Q4 2024 Portland General Electric Co Earnings Call
Okay.
Good morning, everyone and welcome to Portland General Electric company's fourth quarter and full year 2020 for earning results conference call. Today is Friday February 14th 2025.
This call is being recorded and as such all lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there'll be a question and answer period.
If you would like to ask a question. During this time. She press Star then the number is one one on your telephone keypad.
I would like to withdraw your question. Please press star one again.
If you do a fantastic question I'm pleased 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.
Speaker Change: Thank you Martin Good morning, everyone. We're happy you could join us today.
Speaker Change: Before we begin this morning I'd like to remind you that we have prepared a presentation to supplement our discussion, which we'll be referencing throughout the call.
Speaker Change: Slides are available on our website at investors <unk> Portland General Dotcom.
Speaker Change: Turning to slide two some of our remarks. This morning will constitute forward looking statements. We caution you that such statements involve inherent risks and uncertainties and actual results may differ materially from our expectations.
Speaker Change: 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.
Speaker Change: 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's my pleasure to turn the call over to Maria.
Speaker Change: Good morning, and thank you all for joining us today.
Speaker Change: In 2024, we experienced solid growth from new and returning customers enhanced our operational reliability and resilience.
Speaker Change: <unk> strong safety performance and made significant investments in clean energy resources and battery storage.
Speaker Change: We delivered four quarters of strong financial results and overall a solid 2024.
Speaker Change: I'll start by summarizing our results, which you can find on slide four.
Speaker Change: For the full year, we reported GAAP net income of $313 million or $3, one per diluted share and non-GAAP net income of $327 million or $3 14 per share.
Speaker Change: This compares with 2023, GAAP net income of $228 million or $2.33 per share.
Speaker Change: non-GAAP net income of 302, excuse me $233 million or $2.38 per share.
Speaker Change: For the fourth quarter, we reported GAAP net income of $39 million or <unk> 36 per share compared to the fourth quarter of 2023, a 68 million or <unk> 67 per share.
Speaker Change: These results reflect our sustained growth and operate and focus on operational excellence and top quartile customer demand.
Speaker Change: 2020 for weather adjusted energy usage increased 3% compared with 2023.
Speaker Change: Again led by semiconductor manufacturing and data center customers driving industrial growth of 11% year over year.
Speaker Change: With high Tech and digital customers continuing to invest and grow we are increasing our long term customer usage growth expectations from 2%.
Speaker Change: Up to 3% weather adjusted through 2029.
Speaker Change: Given these solid fundamentals and our focus on operating cost reductions.
Speaker Change: Issuing 2022, excuse me 2025 earnings guidance of $3 13 to $3.33 per diluted share and reiterating our long term dividend and EPS growth guidance.
Speaker Change: 5% to 7% using a base of $3 eight per share the midpoint of our original 2020 for guidance.
Speaker Change: Turning to slide five.
Speaker Change: Execution was our imperative as we began 2024.
Speaker Change: While January last year started with historic winter ice storms that brought in nearly half a million customer outages and extreme power market volatility. The extraordinary response of our line increase generating plants and operating teams highlighted our ability to respond and our focus on customer outage.
Restoration.
Speaker Change: We had many significant accomplishments in 2024, including investing in our system deploying over $1 $2 billion in capital projects targeting customer growth grid resiliency and de carbonization.
Speaker Change: Advancing the 2023 RFP.
Speaker Change: Do you think acknowledgment of the final shortlist from the Oregon Public utility Commission and starting negotiations with theaters.
Speaker Change: Returning customers to Kosovo.
Speaker Change: 124, we earned back two prominent customers and there are 27 megawatts of demand among others.
Speaker Change: And delivering solid results.
Speaker Change: Achieving earnings in the upper quartile of our original guidance range.
To build on our progress we remain committed to five key priorities first enabling tech high tech growth.
Speaker Change: Strong industrial growth and in migration.
Speaker Change: <unk>, an important part of our regions economic development.
Speaker Change: Second customer values sustainability.
Speaker Change: Ability and clean energy continue to be important customer values and in the region.
Third customer affordability, we're looking at every cost and every program to keep them as low as possible and to align the economics of our most recent rate case.
Speaker Change: And fourth risk reduction we are prioritizing the safety of our teams and the compliance if our work while investing in stronger more resilient grid to better withstand extreme weather and mitigate against wildfire risk.
Speaker Change: At the Oregon Legislature, we're advocating for a wildfire legislation.
Speaker Change: And fifth creating an investable energy future for Oregon.
Speaker Change: Deepening our relationships with customers and stakeholders to ensure that our returns are competitive.
Speaker Change: It can effectively attract investments to achieve these priorities.
Speaker Change: I'll touch on each of these before returning it to Joe.
Speaker Change: Enabling breadth, we are fortunate to be one of the top growth markets in the country for data centers and semiconductor manufacturers.
Speaker Change: Proximity to the trans specific subsea fiber network, which terminates in our service territory remains a key differentiator.
Speaker Change: In addition to the growth of data centers, Oregon continues to be strongly supportive of our regions semiconductor manufacturing.
Speaker Change: The state is providing $500 million in funding on top of billions of dollars already contracted federal funding to accelerate onshoring and reassuring of tech manufacturing.
