Q3 2024 Portland General Electric Co Earnings Call
Operator: Good morning, everyone, and welcome to Portland General Electric Company's third quarter 2024 earnings results conference call. Today is Friday, October 25, 2024. This call is being recorded and as such, all lines have been placed on mute to prevent any background noise.
Good morning, everyone and welcome to Portland General Electric Company's third quarter 2024 earnings result conference call. Today is Friday October 25th 2020 for this call is being recorded and as such all lines have been placed on mute to prevent any back.
Ground noise. After the Speakers' remarks, there will be a question and answer period. If you would 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 one again, if you do it.
Operator: After the speaker's remarks, there will be a question and answer period. 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 1-1 again. If you do intend to ask a question, please avoid the use of speakerphones.
Speaker Change: Tend to ask a question. Please avoid the use of speaker phones for opening remarks, I will turn the conference call over to Portland General Electrics manager of Investor Relations. Nick White. Please go ahead Sir.
Nick White: For opening remarks, I will turn the conference call over to Portland General Electric's Manager of Investor Relations, Nick White.
Operator: Please go ahead, sir.
Operator: Thank you, Gigi.
Nick White: Thank you Gigi good morning, everyone. Thank you for joining us today before.
Nick White: Good morning, everyone. Thank you for joining 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.
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 will be referencing throughout the call.
Nick White: The slides are available on our website at investors <unk>, Portland General Dotcom, referring.
Nick White: 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. For a description of some of the factors that could cause 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.
Nick White: 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.
For a description of some of the factors that could cause 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.
Nick White: Turning to slide three, leading our discussion today are Maria Pope, President and CEO, and Joe Trpik, Senior Vice President of Finance and CFO.
Turning to slide three leading our discussion today are Maria Pope President and CEO and Joe <unk> Senior Vice President of Finance and CFO. Following their prepared remarks, we will open the line for your questions. Now it is my pleasure to turn the call over to Maria.
Nick White: Following their prepared remarks, we will open the line for your questions.
Maria Pope: Now it is my pleasure to turn the call over to Maria.
Maria Pope: Thank you, Nick, and good morning. I'm happy you can all join us today. Our third quarter reflects PGE's focus on operational excellence and delivering consistent results.
Maria: Thank you Nick and good morning, I'm happy you can all join us today.
Maria: Our third quarter reflects pge's focus operational excellence and delivering consistent results.
Maria Pope: starting with slide four. For the quarter, we reported gap net income of $94 million or $0.90 per diluted share. This compares with third quarter 2023 gap net income of $47 million or $0.46 per diluted share. Three key drivers underpinned our results. First, improve power cost performance driven by PGE's acquisition of renewable resources and regional power market stability. This is despite experiencing very low hydro conditions and summer heat. Certainly significant improvement from TASA's third quarters of the last several years. execution of thoughtful cost and risk management work, as well as overall strong performance across our operation.
Maria: <unk> with slide four.
Maria: For the quarter, we reported GAAP net income of $94 million or <unk> 90 per diluted share. This compares with third quarter 2023, GAAP net income of $47 million or <unk> 46 per diluted share.
Maria: Three key drivers underpin our results.
Maria: First improved power cost performance, driven by Pge's acquisition of renewable resources and regional power market stability.
This is despite experiencing very low hydro conditions in summer heat.
Currently a significant improvement from tough third quarters of the last several years.
Maria: Second.
Maria: Execution of a thoughtful cost and risk management work as well as overall strong performance across our operations.
Maria Pope: and Surge. Continued robust demand growth led by semiconductors and data center manufacturers and customers. Due to our solid third quarter results and outlook for the full year, we expensed a portion of the costs related to the January 2024 storm and damage deferral. Given the application of an earnings test, this resulted in a charge to third quarter earnings of $0.11 per share. Joe will cover this more in detail in his remarks. For the full year, we expect to deliver results in the upper half of our original guidance range. We are narrowing our 2024 Adjusted Earnings Guidance to $3.08 to $3.18 per diluted share.
Maria: And third.
Maria: Continued robust demand growth led by semiconductor and data center manufacturers and customers.
Maria: Due to our solid third quarter results and outlook for the full year.
Maria: We expense a portion of the costs related to the January 2020 form storm and damage deferral.
Maria: Given the application of an earnings test.
Maria: This resulted in a charge to third quarter earnings of 11 <unk> per share.
Speaker Change: Joe will cover this more in detail in his remarks.
Maria: For the full year.
Maria: We expect to deliver results in the upper half of our original guidance range. We are narrowing our 2024 adjusted earnings guidance to $3 eight.
Maria: The $3 18 per diluted share.
Maria Pope: Turning to slide five. We entered 2024 focused on solidifying our energy portfolio by adding 500 megawatts of new renewable hydrocapacity, integrating additional wind and optimizing our generation assets. Our results this quarter reflect the importance of these investments and work. Similar energy capacity and additions across the West have helped steady energy markets. even with significantly below hydro conditions, and the record setting west-wide hot summer temperatures, particularly in July. We strategically deployed our generation fleet and procured energy across Western markets to offset the impacts during the most challenging period. Our power operations and generation teams did an outstanding job.
Maria: Turning to slide five.
Maria: We entered 2024 focused on solidifying our energy portfolio by adding 500 megawatts of new renewable hydro capacity.
Maria: Integrating additional wind and optimizing our generation assets.
Our results this quarter reflect the importance of these investments and work.
Maria: Similar energy capacity and <unk>.
Maria: Additions across the west.
Maria: Helped steady energy markets.
Maria: Even with significantly below hydro conditions, and the record setting west wide hot summer temperatures, particularly in July.
Maria: We strategically deployed.
Maria: Our generation fleet and procured energy across western markets to offset the impacts during the most challenging periods.
Maria: Our power operations and generation teams did an outstanding job.
Maria Pope: We also saw strong performance from the Clearwater Wind Development, officially commissioned in September, which operates at a highly capacity factor and provides important diversity to our generation. Notably, there have already been 25 days this year where, with the addition of clear water, PGE generated more than a gigawatt of wind power. This is equivalent to serving nearly all of our residential customers with wind-generated energy. We are excited to complement Clearwater's success with the incoming Constable and Seaside Battery Storage Project. providing even more flexibility and reliability to our system. Clean energy remains a customer focus and a priority from high-tech and data centers to hospitals and municipalities and individual residential customers.
Maria: We also saw strong performance from the Clearwater Wind development officially commissioned in September which operates at a highly capacity factor and provides important diversity to our generation mix.
Maria: Notably.
Maria: There have already been 25 days this year with the addition of Clearwater PGE generated more than a gigawatt of wind power.
This is equivalent to serving nearly all of our residential customers with wind generated energy.
Maria: We are excited to complement Clearwater success with the incoming comfortable and seaside battery storage projects.
Maria: Providing even more flexibility and reliability to our system.
Maria: Clean energy remains a customer focus and a priority.
From Hi Tech and data centers.
Maria: Two hospitals and municipalities and individual residential customers.
Maria Pope: For the 15th year in a row, PGE's Voluntary Renewable Program was ranked number one by NREL. More than 25% of our residential and business customers chose to enroll in our Green Future Program. We also made important progress in securing the next generation of reliable, clean, and cost-effective resources. In September, in coordination with the Independent Evaluator, we submitted the 2023 RFP final shortlist for acknowledgement by the OPUC. Included on the shortlist are a mix of solar and battery projects that provide critical resource diversity and capacity options. All of these projects help advance our clean energy goals while also balancing reliability and affordability.
For the 15th year in a row PGE voluntary brought Pge's voluntary renewable program was ranked number one by Israel.
Maria: More than 25% of our residential and business customers.
Maria: <unk> to enroll in our green future program.
Maria: We also made important progress in securing the next generation of reliable clean and cost effective resources in.
Maria: In September in coordination with the independent evaluate are we submitted the 2023 RFP final shortlist for acknowledgment by the op QC.
Maria: Included on the shortlist are a mix of solar and battery projects that provide critical resource diversity and capacity options.
Maria: All of these projects help advance our clean energy goals, while also balancing reliability and affordability.
Maria Pope: We've structured this list into two groups at the request of stakeholders. We've prioritized and begun negotiations with the top performing bids, Group A. As negotiations continue and we advance through the regulatory process, we'll determine if engagement with the remaining shortlist projects, Group B, is necessary. OCUC acknowledgment of the shortlist is expected by late November and contracts are expected to be completed throughout 2025. We received numerous other bids that, with continued refinement, could be important portfolio additions in the future.
Maria: We've structured this list into two groups at the request of stakeholders, we prioritize and begun negotiations with the top performing bids coupe.
Maria: As negotiations continue and we advance through the regulatory process, we will determine if engagement with the remaining shortlist projects group P is necessary.
Maria: OCC acknowledgment of the shortlist is expected by late November and contracts are expected to be completed throughout 2025.
Maria: We received numerous other bids that with continued refinement could be important portfolio additions in the future.
Maria Pope: Given our significant need for clean energy and capacity, we expect to file an integrated resource plan update and to conduct a follow on RFP in 2025.
Given our significant need for clean energy and capacity, we expect to file an integrated resource plan update and to conduct a follow on RFP in 2025.
Speaker Change: Turning to the 2025 right with you.
Maria Pope: Turning to the 2025 rate review. Since our last call, PGE and parties have exchanged additional testimony and participating in hearings earlier this week. We appreciate the productive dialogue held across multiple settlement discussions during the year. PGE remains laser focused on keeping our customers prices as low as possible by driving operational efficiency. Our third quarter results, which Joe will cover shortly, reflect this focused approach. as we prioritize work that impacts power costs. O&M, Capital, as well as reduces overall risk. This includes vegetation management that addresses both wildfire and winter storms, power plant and gas storage optimization and progress on our capital plan to replace aging infrastructure, particularly across our T&D systems and to enhance grid reliability.
Speaker Change: Since our last call PGE and parties have exchange additional testimony and participating and hearings earlier this month.
We appreciate the productive dialogue held across multiple settlement discussions during the year.
Speaker Change: PGE remains laser focused on keeping our customers prices as low as possible.
Speaker Change: By driving operational efficiencies.
Our third quarter results, which Joe will cover shortly reflect this focused approach as.
As we prioritize work that impacts power costs.
Speaker Change: O&M capital as well as reduces overall risk.
Speaker Change: This includes vegetation management that addresses both wildfire and winter storms.
Speaker Change: Our plant in gas storage optimization and progress on our capital plan to replace aging infrastructure, particularly across our T&D systems and to enhance grid reliability.
Maria Pope: We also continue to aggressively pursue and successfully capture billions of dollars of federal grants, production tax credits and investment tax credits, both ourselves and with partners. Most recently, the North Plains Connector, a project led by Grid United, received a $700 million federal grant from the U.S. Department of Energy to the Grid Resilience and Innovation Partnership, which includes upgrades for the existing coal strip transmission line. These grants, as well as investment and production tax credits from our clean energy projects, benefit all parts of our business. This includes generation assets, long-lead transmission, distribution enhancement, transportation electrification, workforce development, and more.
Speaker Change: We also continue to aggressively pursue and successfully capture billions of dollars of federal grants.
Speaker Change: <unk> tax credits and investment tax credits.
Speaker Change: With ourselves and with partners.
Speaker Change: Most recently the North claims connector a project led by grid, United received a $700 million Federal grant from the U S Department of energy to the grid resilience and innovation partnership which includes upgrades for the existing colstrip transmission line.
