Portland General Electric Co · NYSE:POR
Portland General Electric — Investor Day (June 2008)
63 slides from Portland General Electric's investor day presentation, Jun 24, 2008
Slide 1: Analyst Day
Exhibit 99.1 Analyst Day June 2008 © 2008 Portland General Electric. All Rights Reserved.
Slide 2: Introduction
Introduction William J. Valach Director, Investor Relations
Slide 3: Information
Information Current as of May 7, 2008 Except as expressly noted, the information in this presentation is current as of May 7, 2008-the date on which PGE filed its Quarterly Report on Form 10-Q for the period ended March 31, 2008-and should not be relied upon as being current as of any subsequent dat
Slide 4: Oregon: Things Look Different Here
Oregon: Things Look Different Here Peggy Fowler Chief Executive Officer & President
Slide 5: Things Look Different Here
Things Look Different Here
Slide 6: Strategy for Success
Strategy for Success Portland General Electric is a well-capitalized, stable company with on-going growth opportunities Stability • Vertically integrated, regulated business • Strong balance sheet/ credit ratings • Diversified power supply • Experienced management team • Fair and balanced regulatory
Slide 7: Investment Case
Investment Case PGE offers strong fundamentals: •$2.3 billion Capital Expenditure Program 2008-2012 • 10.1% ROE on 50% equity capital structure • Constructive regulatory environment • High-performing generation and well-maintained system • 6 to 8% earnings growth over the long term • Dividend payout
Slide 8: Proactive Regulatory Strategy
Proactive Regulatory Strategy Oregon Public Utility Commission • Governor-appointed Commission with staggered four-year terms (Lee Beyer 3/2012, Ray Baum 8/2011, John Savage 3/2009) • Rates set based on a forward test year PGE’s Approach to Regulation • Communicate constantly; no surprises • Commiss
Slide 9: People
People Development Continuously develop people at all levels Build organizational competence for replenishing the talent pipeline to meet future needs Strengthen and develop management through Management Excellence Initiative
Slide 10: Providing Reliable Service to a Growing Customer Base
Providing Reliable Service to a Growing Customer Base Steve Hawke Senior Vice President, Customer Service & Delivery
Slide 11: Dynamic Operations Area
Dynamic Operations Area 4,000-square-mile operations area 807,000 average customers 1.6 million people, 43% of Oregon’s population 52 cities served (Portland and Salem are the largest)
Slide 12: Attractive and Growing Customer Base
Attractive and Growing Customer Base Statistics by Customer Group(1) Revenues by Customer Group 2007 Energy Retail Deliveries Sales (000s of Customers($ mm) MWhs) Residential 706,444 $716 7,688 Commercial(2) 97,088 593 7,781 Industrial(2) 256 147 4,158 Total 803,788 $1,456 19,627 Residential Commerc
Slide 13: Attractive and Growing Customer Base
Attractive and Growing Customer Base PGE’s outstanding power quality and reliability are essential in helping Oregon businesses thrive and grow
Slide 14: Well-Maintained & High-Quality Utility System
Well-Maintained & High-Quality Utility System PGE strategically makes on-going infrastructure investments in order to ensure a high level of system reliability, safety and customer satisfaction • Invested more than $775 million in the last five years on system upgrades to transmission, distribution
Slide 15: Continuous Improvement
Continuous Improvement Customer Focus Initiative • Continuous process improvements focused on improving customer interactions and cost efficiencies to achieve increased customer satisfaction Web Site Redesign • Improve customer interface on the Internet Professionalism Development • Engage line crew
Slide 16: Vibrant Vision of the Future: Smart Metering
Vibrant Vision of the Future Smart Metering • Provides two-way exchange with residential and commercial customers • Real-time communications • Looking into the future, PGE could enable smart meters to implement demand response and direct load control programs • Estimated project cost of $130 million
Slide 17: Vibrant Vision of the Future: Solar Power
Vibrant Vision of the Future Solar Power • Potential for PGE to incorporate solar energy into resource portfolio: – Help customers develop individual solar projects – Install large solar arrays at an existing PGE generating site Dispatchable Standby Generation • 47 MW available currently • Potential
Slide 18: Summary
Summary Solid transmission and distribution system Outstanding operational excellence Highly skilled workforce
Slide 19: Managing a Diverse Power Supply Portfolio
Managing a Diverse Power Supply Portfolio Stephen Quennoz Vice President, Nuclear, Power Supply & Generation
Slide 20: Uniquely Situated For Success
Uniquely Situated For Success Diverse Portfolio • Hydro • Wind • Natural gas • Coal • Purchased power Continuous Improvement • Generation Excellence • Labor agreement Excellent Asset Management • Capital investments have added 108 MW of additional capacity
Slide 21: Diverse Mix of Resources — Hydro
Diverse Mix of Resources — Hydro Pelton Round Butte Deschutes River Projects 298 MW Net Capability
Slide 22: Diverse Mix of Resources — Hydro
Diverse Mix of Resources — Hydro Sullivan River Mill Faraday Clackamas & Willamette River Projects 190 MW Net Capability Oak Grove North Fork
Slide 23: Selective Water Withdrawal Update
Selective Water Withdrawal Update Meet water quality standards for lower river & project reservoirs • Temperature • pH • Dissolved oxygen Provide a downstream fish passage system Screen 100% of powerhouse flows Selective Water Withdrawal Schedule • Begin construction September 2007 • Complete constr