Speaker Change: Second our customers the communities, we serve remains solidly focused on renewable energy.
Speaker Change: Clean energy represented 45% of our energy mix in 2024 is.
Speaker Change: 7% compounded growth rate in non emitting resources since 'twenty 'twenty.
Speaker Change: As we made continued progress towards Pge's and Oregon's clean energy goals.
Speaker Change: Our region's focus on clean energy has always balanced affordability.
Speaker Change: Many of our largest industrial customers have aggressive sustainability goals.
Speaker Change: And our municipal customers, representing the majority of our service area also have very public clean energy targets.
Speaker Change: Our residential customers continue to lead the energy transition with PGE voluntary renewable program again ranked number one by Israel and this year, Oregon ranked as the number six electric vehicle market in the country.
Speaker Change: Integrating the Clearwater Wind Energy Center led to record wind integration in 2024.
Speaker Change: We also added significant battery storage, including the incoming 200 megawatts seaside battery PGE will soon have over 500 megawatts of battery capacity, providing a vital tool for renewable integration system reliability and energy price stability.
Speaker Change: These resources were meaningfully.
Speaker Change: Lower cost for customers, thanks to over 30% battery investment tax credit as well as wind production tax credits.
Speaker Change: In prior quarters I've highlighted our success with federal grants and as of December 2020 for over $300 million of direct PGE grants and are under contract.
Speaker Change: Combined with our grant partners, our total exceeds $2 billion.
Speaker Change: Customer affordability.
Speaker Change: We're taking significant companywide actions to reduce costs.
Speaker Change: <unk>, our cost structure to the economics of our latest rate review.
Speaker Change: And enhance the effectiveness of our work in 2024, we leveraged innovation and technology to provide lasting efficiencies and benefits.
Speaker Change: For example, driving productivity with new AI powered tools to streamline operations improve load forecasting and predictive maintenance as well as employee support.
Speaker Change: And deploying satellite imaging for vegetation management, and utilizing weather station data for wildfire monitoring to enhance dynamic line ratings.
Speaker Change: Appointments across our transmission system.
Speaker Change: In 2025.
Speaker Change: Realizing and evaluating <unk>.
Speaker Change: Programs that will maximize the capabilities of these tech these and other technologies and diligently reducing our costs.
Speaker Change: We're focused on changes that will drive durable long term outcomes.
Speaker Change: Risk reduction.
Speaker Change: We made continued progress on our work to reduce risk across our business our ongoing work to strengthen our safety culture is yielding results.
Speaker Change: On a compounded annual basis since 2020, our Osha recordable incident rate has fallen by 16% and our lost time incident rate has decreased 27%.
Speaker Change: Pte's energy portfolio optimization, and improving western market conditions led to a reduction in power cost volatility.
Speaker Change: We significantly increased routine vegetation management addressing trees and other vegetation impacted by multiple years of record setting high heat and drought.
Speaker Change: As we continue to drive operational improvements were also advocating at the state and federal levels for solutions that address the financial risk from extreme weather events, including wildfires at the state level, we're focused on three areas.
Speaker Change: First standards of care based on approved wildfire plans.
Speaker Change: Second creation of wildfire Baxter fond to support timely resolution and recovery for wildfire victims and third limitations on liabilities.
Speaker Change: At the federal level alongside peer utilities any yard are advocating for policy solutions that enhance the energy security of the U S and address shared risk of catastrophic events.
Speaker Change: This work is focused on four areas.
Speaker Change: First addressing strict liability and expediting permits and authorizations for fork on federal lands.
Speaker Change: Enabling electric utility customers access to FEMA assistance.
Speaker Change: Third federal liability reforms and fourth creating a voluntary federal backstop front.
Speaker Change: Creating an investable energy future for Oregon.
We're deepening our relationships with customers and stakeholders to work towards the competitive returns to attract capital and support the region's need for growths, driven infrastructure development and reliable and resilient clean energy.
Speaker Change: In December we received a decision from the <unk> see in our 2025, where you review while the outcome was not unexpected it is less than what we hit strive for but it does not distract us from our priorities or change the focus on managing our business.
Speaker Change: We remain laser focused on affordability and committed to powering that growth.
Speaker Change: Safely and reliably serving the changing needs of customers.
This has been our commitment for nearly 104 years and remains so with that let me turn it over to Jeff. Thank you. Thank.
Jeff: Thank you Maria and good morning, everyone turning to slide six our solid results reflect continued demand growth improved power cost conditions and strong operational performance throughout the year overall, our region experienced milder weather compared to 2023 with heating degree days and cooling degree days declining 5% and 16%.
Speaker Change: <unk> respectively two.
Speaker Change: <unk> 2024 loads increased by one 3% overall and three 1% weather adjusted compared to 2023 exceeding our 2% to 3% expectations.
Speaker Change: <unk> decreased two 8% year over year, but increased 5% weather adjusted.
Initial customer count increased by one 7%, partially offset by energy efficiency and distribution energy resources driving lower usage per customer.
Speaker Change: Commercial load decreased two 2% year over year or 9% weather adjusted driven largely by continued energy efficiency.
Speaker Change: In the industrial class continued to experience significant growth in 2024, notably from our data center and semiconductor customers industrial load growth increased 10, 3% or 10, 7% weather adjusted from 2023.
