Q2 2025 Portland General Electric Co Earnings Call
Good morning everyone and welcome to Portland. General Electric Company, second quarter 2025 earnings conference call.
Today is Friday, July 25th 2025 this call is being recorded and as such all lines have have been placed on mute to prevent any background noise. 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 Start, then the number is 1, 1 on your telephone keypad. If you like to withdraw a question, please press star 1, 1. Again, if you do intend 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.
Thank you, Victor. Good morning, everyone. I'm pleased. You can join us today.
Before we begin this morning, I would like to remind you that we have prepared a presentation to supplement our discussion, which we will be referencing throughout the call.
The slides are available on our website at investors.pershing.com.
Referring to slide to some of our remarks this morning. We'll 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 different material lead. Please refer to our earnings press release and our most recent periodic, reports on forms, 10K and 10 Q which are available on our website.
Maria Poe: Turning the slide 3 leading, our discussion today are Maria Poe president and CEO and Joe terp senior Vice President of Finance and CFO.
Maria Poe: Following their prepared remarks, we will open the line for your questions. Now it's my pleasure to turn the call over to Maria.
you cross the business and significant advances in each of our 5 strategic priorities, which we've outlined in previous calls,
Maria Poe: First.
Investing and customer-driven clean energy goals.
Maria Poe: Second working to keep customer prices as low as possible.
Maria Poe: Third supporting data center and high-tech growth, and the Region's Economic Development.
Maria Poe: And 5th promoting an investable Oregon. Excuse me. It
Promoting an investable energy future for Oregon.
Maria Poe: Updating our corporate structure and aligning legislative, and Regulatory policies.
Today, we stand at the intersection of high growth.
Maria Poe: And in Oregon a continued focus on clean energy.
All while driving to meet customer needs, reliably and affordably.
Maria Poe: Let me describe the progress. We have made in each area.
Clean energy.
Maria Poe: To align with the 1 big beautiful Bill and take advantage of the changes to investment tax credits. And production tax credits, we're undertaking a price refresh. In our 2023 RFP and accelerating our 2025 RFP. Procurement
Maria Poe: Our company region and customers remain firmly committed to a decarbonized future.
And we're adopting to build on our recent progress while also delivering maximum value.
We're focused on securing projects that meet the latest timing and domestic content requirements.
Maria Poe: Allowing us to maximize the impact of important federal tax credits.
These credits are significant tool in lowering the cost of clean energy and keeping customer prices as low as possible.
Maria Poe: Bill will cover this in more detail shortly.
Maria Poe: Customer affordability.
Our customer affordability commitment. Multi-year cost management. Work is underway and delivering results.
Maria Poe: This quarter, we made the difficult decision to reduce 330 employed and contracted positions and now have process.
Maria Poe: Ongoing.
Maria Poe: Across our company.
Maria Poe: Every aspect of Portland General will be touched and everyone is involved.
Maria Poe: Customer-driven growth.
Maria Poe: Our strong growth continues. Importantly, we're seeing sustained growth from Data Center and high-tech customers.
Maria Poe: Over 16% compared to the same quarter last year.
This comes from over a dozen texts manufacturing and infrastructure companies.
Maria Poe: Including the upcoming Return of the significant Semiconductor Company to pge's cost to service.
Maria Poe: This robust demand Builds on a significant high-tech and data center growth trajectory that we have seen for over 7 plus years.
And benefits all customers.
Enabling grid wide improvements and infrastructure upgrades while spreading the company's fixed costs.
Maria Poe: Across a broader base.
We're also pleased that the Oregon legislature passed the power act, which furthers growth and brings greater Clarity to the rate making framework.
Maria Poe: Enabling regulatory flexibility to the allocation of costs.
Maria Poe: And direct long-term Contracting with data center customers.
Risk management.
Maria Poe: We still have work to do on Wildfire policy and our focus on supporting policies that clarify standards for Wildfire mitigation established Financial back stops and provide timely recovery for victims.
Maria Poe: Operationally. We're deepening our focus on Wildfire mitigation and prevention with systems hardening and monitoring
Quick response and collaboration with First Responders, including the US Forest Service and Oregon Department of Forestry.
And targeted use of Public, Safety power, shut offs in response to high-risk conditions.
Maria Poe: An investable energy future for Oregon.
And finally, on our last call, we discussed our intent to file for a holding company.
Maria Poe: That notification was made on May 21st.
Maria Poe: And today, we completed the filings with the Oregon Public Utility Commission for the approval of a holding company, under which the existing utility company and a separate transmission company will fit
This proposed corporate structure update is designed to help reduce the cost of Investments and infrastructure.
