term specifically by those customers.
Joe: The amount that we would expect not to be deferred that would would be the operating the exclusion would be between 10 and 15.
Sure. That's a great question, so on the longer term side.
Certainly we have been.
Semiconductor manufacturing center for decades.
Joe: Everything else that we talk to would be deferred within one of the two mechanisms that we've mentioned previously.
About 15% of semiconductors are manufactured in our service territory, and we expect to see a lot of longer term growth the construction of those facilities.
Speaker Change: That's helpful. Thank you so much.
Joe Terpik: Thank you. We'll move it for our next question. And our next question comes from Cher Parisa with Guggenheim Partners Alliance. Good morning. Good morning. It's actually James, for sure.
Speaker Change: Thank you.
Speaker Change: One moment for our next question.
Very extensive easier to construct and near term growth is the AI driven data centers.
Speaker Change: Yes.
Speaker Change: And our next question comes from sure.
Both in terms of some of the mega facilities as well as some of the grid edge computing. So we are seeing.
Guggenheim Partners: With Guggenheim Partners. Your line is now open.
Guggenheim Partners: Hi, Good morning, it's actually James for Shar. Good morning, Good morning, Brian.
No small sort of general demand from just about every hyperscale or <unk>.
Operator: Good morning. Um, so if I could start on the load side, uh, just, you know, part of the backdrop is, you know, your service territory is in. A lot of companies involved, emiconductor manufacturing, AI-specific data centers. Can you just give us some color on how AI is providing growth across the customer classes, as you see it, and also any detail on what kind of incremental generation or transition opportunities are being created? In the longer term, specifically, by the, Sure, that's a great question. So on the longer term side, certainly, we have been a semiconductor manufacturing center for decades, and about 15% of semiconductors are manufactured in our service territory, and we expect to see a lot of longer-term growth. The construction of those facilities is very extensive. Easier to construct and with nearer term growth are the AI driven data centers, both in terms of some of the mega facilities, as well as some of the grid edge computing.
James: So if I can start on the loan side.
And cloud computer company out there.
James: Yes, part of the backdrop business in your service territories in Florida.
And it's really a terrific amount of opportunity for us most of these companies on a 100% clean energy they frequently bring their own reliability backup.
James: A lot of companies involved.
Speaker Change: Let me conductor manufacturing.
Speaker Change: AI specific data centers.
Speaker Change: Can you just give us some color on how AI is providing growth across the customer classes as you can see it.
And are interested in additional transmission substation infrastructure as well as other so it allows for significant growth as we move forward.
And also any detail on what kind of incremental generation or transmission opportunities are being created.
Speaker Change: In the longer term specifically by those customers.
For our communities and the other customers. We serve this creates an overall strengthening of our reliability and resiliency as we invest in new infrastructure.
Speaker Change: Sure. That's a great question, so on the longer term side.
Speaker Change: Certainly we have been.
Speaker Change: Semiconductor manufacturing center for decades.
And it provides important jobs for the region are property taxes and other significant benefits.
Speaker Change: About 15% of semiconductors are manufactured in our service territory, and we expect to see a lot of longer term growth the construction of those facilities.
Gotcha, Okay, and then just shifting over to the regulatory side, Joe you instead of this at the end of your prepared.
Speaker Change: Very extensive easier to construct and near term growth is the AI driven data centers.
I assume the timeline for new rates Gen 125 with a.
A new <unk> filing in the next week or two I guess can you just get a little more color on your thoughts on.
Speaker Change: Both in terms of some of the mega facilities as well as some of the grid edge computing. So we are seeing.
Finally.
Sure well, so we haven't finalized our thoughts on timing, but you are correct under the regulatory framework framework in Oregon. It is eight a 10 month window. So if we want rates to effect immediately on January one they filing would be to occur by the end of this month, we we continue to sort of finalize our thinking and approach and we'll obviously commuter.
Maria MacGregor Pope: So we're seeing no small shortage of demand from just about every hyperscaler and cloud computer company out there, and that's a really terrific amount of opportunity for us. Most of these companies want 100% clean energy.
Speaker Change: No small sort of general demand from just about every hyperscale or <unk>.
Speaker Change: And cloud computer company out there.
Speaker Change: And it's really a terrific amount of opportunity for us most of these companies on a 100% clean energy they frequently bring their own reliability backup.
Maria MacGregor Pope: They frequently bring their own reliability backup and are interested in additional transmission, substation, and infrastructure, as well as others. This allows for significant growth as we move forward. For our communities, and the other customers we serve, this creates an overall strengthening of our reliability and resiliency as we invest in new infrastructure. And it provides important jobs for the region, property taxes, and other significant benefits. Now, moving over to the regulatory side.
Kate that as we have it as I mentioned previously.
Certain items, putting weighed on the scale of the batteries coming online and some other items that we would expect.
Speaker Change: And are interested in additional transmission substation infrastructure as well as other so it allows for significant growth as we move forward.
Even more timely recovery.
Okay. Thanks, guys.
Yeah.
Speaker Change: For our communities and other customers. We serve this creates an overall strengthening of our reliability and resiliency as we invest in new infrastructure.
Thank you Juan <unk> for our next question.
Speaker Change: And it provides important jobs for the region property taxes and other significant benefits.
Our next question comes from.
Julien Dumoulin Smith with Bank of America. Your line is now open.
Speaker Change: Gotcha.
Speaker Change: And then shifting over to the regulatory side, Joe you instead of this at the end of your prepared.
Maria MacGregor Pope: Joe, you hinted at this at the end of your prepared statement. But I assume the timeline for the new rates, Jan 125, would mean a new GRC filing in the next week or two. I guess, can we just get a little more color on your thoughts on timing?
Hey, good morning. Thank you guys very much for the time, Hey, Maria Thank you.
Joe: I assume the timeline for new rates Gen 125 with the.
And just a follow up hey, just following up on the latest from the Oregon, PUC and just on the rejection of the clean energy plan I, just want to understand a little bit right. Because obviously this is sort of partial short term versus long term what message are they trying to send here about 100% target, especially relative to affordability I'd love to get.
Joe: <unk> filing in the next week or two I guess can you just get a little more color on your thoughts on filing.
Joe Terpik: Sure. Well, we haven't finalized our thoughts on timing, but you're correct. Under the regulatory framework in Oregon, it is a 10-month window.
Joe: Sure well, so we haven't finalized our thoughts on timing, but you are correct under the regulatory framework framework in Oregon. It is eight a 10 month window. So if we want rates to effect immediately on January one they filing would be to occur by the end of this month.
Joe Terpik: So if we want rates to go back immediately on January 1st, a filing would need to occur by the end of this month. We continue to sort of finalize our thinking and approach, and we'll obviously communicate that as we have it. As I mentioned previously, you know, there are certain items putting weight on the scale of the batteries coming online, and some other items that we would expect, you know, need a more timely recovery. Thanks, guys.
In your words a sense of.
Breaking out of the different pieces that are ongoing and then I've got a follow up quickly.
Joe: We continue to sort of finalize our thinking and approach and we'll obviously communicate that as we have it as I mentioned previously there are certain items, putting weighed on the scale of the batteries coming online and some other items that we would expect Stephen.
Sure No I think it's a great question and first of all this is our first clean energy plan and I want to acknowledge.
And recognize that our integrated resource plan was.
Joe: Need a more timely recovery.
That was acknowledged and we are moving forward under that ERP.
Speaker Change: Okay. Thanks, guys Okay.
Operator: Thank you. One moment for our next question. Our next question comes from Julian DeMoulin, Bank of America. You have a line now. Hey, good morning, team.
Speaker Change: Yeah.
There are questions really had to do around more granular admissions modeling, we had been doing day by day admissions modeling and they'd like to see hour by hour emissions modeling overall, if you will also remember our original IRB pad was upsized in July quite significantly for additional.
Speaker Change: Thank you Juan <unk> for our next question.
Our next question comes from.
Speaker Change: Julien Dumoulin Smith with Bank of America. Your line is now open.
Energy needs as well as additional capacity needs and I think theres more discussion.
Speaker Change: Hey, good morning. Thank you guys very much for the time, Hey, Maria Thank you.
Julian DeMoulin: Thank you guys very much for the time. Hey, Maria, thank you. And just following up on the latest from the Oregon PUC, just on the rejection of the Clean Energy Plan, I just want to understand a little bit, right? Because, obviously, this is sort of a partial solution, short-term versus long-term. What message are they trying to send here about the 100% target, especially relative to affordability? I'd love to get, in your words, a sense of breaking out of the different pieces that are ongoing. And then I got to follow up quickly.
Among stakeholders and key constituents around the how we're going to meet the additional needs with additional renewable energy and other infrastructure. So it's a good time to have healthy discussion around what is a really dynamic and rapidly growing environment here.
Speaker Change: And just a follow up hey, just following up on the latest from the Oregon, PUC and just on the rejection of the clean energy plan I, just want to understand a little bit right. Because obviously this is sort of partial short term versus long term what message are they trying to send here about 100% target, especially relative to affordability I'd love to get.
Speaker Change: In your words a sense of.
Yes, certainly and just to make sure I'm understanding the key takeaway here I mean.
Breaking out of the different pieces that are ongoing and then I've got a follow up quickly.
It seems like there is a broader question about like how you meet the 100% in terms of maybe there is a need for more.
Maria MacGregor Pope: Sure, no, I think it's a great question. And first of all, this is our first clean energy plan. And I want to acknowledge and recognize that our integrated resource plan was not acknowledged, and we're moving forward under that IRP. There are questions really had to do around more granular admissions modeling. We have been doing day by day admissions modeling, and they like to see hour by hour admissions modeling.
Speaker Change: Sure No I think it's a great question and.
Speaker Change: First of all this is our first clean energy plan and I want to acknowledge.
Again, because I know that at times has been an acute focus on affordability here and perhaps enabling and ensuring that there's a pathway for affordability I just want to make sure I'm hearing clearly what direction. This.
Speaker Change: And recognize that our integrated resource plan was.
Speaker Change: That was acknowledged and we are moving forward under that ERP.
Speaker Change: There are questions really had to do around more granular admissions modeling, we had been doing day by day admissions modeling and they'd like to see hour by hour emissions modeling overall, if you will also remember our original IRB.
This rejection on the long term came from.
It came from a need most clearly for additional admissions modeling Julien, but the box back.