Speaker Change: I'll now cover our financial performance year over year.
Speaker Change: Served a 14% increase in revenues, primarily driven by the one 3% increase in demand year over year.
Speaker Change: An increase in power cost.
Speaker Change: 68 <unk>.
Speaker Change: Given by force an increase due to power cost performance in 2023 that reverses for comparison and a 64% increase from favorable power cost conditions in our region and Derisking actions taken by our team, which drove lower power costs than anticipated.
Speaker Change: Annual update tariff.
Speaker Change: Increase renewable and battery integration hydro availability in hydro availability drove market stability and lower market prices through Q3. This was partially offset by less favorable market conditions than anticipated in the fourth quarter.
Speaker Change: A <unk> <unk> decrease from higher O&M depreciation and interest expenses net of improved recovery and deferral related items, driven primarily by increased maintenance cost and wages and higher asset and debt balances to support the ongoing capital investment.
Speaker Change: A <unk> <unk> decrease from other items, including higher property taxes, partially offset by returns on non qualified benefit trust assets and then lastly, a 13% decrease to GAAP EPS, resulting from the 20% portion of the non recoverable January our CE costs, bringing us to a GAAP EPS of $3 <unk> per diluted share after adjusting for the <unk>.
Speaker Change: We reach our 2024 non-GAAP EPS of $3 14 per diluted share.
Speaker Change: As a reminder, our results are subject to an earnings test due to the January storm damage cost deferral. This test was unique to 2024 and became applicable once we had a major storm deferral combined with third quarter performance that exceeded our exceeded our original outlook.
Speaker Change: Last quarter, we highlighted an 11% decrease from the deferral release from the earnings test after evaluating fourth quarter results. We ultimately reversed that accrual release in the deferred balance stands at $46 million at the at year end 2024.
Speaker Change: Turning to slide seven for our updated <unk>.
Speaker Change: Five year capital forecast through 2029, our transmission investment strategy continues to evolve focused on improving our network.
Speaker Change: Alleviating congestion, 2027% through 2029 transmission projects include larger improvements within and adjacent to our service area as well as Pge's estimated contributions through the <unk> line upgrades.
Speaker Change: The Constable battery project was placed in service in December and the <unk> Battery project remains on schedule to come online in the middle of 2025.
Speaker Change: In the 2025 rate review decision PGE was invited.
Speaker Change: To make a new filing to recover.
Speaker Change: <unk> got battery project outside of a rate case with an expedited review.
Speaker Change: We are actively weighing our options available and we will keep you informed of our regulatory strategy as we finalize our evaluation.
Speaker Change: We received formal acknowledgment of the 2023 RFP shortlist in November this is an evolving and competitive environment and we were notified in December that that project. One from group a the 250 megawatt PPA has withdrawn from commercial negotiations negotiations with the remaining projects in group they are ongoing and we expect.
Speaker Change: Build transfer agreements to be finalized in the second half of 2025.
Speaker Change: All projects have an estimated in service date by the end of 2020.
Speaker Change: The <unk> encourage <unk> to promptly launch its next RFP to address remaining resource and capacity needs and preliminary filings for the 2025 RFP were made in November we anticipate submitting an integrated resource plan update in the first half of 2025 as we move toward issuing the next RFP to market. This fall.
Speaker Change: <unk> will provide refined loan growth expectations and the estimated resources needed from future rfps to meet robust customer demand.
Speaker Change: And advanced Decarbonization.
Speaker Change: On to slide eight for summary of liquidity and financing.
Speaker Change: Total available liquidity at the at year end was $997 million, our investment grade credit rating strong balance sheet and our outlook remains unchanged from our last disclosure in the fourth quarter, we drew $119 million previously price under our legacy ATM settling default facility in support of our base capital plan.
Speaker Change: We also priced an additional $67 million under the new ATM, drawing 50 million during the quarter to derisk, our longer term financing plans and manage credit metrics the residual amount price on their facility with an issued at the end of December our equity needs to support our base investment and strengthen our balance sheet remained unchanged at approximately 300.
Speaker Change: Millions per year in 2025, and 2020 states tapering thereafter in 2027 and beyond.
Speaker Change: We also expect debt issuances throughout 2025 up to 550 million focused on funding our capital expenditures.
Speaker Change: Our ongoing evaluation of facilities and structures that maximize our findings the options will continue through the year, we remain focused on maintaining flexibility in managing our capital structure and credit ratings, and providing strong customer value and accretion from rate base investments.
Speaker Change: Turning to slide nine 2024 was a strong year our teams executed in all four quarters, enabling us to deliver at the high end of both our near and long term earnings expectations with.
Speaker Change: With 2020 for setting the foundation, we are initiating full year 2025 of adjusted earnings guidance of $3 13 to $3 33 per diluted share.
Speaker Change: This guidance is supported by solid expectations.
Speaker Change: All of our service territory, including 2025 weather adjusted load growth of two 5% to three 5% highlighted by meaningful growth from our industrial customers.
Speaker Change: In prior quarters I've highlighted our work to set the stage for consistent long term performance.
Speaker Change: <unk> leadership in building effective teams thoughtful focused planning that clarifies our objectives and our constant focus on executing our plan.