Maria Poe: To work to achieve clean, energy goals and serve societies Rising needs for electricity.
Maria Poe: While working to keep customer prices as low as possible.
Maria Poe: We also worked in close collaboration with the customers and the citizens Utility Board on the passage of the fair energy Act.
Maria Poe: This news organs to a more predictable.
Multi-year rate making and offers additional flexibility and opportunities for securitization as well as adjusting the timing of a new customer prices take effect.
Maria Poe: In state regulatory proceedings.
We've strengthened collaboration with all parties and recent mou with interveners and staff and both the seaside battery filing made in May.
Maria Poe: And the distributed system plan alternative recovery mechanism, the DSP arm.
Maria Poe: Which were filing later today.
We're very pleased with these outcomes.
Which incorporate the fair energy act requirements and provide well-defined path forward.
Maria Poe: This combination of multi-year rate making the mou and other regulatory improvements drive towards regulatory predictability in Oregon while supporting greater precision and our planning and execution capabilities.
I want to recognize PG's, legislative and Regulatory teams for the exceptional work and outcomes achieved this quarter.
This includes important progress made on numerous complex topics.
Maria Poe: Outcomes that move PGE forward in serving our customers.
Maria Poe: Now, let's turn to slide 5 for financial results, and then I'll turn it over to Joe.
Joe: For the second quarter, we reported gaap net, income of 62 million or 56 cents per diluted share.
Joe: On a non-gaap basis. Net income was 73 million or 66 cents per share.
Joe: This compares to 7 quarter, gaap net income of 72 million or 69 cents per diluted share.
Q2 2025 non-gaap results exclude business transformation and optimization expenses as part of our customer affordability commitment and the updates to our corporate structure.
Joe: This has been a busy quarter for Portland General Electric. We continue building on the momentum of the first half of 2025, executing on expectations and delivering the results.
We remain laser focused on our strategic priorities and continued execution.
Joe: Thank you to the entire PE team for your work. This quarter bringing safe, reliable energy to our customers and building Upon Our strong operational capabilities to deliver a value for our stakeholders, and the communities we serve.
Joe: With that, I'll turn it over to Joe.
Joe: Thank you Maria and good morning everyone Q2 is indeed been a busy period for PGE and we've climbed a bunch of Hills across the organization.
Turning these 56, our results reflect significant. Demand growth from industrial customers mild, spring temperatures and the maturing of our cost management and optimization program.
Joe: Total load increased 4.9% overall, and 6.1% weather adjusted as compared to Q2 2024, residential load decreased 2.3%, quarter over quarter. But increase 1%, whether adjusted highlighting the warmer than average temperatures in April and May,
Residential customer account increased by 1.4% offset by continued Energy Efficiency.
Joe: Commercial load increased slightly at 3%, overall or 7% weather adjusted.
Joe: Industrial load particularly from data centers continued. Its rapid acceleration with Q2 demand increasing 16.5% on a nominal and whether adjusted basis.
Joe: We expect continued demand growth from our industrial customer class. Underpinning, our reaffirmed weather adjusted 2025 load guidance of 2.5% to 3.5% in the long run with the 2023 cve IRP update published in June captured, fresh load, inputs, further solidifying, our long-term growth expectations of 3% through 2029
Joe: Now, I'll cover our our quarter earnings driver.
Joe: We experienced a 32 Cent increase in total revenue driven by a 12%, increase from the 4.9% demand growth and a 20-cent increase from the average. Price of deliveries from improved recovery. Partially offset by delivery composition changes.
From current year power cost performance driven by less favorable wholesale and environmental credit market conditions.
Joe: A 6.
Joe: Increase from lower operations and maintenance expenses as we begin to realize the benefits and savings from our cost management and optimization work.
Joe: A 13, cent EPS decrease from other operating expenses in support of the ongoing rate rate, based Investments made up of 10 cents from higher depreciation. And amortization and 3 cents from higher interest expense
Joe: and 8 cent decrease from other items including 4 cents from dilution and 4 cents from other miscellaneous items.
Joe: And lastly a 10-cent decrease from business transformation and optimization expenses. As we update our practices and corporate structure to achieve, improved financing flexibility and lower long-term lower, our long-term costs. This brings us to our gaap EPS of 56 cents per diluted share after adjusting for the 10-cent impact. We reach our Q2, 2025 non-gaap, EPS up 66 cents per diluted share
Joe: Turning the slide 7 for our 5-year Capital forecast. We've made a Mis reduction in 2025.