Maria MacGregor Pope: Overall, as you'll also remember, our original IRP was upsized in July quite significantly for additional energy needs, as well as additional capacity needs. And I think there's more discussion, you know, among stakeholders and key constituents around how we're going to meet the additional needs with additional renewable energy and other infrastructure. So it's a good time to have healthy discussion around what is a really dynamic and rapidly growing environment here. Yeah, it certainly is, and just to make sure I'm understanding the key takeaway here. I mean, you know, it seems like there's a broader question about how you meet the 100% in terms of maybe there's a need for more.
Backstory here is is that we're seeing pretty significant changes to the upside of energy usage and wanting to really understand the sources.
Speaker Change: Ed was upsized in July quite significantly for additional energy needs as well as additional capacity needs and I think theres more discussion.
The economics of all.
All of those procurements.
Speaker Change: Amongst stakeholders and key constituents around the how we're going to meet the additional needs with additional renewable energy and other infrastructure. So it's a good time to have healthy discussion around what is a really dynamic.
As we bring on renewable resources and a clear water would be a good example, we're actually not seeing customer prices react as we're displacing higher purchase energy in the market and so the additional renewables procurement is actually not driving customer prices as much as one would think as we model it forward.
Speaker Change: Rapidly growing environment here.
It's the overall need for investment in aging infrastructure and supporting significant customer growth that is that's driving customer prices of any move forward more than clean energy development.
Speaker Change: Yes, it's certainly and just to make sure I'm understanding the key takeaway here I mean.
Speaker Change: It seems like there is a broader question about like how you meet the 100% in terms of maybe there is a need for more.
Maria MacGregor Pope: Again, because I know that at times there's been an acute focus on affordability here and perhaps enabling and ensuring that there's a pathway for affordability. I just want to make sure I'm hearing clearly from what direction this, this, this rejection over the long term came from. It came from a need, most clearly, for additional emissions modeling, Julian, but the back story here is that we're seeing pretty significant changes to the upside of energy usage and wanting to really understand the sources and the economics of all of those procurements.
Speaker Change: Again, because I know that at times has been an acute focus on affordability here and perhaps enabling and ensuring that there's a pathway for affordability I just want to make sure I'm hearing clearly what direction. This this this rejection on the long term came from.
Alright, and actually to that point I mean, you have a dramatic increase here in transmission and that's not necessarily surprising given what you've been telegraphing in recent periods about the need for transmission.
But can you maybe frame out I mean, how do you think about sort of upside generation given the new level of spend tied to especially transmission here I mean should we continue to think about this as being incremental do you have a shift in how you think about allocating capital to generation here I mean, I know that you are reaffirming prior to seven but at times, perhaps theres been sort of.
Speaker Change: It came from a need most clearly for additional admissions modeling Julien, but the backs the.
Speaker Change: Backstory here is is that we're seeing pretty significant changes to the upside of energy usage and wanting to really understand the sources.
The ceiling on how much do you want to push your core rate base, considering all the various needs is there a push out potentially here in terms of some of the investments are really do we should we consider this is.
Speaker Change: The economics.
Speaker Change: All of those procurements.
Maria MacGregor Pope: As we bring on renewable resources, and Clearwater would be a good example, we're actually not seeing customer prices react as we're displacing higher purchase energy in the market, and so the additional renewables procurement is actually not driving customer prices as much as one would think as we model it forward. It's the overall need for investment in aging infrastructure and supporting significant customer growth that is driving customer prices as we move forward, more than clean energy development. Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show.
Speaker Change: As we bring on renewable resources and a clear water would be a good example, we're actually not seeing customer prices react as we're displacing higher purchase energy in the market and so the additional renewables procurement is actually not driving customer prices as much as one would think as we model it forward.
Truly incremental upon incremental opportunities.
Sure I mean, we have to always keep customer price is first and foremost there's no question that we have seen customer price pressures.
We are very attuned to the interest of our customers and keep making sure that affordability stays first and foremost.
Speaker Change: It's the overall need for investment in aging infrastructure and supporting significant customer growth that is that's driving customer prices of any move forward more than clean energy development.
One of the reasons that we have competitive rfps for renewable generation capacity and energy to get the very best prices for customers in competitive processes, we have done well in those processes in the past and we hope to continue to be able to deliver at the lower.
Speaker Change: Alright, and actually to that point I mean, you have a dramatic increase here in transmission and that's not necessarily surprising given what you've been telegraphing in recent periods about the need for transmission.
Maria MacGregor Pope: He is a licensed financial professional both in the U.S. and Israel and works with investors in the field. He is also the co-founder and chief financial officer of Profile Investment Services, Inc. He is also the co-founder and chief financial officer of Profile Investment Services, Inc., the preferred retailer. He is a licensed financial professional both in the U.S. and Israel, and works with investors in the field. He is also the co-founder and chief financial officer of Profile Investment Services, Inc.
But can you maybe frame out I mean, how do you think about sort of upside generation given the new level of spend tied to especially transmission here I mean should we continue to think about this as being incremental do you have a shift in how you think about allocating capital to generation here I mean, I know that you are reaffirming prior to seven but at times, perhaps theres been sort of.
Cost.
Of these to risk clean energy resources to customers that is markedly about available with regards to transmission. There is some flexibility. Some of these transmission spend within our historic run rate <unk> is new and incremental we think has been sort of in concentric circles. The first circle being within our service territory.
Maria MacGregor Pope: He is also the co-founder and chief financial officer of Profile Investment Services, Inc. We are pleased to include him in the discussion. Thank you so much. Have a great day. It's so nice to see you.
Speaker Change: The ceiling on how much do you want to push your core rate base, considering all the various needs is there a push out potentially here in terms of some of the investments are really do we should we consider this is.
It really directly impacting.
Being impacted by customer growth.
Maria MacGregor Pope: Thanks so much. Have a great day. Thanks. Hello, my name is Gregg.
Second is to bring clean energy from our area.
Maria MacGregor Pope: Truly incremental upon incremental opportunity. Sure. I mean, we have to always keep customer prices first and foremost.
Truly incremental upon incremental opportunities.
Just adjacent to our areas to our customers and then the third is broader investments across the northwest one of the big increases as you look farther out on the chart. In 2028 is the Confederated tribes of the warm Springs project on our existing <unk> popping around U line on where we received a two.
Speaker Change: Sure I mean, we have to always keep customer prices first and foremost there's no question that we have seen customer price pressures.
Maria MacGregor Pope: There's no question that we have seen customer price pressures, and we are very attuned to the interests of our customers and keep making sure that affordability stays first and foremost. One of the reasons that we have competitive RFPs for renewable generation capacity and energy is to get the very best prices for customers in competitive processes. We have done well in those processes in the past, and we hope to continue to be able to deliver the lowest cost, least risk clean energy resources to customers that are marketly available. With regard to transmission, there is some flexibility. Some of these transmissions spend within our historic run rate, while some are new and incremental. We think of this sort of this concentric circle.
Speaker Change: We are very attuned to the interest of our customers and keep making sure that affordability stays first and foremost.
Speaker Change: One of the reasons that we have competitive rfps for renewable generation capacity and energy to get the very best prices for customers in competitive processes, we have done well in those processes in the past and we hope to continue to be able to deliver at the low.
<unk> hundred $15 million Department of energy grant to significantly upsize that existing line most of which will continue over existing rights of way. So when you look at transmission, we're focused on relatively easy to execute my colleagues with probably questions that transmission.
Speaker Change: Cost.
It's ever easy to execute.
Speaker Change: At least risk clean energy resources to customers that is markedly available with regards to transmission. There is some flexibility some of these transmission spend within our historic run rate <unk> is new and incremental we think of this sort of as concentric circles. The first circle being within our service territory.
The relatively lower risk.
<unk> within our service territory focused on Repowering, and increasing existing rights of way and lines.
Wonderful excellent and just a quick housekeeping on the Itc's here. If you don't mind just for the battery is that going to be reflected in a single year here or over five years or how do you think about the accounting for the Itc's here real quickly again, it's sort of a novel subject in storage and regulated land.
Maria MacGregor Pope: The first circle is within our service territory, really directly impacting being impacted by customer growth. The second is to bring clean energy from our area or just adjacent to our areas to our customers. And then the third is, you know, broader investments across the Northwest. One of the big increases, as you look farther out in the chart in 2028, is the Confederated Tribes of the Warm Springs project on our existing Pelton Round Butte line, where we received a $250 million Department of Energy grant. To significantly upsize that existing line, most of which would go over existing rights of way.
Speaker Change: It really directly impacting.
Speaker Change: Being impacted by customer growth.
Second is to bring clean energy from our area.
Speaker Change: Just adjacent to our areas to our customers and then the third is broader investments across the northwest one of the big increases as you look farther out on the chart. In 2028 is the Confederated tribes of the warm Springs project on our existing <unk> popping around your line on where we received a two.
So good.
Good morning, Julien so from a from a standpoint of recognition as the battery comes online we will recognize those ITC. Then we would expect since we have two batteries there'll be coming in over 24% 25 that will recognize those itc's with I'll call it about to the balance sheet.
The customer is receiving the benefits of those itc's will lay out in our next regulatory filings that will be amortized to them of Julia I think when you get to the real question is once we put them on the balance sheet. The expectation is that we will monetize them somewhat shortly thereafter.
<unk> hundred $15 million Department of energy grant to significantly upsize that existing line most of which will continue over existing rights of way. So when you look at transmission, we're focused on relatively easy to execute my colleagues with probably questions that transmission.
Maria MacGregor Pope: So, if we look at transmission, we're focused on relatively easy to execute projects. And my colleagues would probably question whether transmission is ever easy to execute, but relatively lower-risk projects within our service territory focused on repowering and increasing existing rights of way and line. Wonderful. Excellent. And just quick, quick housekeeping on the ITCs here, if you don't mind, just for the battery.
As we recognize them and they have the.
Certainty of the ability to transfer we will be looking to monetize it.
Speaker Change: As ever easy to execute.
Got it pretty pretty concurrently got it.
Speaker Change: The relatively lower risk.
Thank you.
Speaker Change: <unk> within our service territory focused on Repowering, and increasing existing rights of way and lines.
So then that will flow through the income statement.
The monitor the monetization will flow through as a as a cash flow right from the.
Wonderful excellent and just a quick housekeeping on the Itc's here. If you don't mind just for the battery is that going to be reflected in a single year here or over five years or how do you think about the accounting for the Itc's here real quickly again sort of a novel subject in storage and regulated land.
The purchase and sale of the Itc's income will be income statement neutral to us.
Maria MacGregor Pope: Is that going to be reflected like in a single year here or over five years? Or how do you think about the accounting for the ITCs here real quickly? Again, this is sort of a novel subject in storage and regulation. So, morning, Julian.
Okay, Thanks for that and monetization.
Okay.
Perfect.
Thank you one moment for our next question.