Speaker Change: These grants as well as investment in production tax credits from our clean energy projects benefit all parts of our business.
Speaker Change: This includes generation assets long lead transmission distribution enhancement transportation electrification workforce development and more.
Maria Pope: This powerful, game-changing federal support is helping us keep customer prices as low as possible. while advancing the energy transformation and accelerating technology and innovation.
Speaker Change: This powerful game changing federal support is helping us keep costs tumor prices as low as possible, while advancing the energy transformation and accelerating technology and innovation.
Maria Pope: While these advancements are critical, let me now turn to the safety of our co-workers. customers, and communities. our top priority. extreme weather, natural disasters, and in particular across the West, wildfires. These are not just a utility issue, but a societal one. Addressing wildfire risk requires maximizing the investments in our capabilities and continued sharpening of our mature, year-round wildfire mitigation program. It also requires collaboration with federal, state, and local agencies and actively supporting potential regulatory and legislative solutions at the state and national level. We are working with partners and policymakers on potential legislation to ensure that utilities in Oregon and across the country can continue providing safe, reliable, and affordable electricity services.
Speaker Change: While these advancements are critical let me now turn to the safety of our coworkers customers and communities.
Speaker Change: Our top priority.
Extreme weather.
Speaker Change: Natural disasters and in particular across the west wildfires. These.
These are not just a utility issue, but its a sizable one.
Speaker Change: Addressing wildfire risk limit requires maximizing the investments in our capabilities and continued sharpening of our mature year round wildfire mitigation program.
Speaker Change: It also requires collaboration with federal state and local agencies and actively supporting potential regulatory and legislative solutions at the state and national level.
Speaker Change: We are working with partners and policymakers on potential legislation to ensure that utilities in Oregon and across the country can continue providing safe reliable and affordable electricity service.
Maria Pope: addressing this risk in a holistic fashion is critical for customers, communities, employees, and shareholders, all stakeholders.
Speaker Change: Addressing this risk in a holistic fashion is critical for our customers communities employees and shareholders all stakeholders.
Speaker Change: Finally, turning to demand growth.
Maria Pope: Finally, turning to demand growth. year-to-date industrial demand has grown more than 9% compared to 2023. extending the trajectory we've observed for the last five years. This further highlights the attractiveness of our service territory to a diverse customer base, including data centers and an ecosystem of semiconductor research and manufacturing customers. By working closely with our customers, communities, and policymakers, we've had a long-running visibility to these trends. This has informed much of our strategy. meeting these growing energy needs reinforces our decision to join the Energy Day Ahead Market. This will help lower power costs, increase resilience, and improve access to diverse resources and clean energy across the West.
Speaker Change: Year to date industrial demand has grown more than 9% compared to 2023.
Speaker Change: Extending the trajectory we've observed for the last five years.
Speaker Change: This further highlights the attractiveness of our service territory to a diverse customer base, including data centers and an ecosystem of semiconductor research and manufacturing customers.
Speaker Change: By working closely with our customers communities and policymakers.
Speaker Change: Had a long running visibility to these trends.
Speaker Change: This has informed much of our strategy.
Speaker Change: Meeting these growing energy needs reinforces our decision to join the energy day head market. This will help lower power costs increased resilience and improve access to diverse resources and clean energy across the west.
Maria Pope: We are also focused on enhancing our transmission capabilities in multiple phases and areas. First, maximizing performance and alleviating bottlenecks in our existing rights-of-way. And second, working closely with partners on lines adjacent to our service territory, like the collaboration with the North Plains Connector. to execute a reliable and affordable clean energy transition and extend the reach of the Western network. This work is critical as we continue to support customer growth and advance our shared decarbonization goals.
Speaker Change: We are also focused on enhancing our transmission capabilities in multiple phases and areas.
Speaker Change: First maximizing performance and alleviating bottlenecks in our existing rights of way.
Speaker Change: And second working closely with partners on lines adjacent to our service territory like the collaboration with the norms North Plains connector.
Speaker Change: To execute a reliable and affordable clean energy transition and extend the reach of the Western network.
Speaker Change: This work is critical as we continue to support customer growth and advance our shared de carbonization goals.
Maria Pope: Looking ahead. This quarter's strong operations, focus on execution, and robust demand growth drove our performance. We integrated a significant amount of renewable resources, experienced stable power markets, and served our growing customer base. we remain focused on providing safe, reliable, and affordable clean energy.
Speaker Change: Looking ahead.
Speaker Change: This quarter's strong operations focus on execution and robust demand growth drove our performance.
Speaker Change: We integrated a significant amount of renewable resources experienced stable power markets and serve our growing customer base.
Speaker Change: We remain focused on providing safe.
Speaker Change: <unk> and affordable clean energy with that I'll turn it over to Joe. Thank you.
Joe Trpik: With that, I'll turn it over to Jill.
Joe Trpik: Thank you.
Joe Trpik: Thank you, Maria, and good morning, everyone. Turning to slide six, our Q3 results reflect improved regional power cost conditions and continued robust demand growth from our industrial class. Our region again experienced warmer conditions than normal throughout the quarter, but conditions were slightly cooler than last year. Q3 2024 loads increased by 3.9% overall and 5.3% weather adjusted as compared to Q3 2023. Q3 2024 residential load decreased 1.2% year over year, but increased 0.9% weather adjusted. Residential customer count increased by 2.1%. However, this was partially offset by energy efficiency driving lower usage per customer. Commercial loads remain relatively flat, with a slight decrease of 1% or 0.1% weather adjusted, driven largely by energy efficiency.
Joe: You Maria and good morning, everyone.
Joe: Turning to slide six our Q3 results reflect improved regional power cost conditions and continued robust demand growth from our industrial class customers.
Joe: Our region again experienced warmer conditions than normal throughout the quarter, but conditions were slightly cooler than last summer Q.
Joe: Q3, 2024 loads increased by three 9% overall and five 3% weather adjusted as compared to Q3 2023.
Joe: Q3, 2024 residential load decreased one two.
Joe: 2%.
Joe: Year over year, but increased 9% weather adjusted residential customer count increased by two 1%. However, this was partially offset by energy efficiency driving lower usage per customer.
Joe: Commercial loads remained relatively flat with a slight decrease of 1% or 1% weather adjusted driven largely by energy efficiency.
Joe Trpik: The industrial class continues to experience chunky growth this quarter compared to the modest growth seen in Q3 last year. Industrial load increased 15.7% or 16.4% weather adjusted. This increase is driven by demand from digital infrastructure and semiconductor customers, emphasizing growing load opportunities within our area. These results, as well as continued visibility to a pipeline of further expansion, reinforce our expectations for near and long-term growth across our service territory. As such, we are reiterating our 2024 weather-adjusted load growth guidance of 2-3%. We are also reiterating our long-term load growth guidance of 2% through 2027. We will continue to evaluate this for potential revision in conjunction with our next IRP, which we plan to file in Q1 of 2025.
Joe: The industrial class continues to experience chunky growth this quarter compared to the modest growth seen in Q3 last year industrial load increased 15, 7% or 16, 4% weather. Adjusted this increase is driven by demand from digital digital infrastructure and semiconductor customers empathy.
Joe: Rising growing load opportunities within our area.
Joe: These results as well as continued visibility to a pipeline of further expansion expansion reinforce our expectations for near and long term growth across our service territory as such we are reiterating our 2020 for weather adjusted load growth guidance of 2% to 3%. We are also reiterating our long term.
Joe: Load growth guidance of 2% through 2027, we will continue to evaluate this for potential revision in conjunction with our next IOP, which we plan to file in Q1 of 2025.
Joe Trpik: I'll now cover our financial performance quarter over quarter. We observed a 10 cent increase in revenues primarily due to increased deliveries to our industrial customers. An EPS increase from power costs of $0.45 driven by a $0.07 EPS increase due to power cost detriments in Q3 of 2023 that reversed for this comparison. and a $0.38 EPS increase from favorable power cost conditions seen throughout our territory and the region. Compared to a very challenging Q3 2023, we saw far less market volatility and operated in a lower price environment. Overall, average mid C, day ahead peak prices were more than 40% lower throughout the quarter than last year.
Joe: I'll now cover our financial performance quarter over quarter.
Joe: We observed a 10% increase in revenues, primarily due to increased deliveries to our industrial customers.
Joe: And EPS increase from power cost of 45, <unk> driven by a 7% EPS increase due to power cost detriment in Q3 of 2023 that reverse for this comparison and.
Joe: And a 38% EPS increase from favorable power cost conditions seen throughout our territory in the region.
Compared to a very challenging Q3, 2023, we saw far less market volatility and operated in a lower price environment.
Joe: Overall average mid C day had peak prices were more than 40% lower throughout the quarter than last year.
Joe Trpik: Improved market stability and market prices were driven by a handful of factors, including higher than expected gas and hydro storage levels due to the mild winter earlier in the year. higher penetration from 4,000 megawatts of new battery storage and 1,500 megawatts of new solar throughout the desert southwest and California. and significant heat events occurring in early July when hydro runoff remained prevalent, which helped avoid pronounced price spikes. We also saw the benefits of renewables that we added to our portfolio, including new hydro capacity and contributions from Clearwater Wind, which performed consistently throughout the summer. The combination of favorable conditions and actions taken by our team drove lower power costs than anticipated in the annual update.
Joe: Improved market stability and market prices were driven by a handful of factors, including higher than expected gas and hydro storage levels due to the mild winter earlier in the year.
Joe: Higher penetration from 4000 megawatts of new battery storage and 1500 megawatts of new solar throughout the desert southwest and California.
Joe: And significant heat events occurring in early July when hydro runoff remain prevalent which helped avoid pronounced price spikes.
We also saw the benefits of renewables that we added to our portfolio, including new hydro capacity and contributions from Clearwater wind, which performed consistently throughout the summer.
Joe: The combination of favorable conditions and actions taken by our team.
Joe: Drove lower power costs and anticipated in the annual update tariff.
Joe Trpik: A five cent decrease from operating maintenance expense, net of improved recovery and deferral related items driven primarily by service restoration during the heat events during the quarter. A $0.05 increase from other items, including higher returns on non-qualified benefit trust assets and lower income tax expense, generally from tax credit impact. Lastly, as Maria mentioned earlier, we had an 11 cent decrease. from a deferral release related to the January 2024 storm and damage deferral. As of the end of Q3, we have forecasted that our full year 2024 regulated ROE would be above the 9.5% threshold used for the emergency storm deferral earnings.
Joe: A <unk> <unk> decrease from operating maintenance expense net of improved recovery in deferral related items, driven primarily by service restoration during the heat events during the quarter.
Joe: A <unk> <unk> increase from other items, including higher returns on non qualified benefit trust assets and lower income tax expense generally from tax credit impacts.
Joe: Lastly, as Maria mentioned earlier, we had an 11% decrease.
Joe: From a deferral release related to the January 24 storm and damage deferral.
Joe: As of the end of Q3, we are forecasting that our full year 2024 regulated Roe.
Joe: It would be above the nine 5% threshold used for the emergency storm deferral earnings test.
Joe Trpik: As a result, we have decreased that deferral from $45 million to $28 million and taken a corresponding charge in the third quarter. This means that due to our expectations of improved 2024 results. storm costs that would have been collected from customers will likely decrease. We will reassess this earnings test and the related impact to the deferred amounts related to the January storm based on the actual regulated return on equity for the end of the year. This test is unique to 2024 and became applicable when we had a major storm deferral earlier this year. It became relevant to our results when we had such a favorable third quarter performance.