Joe: For our 2025 forecast, due to efficiencies from our Capital execution, this year overall, we plan our plan continues to support the trajectory of our growth and the escalating needs of our customers and region.
Joe: On this slide 8.
Joe: All detailed meaningful Regulatory and stakeholder progress Maria highlighted earlier.
After thorough engagement with regulatory stakeholders, PGE signed an mou in June with the apop staff. The Oregon cub and awe which will govern 2 important cost recovery proceedings. First the expedited recovery of the seaside battery project which began serving customers in early July. This filing has a proposed conclusion of October, 2025
Joe: second, an alternative recovery mechanism for distribution system assets the DSP arm
Joe: Which has a proposed. Conclusion of April 2026.
as a result of the mou, the earliest filing, for our next general rate review would occur after Q2 2026 with the early earliest rate, effective date being May 1 2027
Combine, these 2 proceedings, covered nearly, 600 million of critical rate based Investments serving. Customers while also clarifying, our regulatory path and go forward strategy,
Joe: Moving the slide 9 for an update on resource planning and procurement.
Joe: With the passage of the federal legislative package PGE is planning a price, refresh for conforming, bidders in the 2023 RFP.
We undertook a very similar process in our 2021 RFP.
Which also navigated tariff and tax policy changes. This refresh is a strong net positive allowing bidder to price in what was once uncertain lowering risk and improving.
Joe: Consideration of key macro factors.
Joe: In collaboration with the RFP independent evaluator, we will work to update bid scoring and write and ranking to reflect pricing changes. In the coming months, we still expect contract execution, by year, end and remain firmly committed to a 2027 Cod Target for these projects.
Overall, we expect a similar opportunity set for the 2023 RFP, capex Investments, which supports our long-term growth expectations.
Joe: As we noted in the recent, c p update, we have large procurement needs ahead.
Joe: Driving the 2025 RFP, which we plan to issue to the market in the coming weeks.
Joe: The current timeline anticipates, a final short list in the first half of 2026 with contract execution later. Next year, as we track to complete the projects, by the end of the decade.
We'll continue to utilize a lease cost and Lease risk selection approach.
Joe: Which will evolve to capture the changing tax policy, environment and impacts to customer prices for RFP projects.
Joe: At this time, we see limited tax credit exposure for the 2023 RFP projects, especially given the firm and
Of 2027, Cod requirement.
Joe: For the 2025 RFP projects tax, credit eligibility will be key as we evaluate acceleration to keep customer prices it price impacts as low as possible.
in both the 2023 and 2025 RFP, we are focused on maximizing tax credits to dampen customer price impacts
on this slide 10 for our liquidity and financing summary.
As of June 30, we have 104 million of equity price but not drawn under our ATM. Our total Equity Target in 2025 remains at about 300 million in support of our Capital program.
As our holding company. Application proceeds will continue evaluating our financing needs as we seek the most efficient options for our customers and shareholders.
Joe: This approach helps reduce costs better serve customers and creates optionality in how we fund critical grid investments in support of the growing demand for clean, reliable energy.
This also doubts with our broader cost management work which is scaling as designed to reduce costs across the organization.
Joe: We're leaving no stone unturned and we have we enhance as we enhance our practices and optimize our structure to safely operate meet, our financial commitments and keep customer prices as low as possible.
Joe: We are pleased with our year-to-date, execution and remain committed to achieving our full year plan.
Joe: Our progress in Q2 has kept us OnCourse for a solid performance. We are reaffirming our 2025 adjusted earnings. Guidance of $3.13 to $3.33 per diluted share and our long-term earnings and dividend growth guidance of 5 to 7%.
We remain focused on safe, reliable and efficient operations. Advancing, our street, strategic, priorities, and achieving our commitments to deliver value to our customers.
Joe: Communities and shareholders and now operator, we are ready for questions.
Joe: Thank you.
As a reminder, to ask a question, you will need to press star 1 1 on your telephone and wait for me to be announced to enjoy a question. Please press star 1 1 again.
Joe: Please stand by while we comply. The Q&A roster, 1 moment for our first question.
Speaker Change: Our first question will come from the line of Richard Sunderland from JP Morgan. Your line is open.
Richard Sunderland: Hey, good morning, thank you for the time today.
Speaker Change: Morning, Richard morning.