We're entering 2025 with a renewed emphasis on operating as efficiently and effectively as possible over the last eight weeks, we finalized alignment to the outcome of the 2025 rate review, making careful strategic choices to manage our business, while still delivering on our expectations.
We expect 2025, O&M expenses up $795 million to $815 million, which includes $135 million of earnings neutral regulatory deferral amortization wildfire mitigation and deputation management costs and other offsetting items.
Our guidance reflects the initiation of sustained multi year strategy to examine them.
Speaker Change: All activities into support serving our customers safely reliably and efficiently.
Speaker Change: While still delivering on our financial commitments. This work will be intentional and deliberate.
Speaker Change: And our entire team will play a critical role we are calibrating, our cost structure configuring, our teams and harnessing our tools and technology to enhance productivity and provide exceptional customer service.
Our execution capabilities as well as the potential of our service territory also underpinned our long term optimism as Maria highlighted we have updated our long term.
Speaker Change: <unk> growth guidance to 3% through 2029, and we're also reaffirming our long term dividend and earnings growth of 5% to 7% now using the midpoint of our original 2024 adjusted earnings guidance of $3 <unk> per share.
Speaker Change: We remain confident in our fundamentals and focused on the milestones ahead in 2025, and we continue to improve and grow our business, while staying centered on our core priorities.
Speaker Change: Safely, serving clean reliable and affordable energy, while providing value to our communities our customers and our shareholders.
Speaker Change: And now operator, we're ready for questions.
Speaker Change: Thank you at this time, we will conduct a question and answer session.
Speaker Change: A reminder to ask a question you will need to press star one on your telephone and wait for your name again.
Speaker Change: To withdraw your question. Please press star one again, please standby, while we compile the Q&A roster.
And our first question comes from the line of Julien Dumoulin Smith of Jefferies. Your line is now open.
Speaker Change: Hey, good morning team. Thank you guys very much for the time I appreciate it nice to chat with you guys really are nicely done hearings.
Speaker Change: It's up to up in the morning to you guys.
Speaker Change: Maybe just focusing first on the bigger priorities here, obviously, you've got this wildfire effort here in front of you.
Speaker Change: This coming year, and obviously as you've been building into this for some time.
Speaker Change: Can you speak maybe one how the nature of what's happening in California has maybe shifted or evolved any of the dialogues in the state and then secondly.
Speaker Change: If you could frame how you envision that's coming together and kind of a belt and suspenders approach.
Speaker Change: Obviously, you talk about creating sort of a wildfire backstopped here, but.
Speaker Change: How would that work as far as you're concerned in an effort to try to draw analogs from California and in a similar scope of what you would imagine.
Speaker Change: Coming out of this year looks like just what are the conversations look like at this time, obviously, you've been spending your spending quite some time building. This together what does that starting to look like is it a more tangible sense. If you can.
Speaker Change: Great. So thank you Julien first of all I want to just remind us that the wildfire work that we're doing in the legislature at both the state and the federal level really builds upon the work that we've been doing as you noted over multiple years at Portland General.
Speaker Change: Have a very advanced 12 fire mitigation program, we file our plans with the Oregon Public Utility Commission. Our 2025 plan was filed at the end of December this year and really focuses on the hardening of our system the prevention detection and the overall risk mitigation.
Speaker Change: Through power safety shut off as well as other programs.
Speaker Change: We are also working with the state legislature in three main areas. The first one is a standard of care based on the plans for that I, just talked about and the approval of those plants.
Speaker Change: Work extensively with first responders and folks across the state as well as across the entire west who are experts in wildfire prevention and developing those.
Speaker Change: Second the creation of a backstop fund to support the timely resolution and recovery for wildfire victims, but to do this tool and as we've learned in California, we have to have limitations on liabilities. That's a really important aspect of any fund and you can see that in the legislation that is already then.
Past in Utah and is being discussed in many other states at the federal level, what's happening in California has also catalyzed and focused on the need for further work, they're working to address and expedite permit authorizations to do work on federal lands and just to remind you more than that.
Speaker Change: Half of the state of Oregon is owned and managed by either the U S Forest service or the Bureau of land management.
Speaker Change: Second we're enabling.
Speaker Change: Investor owned utility electric customers to have access to FEMA assistance and anytime a disaster.
Speaker Change: Third that federal liability reforms, and then fourth creating involuntary federal backstop, but so theres a lot of work going on increased momentum and focus as we see some of the tragedy is not only in southern California and in other parts of the country.
Speaker Change: Yeah.
Speaker Change: Got it excellent and then maybe just to pivot more to the more tangible here on cost structure obviously.
Speaker Change: You laid out some degree of detail here on your initiatives and some response I imagine.
Speaker Change: Recognizing some of the feedback in the last quarter here.
Speaker Change: Can you elaborate a little bit what youre seeing out there in terms of relative rate lag I mean, how would you frame that this year in light of fee side, and then more prospectively given the higher sales growth in the O&M and can you speak a little bit to kind of maybe with some more structural lag if there's any shifts in that as well as if there is anything else that we should know about given some of the commentary.
Speaker Change: Around the case and O&M, specifically in the last quarter.
Speaker Change: So first of all.