Joe: As a result, we have decreased that deferral from 45 million to $28 million and taken a corresponding charge in the third quarter.
Joe: This means that due to our expectations of improved 2024 results storm costs that would have been collected from customers will likely decrease.
Joe: We will reassess this earnings test and the related impact to the deferred amounts related to the January storm based on the actual regulated return on equity for the end of the year.
This tax test is unique to 2024 and became applicable.
Joe: When we had a major storm deferral earlier this year it.
Joe: It became relevant to our results.
Joe: When we had such a favorable third quarter performance and.
Joe Trpik: and we've exceeded our original output.
Joe: And we've exceeded our original outlook.
Joe Trpik: On to slide 7 for our capital forecast. We've made meaningful headway in our 2024 plan, but we have modestly revised our 2024 and 2025 CapEx forecast based on year-to-date progress. We've elevated our capital program to support customer growth, reliability and decarbonization and we're proceeding thoughtfully to build the rigor to execute at this level in the long run. Our latest battery projects, Constable and Seaside, remain on schedule and are expected to come online at the end of 2024 and in the middle of 2025, respectively. pleased with the nearly 1.7 gigawatts of solar and battery projects on the 2023 RFP shortlist.
Joe: On to slide seven for our capital forecast, we made meaningful headway in our 2024 plan, but we have modestly revised our 2024 and 2025 Capex forecast based on year to date progress.
Joe: We've elevated our capital program to support customer growth reliability and de carbonization and were preceding thoughtfully to build the rigor to execute at this level in the long run.
Joe: Our latest battery projects comfortable in seaside remain on schedule and are expected to come online at the end of 2024 and in the middle of 2025, respectively.
Joe: We are.
Pleased with the nearly one seven gigawatts of solar and battery projects on the 2023 RFP shortlist as a reminder, our current forecast does not include any potential build transfer RFP projects.
Joe Trpik: As a reminder, our current forecast does not include any potential bill transfer RFP project. Updates to our capital forecast from the potential RFP project ownership would occur upon bid selection and contract execution. We expect to execute final contracts over the course of 2025 with billed transfer agreements expect to be finalized in the second half of 2025. All projects are expected to be in service by the end of 2027.
Updates to our capital forecast from the potential RFP project ownership would occur upon bid selection and contract execution, we expect to execute final contracts over the course of 2025, we build transfer agreement expected to be finalized in the second half of 2025.
Joe: All projects are expected to be in service by the end of 2027.
Joe Trpik: On to slide eight for a summary of liquidity and finance. Total available liquidity as of September 30th is just over $1 billion. Our investment grade credit rating, strong balance sheet, and outlook remain unchanged from our last disclosure. In the third quarter, we drew $100 million previously priced under our legacy $300 million ATM program. The residual amount priced on their facility was unissued at the end of September, but we expect to draw the remainder in Q4 to support our base cap. I'll reiterate that we've satisfied our equity needs to support our 2024 base capital plan and capital structure management.
Joe: Onto slide eight for a summary of liquidity and financing.
Joe: Total available liquidity as of September 30 is just over $1 billion.
Joe: Our investment grade credit rating strong balance sheet and outlook remain unchanged from our last disclosure.
Joe: In the third quarter, we drew $100 million previously priced under our legacy $300 million ATM program.
The residual amount priced under facility was was.
Joe: Issued at the end of September, but we expect to draw the remainder in Q4 to support our base capital plan.
Joe: I'll reiterate that we've satisfied our equity needs to support our 2024 base capital plan and capital structure management and any further action in 2024, we'd focus on maintaining strong credit metrics for Derisking, our long term financing plan.
Joe Trpik: And any further action in 2024 would focus on maintaining strong credit metrics or de-risking our long term finance. We expect debt issuances in the last quarter of the year of up to $300 million focused on the funding of capital expenditures. As we highlighted in our last call, for 2024 through 2026, we anticipate that the annual equity need of approximately $300 million to support our base capital investment and continue to strengthen our balance sheet over the next few years. We anticipate our annual base needs to taper after 2026 as our capital structure improves. We're carefully assessing equity needs from the potential RFP investments as contract negotiations proceed.
Joe: We expect debt issuances in the last quarter of the year of up to 300 million focused on the funding of capital expenditures.
Joe: As we highlighted on our last call for 2024 through 2026, we anticipate that the annual equity need of approximately $300 million to support our base capital investments.
Joe: And continue to strengthen our balance sheet over the next few years.
Joe: We anticipate our base annual base needs to taper after 2026 as our capital structure improves.
We are carefully assessing equity needs from the potential RFP investments as contract negotiations proceed.
Joe Trpik: We continue to expect financing RFP ownership opportunities in line with our authorized capital. Consistent with our longstanding practice, we'll continue to pursue financing options that maximize accretion and customer value, minimize dilution, maintain our strong credit ratings, and manage our capital structure.
Joe: We continue to expect financing RFP ownership opportunities in line with our authorized capital structure.
Joe: Consistent with our longstanding practice will continue to pursue financing options that maximize accretion and customer value minimize dilution maintain our strong credit ratings and manage our capital structure.
Joe Trpik: Turning briefly to the 2025 rate case, which is proceeding through its final stage. As Maria noted, settlement discussions continued throughout the quarter, and a hearing was held in early October. Grief filings are scheduled for the end of October and early November, ahead of oral arguments scheduled for mid-November. For the 2025 AUT, we have reached agreement in principle with the parties to resolve all remaining issues and anticipate filing a stipulation in the coming weeks. We remain committed to being engaged with all stakeholders and appreciate the collaboration and discussions that have occurred to date.
Joe: Turning briefly to the 2025 rate case, which is proceeding through its final statements.
Joe: As Maria noted settlement discussions continued throughout the quarter into hearing was held in early October.
Joe: Greif filings are scheduled for the end of October and early November ahead of oral arguments scheduled for mid November.
Joe: For the 2025.
Joe: We have reached agreement in principle with the parties to resolve all remaining issues and anticipate filing a stipulation in the coming weeks.
We remain committed to being engaged with all stakeholders and appreciate the collaboration and discussions that have occurred to date.
Joe Trpik: As we reflect on the quarter and turn to Q4, the results display the continued manifestation of our long-term strategy. Through September, our team has been laser focused on executing our plan, creating certainty in our 2024 results, and setting the stage for 2025. This includes our efforts to maximize the benefits from favorable power market conditions we've seen through Q3. Our power cost processes operate on an annual basis, resetting each year as part of the annual update tariff or AUT. While less extreme weather and improved market conditions help reduce the volatility in 2024, we recognize the AUT will reset in 2025 and our performance may be closer to an established baseline based on market dynamics next year.
Joe: As we reflect on the quarter and turn to Q4. The results displayed the continued manifestation of our long term strategy.
Joe: Through September our team has been laser focused on executing our plan, creating certainty in our 2024 results and setting the stage for 2025.
This includes our efforts to maximize the benefits from favorable power market conditions, we've seen through Q3, our power cost processes operating on an annual basis resetting each year as part of the annual update tariff or AUT.
Joe: While less extreme weather and improved market conditions helped reduce the volatility in 2024, we recognize the AUT will reset in 2025 and our performance may be closer to an established baseline based on market dynamics next year.
Joe Trpik: As such, we have deployed high impact actions to lock in the value of favorable positions and reduce risk ahead of the winter storm and heating season to provide both strong customer service and deliver on expectations for the year. This has caused some positive elements of our 2024 plan to shift from Q4 to Q3. We also have less favorable power cost expectations in Q4 2024 than last year. In Q4 2023, the market conditions enabled outperformance relative to AUT assumptions. Our outlook for Q4 2024 indicates market conditions that are moderately unfavorable relative to the AUT. With this line of sight to Q4, and given our year-to-date progress, remain confident in our ability to strongly deliver for the full year.
Joe: As such we have deployed high impact actions to lock in the value of favorable positions and reduce risk ahead of the winter storm and heating season to provide both strong customer service and deliver on expectations for the year.
Joe: This has caused some positive elements of our 2024 planned to shift from Q4 to Q3.
Joe: We also have less favorable power cost expectations in Q4 2024 than last year in Q4 2023, the market conditions enabled outperformance relative to <unk> assumptions.
Joe: Our outlook for Q4 2024 indicates market conditions that are moderately unfavorable relative to the AUT.
Joe: With this line of sight to Q4, and given our year to date progress we remain confident in our ability to strongly deliver for the full year as such we are narrowing our 2024 adjusted earnings guidance from $2 98 to $3 18 per share to the upper half of the range or $3 eight to $3 18 per share.
Joe Trpik: As such, we're narrowing our 2024 Adjusted Earnings Guidance from $2.98 to $3.18 per share to the upper half of the range, or $3.08 to $3.18 per share. Based on our current projections, we are forecasting that the earnings at the top of our current range would result in us reaching authorized regulatory ROE levels. To the extent that we see results favorable to our expectations, such favorability could be impacted by a deferral of the earnings test I mentioned earlier. We are also reaffirming our long-term earnings and dividend growth guidance of 5 to 7 percent, supported by the strength of our service territory, robust capital opportunities, and our improving operational execution.
Joe: Based on our current projections, we are forecasting that the earnings at the top of our current range would result in us reaching authorized regulatory Roe levels.
Joe: To the extent that we see results favorable to our expectations such favorability could be impacted by a deferral of the earnings test I mentioned earlier.
Joe: We are also reaffirming our long term earnings and dividend growth guidance of 5% to 7% supported by the strength of our service territory robust capital opportunities and our improving operational execution.
Joe Trpik: As we turn to the closing months of 2024, our ongoing focus of providing clean and reliable energy while keeping customer costs as low as possible remain unchanged. We are continuing to prioritize operational excellence and execution, allowing us to deliver maximum value to our customers, shareholders, and the communities we serve.
Joe: As we turn to the closing months of 2024, our ongoing focus on providing clean reliable energy, while keeping customer costs as low as possible remain unchanged.
Joe: We are continuing to prioritize operational excellence and execution, allowing us to deliver maximum value to our customers shareholders and the communities we serve.
Operator: And now, operator, we are ready for questions.
Joe: And now operator.
Joe: We're ready for questions.
Operator: Thank you.
Speaker Change: Thank you.
Operator: As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.
Speaker Change: As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again please.
Richard Sunderland: Please stand by while we compile the Q&A raw Our first question comes from the line of Richard Sunderland from J.P.
Speaker Change: Please standby, while we compile the Q&A roster.
Speaker Change: Our first question comes from the line of Richard Sunderland from J P. Morgan.
Richard Sunderland: Morning, Richard. Good morning. Thanks for the time today.
Richard Sunderland: Good morning, Good morning, good morning, Thanks for the time today.
Joe Trpik: A couple different topics to hit on, the storm deferral release, just wanted to understand if that's just NVPC favorability driving you to earn above that 9.5% ROE test, or are there other factors? And it sounds like this is the case, but could a market improvement this quarter, relative to today's expectations? drive the release of the remaining deferrals. So to your first part, yes, it's mainly driven by favorable NBPC performance. And to the extent that we were to continue to outperform our expectations, there would be a commensurate reduction in that deferral.
Richard Sunderland: A couple of different topics ahead on the.
Richard Sunderland: The storm to five release just wanted to understand if that's just N V. PC favorability driving you to earn above that nine 5% ROE test or are there other factors and it sounds like this is the case, but.
Richard Sunderland: Improvement this quarter relative to today's expectations drive the release of the remaining deferral.
So.