No, a lot of things in motion here, appreciate all the color, maybe starting with this mou and the suicide and distribution recovery proceedings. How do you think that mou informs the path to actually progress through those 2 proceedings in a fashion versus a general rate case? More broadly? I guess. I'm curious. How you think these proceedings will be different? This is just a focus on the prudencia of capital, um, maybe to frame it more. Broadly, how do you think about the 600 million of rate? Basically highlighted is in this to proceedings and how interveners are going to evaluate that under the terms of the mou
Speaker Change: Great, uh, great question. And, um, so first of all, I think we've really front-loaded a lot of the discussion, um, with regards to, uh, the seaside battery projects, which, um, by the way is, uh, fully operational and delivering, tremendous value to customers keeping Energy prices, um, lower uh, as we're into these hot summer months. Um, but as we also include the distributed system plan and much of our Capital that is in uh, the distribution system, uh, for customer growth, as well as reliability. We're able to have a lot of these conversations before we actually get into a uh great review uh preceding. Um, that allows for really good understanding and um shared uh outcomes as we file the uh filings under the those uh the first uh we hope to finish up in October. Uh that would be the seaside battery project and the DSP arm
Speaker Change: In April. But again, I think we're, uh, aligning interests having shared understanding of the work that we're doing, which should lead to a certainty, predictability and driving value.
Understood that that was very helpful, their app, switching, to the RFP topics. You mentioned tax. Credit eligibility is key for the 25 rann Dynamics, you would highlight there. Thank you.
I think it's a, I think it'll it's a good opportunity to drive drive certainty here. You know, we expect similar performance that we saw in the last case but you know, the whole point of this re-priced RFP is to to really be able to get clarity for these bidders. And then also I know we were talking 23 but in 25, you know, to start moving quickly on 25 to hopefully you know, find to be able to have time to identify bidders who have the tax credit um ability for those projects as well.
Speaker Change: Got it that's helpful. And so I just want final clean up from me the um the business transformation efforts and the cost they are are those are going to continue over the balance of the year into next or is that kind of a 1 and done on this quarter. Thank you.
Speaker Change: Yeah, as as it relates to the business transformation. We're we're just getting rolling. I mean, we're pretty, we're pretty excited about the momentum that we we created. We would expect that that will incur, you know, costs or Investments as it relates to the business transformation into next year. Um, you know, a, a collection of costs related to, you know, change management as well as other items. But clearly having, you know, the the benefits will will start to really yield themselves later this year and then have create pretty significant momentum into next year. But but on the true on the cost exclusion side, that is something that will work into 26.
Speaker Change: Thank you for the time today.
Thank you.
For a moment for our next question.
Speaker Change: Our next question will come from the line of Chris ellinghaus from seybert, William shank, your line is open.
Hey everybody. How are you? Chris?
Speaker Change: Good morning.
Speaker Change: Some of the limitations that are within that legislation in terms of like uh rate timing and things like that. Well that make you make adjustments for when you try to time investment, or is that just something you think you can just work around.
Sir. Uh, so first of all, the bill that you're referring to is um uh the Fair Act. Um, and something that we uh, worked collaboratively with the citizens, Utility Board with customers. Um, and uh, we're really pleased that it, uh, creates the opportunity to really look at multi-year rate making. Um, and uh, we are also focused on ensuring that, um, all of our systems, and our processes are aligned with customer prices going into effect. Um, in the April, to November time period and not during the most difficult, uh, months of winter. Uh, so much of that is internal work that we need to do and and isn't a problem, but just as um, some work to get done, um,
Speaker Change: Overall. Uh we're very pleased with the ability to have increased securitization uh and we've had a lot of good discussions on. What is good long-term rate? Making look like in the current environment is and as we go forward. Uh I I think our mous uh that we've just talked about in answer to Rich's questions, you know our right along those same lines of of how do we work better together for outcomes that ensure adequate investment for um our economic growth in the state of Oregon uh for customers, uh, and for reliability and affordability, while delivering value to all stakeholders um, and good Returns on equity.
Speaker Change: Okay? And, and with the SB 688, can you just sort of talk about how you envision, you know, utilizing pbrs?
Speaker Change: so when we look at, uh, what your, the bill that you're referring to is what we call the power Act,
Speaker Change: and um,
And I and I, as we look to that, we're looking at performance um, metrics that are connected to our core work. Um, you know, I don't in terms of performance rate making, you know, I don't think uh we've been long talking about this with our regulators and we're not um I'm not overly concerned about working through these issues. Obviously we need clean energy, Energy, Efficiency. Um and these aren't new Concepts. In fact, you probably
Speaker Change: Know that we have some of the, uh, most productive Energy, Efficiency, programs in the entire country and Portland, General Electric's customers. Uh we have the number 1 clean energy program but if we also look to serving a diversified and growing customer base, particularly data, centers and semiconductors, all of these things work together.