Speaker Change: So good.
Joe Terpik: So, from a standpoint of recognition, as the battery comes online, we'll recognize those ITCs, and we would expect, since we have two batteries, they'll be coming in over 24 and 25, that we'll recognize those ITCs, what I'll call the balance sheet, that the customer is receiving the benefits of those ITCs, and that we'll lay out in our next regulatory filing that will be amortized to them. Julian, I think when you get to the real question is, once we put them on the balance sheet, the expectation is that we will monetize them somewhat shortly thereafter. So, as we recognize them, and they have the certainty of the ability to transfer, we will be looking to monetize them. I got it. Pretty, pretty concurrently.
Yeah.
Speaker Change: Good morning, Julien so from a from a standpoint of recognition as the battery comes online we'll recognize those ITC then we would expect since we have two batteries there'll be coming in over 24% 25 that will recognize those itc's with I'll call it about to the balance sheet.
Our next question comes from Greg oral with UBS. Your line is now open.
Good morning, Thank you good morning.
With regard to the rate case coming up do you have any any sort of early thoughts on.
Speaker Change: The customer is receiving the benefits of those ITT will lay out in our next regulatory filings that will be amortized to them of Julia I think when you get to the real question is once we put them on the balance sheet. The expectation is that we will monetize them somewhat shortly thereafter.
Level of rate increase or sort of thoughts on affordability.
Adding into that.
Sure.
As we recognize them and they have the.
Hey, Greg Good morning <unk>.
Speaker Change: Certainty of the ability to transfer we will be looking to monetize.
Obviously, we start our TACE youre always thinking about affordability to the customer also considering we had a previous case here.
Got it pretty pretty concurrently got it excellent.
Joe Terpik: Got it. Excellent. Thank you. So that and that'll flow through the income statement. The monetization will flow through as a cash flow, right? From the purchase and sale of the ITCs, it will be income statement neutral to us. Okay, thanks for that question. I appreciate it. www.plastics-car.com. Perfect.
Thank you.
Speaker Change: So then that will flow through the income statement.
I would expect in this case, who.
Truly the focus is going to be on the batteries. The assets that have been put in service to to continue to advance both reliable reliability expand capacity on the system as well as small amounts of cost I mean, I think this will mainly be a truly just a an infrastructure update.
Speaker Change: The monitor the monetization will flow through as a as a cash flow right from the.
Speaker Change: The purchase and sale of the Itc's income will be income statement neutral to us.
Speaker Change: Okay. Thanks for that.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Perfect.
The plan focused on on affordability.
Operator: Thank you. One moment for our next question. Our next question comes from Gregg Orrill with UBS. Your line is now open.
Speaker Change: Thank you one moment for our next question.
Speaker Change: Yeah.
Got it thank you.
Greg: Our next question comes from Greg oral with UBS. Your line is now open.
Thank you.
One moment for our next question.
Gregg Orrill: Morning, Greg. Thank you. Good morning.
Gregg Orrill: Good morning, Thank you good morning.
Operator: With regard to the Ray case. Coming up, do you have any sort of early thoughts on the level of the rate increase or any sort of thoughts on affordability heading into that? Gregg, good morning. George Herbig.
Gregg Orrill: With regard to the rate case.
Gregg Orrill: <unk> up do you have any any sort of early thoughts on.
Our next question comes from Paul Fremont with Ladenburg Thalmann. Your line is now open.
Gregg Orrill: Level of rate increase or sort of thoughts on affordability.
Thank you very much and thank you for taking my question.
Joe Terpik: Obviously, you know, we start our case here always thinking about affordability for the customer, also considering, you know, we've had a previous case here. I would expect, in this case, truly, the focus is going to be on the batteries, the assets that have been put in service to continue to advance both reliability, expand capacity on the system, as well as small amounts of cost. I mean, I think this will mainly be a truly just an infrastructure update to the plan, focused on affordability. Thank you. Thank you. Well, I'm going to wait for our next question, which comes from Paul Fremont with Lattenberg Talens, proves it all. Thank you very much and thank you for taking my question. I guess my first question is, given the storm deferrals for January, is that something that you would be looking to recover in the rate case that you're filing currently? Or would that fall outside the purview because it's too recent? Morning, Paul.
Gregg Orrill: Heading into that.
<unk>.
Gregg Orrill: Sure.
I guess my first is.
Speaker Change: Hey, Greg Good morning <unk>.
Given the storm deferrals for January is that something that you would be looking.
Speaker Change: Obviously, we start our TACE youre always thinking about affordability to the customer also considering we had a previous case here.
To recover in the rate case that you are filing currently or would that fall outside the purview because of its too recent.
I would expect in this case <unk>.
Speaker Change: Truly the focus is going to be on the batteries. The assets that have been put in service to to continue to advance both relied reliability expand capacity on the system as well as small amounts of cost.
Good morning, Paul So the.
Storm recovery actually will fall through two separate processes than the.
Speaker Change: This will mainly be a truly just a an infrastructure update.
General rate case, though they'll both be in existing mechanisms. So the as it relates to the operating.
Speaker Change: The plan focused on on affordability.
Costs sort of in the reconstruction costs those will come through rate a deferral rider that will be filed and will have its own proceeding which is and then the as it relates to the the cost of the of the energy and the <unk> event that will go through the PJM process. Each will have a bit of a different timeframe for example, the PJM <unk>.
Speaker Change: Got it thank you.
Speaker Change: Thank you.
Speaker Change: One moment for our next question.
<unk> would not be filed until 2025 with the recovery of that that would work itself into 2026.
Speaker Change: Our next question comes from Paul Fremont with.
Paul Patterson: Brookdale Ma'am your line is now open.
And then the timing on the Opex recovery.
Paul Patterson: Thank you very much and thank you for taking my question.
Does that normally would that normally occur within a year's time or or shorter than that.
Paul Patterson: <unk>.
Paul Patterson: I guess my first is <unk>.
Paul Patterson: Given the storm deferrals for January is that something that you would be looking.
That recovery will be up to the discretion with the <unk>.
Brookdale: To recover in the rate case that you are filing currently or would that fall outside the purview because of its too recent.
The commission normally the storms are recovered over due to their magnitude and the significance over an extended period. The last time, we had a storm recovery of this nature, we've recovered over seven years.
Speaker Change: Good morning, Paul So the.
Joe Terpik: So the storm recovery actually will fall through two separate processes than the general rate case. They'll both be in existing mechanisms. So as it relates to the operating costs and the reconstruction costs, those will come through a deferral rider that will be filed and will have its own proceeding, which is, and then the as it relates to the cost of the energy and the RCE event, that will go through the PCAM process. Each will have a bit of a different time frame. For example, the PCAM process would not be filed until 2025, with the recovery of that that would work itself into 2026. And then the timing on the OpEx recovery. Does that norm would normally occur within a year's time or is it shorter than that? That recovery will be up to discretion with the commission. Normally, these storms are recovered due to their magnitude and their significance over an extended period. The last time we had a storm recovery of this nature, it took seven years.
Paul: Storm recovery actually will fall through two separate processes than the.
Okay.
And what we will also went through just isn't.
They will also look through the eligibility for either of these four securitization, which will obviously change can change the recovery stream as well.
Paul: General rate case, there they'll both be in existing mechanisms. So the as it relates to the operating.
Okay.
And then.
Paul: Costs sort of in the reconstruction cost those will come through rate a deferral rider that will be filed and will have its own proceeding which is and then the as it relates to the the cost of the of the energy and the <unk> event that will go through the PJM process. Each will have a bit of a different timeframe for example, the PJM <unk>.
Looking at the higher base Capex.
How should we think about that relative.
To your.
Bidding into the renewable.
Rfps.
Would you be looking to.
When last in the Rfps, given sort of the magnitude of the Capex increase or.
Paul: <unk> would not be filed until 2025 with the recovery of that that would work itself into 2026.
Would there be sort of no change in in terms of.
In terms of your business strategy.
Paul: And then the timing on the Opex recovery.
So our bidding strategy today, our bidding strategy going forward in our bidding strategy in the past has always been the same and that is to have the most competitive projects for the lease cost and least risk for our customers.
Paul: Does that normally would that normally occur within a year's time or shorter than that.
Paul: That recovery will be up to the discretion with the <unk>.
The commission normally the storms are recovered over due to their magnitude and significance over an extended period. The last time, we had a storm recovery of this nature, we've recovered over seven years.
And those if those projects are our winners they're good for customers.
And they're good for our financing.
Paul: Okay.
Joe Terpik: And we will also look to, just as I was going to say, the eligibility for either of these for securitization, which obviously can change the recovery stream as well. Okay, and then, looking at the higher base cap back.
Paul: And what we will also do just isn't.
Okay.
And then it looks like there is a two to 300 million annual increase in Capex each year.
Paul: They will also look through the eligibility for either of these four securitization, which will obviously change can change the recovery stream as well.
Paul: Okay.
Should we look at the incremental amount of.
Paul: And then.
Paul: Looking at the higher base Capex.
Maria MacGregor Pope: How should we think about that relative to your... bidding into the renewable RFPs? All right, would you be looking to win less in the RFPs given sort of the magnitude of the capex increase? Or would there be sort of no change in terms of?
Paul: How should we think about that relative.
Pending as being funded roughly 50% with equity.
Paul: To your.
Paul: Bidding into the renewable.
Is that sort of a fair way to think about the financing.
Rfps.
Yes, I think when we look to the long term financings here, we we continue to look to.
Paul: Would you be looking to.
Paul: When last in the Rfps, given sort of the magnitude of the Capex increase or.
Over a sort of using flexibility manage our capital structure, you will continue to move towards 50, 50, so assumption that over time they will.
Paul: Would there be sort of no change in in terms of.
Maria MacGregor Pope: in terms of your business strategy. So, our bidding strategy today, our bidding strategy going forward, and our bidding strategy in the past has always been the same. And that is to have the most competitive projects for the least cost and least risk for customers. And those are our winners. They're good for customers, and they're good for finance. Okay. And then it looks like there's a $200-300 million annual increase in CapEx. Should we look at the incremental amount?
Paul: In terms of your business strategy.
That would be looked at at that bounce level, it would be a reasonable way to look at it.
Paul: So our bidding strategy today, our bidding strategy going forward in our bidding strategy in the past has always been the same and that is to have the most competitive projects for the lease cost and least risk for our customers.
Great.
And then my last question is the big step up I think in transmission.
And in 28, and I was just wondering what sort.
Sort of what's the.
And those if those projects are our winners they're good for customers.
The explanation of that.
Sure.