Speaker Change: To your first part, yes, it's mainly driven by favorable NB PC performance and to the extent that we were to continue to outperform our expectations and there would be a commensurate reduction in that deferral.
Understood very clear there.
Joe Trpik: I'm curious how you see O&M trending going forward. Do you expect continued increases? Are there areas to offset some of the inflation? Sure, it's a great question. We have been investing significantly in our wildfire resilience, and ensuring that our system is safe, particularly in our high fire risk zones. We have also done quite a bit of work to drive efficiencies across our operations. And with the additional growth that we're seeing, we're able to spread those fixed costs over more customers. And so we are absolutely seeing efficiencies across our operations. That includes also our deployment of capital as well.
Speaker Change: Separately Maria you mentioned in the script cost work that you have been executing on I'm curious how you see O&M trending going forward do you expect continued increases or are there areas to offset some of the inflation elsewhere.
Speaker Change: Sure it's a great question.
Speaker Change: We have been investing significantly in our wildfire resilience.
Speaker Change: Ensuring that our our system as safe as particularly in our high fire risk zones.
Speaker Change: We have also done quite a bit of work to drive efficiencies across our operations and we're seeing additional growth that we're seeing we're able to spread those fixed costs over more customers and so we are absolutely seeing efficiencies across our operations that includes also our deployment of capital as well.
Joe Trpik: We've had good success with some of the opportunities we've seen in the IT area, as we're keeping headcount largely flat while we're growing our base of work and serving more customers.
Speaker Change: Good success with some of the opportunities you've seen in the area as well.
Keeping head count largely flat, while we're growing our base of work and serving more customers.
Speaker Change: Got it thanks for the color there and just to squeeze in one last one you talked about 50 50 equity funding on the RFP Capex thats been out there for a while curious if you see itc's potentially helping with the funding, meaning lower equity needs because of those itc's.
Richard Sunderland: Got it. Thank you for the color there.
Richard Sunderland: And just to squeeze in one last one, you talked about 50-50 equity funding on the RFP-CAPEX. I know that's been out there for a while. Curious if you see ITCs potentially helping with the funding, meaning lower equity needs because of those ITCs. Absolutely. And you should know that we put it in the queue. There's quite a bit of ITCs and PTCs associated with the Clearwater Wind Farm as well as with the battery storage that we're bringing on the But it's an important part of our financing going forward, in addition to all of the federal grants that we've received.
Speaker Change: Absolutely and you should know that when we put it in the queue.
Speaker Change: There is quite a bit of ITC and PTC is associated with the Clearwater wind farm as well as with the battery storage that we're bringing online.
Speaker Change: But it's an important part of our financing going forward. In addition to all of the several grants that we received.
Richard Sunderland: It's really a way that we can bring those federal dollars to the state of Oregon and keep customer prices as low as possible as we lead in a clean energy transition.
It's really a way that we can bring a federal dollars to the state of Oregon, and keep customer prices as low as possible as we lead in our clean energy transition.
Great. Thank you for the time today.
Richard Sunderland: Thanks for the time.
Speaker Change: Thank you.
Speaker Change: Thank you one moment for our next question.
Shahriar Pourreza: Our next question comes from the line of Shah Pourreza from Guggenheim Partners.
Speaker Change: Our next question comes from the line of shop pool Retzer from Guggenheim Partners.
Shahriar Pourreza: Hey, guys. Good morning.
Speaker Change: Hey, guys morning merger.
Maria Pope: I think the pre-filing deadline for the upcoming long session in the state legislature is in a few weeks, I think something around December. Can you speak to any preliminary discussions around wildfire legislation? point be it a fund like we've seen in other states or some legal protections so maybe just a bit more color from your Sure. Shahriar, as you know, we have long been focused on wildfire work, not only for all the work that we do in our service territory and across our operations, operationally, to reduce the risk of fire, but we have also been advocating both in the federal and the state level for appropriate legislation for changing some of the rules with regards to working in the rights of way, as well as how liabilities are handled.
Speaker Change: Good morning.
Speaker Change: I think the <unk>.
Speaker Change: Pre filing deadline for the upcoming long session in the state legislature is in a few weeks September and December 13th can you speak to any preliminary discussions around on wildfire legislators and at this point be it a fund like we've seen in other states or some legal protections. So maybe just a bit more color from your prepared remarks.
Speaker Change: Sure sure as you know we have long been focused on wildfire work not only for all the work that we do in our service territory and across our operations operationally to reduce the risk of fire, but we have also been advocating both on the federal and the state level.
For appropriate legislation for change and some of the rules with regards to working in the rights of way.
Speaker Change: As well as how liabilities are handled and we will continue to focus that work and we're working extensively with parties at the national level and in particular at the state level I think youll see multiple bills with regards to wildfire at the coming session.
Maria Pope: We'll continue to focus that work, and we are working extensively with parties at the national level, and in particular at the state level. I think you'll see multiple bills with regards to wildfire at the coming session. And that's really important because we have a lot of forest companies in this state, as well as other land management agencies. And there is wide societal concern over the threat of wildfire, and we saw significant fires this past summer in the eastern part of our state.
Speaker Change: That's really important because.
A lot of force companies in this state as well as other land management agencies and there was wise the silo concern over the threat of wildfire and we saw significant fires. This past summer in the eastern part of our state none of significance in our service territory.
Maria Pope: None of significance in our service territory.
Got it perfect and I know you touched a little bit on sort of the industrial growth, but just in light of some of the issues Intel's having can you maybe speak to the durability of industrial growth, we're seeing 50% of that mix of semiconductors, I guess what percentage of that is Intel.
Maria Pope: And I know, Maria, you touched a little bit on sort of, you know, the industrial growth, but just in light of some of the issues Intel's having, can you maybe speak to the durability of industrial growth? You're seeing 50% of that mix is semiconductors. I guess, what percentage of that is Intel? Sure. So, broadly speaking, 15% of semi-sector manufacturing takes place in our service territory, not just in the state of Oregon, which has additional manufacturing capacity. There are five key companies that operate in our area on semi-analog devices, LAM research, you can have microchip as well as Intel.
Speaker Change: Sure.
Speaker Change: So.
Speaker Change: Broadly speaking, 15% of semiconductor manufacturing takes place.
Speaker Change: Our service territory not just in the state of Oregon, which has additional manufacturing capacity. There are five key companies that operate.
Speaker Change: In our area on semi analog devices Lam research.
Speaker Change: You have.
Microchip as well as <unk>.
Maria Pope: About more than half of Intel's patents were created here and other engineers and scientists that led to that research and advancement in their science has really resulted in an ecosystem of semiconductor manufacturing in this region that the state has supported significantly. And we do not expect any changes in that and the strength of the manufacturing that we see out of the Intel campus. We also are seeing growing areas that are adjacent to semiconductor manufacturing. So, whether that's air separation companies to EDA research and development companies like Keynes Design Systems, Synopsys and Metrographics, as well as many others.
Speaker Change: Intel about more than half of Intel's patents were created here and other engineers and scientists that led to those that research and advancements in science has really resulted in an ecosystem of semiconductor manufacturing in this region that the state.
Has supported significantly and we do not expect any changes in that and the strength of the manufacturing that we see out of the Intel campus we.
Speaker Change: Also are seeing outgrowing areas that are adjacent to semiconductor manufacturing so whether that's air separation companies too.
Speaker Change: Research and development companies like cadence design systems, Synopsys and mentor graphics as well as many others.
Maria Pope: We also are seeing quite a bit of growth in data centers, as you know. So, it's a balanced growth portfolio. About half of our load today in this high-tech space is semiconductors, 20% in the fastest-growing is data centers, and 30% is sort of general manufacturing, but very much with a high-tech focus.
Speaker Change: We also are seeing quite a bit of growth in data centers. As you know so it's a balanced growth portfolio about half of our load today in.
Speaker Change: In this high Tech space is semiconductors, 20% in the fastest growing.
Speaker Change: Is data centers, and 30% is sort of a general manufacturing, but very much with the high Tech focus.
Speaker Change: Got it isn't just one last one for me just on just some commentary in the RFP docket around transmission congestion.
Maria Pope: And then just one last one for me, just on just some commentary in the RFP docket around transmission congestion. impacting kind of your ability to interconnect sufficient resources to hit that 2030 target. Does the transmission capex you have in plan for 28 relieve that or is there more work? and 29 and beyond as we're thinking about that. Yeah, absolutely. There's no question.
Speaker Change: Just impacting kind of your ability to interconnect sufficient resources to hit that 20 or target does the transmission Capex you have in plan for 'twenty relieve that or is there more work to do in 2009 to be honest, we are thinking about that potential spend increase.
Speaker Change: Absolutely. There is no question and that's one of the reasons that we separated out our capex spending because we need to do more to relieve that congestion.
Maria Pope: And that's one of the reasons that we separated out our CAPEX spending, because we need to do more to relieve that congestion. And we have a focused group of leaders within the company who are getting that work done. We're also partnering with entities across the state. One of the grants that we've received is $250 million in conjunction with the Confederated Tribes of the Warm Springs to expand the line that we own between here and the reservation where we co-own hydro facilities for significant additional renewable development. I've mentioned on my prepared remarks the North Plains Connector.
Speaker Change: And we have a.
Focused group of leaders within the company, who are getting that work done. We're also partnering with entities across the state and one of the grants that we've received is $250 million in conjunction with the Confederated tribes of the warm springs to expand the line that we own between here and the reservation, where we co own hydro facility.
Speaker Change: <unk> for significant additional renewable development.
Speaker Change: And on my prepared remarks, the North Plains connector, but I think youll see transmission projects.
Maria Pope: But I think you'll see transmission projects that we will continue to do, continue to bring online, as well as partner with others across the region. It's important that we're able to access renewables that in many parts of the country are being curtailed, because there is not enough transmission to bring those to customer usages. So in many instances, there's no incremental generation costs associated with the construction and building out of that transmission network. Got it.
But we will continue to do continue to bring online as well as partner with others across the region. It's important that we are able to access renewables and in many parts of the country are being curtailed.
Speaker Change: Because there is not enough transmission to bring those two customer usage is so in many instances, there's no incremental generation costs associated with the <unk>.
Speaker Change: Construction and building out of that from a transmission network.
Speaker Change: Got it perfect. Thanks, guys stood that answers and congrats on the results and seen a couple of weeks.
Shahriar Pourreza: Perfect. Thanks, guys. That answers it.
Shahriar Pourreza: Congrats on the results and seeing it. Thank you.
Thank you Tucker.
Shahriar Pourreza: Nice to talk to you. Thank you.
Speaker Change: Thank you one moment for our next question.
Nicholas Campanella: Our next question comes in the line of Nicholas Campanella from Barclays.
Our next question comes from the line of Nicholas Campanella from Barclays.
Nicholas Campanella: Good morning. Hi. I like how they said Campanella there. Hey, so just want to ask on the rate case, you said you settled the AU, you're going to settle the AUT, just what's the ability to kind of settle cap structure, ROE, and other components at this point? Are you kind of willing to kind of take that to a fully litigated route? And then just thinking forward, you know, as we go forward in the state, do you see settlements as still something that you can continue to get done in the next rate cases? Or just how should we kind of think about that?
Speaker Change: Good morning, good morning.
Speaker Change: Hi.
Speaker Change: I'd like to highlight that campanella there.
Speaker Change: [laughter] Hey, so.
Nicholas Campanella: Just wanted to ask on the rate case, you said.
Speaker Change: We settled the youre going to settle the AUT.