Okay. Um,
Speaker Change: Utilization of arms in the future.
Speaker Change: No, I think we'll continue the conversations and and keep looking at what's going to work. Best giving the the different work we have in front of us uh, and how we can best serve customers. So you want to add something, the the mou is a is a 1-time item specific to these and then the same thing with with the arm the arm the arm is a is a specific item. And you know the way we think of the arm Seaside they're they're nice bridge between now, the next rate review and then ultimately a multi-year plan we you know we think this this ties nicely with the you know the legislation that's come out there on the timing of rate cases it it can it continues to tie to our overall. Growth plan of just how these rate reviews can be laid out in a way where we can keep the cost as low as possible for the customer. We can, we can manage our costs and do some internal items that really just Bridge us across. What is a longer period of time and create some clarity and certainty as we work through the regulatory framework over the next few years.
Speaker Change: Okay, that helps Joe. Thanks. And, and lastly, you gave us a bunch of dockets to peruse for the weekend. Um, are you still connecting the seaside intervener testimony today to be filed
Speaker Change: Hopefully, um, I will also say that there's more still to come. So, Chris, you should be expecting, uh, the, uh, DSP, later this afternoon and clearly you've got all of the hold so Transco filings this morning.
Speaker Change: Yes. So you gave us a lot of homework, I appreciate that.
Thank you. Okay, thanks. Appreciate the caller.
Thank you, take care.
Moment for our next question.
Speaker Change: Our next question will come from the line of Julian. The Mullen Smith from Jeffrey's. Your line is open.
Speaker Change: Morning. Good morning.
Speaker Change: Hey, it's Brian Russo on for Julian, good morning.
Speaker Change: Morning, Brian.
Hey, um, just um, you know, uh, with the house bill 3179 and the DSP filing and the arm, um, how would you see your Ro's trending, you know, until you get new base rates? I think 2025 guidance assumes in 88 to 91 versus your 9344 percent allowed our early. Do you think you can maintain that that type of, uh, return level? Or should we expect any sort of degradation, uh, you know, given the timing of of the next base rate case?
You know, I so good morning. You know, our Our intention here is that the the combination of, you know, our cost management actions. The the timing of these cases is to really continue in that that same type of earning stand. We don't we don't expect to see any additional lag. I think the range that you derived of, of earned of the earned Roe sites continues to be where our expectations lies with, you know, even considering this this legislation in all honesty, our regulatory plan our, our growth plan, you contemplate, something very similar to this. So we'd expect our our performance that relative earn to allow to be consistent, um, over this period.
Speaker Change: Okay, great. And and then the the 23 uh, c p update. Actually calls for 800 megawatts more of uh Renewables uh and and storage. And I'm just curious, you know, with the OBD. Um, and and does that increase Portland, generals competitiveness to, uh, uh, essentially improve the win rate, which I think, you know, historically has been about 25%.
Speaker Change: So we talked about 25% is sort of a a baseline that's in our financial forecast. Uh but our actual performance is actually exceeded that um as when we um work with some um parties on projects that end up as ownership. Um we're only focused on Portland. General, Electric customers we're not looking at at other customers to serve
Speaker Change: So we're more focused on what would meet the needs of of this specific region? Um, and also making sure that, uh, we're, uh, very cost-conscious and cost competitive. As these are all lease cost lease risk competitive projects, uh, we've done well in the past. Um, and we also have a number of ppas that come into our service territory as well. And actually, you can see those on the financial statements because we pull we pull them out somewhat separately, um, on the, on the energy procurement line. So we have a balance with all parties to make sure that we're achieving lease costs, lease risk, clean energy options for customers.
And um uh Capital markets initiatives, it's a 300 million a year, uh still you know applicable with 5050 financing for RFP related Investments or or is there something about this whole cost structure that can alter that and I guess just make it more efficient.
Speaker Change: Yeah. So I mean
Speaker Change: So as it relates to the hold code, you know we we look forward to to working through the preceding here through to next year. You know the goal of the whole code is to drive flexibility. So as the whole code gets ultimately defined and put in place and as a reminder, right? In addition there, there would be a, a Transco, we will evaluate what flexibility it provides, how it allows us to yield, you know, greater benefits for our customers as well as us. And and and in that time, we will also rethink what that means to our financing plan. We really just we, we want to wait and see how this lays itself out and then how do we feel mostly over time drive drive drive, what benefits will come from having to hold them?