The answer to Julians question earlier, that's the Pelton round you to $2 30 Lon.
Paul: And they are good for our financing.
Our plan to be increased to 500 kv and partnership with the Confederated tribes of the warm springs.
Paul: Okay.
Paul: And then it looks like there is a two to 300 million annual increase in Capex each year.
We previously announced a $250 million grant for that work.
Paul: Should we look at the incremental amount of.
From the Department of Energy, obviously that project would cost more than $250 million its over 100 miles long and it would be a multi year project. The first year, we're anticipating in 2028.
Paul: Pending as being funded roughly 50% with equity.
Paul: Is that sort of a fair way to think about the financing.
Paul: Yes.
So with the tram level of transmission spending sort of stay at that higher level for.
Paul: When we look to the long term financings here, we continue to look to.
Several years.
Paul: Over and sort of using flexibility manage our capital structure, you will continue to move towards 50, 50, so assumption that over time they will.
Yeah.
Probably for a couple of years after that in 2029 2030, the transmission line and the increase also opens up.
Paul: That would be looked at at that bounce level would be.
Good portion of the central part of Oregon for additional renewable development in partnership with the tribes. We currently colon several hydro facilities with them and so this will allow for a significant expansion, particularly of solar energy, but really making the <unk>.
Paul: Reasonable way to look at it.
Paul: Great.
Speaker Change: Then my last question is the big step up I think in transmission spend.
Speaker Change: And in 2008, and I was just wondering what.
Speaker Change: Sort of what's the.
Speaker Change: The explanation of that.
Speaker Change: Sure.
Speaker Change: The answer to Julians question earlier, that's the Pelton round you to $2 30 Lon.
Part of of Oregon, and the Confederate types of the warm Springs reservation and opportunity for further development through 2028 and beyond.
Speaker Change: Our plan to be increased to 500 kv and partnership with the Confederated tribes of the warm springs.
And then my last question.
Speaker Change: We previously announced a $250 million grant for that work.
Sort of the step up in Capex, what what type of rate base growth.
Speaker Change: From the Department of Energy, obviously that project would cost more than $250 million its over 100 miles long and it would be a multi year project.
Does that give you on a percentage basis.
Through through 28.
So Paul in the sort of the SR document that we also filed this morning for the base capital, which includes the transmission which includes the.
Speaker Change: First year, we're anticipating in.
Speaker Change: In 2028.
Speaker Change: So with the level of transmission spending sort of stay at that higher level for.
The line that Maria just mentioned that would put us right around that 8% rate base growth and then we've also in that in that update.
Speaker Change: Several years.
Speaker Change: Yeah.
Speaker Change: Probably for a couple of years after that in 2029 2030, the transmission line.
Nathan <unk>.
Scenarios regarding an RFP outcome in that update we would put you at eight with a 25% would put you at a nine 2% rate base growth through 2008.
Speaker Change: The increase also opens up.
Speaker Change: Good portion of the central part of Oregon for additional renewable development in partnership with the tribes. We currently colon several hydro facilities with them and so this will allow for a significant expansion, particularly of solar energy, but really making the <unk>.
Great. Thank you.
Thank you.
Thank you.
Reminder, to ask a question. Please press star one one on your telephone and wafer name to be announced.
Your question. Please press star one again.
Speaker Change: Central part of of Oregon, and the Confederate types of the warm Springs reservation and opportunity for further development through 2028 and beyond.
One moment for our next question.
Yes.
Speaker Change: And then my last question.
Our next question comes from Travis Miller with Morningstar. Your line is now open.
Speaker Change: With sort of the step up in Capex, but what type of rate base growth.
Thank you Catherine good morning, everyone.
Speaker Change: Does that give you on a percentage basis.
Quick question on the battery stuff that increase in the 2024 number is that incremental projects or is that some kind of carryover spending from 2023.
Speaker Change: Through through 28.
Speaker Change: So Paul in the sort of the the sister document that we also filed this morning for the base capital, which includes the transmission which includes the <unk>.
Specifically as it relates to the battery that is the that is the 2000 22021 RFP moving out in fact, the battery spend you see in 'twenty four and 25 was all existing from that RFP and it is the first set of spend is more of that is the comparable project is a smaller battery and then the spend it goes into 2025.
Speaker Change: The line that Maria just mentioned that would put us at right around that 8% rate base growth and then we've also in that in that update.
Speaker Change: Mason <unk>.
Speaker Change: Scenarios regarding an RFP outcome that update would put you at eight with a 25% would put you at a nine 2% rate base growth through 2008.
<unk> battery, which is the larger one.
Speaker Change: Great. Thank you.
Okay, I was thinking about the comp from the previous capital update.
Speaker Change: Thank you.
Speaker Change: Thank you.
Which was living under and so on.
Two.
Speaker Change: Reminder, to ask a question. Please press star one one on your telephone and wafer name to be announced.
235.
These are the same patterns, we haven't we have not we have not added any projects. This is Dave.
Speaker Change: Your question. Please press star one again.
The update to the pricing for those same batteries. So there were some payments that went from 2023 to 2020.
Speaker Change: One moment for our next question.
Got it okay, Okay, and then related on that how much of the batteries, specifically capex and those payments do you anticipate you'll be able to get into.
Speaker Change: Yes.
Speaker Change: Our next question comes from Travis Miller with Morningstar. Your line is now open.
Travis Miller: Thank you Catherine good morning, everyone.
The rate case, given that and correct me, if I'm wrong, given that they're probably not going to be done right operational.
Quick question on the battery stuff that increase in the 2024 number is that incremental projects or is that some kind of carryover spending from 2023.
And the next.
Well when we update the so when we do the filing the bilingual will look we will use a future amount of rate base. So we're using the end of 2020 for rate base and we will we will.
Travis Miller: Specifically as it relates to the battery that is the that is the 2000 22021 RFP moving out in fact, the battery spend you see in 2020 five was all existing from that RFP and it is the first set of spend is more of that is the comparable project is a smaller battery and then the spend that goes into 2025.
When we decided to file we will places a structure in there that wed expect recovery of the batteries on their in service dates the first the comparable battery, which has an in service date somewhere right around at.
At the end of 2024, and then also the NBC side battery as it goes in service in 2025 as you may recall on our prior case and when we file whenever we file our next phase we will address the lack or the <unk>.
Travis Miller: <unk> battery, which is the larger one.
Speaker Change: Okay, I was thinking about the comp from the previous capital update.
Speaker Change: Which was living 100 and so on.
Speaker Change: Two.
235.
The renewable adjustment clause that allows for renewables will go into service. We previously had requested that batteries get included there. So they just automatically go into service. We will again look within our filing to address that that policy as well as potentially consider other policies to ensure that the batteries are timely into service similar to other.
Speaker Change: These are the same patterns, we have not we have not added any projects. This is Dave.
Speaker Change: The update to the pricing for those same batteries. So there were some payments that went from 2023 to 2020.
Speaker Change: Got it okay, Okay, and then related on that how much of the battery, specifically capex and those payments do you anticipate you'll be able to get into.
Other renewable assets.
Okay, Great. That's really helpful. And then different question given the increase in the capital spending.
Speaker Change: The rate case, given that and correct me, if I'm wrong, given that theyre, probably not going to be done right operational.
Comments around trying to get back to the certain capital structure, what does that mean for the dividend.
Speaker Change: And the next.
Speaker Change: Well when we update.
Dividend growth you anticipate.
When we do the filing the bilingual look we'll use the future amount of rate base. So we're using the end of 2020 for rate base and we will we will.
Our our expectation is as we continue to grow we are committed to.
Are those drawing the line as it relates to our five 7% earnings growth in that similar dividend growth. So we have no expectation of changes in our dividend growth rate off of our previously communicated.
Speaker Change: When we decided to file we will places a structure in there that would expect recovery of.
Speaker Change: The batteries on their in service dates the first the comparable battery, which has an in service date somewhere right around.
Okay in line with earnings.
Speaker Change: At the end of 2024, and then also then the seaside battery as it goes in service in 2025 as you may recall in our prior case and when we file whenever we file our next phase we will address the rack or the.
That is correct.
Okay.
That's all I had thanks so much.
Thank you thank you Travis.
Thank you.
One moment for our next question.
Speaker Change: The renewable adjustment clause that allows for renewables will go into service. We previously had requested that batteries get included there. So they just automatically go in service, we will again look within our filings to address that that policy as well as potentially consider other policies to ensure that the batteries are timely into service similar to other.
Our next question comes from Willard Granger with Mizuho. Your line is now open.
Good morning, Hi, good morning, everybody.
Good morning.
Just a question.
It's sort of coming back to the.
Speaker Change: The renewable assets.
The equity.
Speaker Change: Okay, Great. That's really helpful. And then different question given the increase in the capital spending.
And the balance sheet the debt to cap you finished 2023 around 56%.
Speaker Change: Comments around trying to get back to a certain capital structure, what does that mean for the dividend.
Debt to cap.
When do you think you'll be closer to the low.
Speaker Change: Dividend growth you anticipate.
Speaker Change: Sure.
Speaker Change: Our our expectation is as we continue to grow we are committed to.
50% that you got in the last rate case.
Sure.
Good morning, good morning, so.
Speaker Change: Are those drawing the line as it relates to our five 7% earnings growth in that similar dividend growth. So we have no expectation of changes in our dividend growth rate off of our previously communicated.
We look to as we built the the five year plan, we have considered a path that will get us towards that 50% over that period with some flexibility on the timing between years, considering the RFP or considering the.
Speaker Change: In line with earnings.
Speaker Change: That is correct okay.
Speaker Change: That's all I had thanks so much.
Speaker Change: Thank you thank you Travis.
Considering all within or without RFP scenarios that we have sort of a series of flexible.
Speaker Change: Thank you.
Strategies that will work is there over what I'll call this was longer planning.
Speaker Change: One moment for our next question.
Understood. Thanks for the clarity and then.
Speaker Change: Our next question comes from Willard Grainger.
Just thinking about the.
Willard Grainger: <unk> Your line is now open.
The battery storage.
Is that something that.
Willard Grainger: Good morning, Hi, good morning, everybody.
Willard Grainger: Good morning.
You likely see more of with with some of the load growth or do you think that the generation spend is more.
Willard Grainger: Just a question.
Willard Grainger: So sort of coming back to the equity.
So more geared toward.
Willard Grainger: And the balance sheet.
Traditional renewables.
Willard Grainger: To cap.
Willard Grainger: <unk> 2023 with around 56%.
Well I think we will see both.
Clearly capacity is is important.
Willard Grainger: Debt to cap.
Willard Grainger: When do you think you'll be closer to the low <unk>.