Speaker Change: Just what's the ability to kind of settle cap structure ROE and other components. At this point are you kind of willing to kind of take that to a fully litigated route and then just thinking forward as we go forward in the state do you see settlements is still something that you can continue to get done.
Speaker Change: And the next rate cases, or just how should we kind of think about that because in my time covering the company. It's one of the few times that you havent subtle. Thank you.
Nicholas Campanella: Because in my time covering the company, it's one of the few times that you haven't settled.
Joe Trpik: Thank you.
Joe Trpik: So, morning Nick, this is Joe. So, you know, as it relates to the case, we continue to have open dialogue and, you know, the settlement window is open, but, you know, in reality, we haven't been far apart, but we haven't been able to settle. So, you know, at this point, we're, you know, we're comfortable writing either a settlement or working this through to litigation.
Speaker Change: So good morning, Nick This is Joe so.
Joe: As it relates to the case, we continue to have open dialogue and the settlement Windows open but.
In reality, we haven't been far apart, but we haven't been able to settle so.
Joe: At this point, we're comfortable writing either a settlement or working this through to litigation we have built as we've gone through this.
Joe Trpik: We have built, as we have gone through this, a, you know, a well-structured case of the evidence in that. So, we continue to be hopeful that we'll find a way here to settle some of these items, but we also, at the same time, are prepared for and have planned for, you know, the possibility of taking this case to the commission.
Joe: A well structured case the evidence in that so.
Joe: We continue to be hopeful that we'll find a way here to settle some of these items, but we are also at the same time, our prepared for it and plan for the possibility of taking this case to the commission.
Joe: Okay.
Nicholas Campanella: Okay, that's super helpful.
Speaker Change: Okay. That's super helpful. And then I guess, just you talked a little bit about managing affordability in your prepared remarks.
Joe Trpik: And then I guess just, you know, you talked a little bit about managing affordability in your prepared remarks. And, you know, I, it's super exciting to see kind of the rate based growth continue to inflect higher, especially as you kind of add in these new CapEx opportunities. How are you kind of thinking about balancing all that as the, you know, the CapEx just continues to scale higher here? Is it, you know, as you wrap in these RFP awards, and these build on transfers, is that purely one for one incremental to the CapEx plan? Is there any kind of offsets in the CapEx plan to manage affordability?
Joe: <unk>.
Speaker Change: It's super exciting to see kind of the rate base growth continue to inflect higher, especially as you kind of add in these new capex opportunities.
Speaker Change: You're kind of thinking about balancing all of that as the Capex just continues to scale higher here.
Is it as you wrap in these RFP awards in these build own transfers is that purely one for one incremental to the Capex plan.
Speaker Change: Are there any kind of offsets in the Capex plan to manage affordability, how should we think about that.
Joe Trpik: How should we think about that?
Joe Trpik: So, you know, I'll start this and Maria may add in. So as it relates to the RFP, you know, generally speaking, those are incremental to our plan. But of course, a lot of these resources that are coming online also do drive benefits. You know, for example, the Clearwater assets that came online were a reduction to the customer bill for the energy that they were replacing.
Speaker Change: So I'll start this and Maria may add in so as it relates to the RFP generally speaking those are incremental to our plan but of course a lot of these resources that are coming online also do drive benefits for example, the Clearwater assets that came online.
Speaker Change: We're a reduction to the customer bill for the energy that they were we're replacing and that's key to as we work through these RFP processes. When we're selecting the project we are evaluating them based on cost and risk and risk being of course risk to be able to execute and deliver.
Joe Trpik: And that's key to as we work through these RFP processes, when we're selecting the project, we are evaluating them based on cost and risk and risk being, of course, risk to be able to execute and deliver. And then also, as a reminder on affordability, a lot of these projects have the ITCs or PTCs with them that are turning back to the customers, which help drive affordability as well. So affordability is key as we're working towards the clean energy plan and working towards the policies for 2030 and beyond. But, you know, we never stop thinking about affordability and ensuring that we're aligning that with the customers as well.
And then also as a reminder, on affordability a lot of these projects have the ITC or PTC with them that are turning back to the customers, which helped drive affordability as well. So affordability is is key as we're working towards that clean energy plan and working towards our policies through 2030 and beyond but we never.
Speaker Change: <unk> stopped thinking about affordability and ensuring that we're aligning that with the customers as well.
Joe Trpik: And then my last one is just on the RFP, that it sounds like you'll be filing a new one in 25, just in terms of the process. And when you eventually get to the awards, what's the timeline for capital around that? Is it late 20? Is it end of decade? Or is it early 2030s? Or, you know, could any of this kind of make it into the 27-28 window? Just trying to understand that.
Speaker Change: And then my last one is just on the RFP.
Speaker Change: And it sounds like Youll be filing a new one in 'twenty five.
Speaker Change: Just in terms of the process and when do you eventually get to the awards whats the timeline for capital around that is it late 'twenty.
Speaker Change: Is it end of decade or is it early 2000, thirty's or could any of that kind of make it into the 27 28 window just trying to understand that.
Joe Trpik: So if we talk to the potential new RFP, so the new RFP that we're talking about, the potential that we would file at some time in the beginning of next year, either done concurrently with an IRP or in a linear fashion, we have an expectation that those assets would be requested to come on service by 2028. So 2028, I guess we could see they could go to 2029, but considering our needs on the system, both from a renewable energy as well as capacity, we would expect whatever the next RFP is to have assets delivered in that 28 or so period.
Speaker Change: So are are currently so we talked to the potential new RFP. So the new RFP that were talking about the potential that we would file at some time at the beginning of next year either done concurrently with an IOP or in a linear fashion. We current we have an expectation that those assets would be requested to come on <unk>.
By 2028, so 2028, I guess, we could see that could go to 2929, but considering our needs on the system both from a renewable energy as well as capacity, we would expect whatever the next RFP is to have assets delivered in that 28 or so period.
Nicholas Campanella: That's really helpful.
That's really helpful. Appreciate the time today and have a great Friday.
Nicholas Campanella: Appreciate the time today and have a great Friday. Thank you.
Speaker Change: Thank you.
Julien Dumoulin: One moment for our next question. Our next question comes from the line of Julien Dumoulin from Jeffrey. Hi, good morning. Hi, Julien.
Speaker Change: Thank you one moment for our next question.
Speaker Change: Our next question comes from the line of Julien Dumoulin from Jefferies.
Julien Dumoulin: Hi, Good morning, Julien, Brian and Sue.
Julien Dumoulin: Hi, it's Brian. Hey, just the upcoming RFP, how much capacity is actually remaining after you complete the 2020? RFP. So I'll pull that up as we're talking here, but just as a reminder, when we when we kicked off the 2023 RFP, the needs of that IRP at a midpoint were 3200 megawatts. So we will update the IRP, which has the expectation of potential growth, which will redefine that item. So if you take that, we had 3200 megawatts of need, the nameplate of both Groups A and Group B is 1700 megawatts total. Again, just as an understanding, we will be acting and we're in discussions with Group A and then we will evaluate the needs for those Group B items. But so there you have 3200 megawatts is what our need was before this RFP.
Brian: It's Brian.
Julien Dumoulin:
Julien Dumoulin: Hey.
Julien Dumoulin: The upcoming RFP, how much capacity is actually remaining after you complete the 2023.
Julien Dumoulin: RFP.
Julien Dumoulin: Yes.
Speaker Change: Ill pull that up as we're talking to you, but just as a reminder, when we when we kicked off the 2023 RFP the needs of that IRT at a midpoint. We're 3200 megawatts. So we will we will update the ERP, which has the expectation of potential growth, which will redefine that that item. So.
Speaker Change: You take that we had 3200 megawatts of need the nameplate of both groups a and B is 1700 megawatts total.
Speaker Change: Again, it is just as an understanding we will be acting and we're in discussions with a and then we will evaluate the needs for those group b items, but so there you have 3200 megawatts as what our need was before this RFP. We have 1700 megawatts of nameplate here and then we will update that with the <unk> in the first quarter of next year.
Joe Trpik: We have 1700 megawatts of nameplate here, and then we will update that with the IRP in the first quarter of next.
Speaker Change: Okay.
Joe Trpik: Okay, great. And any milestones we should look for the Northlands connector?
Speaker Change: Okay great.
Speaker Change: And any milestones we should look for the newer planes connector or are you still.
Joe Trpik: Are you still the only for 20% is still impact, and then also remind us of the Centenary Tribes One Spring EPICS protocol, you know, in the five years. Is it all within the five years or does that project extend past 2028? So sure, I'll start with on the North Plains Connector, we continue to proceed with our 20% stake. There will be, there aren't at this point in time specific dates of milestone, we will be adding partners. We will make disclosures when our commitments continue to expand. Right now we have a memorandum understanding that it is not binding, so, that it is not binding.
20% is too.
Speaker Change: Impact and then also remind us.
Speaker Change: Charles Good morning.
Speaker Change: Capex profile in the five years is it all within the five years or.
Does that project.
Speaker Change: <unk> past two.
Speaker Change: 28.
Speaker Change: So sure I'll start with on the North claims connector. We continue to proceed with our 20% stake.
Speaker Change: There will be there aren't at this point in time specific dates of milestone we will be adding partners, we will make disclosures when our commitments continue to expand right now we have a memorandum of understanding that it is not binding so that it is not binding so but there will be updates that proceed as new.
Joe Trpik: So, but there will be updates that proceed as new partners and that project proceeds.
Speaker Change: Partners in that project proceeds as it relates to the Confederate stripe tribes of the warm Springs, just as a reminder, we are placed in the plan that you currently see the first year of that project is in 2028, we would expect that to be a multi year project.
Joe Trpik: As it relates to the Confederated Tribes of the Warm Strings, this is a reminder, we have placed in the plan that you currently see, the first year of that project is in 2028, we would expect that to be a multi-year project going out beyond our current forecast period that we show, you know, you would expect as a normal transmission project that you'll get a few years out of that. Just as a reminder, tying this back to the grants, that is the project where the Confederated Tribes are participating in one of the grants with the federal government.
Going out beyond our current forecast period that we show you would.
Speaker Change: <unk> is a normal transmission project that Youll get a few years out of that just as a reminder, tying this back to the grants that is the project where the competitor. It drives are participating in one of the grants with the federal government.
Speaker Change: Okay and then just lastly, you mentioned the tax credits as a means to offset some of the equity funding. So could you just talk more specifically.
Joe Trpik: Okay, and then just lastly, you mentioned the tax credits as a means to offset some of the equity financing. Could you just talk more specifically? on the strategy with Constable and Seaside, I think as part of the raid case, the refund to customers over 5 or 10 or 20 years. is being evaluated. Just wanted to get your thoughts. So sure, specific to Constable and Seaside, which are eligible for ITCs, if you value the two of them combined, you get somewhere around approximately $150 million over time. You know, so our policy is to refund them to customers over a period that we align with, with the regulator, right.
Speaker Change: On the strategy with.
Speaker Change: With comfortable fee side, I think as part of the rate case.
Speaker Change: The refund to customers over five or 10 or 20 years.
Is being evaluated just wanted to get your thoughts.
Speaker Change: So to share specific to console and PC side, which are eligible for ITC. If you value. The two of them combined you get somewhere around approximately $150 million over time.
Speaker Change: Our policy is to refund them to customers over a period that we align with with the with the regulator right and as you mentioned.