Okay, great. Thank you very much.
Speaker Change: Thank you.
Speaker Change: 1 moment for next question.
Speaker Change: Our next question will come to the line of Nicholas Campanella from Barclays. Your line is open.
Hey thanks. Happy Friday.
Speaker Change: Happy Friday. Thanks uh yeah a lot of good questions uh just a quick follow-up on the on the RFP repricing. It it sounds like you still see a good opportunity for ownership and and, and any outcome. But just with with prices potentially being higher, um, is that additive to the to the current 9% rate based kegger that you show in slides, are there offsets elsewhere in the plan. Can you just kind of talk about like competition for capital on the planet at this point? And then you know how you think about financing that?
Speaker Change: Sure. So you know as it relates to our our base plan that we show is a specific Capital. Obviously doesn't include the results of the RFP and then we have the the illustrative growth. I mean this
Speaker Change: This really just underpins that that illustrative growth that we we show at a a 25% rate, right? And, you know, we yielded about a 60% win rate in in 2021 uh,
But we really just think that the the rep price here gives an opportunity gives an opportunity to drive this certainty. Uh we think it yields a very similar opportunity set for both the overall megawatts as well as you know our performance in in the overall portfolio. I mean we just we just think of it as the re price here is driving certainty into what, you know, what has been a bit of an uncertain time?
Okay. Okay. Um, and then just these, um, the distribution filing that you're going to be putting out there today. Um, you know, if that if that gets approved, um, and then you're then going into file the next case. Uh, after that, just what do rate cases? Look like, if you have this type of structure in place going forward, I would imagine that they're less owner from an Ask level, but maybe you can kind of talk through some of the puts and takes around the benefits of that.
Speaker Change: You know, I think we look at the overall puts and takes um, you know, sort of in the, in the totality.
Speaker Change: Conversations with all stakeholders, uh, ensuring that we have alignment on the work that we're doing, keeping customer prices as low as possible, uh, but ensuring that we are supporting and enabling the growth with the region that is making a difference in our economy.
Naked if I could add, right? So we're when we think to the cases, right? I mean we've been pretty clear on, you know, you have the seaside tracker and then you have the DSP and then and then some kind of a rate review, you know, within the committed period, right? And the goal here is to have predictability both on our side as well as the stakeholder side. Uh it allows us to have time to continue to drive the cost benefits that we're driving into the organization to yield here. But ultimately you know I think of these all as steps along the path to get towards the multi-year, a multi-year plan which gets gets to a place. I think for both parties where we can
Speaker Change: You'll get clarity and have Clarity over longer periods of time here. Instead of you know, some of these small steps. Although I think right now I think there's some pretty clear thoughtful aligned steps that that we have
All right, we're looking forward to seeing that. Thank you.
Thank you.
Speaker Change: 1 moment for our next question.
Speaker Change: Our next question will come from the line of Greg oral from UBS. Your line is open,
Greg: Morning Greg? Yeah. Good morning. Um,
Greg: I was just wondering if you could uh, sort of, uh, talk about the uh, balance of year sort of earnings Bridge versus
Greg: uh, last year, um, sort of the
Greg: Which I think is around.
407.
Yo 2020, 2024 and 2025 are a little bit of a, a challenge to compare as, as you recall in 24. Very front end loaded. Now, you know, we we came in above the, the, the midpoint of our, our, our guidance there, on the actual results, but it was, you know, a lot of that earnings was in the first half of the year and it was, it was weighted to what were some pretty favorable market conditions that that occurred. Both both on a load consumption side but also on a favorable pricing side and if you recall in Q3 and Q4 of last year, we tailed off pretty significantly to where Q4 was a quite a low performer and this year, you know, consider based on the way that the energy markets have set themselves up based on the way that the cost management and the cases have set themselves up. We see this as a much more evenly distributed plan and you know we we just need to continue to work from where we sit right now continue on our our passage is staying on our net variable power cost plan and you know, to hit hit hit our results. So we think this year is a lot cleaner and not,
Greg: Is, you know, not as unusual flow right? The last year is the is the 1. That's causing more, the the uncertainty
And we're pretty, we're pretty competent. I mean, based on where we sit cost management wise understanding we've had a, we had a warmer April and May we, we feel we're pretty, we're, we're set up pretty well to have a, you know, solid performance considering, you know, normal bands of of market price and and load consumption.
Okay, thank you. Joe.