As.
And in particular with all of the volatile weather that we're seeing so I think youll see additional batteries coming through through Rfps and I think Youll also see more traditional renewables of wind and solar.
Willard Grainger: 50% that you got in the last rate case.
Willard Grainger: Sure.
Speaker Change: Good morning so.
Speaker Change: We look to as we built the the five year plan, we have considered a path that will get us towards that 50% over that period with some flexibility on the timing between years, considering the RFP or considering they are.
Or also some pumps.
I'll start with projects and some other projects that are farther out the independent power producers have been working on.
And so I think this is going to be what I call. The all above a set of solutions as we move forward. While also working very closely with customers on their energy usage and flexibility as well as standby generation two.
Entering are within or without RFP scenarios that we have sort of a series of flexible.
Speaker Change: Strategies that will work is there over what I'll call this longer planning.
Bring all of the resources to bear through this transition.
Speaker Change: Understood. Thanks for the clarity and then maybe just thinking about the the battery.
Thank you I'll leave it there that's super helpful.
Thank you.
Speaker Change: Battery.
Speaker Change: George.
Yeah.
Speaker Change: Is that something that you.
Thank you.
Speaker Change: You'd likely see more of with with some of the load growth or do you think that the generation spend is more.
Im showing no further questions at this time I would now like to turn it back to Maria Pope for closing remarks.
Great. Thank you very much we appreciate your interest in Portland General Electric and we're excited about 2020 for our continued growth in high Tech and digital customers our capital plan to support that growth in renewable development as well as our continued focus on operating costs and operational excellence.
So more geared toward.
Speaker Change: Additional renewables.
George: Well I think we'll see both.
George: Clearly capacity is important.
George: As.
George: And in particular with all of the volatile weather that we're seeing so I think youll see additional batteries coming through through Rfps and I think Youll also see more traditional renewables of wind and solar.
Lance.
Look forward to connecting with you soon and thank you very much for joining us today.
This concludes today's conference call.
George: There are also some.
George: <unk> started projects and some other projects that are farther out.
Your for participating you may now disconnect.
George: Independent power producers have been working on.
George: And so I think this is going to be what I call. The all above a set of solutions as we move forward. We will also working very closely with customers on their energy usage and flexibility as well as standby generation.
George: To bring all of the resources to bear through this transition.
Speaker Change: Thank you I'll leave it there thats super helpful.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Im showing no further questions at this time I would now like to turn it back to Maria Pope for closing remarks.
Great. Thank you very much we appreciate your interest in Portland General Electric and we are.
Excited about 2020 for our continued growth in high Tech and digital customers, our capital plan to support that growth in renewable development as well as our continued focus on operating costs and operational excellence, we look forward to connecting with you soon and thank you very much for joining us today.
Speaker Change: This concludes today's conference call.
Speaker Change: Thank you for participating you may now disconnect.
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Speaker Change: Good morning, everyone.
Speaker Change: And welcome to Portland General Electric company's fourth quarter 2023 earnings results Conference call.
Speaker Change: Today is Friday February 16th 2024.
This call is being recorded.
Speaker Change: Such all lines have been placed on mute to prevent any background noise.
Speaker Change: After the Speakers' remarks, there will be a question and answer period.
Speaker Change: If you would like to ask a question. During this time simply press Star then the number is one one on your telephone keypad.
As you would like to withdraw your question. Please press star one again.
Speaker Change: If you do intend to ask a question. Please avoid the use of speaker phones.
Speaker Change: For opening remarks.
Speaker Change: I will turn the call over to Portland General Electrics manager of Investor Relations Nichol.
Nichol: Please go ahead Sir.
Thank you Daniel Good morning, everyone I'm happy you could join us today.
Nichol: Before we begin this morning, I would like to remind you that we have prepared a presentation to supplement our discussion, which we will be referencing throughout the call.
Nichol: Slides are available on our website at investors Dot Portland General Dot com.
Nichol: Referring to slide two some of our remarks. This morning will constitute forward looking statements. We caution you that such statements involve inherent risks and uncertainties and actual results may differ materially from our expectations.
Nichol: For a description of some of the factors that could cause our actual results to differ materially.
Nichol: Please refer to our earnings press release, and our most recent periodic reports on forms 10-K, and 10-Q, which are available on our website on our website.
Nichol: Leading our discussion today are Maria Pope President and CEO, and Joe <unk> Senior Vice President of Finance and CFO.
Nichol: Following their prepared remarks, we will open the line for your questions.
My pleasure to turn the call over to Maria.
Maria MacGregor Pope: Thank you Nick and good morning.
Maria MacGregor Pope: Thank you all for joining us today.
Maria MacGregor Pope: Beginning with slide four I'll discuss our 2023 full year and fourth quarter results and then turn to our outlook for 2024 and beyond.
Maria MacGregor Pope: For the full year, we reported GAAP net income of $228 million or $2 33 per diluted share and non-GAAP adjusted net income of $233 million or $2 38 per share.
Maria MacGregor Pope: This compares with GAAP net income of $233 million or $2 60 per share and non-GAAP adjusted net income of $245 million or $2 74 per share in 2022.
Maria MacGregor Pope: For the fourth quarter, we reported net income of $68 million or <unk> 67 per share up from the fourth quarter of 2000 $20 million to $50 million or <unk> 56 per share.
Maria MacGregor Pope: While these are lower than expected results, we remain confident in our long term broth protectory, a 5% to 7% and.
Maria MacGregor Pope: In 2024 guidance of $2 98 to $2.18 per diluted share.
Speaker Change: To start.
Speaker Change: <unk> weather impacted the quarter.
Speaker Change: With mild conditions across the period and the second warmest December on record.
Speaker Change: This resulted in very low energy usage, and historically low wind and hydro production.
Speaker Change: As a result of this combination both to our revenue and purchase power and fuel expense performance fell short.
Speaker Change: The power cost challenges, we faced in 2023 underscore the importance of risk reductions achieved as part of the 'twenty 'twenty four general rate case.
Speaker Change: This includes 500 megawatts of hydro agreements, improving our capacity portfolio and the introduction of the reliability contingency event position as part of the P. Chem.
Speaker Change: These are solid steps and reflecting actual power costs and extreme events.
Speaker Change: Also have more work to do and look forward to working with the commission.
Speaker Change: Utilities and regional stay card holders towards a holistic energy framework and solution.
Speaker Change: Finally, our results also reflect higher costs associated with continued capital investment to support grid resiliency customer growth and de carbonization.
Speaker Change: Turning to slide five.
Speaker Change: We consistently said that 2023 would be an investment year notwithstanding.
Speaker Change: Notwithstanding the challenges we faced we achieved important milestones and have set the stage for 2024, including a constructive outcome in our general rate case.
Speaker Change: 2024 will be a year of growth supported by three key drivers.
Speaker Change: First continued load growth led by high Tech and digital customers.
Speaker Change: Second capital investment to enable this growth advance, our clean energy goals and strengthen reliability and resilience.
Speaker Change: And third ongoing operational discipline across our organization.
Speaker Change: I will touch on each of these in turn.
Speaker Change: First we expect continued strong industrial load growth supported by the state and federal policies.
Speaker Change: Microchip was recently awarded $72 million under the federal chipset for $800 million expansion at their facility in Brescia.
Speaker Change: This is in addition to the multibillion dollar investments by analog devices and others.
Speaker Change: This builds on the state of Oregon appropriation of $240 million for semiconductor projects, 85% of which are in our service territory.
Speaker Change: Our capital plan now includes additional strategic transmission investments to enable this hi tech and other customer growth as well as renewable development.
Speaker Change: Joe will walk you through the updates to our plan in more detail, but at a high level. Our transmission projects are largely within our service territory or adjacent Manny.
Speaker Change: Many of these lower risk projects are re conducting existing lines.
Related to renewable development.
Speaker Change: We are currently accepting and evaluating bids for the 2023 RFP throughout the first quarter of 2024 and will present the shortlist later in the year.
Joe: Coming out of our last RFP Clearwater Wind project came online in January with an impressive 45% capacity factor.
We look forward to our battery storage projects coming online later this year and into 2025.
Joe: Now onto slide six Utah.
Joe: Utilities across the country are dealing with increasing impacts of extreme weather.
Joe: This January severe storm.
Joe: <unk> combination of high winds ice and snow that led to widespread damage and high power costs.
Joe: In the face of these extraordinary conditions, we deployed an extraordinary response.
Joe: This included more than 1800 personnel crews and support staff working hard to restore power and repair critical equipment.
Speaker Change: I want to take a moment to acknowledge and thank.
Speaker Change: Our teams and partners for all of their hard work in very challenging conditions.
Speaker Change: The storm came in multiple phases of severe weather and single digit temperatures.
Speaker Change: In the course of about a week crews restore power to over half a million customers.
Speaker Change: This is a great example of how our teams are working together efficiently to deliver for customers when they need us most.
Speaker Change: Our response was informed by lessons learned from the severe storms, we experienced in 2021 and we're continuing to improve.
Speaker Change: And what used to be one in a decade event.
Speaker Change: This operational focus is showing up in other ways as well.
Speaker Change: Our results in 2023 reflects our strong execution on cost management. Thanks to the extraordinary efforts of our team to streamline processes leverage the technology and improved productivity.
Speaker Change: As we look to 2024, we continue to build on this progress.
Speaker Change: To reiterate.
Speaker Change: We're focused on three main areas to achieve growth in the coming year and beyond.
First exceptional customer growth.
Speaker Change: Second execution of our capital plan and third ongoing operational discipline.
Speaker Change: As such we are well positioned to achieve 5% to 7% long term earnings growth.
Speaker Change: With that I'll turn it over to Joe who will walk you through our financial results.
Speaker Change: Yes.
Thank you Maria and good morning, everyone before I walk through the results and outlook I want to acknowledge that we did not file our 10-K. This morning in line with our typical practice. We are just finalizing the required documentation for the 10-K and completing associated compliance procedures. As you May know we finished the new ERP software implementation in the fourth quarter with the holiday.
Speaker Change: On Monday, you will see our filing posted with the SEC on Tuesday morning.
Speaker Change: Now turning to slide seven our 2023 results reflect continued industrial load growth dynamic weather and power cost conditions execution of our capital plan and strengthening our growth Foundation.
Weather had a meaningful impact on 2023 results, particularly in the second half of the year, we saw 11% fewer cooling degree days and 13% fewer heating degree days compared to 2022 Q4 had historically moderate stretches with our regions seeing the second warmest December on record overall, we experienced 15%.
Speaker Change: <unk> fewer heating degree days than the 15 year average.