Joe Trpik: And as you mentioned, the refund period for these are not set, it will be somewhere between five and 15 years. But on the financing side to that, we also have have had agreement with with the OPUC as it relates to being able to monetize these tax credits on the front end as long as we and be able to do it, I should say, with within a discount of 10 percent. So we've generally take an approach where these tax when these tax credits are earned, we will monetize these tax credits, thereby reducing our our equity needs and that equity need reduction will be tied to how long that amortization period.
Speaker Change: Refund period for these are not set it will be somewhere between five and 15 years.
Speaker Change: But on the financing side to that we also have have had agreement with.
Speaker Change: With the <unk> as it relates to being able to monetize these tax credits on the front end.
As long as we have been able to do it I should say within a discount of 10%. So we've generally taken approach where these tax group. When these tax credits earned we will monetize these tax credits, thereby reducing our our equity needs and that equity need reduction will be.
Speaker Change: Two how long that amortization periods.
Speaker Change: Okay, great. Thank you.
Joe Trpik: I was going to say, we have monetized $31 million in credits this year. We do have certain agreements for future monetization as well.
I would just say just this year, we had monetized $31 million in credits. This year, we do have certain agreements for future monetization as well.
Joe Trpik: Understood. Thank you.
Speaker Change: Understood. Thank you.
Speaker Change: Thank you.
Michael Lonegan: One moment for our next question. Our next question comes from the line of Michael Lonegan from Evercore. Morning. Hi, thanks for the question. So on the R. You know, you previously laid out 20.
One moment for our next question.
Speaker Change: Our next question comes from the line of Michael Monaghan from Evercore.
Michael Monaghan: Good morning, Thanks for the questions.
So on the RFP.
Michael Monaghan: Previously paid out 25% ownership that you assumed in your illustrative rate base growth rate based growth example.
Michael Lonegan: And the end of the CSIFI growth corporate models that you assumed in your rate based growth Group X growth example. So the final short list here could be towards 50% ownership. It looks like this wondering how you are thinking about where this positions you to land in the range of your 5 to 7% EPS growth forecast. Obviously, the additional Capex could come with incremental equity things spoken to an approach see going forward. You're the thing.
Michael Monaghan: So the final shortlist here could be towards 50% ownership. It looks like just wondering how you were thinking about where this positions you to land in the range of your 5% to 7% EPS growth forecast, obviously, the additional capex could come with incremental equity that you've spoken to.
Michael Monaghan: Yes.
Joe Trpik: Currently, this, this RFP, you know, obviously, you measure how we do in either group A or group B, but no matter how you look at it, all of this continues to align us within the, within the earnings band is as we had mentioned, so you know, the success of these RFPs and assuming we continue to execute would, would be consistent with our, our earnings expectations within the growth band. Got it.
Michael Monaghan: Currently this this RFP.
Speaker Change: Obviously, you measure how we do in either group a group B, but no matter. How you look at it all of this continues to align us within the within the earnings band is as we had mentioned to you.
Speaker Change: The success of these rfps and assuming we continue to execute would would be consistent with our our earnings expectations within the growth of it.
Speaker Change: Got it. Thank you and then secondly for me in the pending rate case, you can see some items you revised your ask with some.
Joe Trpik: Thank you. And then secondly, from me, in the pending rate case, you conceded some items, you revised your ask with some, you know, like you withdrew the request for the investment recovery mechanism and a related storage policy. Just wondering if you see an opportunity to ask for these in the next rate case. I think you've alluded to annual filings going forward. Yeah, I mean, I think, you know, each case, as you know, stands by itself. And what we've been trying to do in these cases is be responsive to the stakeholders on things of obviously managing affordability, but also managing the timing of cases and that.
Speaker Change: With further request for the investment recovery mechanism in a related storage policy. Just wondering if you see an opportunity to ask for the and.
Speaker Change: And the next rate case, I think you've alluded to annual filings going forward.
Speaker Change: Yes, I think each case as you know stands by itself and what we've been trying to do in these cases is be responsive to the stakeholders on things have obviously managing affordability, but also managing the timing of cases in that so yes, I believe we will continue to have dialogue over item.
Joe Trpik: So yes, I believe we'll continue to have dialogue over items like an EIRM, items as it relates to trackers for storage solely to continue to align to their goals. So yeah, for this case, we've pulled some of them out that I think, you know, we'll work through potentially, you know, there's been discussions of a multi-year framework going forward. But I would think that these type of proposals will come forward in the future. And so I think there's possibility for those.
Speaker Change: <unk> like an eight and earn items as it relates to trackers for storage slowly continue to align to their goals. So yes.
Speaker Change: For this case.
Speaker Change: Some of them out, but I think we'll work through potentially if there had been discussions of our multi year framework going going forward, but I would think that these type of proposals.
Speaker Change: We will come forward in the future and so I think there is possibility for them I think tools like this will be needed to consistently meet the clean energy goals and meet the expectations of the timing of vacations and other matters.
Joe Trpik: I think tools like this will be needed to consistently meet the clean energy goals and meet the expectations of, you know, the timing of vacations and other matters. Great.
Speaker Change: Great. Thanks for the time.
Michael Lonegan: Thanks for the time. Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you one moment for our next question.
Travis Miller: One moment for our next question. Our next question comes from the line of Travis Miller from Morningstar, Inc.
Speaker Change: Our next question comes from the line of Travis Miller from Morningstar, Inc.
Travis Miller: Morning, Travis.
Speaker Change: Good morning, Good morning, Travis Hi.
Travis Miller: Hi. Sticking on that rate case, and you answered a lot of questions around the settlement and what's going on there. But what do you see high level is the difference between Perhaps this rate case, the settlement negotiations, and the past several where you've been able to settle. Are there certain issues or certain things that have come up that are making it? less possible, if that's the right way to put it. that's all. Sure.
Travis Miller: Sticking on that rate case.
Speaker Change: The other question is around the settlement and what's going on there, but what do you see a high level is the difference between.
Travis Miller: Perhaps this rate case settlement negotiations and the past several.
<unk> been able to settle or there are certain issues or certain things that have come up that are making it less.
Unless possible alright.
Travis Miller: Alright, where to put it.
So subtle.
Speaker Change: That's a really good question.
Travis Miller: That's a really good question. And I'd say that the biggest distinction in the discussion and overall dialogue in this rate case is that some parties have focused a lot on the press and sort of the broader inflationary environment. Okay, okay, so more public. Animosity, again, if it's the right word, then past settlements, is that the way to summarize what you're saying? I think that's the... Those are the tools that they've decided that are helpful to where they want to go and what they want to accomplish. Okay.
Speaker Change: And I would say that the big.
Speaker Change: Biggest distinction in the discussions and.
Speaker Change: And overall dialogue in this rate case is is that some parties have focused a lot on the press.
Speaker Change: And sort of the broader inflationary environment.
Speaker Change: Okay, Okay, so more public.
Speaker Change: Animosity again inputs Loring ward.
Speaker Change: That settlement.
Speaker Change: I think that's it.
Speaker Change: That's the those are those are the tools that they've decided that are helpful to where they want to go and what they want to accomplish.
Joe Trpik: Statutory, is there a settlement period end or can you continue to try to settle throughout the world? I believe, and I won't be precise here, but I believe it remains open not until we get, once we get to the hearing, that's when the period, I believe, would begin. And I want to reiterate that we have had extensive discussions. Overall, they have been very constructive and that we're not far apart with most parties. But so far, you know, you know, we've not been able to reach a settlement. And I think that that likely could be where we end.
Speaker Change: Okay stature.
Speaker Change: Statutory is there a settlement period and or can you continue to try to settle throughout the oral arguments.
Speaker Change: I believe that it won't be precise here, but I believe it remains open not until we get once we get to the hearing that's when the period I believe with the gap.
Speaker Change: I want to reiterate that we have had extensive discussions.
Speaker Change: Overall, they have been very constructive.
And then we're not far apart with most parties.
Speaker Change: But so far.
Speaker Change: We've not been able to reach a settlement.
Speaker Change: I think that likely could be where we end up.
Travis Miller: Okay, perfect. And then one different subject.
Speaker Change: Okay, perfect and then one different subject.
Maria Pope: When these industrial customers are coming to you, the new ones and asking for to get on the system, what are they saying is the reason for choosing your system, right? Apart from the fact that there are a lot of semiconductors, etc. in that area, is it access to the grid is really easy, low cost of power, what are some of the things they're telling you they like about KD? So for the significant manufacturers, and particularly those for whom power quality and power factors are very important, that absolutely is a consideration. I would also say that there's an ecosystem of talent, whether it starts from our community colleges to our universities and to the overall environment that has been built up over several decades of really significant talent in this region.
Speaker Change: When these industrial customers are coming to you the new ones and asking for to get on the system. What are they saying is the reason for choosing your system right. Apart from the fact that there are a lot of semiconductors et cetera in that area.
Speaker Change: Is it access to the grid is really easy low cost of power what are some of the things that are telling you they like about <unk>.
Speaker Change: So for the significant manufacturers and particularly those for whom a power quality and power factors are very important.
Speaker Change: That absolutely is a consideration.
Speaker Change: I would also say that there is an ecosystem of talent.
Whether it starts from our community colleges to the our universities.
Speaker Change: And to the overall environment that has been built up over several decades of really significant talent. In this region. There is no question that the subsea communications cables from the Pacific What's terminate in Oregon, just as the Atlantic cables terminate in for.
Maria Pope: There's no question that the subsea communications cables from the Pacific, which terminate in Oregon, just as the Atlantic cables terminate in Virginia, have an impact on data centers, as well as other companies. And I think there's also much of our customer base is really focused on clean energy, and we have been a leader when it comes to delivering clean energy and options for those customers, particularly those that want to go faster, further towards 100% clean energy.
Speaker Change: Junior.
Speaker Change: Have an impact on data centers as well as other companies.
Speaker Change: And I think there's also.
Speaker Change: Much of our customer base is really focused on clean energy and we have been a leader when it comes to delivering clean energy and option for those customers, particularly those that want to go faster further.
Speaker Change: Still towards 100% clean energy.
Maria Pope: Okay, that's great.
Speaker Change: Sure. Okay. That's great. Thanks, so much.
Maria Pope: Thanks so much. Thank you.
Speaker Change: Thank you.
Thank you one moment for our next question.
Anthony Crowdell: One moment for our next question. Our next question comes from the line of Anthony Crowdell from Mizuho.
Speaker Change: Our next question comes from the line of Anthony <unk> from Mizuho.
Anthony Crowdell: Hey, good morning team. Just a couple quick questions. I appreciate all the detail. I know we've talked a lot about the tax credits. When the company gives forward year guidance, will the company start giving us how much they're assuming in ITCs for each year? Oh, that's a good question. You know, it will dovetail with the renewable projects that we're bringing online or the storage projects that we're bringing online. And so, as we give you more color with regard to those projects, we'd be happy to give you the associated tax savings or investment tax savings that will come with each of those projects.
Speaker Change: Hey, good morning, Jane just.
Speaker Change: A couple of quick questions I appreciate all the detail.
Speaker Change: We've talked a lot about.
Speaker Change: The tax credits when the company gives forward year guidance or.
Speaker Change: The company started giving us how much they are assuming.
Speaker Change: ITC for each year.
Speaker Change: Oh, that's a good question.
Speaker Change: It will dovetail with the.
Speaker Change: Renewable projects that we're bringing online are the storage projects that we're bringing online and so as we give you more color with regards to those projects.
Speaker Change: We'd be happy to give you the associated tax savings.
Speaker Change: Our investment tax savings that will come off each of those projects in general rule of thumb, it's 30% or north of the capital amount of the project is very significant ability to reduce customer prices with these tax credits.