Speaker Change: We are very fortunate to be in a part of the world that has tremendous growth. We've just increased as Joe and I noted in our prepared comments, our long term growth rate.
Speaker Change: From 2% to 3%. This is really driven by semiconductor manufacturers data centers and the re shoring of regular manufacturing into our service area. We just had growth year on year or 11% of that sector and that remains a key driver.
Speaker Change: As we move forward, but equally as important is realigning our cost structure.
Speaker Change: At all of the cost of how we do our work ensuring that we are meeting our customers' needs as efficiently effectively as we can and also ensuring that our programs are all aligned with those outcomes. Let me, let Joe talk with you a little bit about the extensive work that we're going to be doing in 2025.
Speaker Change: Around our cost structure.
Julian you know to your comment part of <unk>.
Speaker Change: What we're doing in 2025 is to try to reduce that structural lag as we've realigned to the rate case outcome.
Speaker Change: <unk> taken a really hard look honestly starting in 2020 mid 2024 forward.
Speaker Change: How we how we work within our distribution ops are.
Speaker Change: Functions, our digital tools, our support and really looking at realigning our cost structure here to continue to put what we will call downward pressure on that structural lag I mean, there are certain items. When you deal with the short term within the rate case that create structural some structural lag, but we're really focused on this long term compression.
Speaker Change: Our performance against the regulatory recovery.
So I mean thats why Youll see if you look to 2025 of our earnings guidance range Youll see is lower than the midpoint of that range is lower than our actual performance last year, when adjusting for regulatory and other type of items you see.
Speaker Change: Small relative increase that we're expecting from our cost structure as we manage forward.
Speaker Change: So when we make are committed to.
Speaker Change: Making up for the 16 basis points that we've seen in reduction.
Speaker Change: Ensuring that we continue to deliver on our growth prospects.
Speaker Change: Okay excellent that's a lot of kudos on the cost and good luck this session.
Speaker Change: Sure.
Speaker Change: Thank you. Thank you.
Speaker Change: Thank you wall women for next question.
Speaker Change: And our next question comes from the line of Richard Sunderland of Jpmorgan Securities. Your line is now open.
Richard Sunderland: Good morning, guys. Good morning. Thank you yeah. Thank you for the time today.
Speaker Change: Picking up on that.
Speaker Change: Log from the last question just thinking about the durable long term outcomes you referenced in the script is there any way to sensitize this potential on say three to five year basis.
Speaker Change: Sure I mean, I think Richard to that I mean, the way to sensitize understanding for US you have to you have to Peel out some theres some regulatory spend like wildfire.
Speaker Change: In that I mean, I would sensitize it.
Speaker Change: Using.
Speaker Change: Using our cost structure going forward, some relatively low single digit growth rates off of what is the adjusted our 2025 range. I mean that is our goal is is to challenge our cost against.
Speaker Change: Inflation, but whats important is what you laid out this is about being methodical about durable this isn't about chasing any individual thing. It is about structurally changing how we do our work.
While continuing to safely effectively reliably serve our customers and can you continue to improve on that so I mean this is data and is a programmatic move as opposed to what I'll call. It reactionary to what we're trying to do.
Speaker Change: Got it that's very clear and then touching on overall regulatory strategy. After the last rate case.
Speaker Change: Are you weighing the timing of another rig case, the seaside options and then I guess against these O&M efforts as well I know you said, you're evaluating what to do with C side, but could you speak a little bit more to how you're balancing those different considerations and when you might have an update across all of that.
Speaker Change: Sure and Richard we're working through these issues of whether we focus on C side as a single regulatory item or whether we take a more comprehensive approach to recover the battery storage project as well as other capital.
Speaker Change: Got it thank you.
Speaker Change: Thank you.
Speaker Change: Thank you one moment for our next question.
Speaker Change: Our next question comes from the line of sharp rise of Guggenheim Partners. Your line is now open.
Speaker Change: Hey, guys good morning.
Speaker Change: Morning.
Speaker Change: Just a real quick follow up on Julians question. If there was some sort of a fund established would you be open at this point to structures that require equity contributions from the company.
Speaker Change: I couldn't get a strong sense there.
Shar Geotropic: Good morning morning, Shar Geotropic.
Speaker Change: So I think the answer is yes I think.
Speaker Change: Critical to your to your opening comment is addressing standards of conduct.
Speaker Change: Framing the liability side of the equation, but taken.
Speaker Change: Taken as a bundle there.
Speaker Change: That there is value to that risk risk reduction for the customers and for others.
Speaker Change: We think that would be a worthwhile investment.
Speaker Change: I think also it's important that you would expect something like that is an over time kind of kind of items.
Speaker Change: Got it and then I just want a piece some of the data points that you guys were kind of touching on but I'd like to just I guess as you guys you guys talk a little more.
Speaker Change: On the plan the different facets, I guess, where do you see yourselves I guess trending within that 5% to 7% through the planning period.
Speaker Change: Any kind of considerations, we should be thinking about it from a year over year variability what does the guide embed from a rate case timing and then Joe just specifically I wanted to make sure I'm Crystal clear on the 25 guide do you assume you get the tracker for C side. After the June completion. Thanks.
Speaker Change: Yes, so so overall.
Speaker Change: No.
Speaker Change: Where we sit in the range in that in that 5% to 7% range I think I've mentioned.