Speaker Change: Customer usage was affected by these conditions.
Speaker Change: Power costs were also challenge as renewables production was significantly impacted during these mild periods.
Speaker Change: Pgd's wind farms generated 23% less energy in Q4, 2023 than Q4 2022, requiring generation it pge's thermal fleet to make up much of the shortfall. Ultimately these dynamics were a significant headwind in achieving the level of power cost favorability expected for the year.
Speaker Change: 2023 load increased by <unk>, 9% or one 4% weather adjusted compared to 2022.
Speaker Change: 2023 residential load decreased one 7% year over year.
Speaker Change: 5% weather adjusted driven by mild weather and energy efficiency residential customer count increased 8% for the year.
Speaker Change: Commercial load decreased slightly down <unk>, 3% or 2% weather adjusted versus 2022, largely driven by energy efficiency.
Speaker Change: Healthy industrial load growth continued in 2023, increasing five 9% over the last five years, we've observed a seven 5% compound annual growth rate and industrial load as high Tech investment in AI expansion have driven semiconductor and data center demand growth.
While total loads in 2023 were below our expectations, our service territory fundamentals and our load outlook remained strong unemployment in our region of three 4% trailed the national average of three 7% and we continue to see other public positive indicators public and private sector investment points to broader economic.
Speaker Change: Development and continued load growth in 2024 and beyond.
Speaker Change: I'll now cover our financial performance year over year.
Speaker Change: We experienced a 14% decrease in revenues, excluding power cost and regulatory program collections, driven by a 13% increase due to the <unk> nine increasing deliveries and 27% decrease due to changes in the average prices of deliveries from higher industrial load and lower residential and commercial loans.
Speaker Change: Power costs drove a 25% increase in EPS driven by a 29 cents EPS increase due to the power cost headwinds in 2022 that reversed for this comparison and a <unk> <unk> EPS decrease from higher power cost and anticipated in the annual update tariff.
Serving load during the August heat event and the impact of mild weather on Q4 renewable generation were the key factors.
Speaker Change: Operating expenses.
Speaker Change: Net of deferral related items drove a one cent decrease our efficiency and cost management efforts, particularly in Q4 allowed us to keep.
Speaker Change: Base O&M nearly flat year over year.
Speaker Change: Next a handful of impacts driven by the execution of our long term capital strategy, including a 19% decrease from higher depreciation and amortization and <unk> decreased due to higher interest expenses.
Speaker Change: That is a 10% increase from higher AFDC, driven by ongoing investment, including the recently completed Clearwater wind development and a 22% decrease due to the dilutive impacts of draws on the equity forward sale in 2023.
Speaker Change: We had a <unk> <unk> increase from other items, including higher returns on benefit plan assets and regulatory interest partially offset by benefit plan buyout in 2022 that did not recur.
Lastly, a <unk> <unk> decrease the GAAP EPS, resulting from the Boardman settlement refund, bringing bringing us to our GAAP EPS of $2 33 per diluted share after adjusting for this <unk> impact we reach our 2023 non-GAAP EPS of $2.38 per diluted share.
Speaker Change: Turning to slide eight.
Which shows our latest five year capital forecast 2020.
Speaker Change: Or through 2027 estimates are now upsized by $1 2 billion as we look to maximize customer value with system wide improvements and emerging transmission investments.
Speaker Change: These transmission projects will focus on network improvements meant to alleviate congestion improve adequacy and reliability enabled de carbonization and address customer growth.
Speaker Change: 2028 transmission projections also include PGE.
Speaker Change: <unk> contribution to the Bethel round Butte transmission line upgrade which will be undertaken with our longtime partner the confederated tribes of the warm springs.
Speaker Change: This project will be assisted by the previously disclosed $250 million U S. Dod grant awarded to the tribes.
Speaker Change: As planning and scoping or finalized for this and other grant related projects, we will update our estimates.
Speaker Change: And reflect in future forecast.
Speaker Change: We have also refined our expectations for base capital spend to support grid monetization system hardening and technology investments.
Speaker Change: As a reminder, this chart does not reflect capex related to the possible ownership from the recently launched 2023, RFP, which went to the market on February 2nd.
Speaker Change: The competitive bidding process schedule, which is included in our RFP website anticipates bid submission final shortly shortly selection and shortly submission to the <unk> by mid 2024.
Speaker Change: <unk> selection is expected in Q3 or Q4.
Speaker Change: This timeline is dependent on the volume and complexity of the bids and.
Speaker Change: And we will update you as the competitive process continues.
Speaker Change: While we are continuing to evaluate timing increased base capex to deliver customer benefits and the incoming battery projects to improve great flexibility put weight on this scale for a near term rate case filing in line with our standard process. We will keep you informed of any actions regarding a rate case filings.
On to slide nine.
For our liquidity and financing summary.
Speaker Change: Total available liquidity at December 31 is $969 million, our strong balance sheet investment grade credit ratings and stable credit outlook remains unchanged from our previous disclosures.
Speaker Change: Through December 2023, we've entered into forward sale agreements grew $78 million of the $300 million available under the ATM.
Speaker Change: There have not been any draws on these forward agreements thus far.
Speaker Change: As we look to the remainder of 2024, we anticipate debt issuances of up to $730 million for the year and we plan to continue our practice of issuing under our green financing framework where possible.
Speaker Change: On the equity front capacity under the ATM remains sufficient for our base capital financing needs, including a battery projects currently underway. The ATM provides a helpful. Mitch.
Speaker Change: Mix of capital access and dilution management that supports our ongoing base capital plan.
Speaker Change: <unk> management of our capital structure and trending towards our authorized 50 50 ratio overtime remains a key priority.
Speaker Change: We maintain flexibility in financing options and remain confident in competitively accessing both debt and equity markets when necessary.
Speaker Change: The additional capital investment opportunities mature, including from the RFP, We will continue to evaluate our strategy and update you on our financing plans.
Speaker Change: Turning to slide 10.
We are initiating full year 2024, adjusted earnings guidance of $2 98 to $3 18 per.
Speaker Change: Our diluted shares.
Speaker Change: As Maria noted earlier the January.
Speaker Change: Norm system had a meaningful impact on our service territory and we are continuing to work through the implications of the multi day event.
Speaker Change: Currently we estimate storm restoration operating expenses of $35 million to $45 million and approximately $15 million of capital cost to repair impacted assets.
Speaker Change: Earlier this month.
The deferral of these cost understanding emergency restoration deferral.
The conditions to trigger the first reliability contingency event treatment under the updated power cost recovery framework format.
As the region saw a market price spikes balancing authority alerts and resource adequacy constraints on PGE system.
Speaker Change: Under the <unk> mechanism PGE is allowed to pursue recovery of 80% of the cost for the RC above the amounts forecasted in the AUT with the remaining 20% flowing through the existing PJM.
Speaker Change: We are currently estimating the rte costs between $85 million and $100 million. These impacts are still being finalized, but we will be able to provide more detail. When we report Q1 2024 results.
Speaker Change: Given the extraordinary any irregular in nature of the storm last month the effects are excluded from our 2020 for guidance.
Speaker Change: We will be excluded from our 2024 adjusted non-GAAP result to improve the comparability of earnings and to better reflect our ongoing financial performance.
Speaker Change: We expect this to involve the exclusion of the non recoverable, 20% portion of the <unk> cost and any operating costs, which have been determined non recoverable under existing mechanisms.
I will now touch on the other drivers of 2020 for guidance.
Speaker Change: As I said earlier, our confidence in our service territory remains strong highlighted by continued load growth from industrial customers and modest increases in the residential and commercial classes combined we assume a 2% to three 3% weather adjusted retail load growth for 2024, these load dynamics as well.
Speaker Change: Continued regional investment and a pipeline of incoming projects.
Speaker Change: Give us continued confidence in our long run load assumptions expected expectation sorry.
Speaker Change: As such we are reiterating our long term load growth guidance of 2% through 2027.
Speaker Change: We anticipate O&M expense ranging from $815 million to $840 million, which includes $165 million of earnings neutral regulatory deferral amortization wildfire mitigation and vegetation management costs and other offsetting items.
Speaker Change: Net of these items the midpoint.
Speaker Change: Of our O&M range represents a 3% compound annual growth rate compared to 2022 base O&M net of similar offsets.
Speaker Change: We remain committed to deploying the right tools to optimize productivity and provide the highest quality customer service, while also managing operating costs.
Speaker Change: This philosophy, coupled with Derisking accomplishments and critical investments made in 2023 give us continued confidence in our growth plan as such we are reiterating our long term earnings growth and dividend growth guidance of 5% to 7%.
Speaker Change: As our attention shifts to the year ahead, our core focus remains unchanged safely serving clean reliable and affordable energy, while providing value to our communities our customers and our shareholders.
And now operator, we're ready for questions.
Speaker Change: As a reminder to ask a question. Please press star one on your telephone.
Speaker Change: For your name to be announced.
Speaker Change: To withdraw your question. Please press star one again.
Speaker Change: Please standby, while we compile the Q&A roster.
Speaker Change: And our first question comes from Nicholas Campanella with Barclays. Your line is now open.
Hey, Thanks, so much for taking my question Happy Friday.
Good morning.
Nicholas Campanella: Just pretty material increase in the base Capex plan here. So can you just help us understand.
Nicholas Campanella: Are there additional equity requirements beyond kind of the $300 million ATM that you highlighted in the slides and then.
Speaker Change: Maybe I'll, maybe I'll just leave it there for now and then where do you stand.
Speaker Change: And that 5% to 7% EPS CAGR with this new Capex plan. Thank you.
Speaker Change: Sure well, thank you very much.
Speaker Change: So first one of the additions that you are seeing and we pulled it out and separated it from what we had shown you in the past is our transmission investment plan.
Speaker Change: That will continue to probably increase as we move forward as well.
Speaker Change: And then further cars to your questions on.
Our equity offerings.
Speaker Change: Or where are we looking for the ATM.
Speaker Change: The ATM will cover what we need for the foreseeable future, including the batteries, we are waiting to see where we end up with the RFP projects that could be coming in from that could potentially require additional capital.
Speaker Change: We remain confident in our 5% to 7% growth rate and.
Speaker Change: And you'll see that moving forward.
Speaker Change: With confidence as we look.
In 2024, which is a really solid year for us given the out of our rate case customer growth and the capital plan.
Speaker Change: Yes.
Speaker Change: Okay. So on the on the base plan today, it's just the current equity funding needed to do a plan today, obviously that can change as this RFP comes through and we will see how much you can own.
Speaker Change: Is that the message.
Speaker Change: Yes, that's correct next thanks.