Joe Trpik: In general rule of thumb, it's 30% or north of the capital amount of the project. It's a very significant ability to reduce customer prices with these tax credits.
Joe Trpik: Great, and then I think you spoke about earlier, I hope I have the number correctly, load growth for this year, I believe it's like 2 to 2.5%, but long term it's 2%, and you're going to revisit that when you file the 2025 IRP, so does that, just understanding the cadence, right, if that's correct, do we potentially get an update on the long term load growth on the fourth quarter goal? Yeah, you know, I don't know if we will have all of the analysis complete by that time. We have been doing updates on our load growth as we have seen significant changes.
Speaker Change: Great and then I think you spoke about earlier.
Speaker Change: I hope I've been on the front end load growth for this year I believe is two to two 5%, but long term, it's 2% and you're going to revisit that on the when you file the 2025 ERP So does that mean.
Speaker Change: Understanding the cadence right. If that's correct do we potentially get an update on the long term load growth on our fourth quarter call.
Speaker Change: Yeah, I don't know if we will have all of the analysis complete by that time, we haven't been doing updates on our load growth as we have seen significant changes.
Joe Trpik: I probably think you'll see it closer to March for the IRP update. But suffice it to say, we have really good diverse, solid load growth. And that's important as we look at our cost structure overall and our ability to deliver cost effectively for customers.
Speaker Change: I, probably think youll see it closer to March for the AARP update.
Speaker Change: Suffice it to say, we have really good diverse solid load growth.
And as we look at our cost structure overall, and our ability to deliver cost effectively for customers.
Speaker Change: Yeah.
Anthony Crowdell: Great.
Maria Pope: I guess just my last question, I believe politically, Washington state and Oregon are somewhat aligned. It appears that Washington state is getting less green. I think on on this year's ballot in Washington state, there's some like, I don't know if I characterized like anti-green bills, but there's a bill where they're going to ban any restriction on gas going to new buildings. They revoke some RPS standards. I'm just curious if Oregon is seeing any of that. Are you seeing the state get less green? Yeah, you know, I think, first of all, we have different policies when it comes to clean energy and carbon reductions.
Speaker Change: Great and I guess, just my last question.
Speaker Change: Belief politically Washington State and Oregon.
Speaker Change: Are somewhat aligned.
Speaker Change: It appears that Washington State is getting less green I think on on this year's ballot in Washington State.
Speaker Change: Like I don't know if I characterize like A&P Green bills, but there is a bill where theyre going to ban any restriction on gas going to new buildings.
Speaker Change: Mig revoke some rps standards I'm just curious if Oregon is seeing any of that have you seen the state get less screen.
Speaker Change: Yes, I think.
Speaker Change: First of all we have different policies when it comes to clean energy and carbon reductions.
Maria Pope: And first and foremost, for us as a customer, we're really guided to us as a utility. We are really guided by our customers and their interests. Twenty five percent of our customers voluntarily pay to pay a little bit more on their bill for 100 percent clean energy. And many of our largest high tech customers, as well as municipal customers, hospitals and others participate in our green future programs, having 100 percent clean energy for them as well. So one of the key reasons for this is that we have been able to bring on new clean resources very economically.
And first and foremost for us as a customer and we're really guide dogs to the utility we're really guided by our customers and their interest 25% of our customers voluntarily pay to pick a little bit more on their bill.
Sure, 100% clean energy and many of our largest high tech customers as well as municipal customers hospitals and others participate in our green future programs.
Having 100% clean energy for them as well so.
Speaker Change: And one of the key reasons for this is that we have been able to bring on new clean resources very economically as Joe was mentioning the Clearwater wind project actually has reduced customer prices this year to date.
Maria Pope: As Joe was mentioning, the Clearwater wind project actually has reduced customer prices this year to date and is a significant part of how we build out our portfolio as has additional hydro contracts. And we look forward to the battery stores we're bringing online. So just to recap, you're not seeing any ballot initiatives on changing any of the state's policies on, you know, renewables or green. There could be discussions out there that we're not aware of, but we don't see any valid issues.
Speaker Change: And as a significant part of how we build out our portfolio as has additional hydro contracts and we look forward to the battery storage, we're bringing online.
Speaker Change: So just to recap you are not seeing any ballot initiatives on changing.
Speaker Change: Any other states policies on.
Speaker Change: Renewables are green.
Speaker Change: There could be discussions out there that we're not aware of but we don't see any violations.
Maria Pope: Great.
Speaker Change: Great. Thanks, so much for taking my questions and congrats on a good quarter.
Anthony Crowdell: Thanks so much for taking my questions and congrats on a good quarter.
Thank you. Thank you.
Speaker Change: Thank you one moment far next question.
Chris Ellinghaus: Our next question comes from the line of Chris Ellinghaus from Siebert-Williams Shanks.
Speaker Change: Our next question comes from the line of Chris Elling House from Siebert Williams Shank.
Maria Pope: Hey everybody. Um, Maria, sort of customer growth has been accelerating in the last few quarters. sort of talk about where that's coming from and is that sort of, you know, some of your new data centers, semi-customers, you know, increasing employment. Sure. So first of all, as Joe mentioned in his remarks, he noted that this customer growth could be chunky. And we have seen it go up and down at different levels between quarters because some of it is significant. Fifty percent of our customer, our industrial customer base is semiconductor manufacturing. Twenty percent is data centers and then 30 percent is other manufacturing.
Speaker Change: Hey, Chris.
Maria.
Speaker Change: Customer growth has been accelerating in the last few quarters can you sort of talk about where that's coming from and is that sort of.
Speaker Change: Some of your new data centers semi customers.
Speaker Change: Increasing employment.
Speaker Change #100: Sure so.
Speaker Change #101: First of all as Joe mentioned in his remarks. He noted that this customer growth can be chunky.
Speaker Change #101: And we have seen it.
Speaker Change #101: Go up and down at different levels between quarters, because some of it is significant.
Speaker Change #101: 50% of our customer our industrial customer base is semiconductor manufacturing.
Speaker Change #101: 20% is data centers and then 30% is other manufacturing. It is overall that industrial segment that is growing the fastest and the 9% that I mentioned before we also continue to see in migration.
Maria Pope: It is overall that industrial segment that is growing the fastest and the nine percent that I mentioned before. We also continue to see in migration in most of our counties and continued new connections. So all of that is very positive. Overall, most of the growth short term is coming from data centers, but most of the growth expectations long term comes from semiconductor manufacturing. Um, you know, you've had a really great effort on variable power costs. Your, can you sort of provide us a little color, you know, your de-risking of supply effort while the AUT gets reset every year is sort of your lengthening strategy.
In most of our counties.
Speaker Change #101: And continued.
Speaker Change #101: New connections so all of that is very.
Speaker Change #101: Positive overall most of the growth short term is coming from data centers, but most of the growth expectations long term comes from semiconductor manufacturing.
Speaker Change #102: Okay great.
Speaker Change #102: <unk> had a really great effort.
Net variable power costs. This year, you're can you sort of provide us a little color.
Speaker Change #102: De risking of supply effort.
Speaker Change #102: While the AUT.
Speaker Change #102: <unk> gets reset every year survey youre lengthening strategy.
Maria Pope: Should we think about you being able to be more in line with the AUT going forward, or was this your, you know... more market-related. Sure. So first of all, it starts with our own generation facilities, and the folks that run those operations and the exceptionally good work that they have done. Next, it is the integration of our generation with resources that we procure either a long term contracts and partnerships or in shorter term partnerships. One of the goals we have also had is to build out what comes from the distribution system. We call it in sort of a wonky terms, our virtual power plant as 25% of our systems energy capacity by 2030 will come from that area.
Should we think about.
Speaker Change #102: Being able to be more in line with the AUT going forward.
Speaker Change #102: This year.
Speaker Change #102: No.
Speaker Change #102: More market related.
Speaker Change #102: Sort of factors.
Speaker Change #103: Sure. So first of all it starts with our own generation facilities and the folks that run those operations and the exceptionally good work that they have done.
Speaker Change #103: Next is the integration of our generation with resources that we procure either on long term contracts and partnerships.
Speaker Change #103: Sure.
Speaker Change #103: Shorter term partnerships one of the goals. We have also had is to build out what comes from the distribution system.
Speaker Change #103: Call. It instead of a wonky terms, our virtual power plant as 25% of our systems to energy capacity by 2030 and will come from that area and that provides an important stabilizing ability for us and we have put a lot of time and effort into that work. We also.
Maria Pope: And that provides an important stabilizing ability for us. And we have put a lot of time and effort into that work. We also procure power from across the entire region and are entering into the California independent system operators day ahead market. We've had terrific success in the energy and balance market. And this past year, we have seen power flows really begin to change quite significantly as excess solar out of California, combined with their battery storage, has flattened overall market conditions and allowed for much more significant inflows of power into the Pacific Northwest from other regions that are higher and generating solar power and others.
Speaker Change #103: Procure power from across the entire region and are entering into the California independent system operators dead head market <unk> had terrific success in the energy imbalance market and this past year. We have seen power flows really begin to change quite significantly as excess solar out of.
Speaker Change #103: California combined with their battery storage has flattened overall market conditions and allowed for a much more significant inflows of power into the Pacific northwest from other regions that are higher in generating solar power and others.
Maria Pope: We also see overall that many of our peer utilities have done many of the same actions that we have. And that's provided more capacity throughout the entire system. We're collectively working together through the Western Power Pool on resource adequacy to ensure that the trends that we saw in the third quarter, which could significantly reverse the prior couple of years, very volatile and negative results on the power cost side, continue into the future. And lastly, you know, somebody asked about balancing cost. and the RFPs. But, you know, theoretically... Asserted data is expanding almost exponentially. You also have electrification ahead.
Speaker Change #103: You also see overall.
Speaker Change #103: Many of our peer utilities have done many of the same actions that we have and that's provided more capacity.
Speaker Change #103: The entire system, we're collectively working together through the western power pool on resource adequacy to ensure that the trends that we saw in the third quarter, which could significantly reverse the prior to a couple of years.
Speaker Change #103: The volatile and negative results on the power cost side continue into the future.
Speaker Change #104: Okay great.
Speaker Change #104: Lastly.
Speaker Change #105: Somebody asked about balancing costs.
Speaker Change #105: And the Rfps, but.
Speaker Change #105: Yeah.
Theoretically yes.
Data is expanding almost exponentially.
You also have electrification ahead, so when youre thinking about RFP resources and costs.
Maria Pope: So when you're thinking about RFP resources and costs. You also think about, you know, there is... you know, potentially huge load growth that continues for a pretty extended period. So, do you think about the, you know... opportunity cost of, you know, getting short in that kind of environment. wanting to add resources. Sure, it's a really good question. And as we look at the RFP results, we're balancing reliability, affordability, and the pace of our transition to ever increasing amounts of clean energy. We also have brought on existing resources, hydro contracts from the Columbia River, and some of the PUDs that operate in those regions, through our partnerships with them and with others.
Speaker Change #105: Do you also think about there is.
Speaker Change #105: Potentially huge load growth.
Speaker Change #105: Continues for a pretty extended period.
Speaker Change #105: So do you think about that.
The opportunity cost of getting short and that kind of environment.
Speaker Change #105: Just wanting to add resources to.
Speaker Change #105: Prevents getting behind the curve.
Speaker Change #106: Sure. It's a really good question.
Speaker Change #107: And as we look at the RFP results, we're balancing reliability affordability and the pace of our transition to ever increasing amounts of clean energy. We also have brought on existing resources hydro contracts from the Columbia River and some of the <unk> that operate in those regions through our.