Speaker Change: <unk>.
Speaker Change: In a year, where we do not have meaningful investment in RFP. So take for example, right now 2025 would really spell that out we would expect to be on the lower end of that range to the extent that we have a period, where we are modestly performing within an RFP. We would expect that we would push ourselves.
Speaker Change: Towards the higher end of that band I think you can see that a little bit in the last couple a couple of years year cycles that we have.
Speaker Change: To your specifically to your <unk> question.
Speaker Change: Because the offer from the commission is somewhat unique rate. These extra days process for this battery we had even though we have not decided what we're going to do we have designed a plan that does not include recovery of <unk> because of its uncertainty. So our cost management program. The structure that we are working through our guidance here is.
Speaker Change: <unk>.
Speaker Change: <unk> debt.
Speaker Change: A zero for right now <unk> not because we're not you know would you seek recovery, but just the uncertainty of it and by the time you would have clarity on it certainty would be relatively late so planning.
Speaker Change: Waning with it in would might be probably too optimistic of what we're doing so we want to make sure that we have numbers, we can execute on with or without it.
Speaker Change: Perfect and then just real quick lastly.
Speaker Change: With wildfire.
Speaker Change: Process working itself through any sense on timing, Joe as far as a holding company structure is it still let's get through the wildfire process and then we can look at the Holdco is that this year.
Speaker Change: Catalyst is it a next year catalyst.
Speaker Change: Are we on that process.
Speaker Change: We continue to evaluate here and we're reading.
Speaker Change: The legislation starts to evolve, but I mean, I think we're taking a serious hard look on the timing when we will address the holdco here, we think the having that action out there is important to drive financing flexibility for us to manage our costs both for our customers.
Speaker Change: We're going to take some form of action. This year I think we're down to just measuring month months here and we.
Speaker Change: We'd like to have a few more facts in front of us before where we're tight but we think it is an important item to take a run at the June.
Speaker Change: Okay perfect lot of a lot of moving pieces I appreciate it guys. Thanks.
Speaker Change: Sure.
Paul Wogan: Thank you Paul Wogan for next question.
Michael: Our next question comes from the line of Michael on again of Evercore ISI. Your line is now open.
Michael: Alright, good morning, and thanks for taking my question good morning.
Speaker Change: So going back to the <unk> sidetrack or you said youre still evaluating a potential filing.
Speaker Change: And in the written order in the DRC. The Commission mentioned that in order to grant you were tracker. They may want a commitment from you not to file a <unk> for a certain period of time I was just wondering your thoughts on committing to this and what kind of timeline you would commit to before the next rate case, if you were to make this tracker filings.
Speaker Change: So we have that's obviously out there as is the request by a PUC staff to engage in discussions on multi year.
Speaker Change: Regulatory solutions and so we're taking all of these things into consideration to.
Speaker Change: Hopefully end up with a more durable place.
Speaker Change: For the company as well as for staff and the PUC.
Speaker Change: Got it. Thank you and then on the equity issuance plan, you reiterated $300 million and 25 and 26.
Speaker Change: And continue to dimension tapering off in 2007 and beyond consistent with your prior outlook.
Speaker Change: I know you've talked about monetization of renewable tax credits mitigate needs I'm. Just wondering what are your latest thoughts on equity needs beyond 2006, and the <unk> to debt metric you are targeting.
Speaker Change: Yes so.
Speaker Change: As it relates to beyond 26 exclusive.
Speaker Change: The RFP or some of the other equity items.
Speaker Change: We discussed here, we continue to have a focus to maintain our cap structure at about a 50 50. If you take this capital plan for the few years. After 2006, you get do you have an equity plan that is.
Speaker Change: The relatively low to mid one hundreds understanding it rounds by year.
Speaker Change: Our initial focus here is to continue to maintain the strength of the balance sheet and then allow that strength of the balance sheet to drive our our credit ratings going forward I mean, we have we have commitments on.
Speaker Change: Budget sides between just how one we want to operate the business. How we are involved in our rate structure and then just how the strength on the on the credit metric side. So we'll we'll focus on just constantly re upping that to just really maintain it within that range. I mean really we've had no no change here just because we're trying to be.
Speaker Change: We're trying to be clear and consistent over time and what our equity needs are and is that.
Speaker Change: I'll stop there.
Speaker Change: Great. Thanks for taking my questions.
Speaker Change: Thank you one moment for our next question.
Speaker Change: Our next question comes from the line of Nicholas Campanella of Barclays. Your line is now open.
Nicholas Campanella: Good morning.
Nicholas Campanella: Hey, good morning, Thanks for taking the time.
Nicholas Campanella: I just wanted to clarify on the.
Speaker Change: The comments around being at the high end of the five to seven.
Nicholas Campanella: You've kind of said that if you have a meaningful.
Nicholas Campanella: <unk> addition, and I'll put you there.
Nicholas Campanella: In the prior updates you kind of gave like base rate base growth of 8% and then I think for the upside opportunities that was it was roughly a 10% CAGR.
Nicholas Campanella: What's kind of like the new refreshed Rob metrics with with this new outlook youre presenting today that kind of targeted at high end sure sure. So I'll.