Speaker Change: Okay. Thank you and then just I.
Speaker Change: I guess just on the the storm expenses.
Speaker Change: Understanding that you are deferring a portion of it you kind of talked about this $35 million to $40 million bucket and then this 85 million to $100 million for the <unk> costs, just simplistically like how much is actually being deferred versus at versus excluded from the non-GAAP number in 'twenty four.
Speaker Change: So let me, let Joe take that on and one of the things I want to recognize that this was truly an extraordinary event not only for the restoration efforts with regards to customer outages, but BJ wide the energy markets were really insignificant disarray.
Speaker Change: Gentlemen.
Joe: So Nick two to all sort of answered this a bit in reverse so as it relates to the cost.
Nick White: The amount that you would expect not to be deferred that would would be the operating the exclusion would be between 10 and 15.
Speaker Change: Everything else that we've done.
Speaker Change: Within one of the two mechanisms that we've previously.
Speaker Change: That's helpful. Thank you so much.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: For our next question.
Speaker Change: Yes.
Share: And our next question comes from share.
Share: With Guggenheim Partners. Your line is now open.
Share: Hi, Good morning, it's actually James for Shar. Good morning, good morning.
James: So if I can start up the load side.
James: Yes part of the backdrop.
James: Our targets.
James: A lot of companies involved.
James: Semiconductor manufacturing.
James: AI data centers can you just give us some color on how AI is providing growth across the customer classes.
James: And also any detail on what kind of incremental.
James: Generation transmission opportunities are being created in the longer term specifically by those customers.
Speaker Change: Sure. That's a great question, so on the longer term side.
Speaker Change: Certainly we have been a semiconductor.
Speaker Change: Doctor manufacturing center for decades.
Speaker Change: About 15% of semiconductor manufacturing in our service territory, and we expect to see a lot of longer term growth the construction of those facilities.
Very extensive.
Speaker Change: Year to construct and nearer term growth is the AI driven data centers.
Speaker Change: Both in terms of some of the mega facilities as well as some of the grid edge computing. So we are seeing.
Speaker Change: No small shortage of demand from just about every hyper scaler.
Speaker Change: And cloud computer.
Speaker Change: Company out there.
Speaker Change: And it's really a terrific amount of opportunity for us most of these companies, 100% clean energy.
Speaker Change: They bring their own reliability backup.
Speaker Change: And are interested in additional transmission subs.
Substation infrastructure as well as other so it allows for significant growth as we move forward for our communities and the other customers. We serve this creates an overall strengthening of our reliability and resiliency as we invest in new infrastructure.
Speaker Change: And it provides important jobs for the reason property taxes and other significant benefits.
Speaker Change: Got it.
Speaker Change: Just shifting over to the regulatory side, Joe you hinted at this at the end of your prepared.
Joe: I assume the timeline for new rates Gen 125, with the new <unk> filing in the next week or two I guess can you just get a little more color on your thoughts on filing.
Joe: Sure.
Joe: We haven't finalized our thoughts on timing, but youre correct under the regulatory framework framework in Oregon is a a 10 month window. So if we want rates dual effect immediately on January one they filing would be to occur by the end of this month.
Joe: We continue to sort of finalize our thinking and approach and we'll obviously communicate that as we have it as I mentioned previously there are.
Joe: Certain items, putting weighed on the scale of the batteries coming online and some other items that we would expect.
Joe: On a more timely recovery.
Speaker Change: Okay. Thanks, guys Okay.
Speaker Change: Thank you Juan <unk> for our next question.
Speaker Change: Our next question comes from.
Speaker Change: Julien Dumoulin Smith with Bank of America. Your line is now open.
Speaker Change: Hey, good morning. Thank you guys very much for the time, Hey, Maria Thank you.
Speaker Change #100: And just.
Speaker Change #101: Hey, just following up on the latest from the Oregon, PUC and just on the rejection of the clean energy plan I, just want to understand a little bit.
Speaker Change #101: The short term versus long term what message are they trying to send here about 100% target, especially relative to affordability.
Speaker Change #101: Yet in your words a sense of.
Speaker Change #101: Breaking out of the different pieces that are ongoing and then I've got a follow up quickly.
Speaker Change #102: Sure No I think it's a great question and first of all this is our first clean energy plan and I want to acknowledge and recognize that our integrated resource plan was.
Speaker Change #102: Agnon was acknowledged and we are moving forward under that ERP.
Speaker Change #102: There are questions really had to do around more granular admissions modeling, we had been doing day by day admissions modeling and they'd like to see hour by hour emissions modeling.
Speaker Change #102: Overall, you'll also remember our original IRB had was upsized in July quite significantly for additional energy needs as well as additional capacity needs and I think there is more discussion.
Speaker Change #102: Amongst stakeholders and key constituents around the how we're going to meet the additional needs with additional renewable energy and other infrastructure. So it's a good time to have healthy discussion around what is really a dynamic.
Speaker Change #102: Rapidly growing environment here.
Yes, it certainly and just to make sure I'm understanding the key takeaway here I mean.
Speaker Change #102: It seems like there is a broader question about like how you meet the 100% in terms of maybe there is a need for more.
Speaker Change #102: Again, because I know that at times has been an acute focus on affordability here and perhaps enabling and ensuring that there is a pathway for affordability I just want to make sure I'm hearing clearly what direction. This this this rejection on the long term came from.
Speaker Change #103: It came from a need most clearly for additional admissions marbling, Julien, but the backs the.
Speaker Change #103: Backstory here is is that we're seeing pretty significant changes to the upside of energy usage and wanting to really understand the sources.
Speaker Change #103: The economics all along.
Speaker Change #103: All of those procurements.
Speaker Change #103: As we bring on renewable resources and a clear water would be a good example, we're actually not seeing customer prices react because we're displacing higher purchase energy in the market and so the additional renewables procurement is actually not driving customer prices as much as one would think as we model it forward.
Speaker Change #103: It's the overall need for investment in aging infrastructure and supporting significant customer growth that is thats driving customer prices of any move forward more than clean energy development.
Speaker Change #104: Right and actually to that point I mean, you have a dramatic increase here in transmission and that's not necessarily surprising given what you've been telegraphing in recent periods about the need for transmission.
Speaker Change #105: But can you maybe frame out I mean, how do you think about sort of upside generation given the new level of spend tied to especially transmission here I mean should we continue to think about this as being incremental do you have a shift in how you think about allocating capital to generation here I mean, I know that you are reaffirming prior to seven but at times, perhaps theres been sort of.
Speaker Change #105: Ceiling on how much you want to push your core rate base, considering all the various needs is there a pushout potentially here in terms of some of the investments are really do we should we consider this is.
Truly incremental upon incremental opportunities.
Speaker Change #106: Sure I mean, we have to always keep customer prices first and foremost there's no question that we have seen customer price pressures.
Speaker Change #106: We are very attuned to the interests of our customers and keep making sure that affordability stays first and foremost one of the reasons that we have competitive rfps for renewable generation capacity and energy to get the very best prices for customers and competitive.
Speaker Change #106: Processes, we have done well in those processes in the past and we hope to continue to be able to deliver at the lowest cost.
Speaker Change #106: <unk> risk clean energy resources to customers that is markedly.
Speaker Change #106: <unk> with regards to transmission there is some flexibility some of these transmission spend within our historic run rate is.
Speaker Change #106: Is new and incremental we think has been sort of as concentric circle. The first circle being within our service territory really directly impacting.
Speaker Change #106: Being impacted by customer growth.
Speaker Change #106: Second is to bring clean energy from our area.
Just adjacent to our areas to our customers and then the third is broader investments across the northwest one of the big increases as you look farther out on the chart. In 2028 is the to Federated tribes of the warm Springs project on our existing partner out putting around your line, although we received a two.
Speaker Change #106: <unk> hundred $50 million Department of energy grant to significantly upsize that existing line most of which will continue over existing rights of way. So when you look at transmission, we're focused on relatively easy to execute my colleagues would probably questions that transmission.
Speaker Change #106: As ever easy to execute.
Speaker Change #106: The relatively lower risk.
Speaker Change #106: <unk> within our service territory focused on Repowering, and increasing existing rights of way and lines.
Speaker Change #107: Wonderful excellent just a quick housekeeping on the Itc's here. If you don't mind just for the battery is that going to be reflected in a single year here or over five years or how do you think about the accounting for the Itc's here real quickly again, there's sort of a novel subject in storage and regulated land.
Speaker Change #107: So.
Speaker Change #108: Good morning, Julien so from a from a standpoint of recognition as the <unk>.
Speaker Change #108: He comes online we'll recognize those ITC then we would expect since we have two batteries there'll be coming in over 24% 25 that will recognize those itc's, what I'll call it about to the balance sheet.
Speaker Change #108: The customer is receiving the benefits of those itc's will lay out in our in our next regulatory filings that will be amortized to them of Julian I think when you get to the real question is once we put them on the balance sheet. The expectation is that we will monetize them somewhat shortly thereafter.
Speaker Change #108: As we recognize them and they have the certainty of the ability to transfer we will be looking to monetize.
Got it pretty pretty concurrently got it excellent. Thank you.
Speaker Change #108: So and that will flow through the income statement.
Speaker Change #108: The monitor the monetization will flow through as a as a cash flow right from the.
Speaker Change #108: The purchase and sale of the Itc's income will be income statement neutral.
Speaker Change #109: Okay. Thanks for that.
Speaker Change #109: Okay.
Speaker Change #109: Perfect.
Thank you one moment for our next question.
Speaker Change #109: Yeah.
Speaker Change #109: Our next question comes from Greg oral with UBS. Your line is now open.
Gregg Orrill: Good morning, Thank you good morning.
Gregg Orrill: With regard to the rate case.
Gregg Orrill: Up do you have any any sort of early thoughts on.
Level of rate increase or sort of thoughts on affordability.
Gregg Orrill: Heading into that.
Gregg Orrill: Sure.
Gregg Orrill: Hey, Greg Good morning, George.
Speaker Change #110: Obviously, we start our TACE here always thinking about affordability of the customer also considering we had a previous case here.
Speaker Change #110: I would expect in this case truly.
Speaker Change #110: Truly the focus is going to be on the batteries. The b assets that have been put in service to continue to advance both relied reliability expand capacity on the system as well as small amounts of costs.
Speaker Change #110: Think this will be mainly be a truly just a an infrastructure update.
Speaker Change #110: The plan focused on on affordability.
Speaker Change #111: Got it thank you.
Speaker Change #112: Thank you.
One moment for our next question.
Speaker Change #112: Our next question comes from Paul Fremont with.