Joe: 1 moment for our next question.
Speaker Change: Our next question, on C, line of Sophie Carp from KB CN, your line is open.
Speaker Change: Morning. Thank you for taking my question. Um and I appreciate the comprehensive update as we this morning. So I just kind of wanted to dig a little bit more and what Nick was asking. So with the seaside tracker in place. Yes. And the distribution recovery. Separate how much Capital would you save? And it would be subject to General rate, reviews and kind of rate cases, going forward, is there like a percentage? You can think of to help us think about how the importance of rate cases might be diminished in the future?
Speaker Change: Sure. You know, I think the best way of taking a look at that Sophie, um, is looking at our Capital plan as we go forward and you'll see that, um, the bulk of our Capital spend and it's on page 7 of the, of the slides, um, is in the distribution area, uh, much of that is reliability related work that we do.
Speaker Change: Um much of this area that we serve grew about uh quite dramatically about 6240 years ago, and that equipment is getting older and it's quite a bit of uh, replacement. We also have the renewable adjustment cost the rack for all wind and solar projects. And so that's another way that we can have customer price is checked in and then we also have for Wildfire the AAC uh, as well. So uh there's a lot of uh good work to create more predictability. Uh which also enhances our ability from an operational. Planning standpoint along executing along 5 year, discipline plans.
Speaker Change: Right, right. Right, right. So so yeah. So that that sounds like a lot of the capital will be recovered more contemporaneously with all these mechanisms in can you remind us? What would, what would govern? I guess they are allowed at least over this entire kind of portfolio of capital. Spend is up to every that's going to be set in this rate review, or a separate proceedings because it doesn't work.
Speaker Change: So to taking a look at the row, we would require a general rate case.
Speaker Change: And we planning on that, you know, in, in the future. But right now we have a really good Bridge through, uh, great recovery of our recovery opportunities at the Capitol. We've just discussed, uh, as well as a number of other improvements from our cost structure uh as well as financing alternatives.
Speaker Change: My great, great, thank you. And lastly, for me, I guess, uh, with I'm assuming your next rate case would be uh, multi-year rate case already.
Speaker Change: Case it will will follow.
Speaker Change: That sounds good. Thank you. I appreciate your time.
Speaker Change: Thank you.
Speaker Change: 1 moment for our next question.
Our next question will come from the line of Anthony Crowell from mizuho. Bulan is open.
Speaker Change: Hey, good morning.
Morning morning.
Hey, I I
Richard's question on but I just said you may not want to answer it on 1 of the other earnings calls. We had uh earlier this week 1 of the companies was talking about when you look at renewable projects and there's changes in tax law or I'm just going to use a word like there's some turbulence in the whole uh business model. It's benefited, certain developers and hurt other developers. And when I you guys had mentioned, I think you're forecast is based on a 25% win rate of from the rfps, but you've achieved kind of, I think you said a 60% number. Do you see those numbers changing in the re-pricing of the rfps?
No, I, you know, I think as we as we look, as we go forward, um,
We're going to see what kind of projects come come forth. Uh we do have a number of of very beneficial Partnerships with the developers but we also have a number of completely third-party. Um developers that bid in the 25% that you're referring to is illustrative in our forecast.
Joe: And sort of a baseline is Joe. Mentioned our most recent, um, build uh, percentages were about 60%
Speaker Change: You know.
Speaker Change: If you add on, you know, with where the IRP update Set, uh, we believe that in this, you know, this repriced there is plenty of room for all all parties. Here we we expect, you know, to have pretty solid performance, you know, and back to Maria's, you know, we use the 25% here is is solely as solely a guy.
Speaker Change: I think we need to remember that. We have a a great window while we have investment tax credits and production tax credits that can significantly reduce the cost of clean energy and customer prices.
Got it. And then I want to jump on Richard's question. I think that was on the the business transformation and optimization and you talked that you would see that through 2025 those Chargers and we start to see them benefiting in 26 and my questions that I hear that right. And do we see the same magnitude or the the actual amount of the Chargers or does that improve as we move closer to the beneficial part of it?
Speaker Change: Yeah, so the the charges will will taper into 26 but I the charges are more front end loaded here, right? We're making some pretty significant Investments here. Um that are the biggest investments in on the spend side are going to be here in 25. They they'll trickle into 26 here. Uh and and really just the and the true then benefits will really start to materialize. There are obviously there are already benefits this year, will will materialize next year? You know, we, we view the, the benefits that we'll see next year, combined, with the, the regulatory items as we talked to is, is really part of our nice clear path to continue to perform in our in our earnings expense. You know, and overall if you think to the the cost, you know, we pretty solid performance but because we're trying to, to drive transformational change, we're going to step into these changes over time. But even with that, that, you know, the payback period of time on the, from it from investment to, to True, net return is is really a year, right? Right, right around a year or less.