Nicholas Campanella: I'll get back in the materials that got published this morning, we did update that rate base growth slide the rate base Slide will now show that range of seven to nine it showed eight to 10 last time, but that isn't.
Nicholas Campanella: There isn't really a change in the trajectory of what we're doing it's just regulatory first of all.
Nicholas Campanella: When we Rebased the earnings we Rebase that chart in all honesty, just cutting 22 and 'twenty three off slightly changed the trajectory because there was a fair amount of movement between distinguished using that 22 pillar and then secondarily some small items regarding the treatment in this last case regarding the itc's youll being against rate basis.
Nicholas Campanella: And shrunk that that those numbers a little bit the fundamentals are there right. The earnings trajectory holds at just a slightly smaller rate base growth due to those those mechanics.
Nicholas Campanella: I think it's important to recognize that the additions to our rate base.
Nicholas Campanella: Projections are almost exclusively in the transmission area.
Nicholas Campanella: We've utilized all of the excess transmission across the region and it's really important that we invest not only in our existing rights of way and in our service territory, but in adjacent areas.
To our service territory with regards to transmission as well as broader across the Pacific Northwest, we should recognize that on the rate base.
Nicholas Campanella: Gross slides in the capital forecast the Rfps the competitive bidding processes as we go out further years are not reflected in those numbers.
Nicholas Campanella: Not reflected in those numbers and the best in the basin.
Nicholas Campanella: Sorry, if I missed that I appreciate that.
Nicholas Campanella: And then just.
Speaker Change: Common equity ratio I think in the K.
Speaker Change: 45, 6% and I know youre working to get back to the plan, but just how are you framing the cadence of improvement through the plan at this point is it.
Speaker Change: Is it.
Speaker Change: 50 to 100 basis points, a year or just how should we think about that.
Speaker Change: I mean, I think we should buy by 27% so between 25%, 26% to 27, and we expect that that move upwards to be in the range understanding theres a couple of different calculation. So the way you see it there on the financials and the way the <unk> does it but it should be relatively methodical to our earnings trajectory and our and our <unk>.
Speaker Change: Equity needs here, but I mean, it should be a consistent move chunk wise between now and 2007.
Speaker Change: Okay. Thank you so much.
Speaker Change: Thank you.
Speaker Change: Thank you one moment for our next question.
Speaker Change: Our next question comes from the line of Anthony <unk> of Mizuho. Your line is now open.
Speaker Change: Hey, good morning, Rick Good morning, Joe just cleanup from Julians question I was wondering on the structural lag and I may have missed the number so apologies, but are you able to tell us what what structural lag the amount and maybe basis points that you experienced in 2024, and then where do you think that lag could potentially be.
Speaker Change: At the end of your plan.
Speaker Change: So I believe if we take 2020 fours performance from an accounting basis, we had about a 70 basis point.
Speaker Change: Structural issue between earned earned and allowed.
Speaker Change: What we plan to do and we have an assigned Anthony to that debt.
Speaker Change: The amount, but we plan to do with thoughtful cost management and just are structured to squeeze that 70 basis points lower as we work forward.
Speaker Change: And we will obviously, it's going to take us it's going to take us a bit of time, but we are hoping to use that as more of a high watermark for where we are on that lag and reduced from that.
Speaker Change: Got it but you didn't quantify each you haven't quantified where you think you can get in with that of the plan is that correct.
Speaker Change: At this point, what we've quantified so far is really that earnings guidance on where we will get O&M O&M range wise.
And then we'll build from there.
Speaker Change: Great and then just if I could follow up on some of the wildfire questions I think one of the issues.
Speaker Change: Right.
Speaker Change: You mentioned the limitation on liabilities I guess is do you think this could be achieved in this.
Speaker Change: Legislative session in 2025, and if you wouldn't mind I don't know the Oregon Legislative session. What's the like when does it start when did it.
Speaker Change: Sure well, we have three areas of focus as I mentioned in the Oregon legislature.
Speaker Change: And we are very optimistic and working diligently with parties bill of it will be.
Speaker Change: <unk> submitted probably in the next two weeks, so youll be able to see them publicly in this.
Speaker Change: Session ends in June.
Speaker Change: We remain optimistic we're going to work hard, but I would not underappreciated, but this is tough and may make it may take two sessions.
Speaker Change: Great session starts in two weeks that those may be may be submitted in two weeks and the session ends in June.
Speaker Change: Fashion has already started bills will be submitted within the next two weeks by.
Speaker Change: Representatives, who are working diligently with wildfire.
Speaker Change: <unk> session ends in June.
Speaker Change: And lastly does recession happened every year, it's one of those where every other year every year and have it every year. They need. This is a long session next year would be a short session.
Speaker Change: Great. Thanks, so much for taking my questions I appreciate it thank.
Speaker Change: Thank you.
Speaker Change: Thank you Amit for next question.
Speaker Change: Our next question comes from the line of Paul Fremont of Ladenburg Thalmann <unk> co. Your line is now open.
Speaker Change: Thank you.
Speaker Change: Congratulations on a good quarter.
Speaker Change: My question I guess following up on Anthony's question in terms of.
Speaker Change: Wildfire legislation are you looking to essentially replicate.
Speaker Change: What is it $10 54 or are you looking for something thats different than that.