Paul Patterson: Berg Thalmann. Your line is now open.
Paul Patterson: Thank you very much and thank you for taking my question.
Paul Patterson: <unk>.
Paul Patterson: I guess my first is.
Paul Patterson: Given the storm deferrals for January is that something that you would be looking.
Berg Thalmann: To recover in the rate case that you're filing currently or would that fall outside the purview because of its too recent.
Speaker Change #114: Good morning, Paul So the.
Paul: Storm recovery actually will fall through two separate processes than the.
General rate case, there they'll both be in existing mechanisms. So the as it relates to the operating.
Paul: Costs are in the reconstruction cost those will come through rate a deferral rider that will be filed and will have its own proceeding which is and then as it relates to the the cost of the of the energy and the <unk> event that will go through the PJM process. Each will have a bit of a different timeframe for example, the <unk>.
Paul: <unk> would not be filed until 2025 with the recovery of that that would work itself into 2026.
Paul: And then the timing on the Opex recovery.
Paul: Does that normal would that normally occur within a year's time or or shorter than that.
Paul: That recovery will be up to the discretion with the <unk>.
Paul: Commission normally the storms are recovered over due to their magnitude and significance over an extended period. The last time, we had a storm recovery.
Paul: This nature, we've recovered over seven years.
Paul: Okay.
Paul: And what we will also went through just isn't.
Paul: I'll just say, we'll also look through the eligibility for either of these four securitization, which will obviously Jane can change the recovery stream as well.
Paul: Okay and then.
Looking at the higher base Capex.
Paul: How should we think about that relative.
Speaker Change #115: To your right.
Speaker Change #115: Bidding into the renewable.
Speaker Change #115: Rfps or would you be looking to.
When last in the Rfps, given sort of the magnitude of the Capex increase or.
Speaker Change #115: Would there be sort of a change in in terms of.
Speaker Change #115: Bob.
Speaker Change #115: In terms of your strategy.
Bob: So our bidding strategy today, our bidding strategy going forward and are bidding that in the past has always been the same and that is to have the most competitive.
Bob: <unk> for the lease cost and least risk for customers.
Bob: And if.
Bob: If those projects are our winners they're good for customers.
Bob: And they're good for financing.
Bob: Okay.
And then it looks like there is a 2% to 300 million annual increase in Capex each year.
Bob: Should we look at the incremental.
Bob: Mt.
Bob: Pending.
Bob: Roughly 50% with equity is.
Bob: Is that sort of a fair way to.
About the same thing.
Speaker Change #117: Yes, I think when we look to the long term financings tier we we continue to look to.
Speaker Change #117: Over and sort of using flexibility manage our capital structure, you will continue to move towards 50 50. So.
Speaker Change #117: Over time.
David.
Speaker Change #117: We looked at.
Speaker Change #117: But that balance, but you are reasonable.
Speaker Change #118: Great and then my last question the Big step up I think in transmission.
Speaker Change #118: 28%.
Speaker Change #119: I was just wondering.
Speaker Change #119: What.
Speaker Change #119: Sort of what's the.
Speaker Change #119: The explanation of that.
Speaker Change #119: Sure.
Speaker Change #119: And answer to Julians question earlier, that's the round you to $2 30 Lon.
Speaker Change #119: Our plan to be increased to 500 kv and partnership with the Confederated tribes of the warmest Springs.
Speaker Change #119: We previously announced a $250 million grant for that work.
Speaker Change #119: From the department of energy, obviously that project with more than $250 million its over 100 miles long and it.
Speaker Change #119: Would be a multiyear project.
Speaker Change #119: First youre anticipating.
Speaker Change #119: In 2028.
Speaker Change #119: With the level of transmission spending sort of stay at that higher level for <unk>.
Speaker Change #119: All years.
Speaker Change #119: Probably for a couple of years after that in 2029 Tony.
Speaker Change #119: The transmission line and the increase also opens up a good portion of the central part of Oregon for additional renewable development at <unk>.
Speaker Change #119: Partnership with the tribes.
Speaker Change #119: We currently colon small hydro facilities with them and this will allow for a significant expansion, particularly of solar energy, but really making the central part of of Oregon, and the Confederate types of the warm springs reservation and opportunity for further development.
Through 2028 and beyond.
Speaker Change #120: And then my last question with sort of the step up in Capex, but what type of rate base growth.
Speaker Change #120: Does that give you on a percentage basis.
Speaker Change #120: Through through 28.
Speaker Change #120: So Paul in the sort of the SR document that we also filed this morning for the base capital, which includes the transmission which includes the.
Paul: The line that Maria just mentioned that would put us right around an 8% rate base growth and then we've also in that in that update.
Paul: Some.
Paul: Scenarios regarding an RFP outcome and did that update what would put you at eight with a 25% outcome would put you at a nine 2% rate base growth through 2008.
Speaker Change #121: Great. Thank you.
Speaker Change #122: Thank you.
Speaker Change #123: Thank you.
Speaker Change #123: A reminder to ask a question. Please press star one one on your telephone and wafer name to be announced.
Speaker Change #123: Your question. Please press star one again.
Speaker Change #123: One moment for our next question.
Yes.
Speaker Change #123: Our next question comes from Travis Miller with Morningstar. Your line is now open.
Travis Miller: Thank you Catherine good morning, everyone.
Travis Miller: Yeah.
Travis Miller: Quick question on the battery stuff that increase in the 2024 number is that incremental projects or is that some kind of carryover spending from 2023.
Specifically as it relates to the battery that is the that is the 2000 22021 RFP moving out in fact, the battery spend you see in 'twenty four 'twenty five was all existing from that RFP and it is the first set of spend is more of that is the comparable project or the smaller battery and then the spend it goes into 2025.
Travis Miller: Syed battery, which is the larger one.
Speaker Change #124: Okay, I was thinking about the comp from the previous capital update.
Speaker Change #124: Which was living $100 million too.
Speaker Change #124: 235.
Speaker Change #124: These are the same patterns, we have not we have not added any projects. This is Dave.
The update their pricing for those same batteries. So there were some payments that went from 2023 to 2020.
Speaker Change #125: Got it okay, Okay, and then related on that how much of the battery, specifically capex and those payments do you anticipate youll be able to get into.
Speaker Change #125: The rate case, given that and correct me, if I'm wrong, given that theyre, probably not going to be done right operational.
Speaker Change #125: And the next.
Speaker Change #125: Well when we update the so when we do the filing the bilingual look we'll use a future amount of rate base. So we're using the end of 2020 for rate base and we will we will.
When we decided to file we will place a structure in there that wed expect recovery of the batteries on their in service dates the first the comparable battery, which has an in service date somewhere right around at.
Speaker Change #125: At the end of 'twenty 'twenty four and then also the NBC side battery as it goes in service in 2025 as you may recall in our prior case and when we file whenever we file our next phase we will address.
Speaker Change #125: <unk> or the <unk>.
Speaker Change #125: The renewable adjustment clause that allows for renewables should go into service. We previously had requested that batteries get included there. So they just automatically go into service. We will again look within our filing to address that that policy as well as potentially consider other policies to ensure that the batteries are timely into service similar to other.
Speaker Change #125: The renewable assets.
Speaker Change #126: Okay, Great. That's really helpful. And then different question given the increase in the capital spending.
Speaker Change #126: Comments around trying to get back to the certain capital structure, what does that mean for the dividend.
Speaker Change #126: Dividend growth you anticipate.
Speaker Change #126: Our our.
Speaker Change #126: Our expectation is as we continue to grow we are committed to.
Speaker Change #126: Drawing the line as it relates to our five 7% earnings growth in that similar dividend growth. So we have no expectation of changes in our dividend growth rate.
Speaker Change #126: As previously communicated.
Speaker Change #126: Okay in line with earnings.
Speaker Change #127: That is correct okay.
Speaker Change #128: That's all I had thanks so much.
Speaker Change #129: Thank you thank you Travis.
Speaker Change #130: Thank you.
Speaker Change #131: One moment for our next question.
Speaker Change #131: Our next question comes from Willard Grainger.
Willard Grainger: With Mizuho your line is now open.
Willard Grainger: Good morning, Hi, good morning, everybody.
Willard Grainger: Good morning.
Willard Grainger: Just a question.
Willard Grainger: Just sort of coming back to the equity.
Mizuho: And the balance sheet the debt to cap.
Mizuho: 2023 around 56% debt.
Mizuho: Debt to cap.
Mizuho: When do you think you'll be closer to the low.
Mizuho: 50% that you got in the last rate case.
Mizuho: Sure.
Speaker Change #133: Good morning, good morning, so.
Speaker Change #134: We look to as we built the the five year plan, we have considered a path that will get us towards that 50% over that period with some flexibility on the timing in between here.
Speaker Change #134: Considering the RFP or considering the.
Speaker Change #134: Considering all within or without RFP scenarios that we have sort of a series of flexible.
Speaker Change #134: Strategies that will work is there over what I'll call this longer planning.
Speaker Change #135: Understood. Thanks for the clarity and then.
Speaker Change #136: Maybe just thinking about the.
Speaker Change #136: The battery storage.
Speaker Change #136: Is that something that you.
Speaker Change #136: You'd likely see more of with with some of the load growth or do you think that the generation spend is more.
Speaker Change #136: So more geared toward traditional renewables.
Speaker Change #137: Well I think we will see both.
Speaker Change #137: Clearly capacity is important.
As we.
Speaker Change #137: And in particular with all of the volatile weather that we're seeing so I think youll see additional batteries coming through through Rfps and I think Youll also see more traditional renewables of wind and solar there are also some.
Speaker Change #137: Pump started projects and some other projects that are farther out the independent power producers have been working on.
Speaker Change #137: And so I think this is going to be what I call. The all above a set of solutions as we move forward. While also working very closely with customers on their energy usage and flexibility as well as standby generation.
Speaker Change #137: Bring all of the resources to bear through this transition.
Speaker Change #138: Thank you I'll leave it there that's super helpful.
Speaker Change #139: Thank you.
Speaker Change #139: Okay.
Speaker Change #139: Yes.
Speaker Change #139: Thank you.
Speaker Change #139: I am showing no further questions at this time I would now like to turn it back to Maria Pope for closing remarks.
Maria MacGregor Pope: Great. Thank you very much we appreciate your interest in Portland General Electric and we're excited about 2020 for our continued growth in high Tech and digital customers our capital plan to support that growth in renewable development as well as our continued focus on operating costs and operational X.
We look forward to connecting with you soon and thank you very much for joining us today.
Speaker Change #140: This concludes today's conference call.
Speaker Change #141: For participating you may now disconnect.