And I think this is to Brian. Russo's question, should we be updating our assumption for earned return?
Once this program starts yielding fruit or or that's not what you're trying to tell us.
Speaker Change: So know what we're saying is we, we believe so we our earned return guidance, I believe we've given you has somewhere around, you know, 70 basis points or so is the midpoint uh we we believe that, right? Our plan that we have now we will hold that type of item, right? That has. That's a compressed number from them from what you've seen before. Uh, but but we believe that the the cost management
Plan will continue to, uh, you know, continue to allow us to earn to get that earn. Are we in that, that, that higher range that we we've talked about it in, in our guidance?
Speaker Change: Great. Thanks so much for taking my questions and congrats on a good quarter.
Speaker Change: Thank you. Thank you.
Speaker Change: Thank you. 1 moment for our next question.
Our next question will come from the line of Travis Miller from Morning Star. Your line is open.
Travis Miller: Good morning everyone. Thank you.
Answered the multiple derivatives of all of my questions. But, uh, have a higher level maybe different subjects here.
Travis Miller: As you get more of this industrial demand growth and that becomes a larger share of your total demands. How do you see that now? Or how do you anticipate that changing purchase power costs? That variable costs anything involved in the wholesale Market just wondering if an industrial demand comes with a different type of
pricing environment, if that's the right word to use.
Travis Miller: Should in a complex question.
Travis Miller: Just some of the legislation that just recently passed. Uh, it's the power act. Um, and uh, in the spirit of Chris Allen and the house I'll give you the number. It's um, 23777, um, the um, uh, we are able to do long-term Contracting uh, with uh, key customers in particular with data centers, 10 year plus contracts, which will make a big difference, uh, in how we're able to, um, secure, uh, ties that investment into infrastructure. Um, and enable better financing long term. Um, I from a power cough standpoint that will go all the way into generation projects, uh, which should overall reduce power costs pressures on all customers. Um, from the power cough side, uh, many of the things that we have been doing and made a tremendous difference already. Uh, I would note that we
We have just under 500 megawatts of battery storage, um, which is really smooth customer prices particularly during these critical periods of the summer time. Um, and uh, cold winter days, uh, but also our advancing, uh, across Western wide energy markets. We've announced our uh, intention to join the energy, uh, day Head Market. Uh, led by the California independent system operator. Um, and that will also make a big difference in terms of procurement West wide, and taking advantage of excess renewable energy, uh, generated and desert Southwest, uh, and in California, we've seen remarkable change in power flows already, and we expect to see more which will only benefit customers in our region as we work to lower costs,
Speaker Change: Okay, now, that that's great, appreciate that, uh, all of that, that you talked about in a special with the Contracting opportunity.
will that reduce some of the earnings exposure to net variable power costs or
No, no change in that earnings of. I think what we need to go to on the net variable, power cost side. Uh, is really looking at the underlying rate design, some improvements that we can make, um, in our pcam mechanism um, as well as the uh volatility that we just see is an evolution of the growth of the region um and the tighter markets overall, um, as well as
Uh, balancing that with the energy day ahead Market, we're going to have to rationalize how these work, because there are some conflicts, that we will experience, um, in the, uh, late fall of 2026. After we go live with Edam.
Speaker Change: Okay, perfect, I appreciate it. And then 1 quick clarification.
the timing of that base rate case is that part of the DSP or the mous or is that just your anticipation of when you might need a
Speaker Change: Base rate, case or GC?
Speaker Change: Go ahead in in the mou we have a we have an agreed upon of a not before a filing of not before that that Q2 of of or cue the beginning of Q3 in 2026. So that is that is an agreed upon um okay but you don't have to just after you don't have to file that we could
Speaker Change: That's correct.
Okay, thanks so much. Appreciate it.
Speaker Change: Great. Thank you.
Speaker Change: Thank you. I'm not showing you any further questions in the queue? Oh, and I like to turn the call back over to Maria. Pope for a closer remarks.
Great. Thank you for joining us all today. We appreciate your interest in Portland General Electric and we hope to connect with you soon. Thank you very much. Have a great day.
Speaker Change: Thank you for your participation. In today's conference, this does conclude the program. You may now disconnect everyone have a great day.