Partnerships.
Speaker Change #107: With them and with others.
Maria Pope: We look at this as a broad set of strategies, you know, knowing that one of the key factors for clean energy transition is that it is affordable for all of our customers. We serve everyone in our service territory, and affordability, and keeping prices low as possible is also very important in this transition.
Speaker Change #107: Look at this as a as a broad set of strategies.
Speaker Change #107: Knowing that one of the key factors for our clean energy transition is that it is affordable for all of our customers. We serve everyone in our service territory and affordability and keeping prices low as possible is also very important in this transition.
Maria Pope: Okay, thanks, everybody.
Okay. Thanks, everybody I appreciate it.
Operator: I appreciate it. Thank you.
Speaker Change #107: Thank you.
Speaker Change #108: Thank you one moment for our next question.
Paul Fremont: One moment for our next question. Our next question comes from the line of Paul Fremont from Lattinburg, Thalman & Co, Inc.
Speaker Change #109: Our next question comes from the line of Paul Fremont from Ladenburg Thalmann and co Inc.
Paul Fremont: Oh, Paul, thank you.
Speaker Change #110: Oh, Paul Thank you.
Joe Trpik: Hey, good morning. It, it looks like there's 55 million reduction in generation spending this year. Some of that looks like a delay and some of that seems to be offset with higher distribution in general technology spend. Um, can you sort of, uh, uh, document what, what happened there? So if you're talking, Paul, if you're talking to a full year, we just have a lot of, we've had some timing movements as we've executed. Some of that generation is things like land purchases for items, things like that. So I mean, what we really are, we continue to pretty effectively execute our plan.
Paul Fremont: Good morning.
Paul Fremont: Good morning.
Paul Fremont: It looks like there's $55 million reduction in generation spending this year some of that looks like a delay in some of that seems to be offset with higher distribution in general technology spending.
Paul Fremont: Can you sort of.
Paul Fremont: Document what what happened there.
Paul Fremont: So if youre talking about.
Speaker Change #112: Paul if you're talking to your full year do we just have a lot of we've had some timing movements as we've executed.
Some of that generation is things like land purchases for for items things like that so I mean, what we really are that we continue to pretty effectively.
Speaker Change #112: Effectively execute our plan.
Joe Trpik: We saw some items as we worked through the year that were gonna be a little delayed, so we've shifted. If you look between the update between the two years of the capital plan, we pretty much net to zero. There's a little bit of some, as projects get their money colored differently, but there's no real substantive change to our plan other than just the timing of execution.
Speaker Change #112: We saw some items as we work through the year that we're we're going to be a little delayed. So we've shifted if you look between the update between the two years of the capital plan, we pretty much net to.
Speaker Change #112: <unk> zero.
Speaker Change #112: There's a little bit of some as projects get their money colored differently, but theres no real substantive change to our plan other than just the timing of execution.
Joe Trpik: Great.
Speaker Change #112: Great.
Joe Trpik: Um, quick one second. With the OPAC expected to certify the results of the RFP in November, how long is it going to take for you to actually execute the contract so that we see it showing up in your capital spending? You know, so as specifically as it relates to the build transfer items, we currently anticipate it will be the second half of 2025. You know, as we've as we've started into the discussions with the party and applying our experience for some similar agreements in the past, that that seems to be what the time frame will end up being here.
Speaker Change #112: Quick.
Speaker Change #112: One second.
Speaker Change #112: Okay.
Speaker Change #112: With with the <unk> expected to certify.
Speaker Change #112: The results of the RFP in November how long is it going to take for you to actually execute the contracts so that we see it.
Speaker Change #112: Showing up in <unk>.
Speaker Change #112: In your in your capital spending forecast.
Speaker Change #112: So.
Speaker Change #113: As specifically as it relates to the build transfer items. We currently anticipate it will be the second half of 2025 as we've as we've started into the discussion with discussions with the party and applying our experience for some similar.
Speaker Change #113: <unk> in the past that that seems to be what it what the timeframe what will end up being here, but we will update parties, obviously to the extent that changes, but that is our current expectation.
Joe Trpik: But we will we will update parties, obviously, to the extent that changes. But that is our current expectation. And I guess I can see sort of the second bucket, B, but with respect to A, wouldn't you have sort of enough information to update after you get OPAC acknowledgment? I think if it relates to having a date, once we have the acknowledgment, we'll be able to. I agree. We'll have more precision. I mean, if your question is, will we be able to generate a little bit more certainty to say, hey, we're very likely to be, say, the second half of those?
Speaker Change #114: And I guess I can see sort of the.
Speaker Change #115: The second bucket b, but with respect to a what did you have sort of enough information to update after you get.
Speaker Change #115: Oh pocket acknowledgment.
Speaker Change #117: I think if it relates to having a date once we have the acknowledgement, we'll be able to add I agree we will have more precision.
Speaker Change #115: If your question is will we be able to generate a little bit more certainty to say hey.
Speaker Change #115: Very likely to be say the second half with those yes, I would think that as we get not only the approval because we're already dialogue with the parties, but as we continue to dialogue here in locked down certain provisions, which are critical for us to have a contract yes.
Joe Trpik: Yes, I would think as we get not only the approval, because we're already dialoguing with the parties, but as we continue to dialogue here and lock down certain provisions which are critical for us to have a contract. Yes, we hopefully will have updates here and take some of these down. But again, and then as we're moving on this, if I could just, if we're moving on this delay, nothing in our dialogue with the parties, even as we're talking to time, the contract is changing our expectation that the assets will be delivered by the end of 2017.
Yes, we will hopefully we'll have updates here and taking some of these done.
But again and then as we are moving on this if I could just if we're moving on this delay nothing in our dialogue with the parties even as we're talking to time the contract is changing our expectation that the assets will be delivered by the end of 2007.
Joe Trpik: And then aside from ITCs or tax credits, I mean, have you thought of other ways to potentially reduce the equity need of the company? So, yes, we continue to evaluate other approaches to the company. I know there's been discussion at times of differing financing structures and differing products, and we do continue to evaluate them. Some of them take some more detailed actions. And the way I like to look at this is we are like resolute in being focused on the wildfire and addressing what is the broadest issue to the company. And as we start to get alignment on that, evaluating and taking action on potentially other designs and processes will come more into light.
Speaker Change #118: And then aside from ITC or tax credits I mean have you thought of other ways to potentially reduce the equity need of the company.
So yes, we can see we continue to evaluate other approaches to the company I know theres been discussion at times.
Speaker Change #118: Of different different financing structures and different products and we do continue to evaluate them some of them take some some more detailed actions and the way I like to look at this is we are we are like resolute and being focused on the wildfire in addressing what has the broadest issue to the company and as we.
Speaker Change #118: Starting to get alignment on that evaluating and taking action on potentially other designs and processes will come more.
Speaker Change #118: Into light, but we think it is critical as we continue to evaluate but to act first and be aligned on wildfire and then then we will subsequently addressed some of these different potential approaches we can take the financing our growth.
Joe Trpik: But we think it is critical as we continue to evaluate, but to act first and be aligned on wildfire. And then then we'll subsequently address some of these differing potential approaches we can take to financing that are.
Joe Trpik: And then I mean, if you were to potentially establish a holding company, would you consider selling down a minority stake in the utility? So I don't want to give guidance on any transactions, but I would just tell you that we are evaluating all options here, Paul, that would come from that. So there's nothing that isn't on the table to ensure that we can serve our customers safely, reliably, and manage our growth.
Speaker Change #119: And then I mean, if you were to potentially establish a holding company would you consider.
Speaker Change #118: Selling a.
Speaker Change #118: Down a minority stake in the utility.
Speaker Change #118: So.
Speaker Change #118: I don't want to.
Speaker Change #120: Give guidance on any transactions, but I would just tell you that.
As you know we are evaluating all options here Paul.
Speaker Change #120: Come from that so there is nothing that isn't on the table to ensure that we can serve our customers safely reliability reliably and manage our growth.
Speaker Change #120: And.
Joe Trpik: Are settlements in Oregon, do they need to be unanimous? Or could you do a partial settlement in Oregon? We can do partial settlements in Oregon. It's not common. And it is common that we do end up settling, but we're not necessarily in common time. Well, I understand that. But I think what you said is that with a number of the more significant parties, you're you think you're closed. Why not go with a parcel settlement and wouldn't that put you in better standing going into a final OPUC decision? If we could get to that resolution, then that probably would be a good idea.
Speaker Change #121: Our settlements in Oregon, do they need to be unanimous or could you do a partial settlement in order.
Speaker Change #122: We can do partial settlements and in Oregon.
Speaker Change #121: Not common.
Speaker Change #121: And it is we do end up settling but we're and we're not necessarily in common times.
Speaker Change #123: Well I understand that but I think what you said is that with a number of the more significant parties.
Speaker Change #124: Or you think you're close.
Speaker Change #124: Why not go with the partial settlement and wouldn't that put you in better standing.
Speaker Change #124: Going into our final OPEC decision.
Speaker Change #124: If we could get to that resolution and that probably would be a good idea I'm not sure we could get to that resolution, but we have had thorough discussions and we have a solid record even if we do get two in Oregon Public utility Commission decision.
Joe Trpik: I'm not sure we could get to that resolution, but we have had thorough discussions and we have a solid record, even if we do get to an Oregon Public Utility Commission decision.
Joe Trpik: And then last question for me, I mean, I think the base of your EPS growth is still sort of 2022. Is there, are there any thoughts to potentially updating that at some point in time, the base here? The answer is yes, at some point in time. In all honesty, right, we would like to get some time under our pocket, right? We have said as a company that we want to deliver and, you know, meet our expectations and goals here. And, you know, we are in the sort of the middle of doing that right now. So that is something we continually evaluate.
Speaker Change #124: And then last question for me I mean I.
Speaker Change #125: The base of your EPS growth is still sort of 2022 is there are there any thoughts potentially updating that at some point in time the base here.
Speaker Change #124: The answer is yes at some point in time.
Speaker Change #124: Is the rate, we would like to get some time under our pocket right. We have said is the company that we want to deliver and.
Speaker Change #124: Meet our expectations and goals here we are.
Speaker Change #124: Are in the sort of the middle of doing that right. Now so that is something we continually evaluate but I think youll showing we can execute first under the plan. We have would be the first item before we decide that it's time to to look to an update or a re baseline.
Joe Trpik: But I think, you know, showing we can execute first under the plan we have would be the first item before we decide that it's time to look to an update or a rebase.
Operator: Thank you.
Speaker Change #126: Thank you. Thank you very much.
Operator: Thank you very much.
Operator: Thank you.
Operator: Great questions. Thank you.
Speaker Change #126: Great questions.
Maria Pope: At this time, I would now like to turn the conference back over to Maria Pope for closing remarks. Thank you all for joining us this morning. We appreciate your interest in Portland General Electric and we look forward to connecting with you soon. In particular, we'll probably see many of you at the upcoming EEI financial conference next month.
Speaker Change #127: Thank you at this time I would now like to turn the conference back over to Maria Pope for closing remarks.
Maria Pope: Thank you all for joining us. This morning, we appreciate your interest in Portland General Electric and we look forward to connecting with you soon in particular will probably see many of you at the upcoming <unk> Financial Conference next month, Thank you and have a great day.
Maria Pope: Thank you and have a great day.
Speaker Change #129: This concludes today's conference call. Thank you for participating you may now disconnect.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
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