Speaker Change: So we're looking for a combination of what you can see in Utah and in California, as well as talking with other states about the active work that they're doing many almost every state in the West currently has wildfire legislation discussions ongoing and so we're looking at.
Speaker Change: What is best practices and what is.
Speaker Change: Doable.
Speaker Change: Within the state of Oregon, and will reflect the continued investments that are needed by the <unk>.
Speaker Change: <unk> into the system and the risk reduction something catastrophic.
Speaker Change: And then.
Speaker Change: <unk>.
Speaker Change: Has the state or or have the parties sort of come up with a number.
Speaker Change: Number potentially for the for the Backstop fund.
Speaker Change: Looking about.
Speaker Change: No we have not and there's a lot we clearly need to have.
Speaker Change: Stablish sat as a prudent utility practices based on the wildfire plans, but we have been submitting and most recently submitted for 2025 to the Oregon Public Utility Commission will also need to make sure that we have some balance around <unk>.
Speaker Change: Limitations on liabilities.
Speaker Change: We already have some press added in Oregon State law, So we'll need to make sure that.
Speaker Change: We are able to.
Speaker Change: Have a fund that is actually investable.
Speaker Change: And durable.
Speaker Change: Okay and then the.
Speaker Change: The limits of liability would they apply to.
Speaker Change: Just regular <unk>.
Speaker Change: Uh huh.
Gross negligence in how would they just be absolute limits on liability how should we think about sort of.
Speaker Change: So we do have a negative is we do have a negligence standard within the.
Speaker Change: State law, and we're working through all of those details right now.
Speaker Change: Okay great.
Speaker Change: Yes.
Speaker Change: Thank you.
Speaker Change: Thank you one moment for our next question.
Speaker Change: Again as a reminder to ask a question you will need to press star one on your telephone.
Our next question comes from the line of Travis Miller of Morningstar. Your line is now open.
Travis Miller: Thank you good morning.
Speaker Change: Good morning, good morning.
Speaker Change: Interest so a little more on the federal initiatives there with the New administration. What are you either hearing or anticipate hearing in terms of changes in tone relative to any kind of wildfire mitigation seemed like glass administration or is it too interested in doing a whole lot to help at the federal.
Speaker Change: Level wondering if that's changing at all that you hear in bakery.
Speaker Change: Sure well first of all there is a lot of discussion on the hill with regards to concern over wildfire and we're working with a variety of parties many of whom have extensive personal experience either in the forest products industry or as firefighters themselves. So we're really encouraged with regards to administration. It is just.
Speaker Change: Too early to tell we're clearly all hearing a lot of things out of the administration, we look forward to work with them.
Speaker Change: I do believe that there is ignitions, but that we need to proactively manage our federal for us to reduce the risk of wildfires across all states, but particularly in the west.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Would you anticipate any kind of conflict either legislative or political conflict between what youre doing at the state or what might develop.
Speaker Change: Within California, and what you are trying to initiate at the federal level.
Speaker Change: We see these efforts and as do other utility is doing similar work within their states as very complementary to what would take place at the federal government.
Speaker Change: I also want to make sure that we recognize that.
Speaker Change: Energy security.
Speaker Change: And the integrity of the electric system.
Speaker Change: Also national security. So I think we're highly aligned at the federal level and the actions that we're taking in Oregon as well as other utilities are taking other states are aligned with all of these objectives.
Speaker Change: Okay that makes sense and then.
Speaker Change: One other real quick one how do you think about power costs with thier now updated demand forecast and I'm thinking about wrapping in the.
Speaker Change: Projecting the rfps with drug out of a very low variable cost in there or how do you think about total power cost element, where the last next few years.
Speaker Change: Joe mentioned this and you can see in our forecast. So we're actually seeing a near term moderation in power costs I think the battery storage.
Speaker Change: We've seen implemented by ourselves as well as other utilities across the west, particularly in California, and Arizona is having an impact we're seeing continued growth in renewable energy projects and being able to leverage the hydro system to balance all of these things thats been long been a part of the Pacific Northwest.
Speaker Change: And then a unique characteristic of our renewable energy that we are building upon.
Speaker Change: We have also seen with the continuation of production tax credits and investment tax credits that renewable energy is some of the lowest cost energy that we can bring onto the system and clearly that remains the preference of our customers in the region.
Speaker Change: Sure, Okay, well I really appreciate all the thoughts.
Speaker Change: Yeah.
Speaker Change: Thank you I'm showing no further questions at this time I would now like to turn it back to Maria Pope for closing remarks.
Maria Pope: Thank you for joining us today, we appreciate your interest in Portland General Electric and we look forward to connecting with you soon.
Thank you very much for your time this morning.
Maria Pope: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
Maria Pope: Okay.
Maria Pope: [music].
Maria Pope: Yes.
Maria Pope: Yeah.
Maria Pope: [music].
Maria Pope: Okay.
Maria Pope: Okay.
Maria Pope: Okay.
Maria Pope: [music].
Maria Pope: Okay.
Maria Pope: Yes.
Maria Pope: Yes.
[music].
Maria Pope: Hum.
Maria Pope: Okay.
Maria Pope: [music].
Okay.
Maria Pope: Yeah.
Maria Pope: Okay.
Maria Pope: Sure.
Maria Pope: Yes.