Slide 24: Diverse Mix of Resources — Natural Gas
Diverse Mix of Resources — Natural Gas Coyote Springs Beaver Port Westward 234 MW Net 505 MW Net 406 MW Net Capability Capability Capability
Slide 25: Diverse Mix of Resources — Coal
Diverse Mix of Resources — Coal Boardman Colstrip 3 & 4 380 MW Net 296 MW Net Capability Capability
Slide 26: Boardman BART Update
Boardman BART Update Best Available Retrofit Technology (BART) for compliance with EPA Regional Haze Rule Current BART proposal: $300 to $400 million(1) Alternative proposals: $470 million to $620 million(1) Preliminary schedule: • Public notice on rule November 2008 • EQC decision on BART February
Slide 27: Port Westward Update
Port Westward Update One of the most efficient combined-cycle power plants in the nation Net capability: 406 MW Mitsubishi 501G1 (first in U.S.) Heat rate: 6,690 Btu/kWh Steam-cooled combustors Operational: June 2007
Slide 28: Diverse Mix of Resources — Wind
Diverse Mix of Resources — Wind Biglow Canyon Wind Farm I Klondike II Biglow Phase I Commercial: December 2007 Total capacity : 125 MW Turbines: 76 Vendor: Vestas (1.65 MW)
Slide 29: Opportunities for Future Growth
Opportunities for Future Growth Biglow Canyon II • Turbines 65 • Vendor Siemens Phase I • Total capacity: 150 MW 2007 • Construction start: June 2008 • Commercial: 2009 Biglow Canyon III • Turbines 76 • Vendor: Siemens • Total capacity: 175 MW • Construction start: July 2009 Phase II • Commercial: 2
Slide 30: Project Management: Exceeding Expectations
Project Management: Exceeding Expectations • Port Westward – 2008 Best Practices Award (Combined Cycle Journal) • Biglow Canyon Wind Farm Phase I • Willamette Falls/Sullivan Flow Control • Pelton Round Butte Selective Water Withdrawal • River Mill Fish Ladder – 2008 Aon Build America Award • Marmot
Slide 31: Generation Excellence
Generation Excellence • OR-OSHA Voluntary Protection Program • OR-OSHA SHARP Certification • SafeStart Program Safety • Industry Best Practices • Reliability Centered Maintenance • Contractor Quality Assurance Reliability Optimal Performance • Operations Training • Maintenance Training • Staffing &
Slide 32: Summary
Summary Diverse portfolio of resources History of continuous improvement Excellent asset management
Slide 33: Managing the Portfolio to Meet Customers' Energy Needs
Managing the Portfolio to Meet Customers’ Energy Needs Jim Lobdell Vice President, Power Operations & Resource Strategy
Slide 34: Power Supply Strategy
Power Supply Strategy Manage power supply operations • Capitalize on PGE’s assets and position in the marketplace • Meet load in most economic fashion to lower costs to customers • Manage and monitor risks with appropriate systems and processes to assure strategy is implemented prudently Communicati
Slide 35: Meeting Retail Energy Needs
Meeting Retail Energy Needs
Slide 36: Meeting Retail Energy Needs
Meeting Retail Energy Needs Power Sources as % of Retail Load 2006 Actual Purchased Gas Power Hydro/Wind(1) Coal Actual Purchased Gas Power Hydro/Wind(1) 47% 8%18% 27% 25% 19% 27% 29% Coal (1) Includes purchased power from hydro contracts and the Klondike II wind contract.
Slide 37: Meeting Retail Energy Needs: Load Following
Meeting Retail Energy Needs Load following Meeting customers needs minute by minute — hour by hour PGE Load MW Hours 2500 2300 2100 1900 1700 1500 1300 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 6/18/2008 6/19/2008
Slide 38: Robust Supply Portfolio
Robust Supply Portfolio Diverse fuel sources Market access Actively managed GAS MARKET COAL WIND HYDRO Diverse generation technology Flexible dispatch Reliable
Slide 39: Natural Gas Transportation
Natural Gas Transportation WCSB BRITISH COLUMBIA Southern Crossing Pipeline Spectra B.C. Pipeline AECO Kingsgate Huntingdon/Sumas WASHINGTON Williams (Northwest Pipeline Corp.) Spokane Seattle K-B Pipeline Beaver Port Westward Mist Storage Portland Coyote IDAHO TransCanada Gas Transmission Northwest
Slide 40: Boardman Coal Supply and Transportation
Boardman Coal Supply and Transportation Ability to secure and deliver coal from Powder River Basin (Wyoming) and Montana Multiple mine sources and delivery options provide reliable and competitive pricing Secured rail contract through 2013, and currently completing an RFP for post-2008 supply
Slide 41: Hydro Supply
Hydro Supply Diversity of river systems • 12 plants on 5 river systems – 7 owned, on 3 rivers – 5 contract, on 2 rivers High reliability • 99%+ availability Priest Rapids Wanapum Rocky Reach Wells (Mid-Columbia contracts) Columbia River Portland (contract) Portland Sandy River Deschutes River Clacka
Slide 42: Strategic Location Within Western Grid
Strategic Location Within Western Grid Access to liquid Western trading hubs Sufficient rights to meet 1:2 peak requirement Exploring opportunities for new transmission to meet demand and access new resources Control Area & Transmission Provider Control Area Only Joint Ownership, Interconnection, an
Slide 43: Portfolio Management Horizon
Portfolio Management Horizon IRP MID TERM TERM BALANCE OF MONTH PRE-SCHEDULE REAL TIME <20 YEARS <5 YEARS <18 MONTHS <PROMPT MONTH <72 HOURS <24 HOURS
Slide 44: Generation Growth Opportunity
Generation Growth Opportunity Load Growth PGE’s retail load is expected to grow consistently while selected long-term power purchase contracts expire, driving need for additional generation capacity Resource Need: Energy Resource Need: Capacity 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Retail
Slide 45: Renewables and Reducing the Carbon Footprint
Renewables and Reducing the Carbon Footprint Approximately 33% of the company’s resource acquisitions between now and 2025 will need to be renewables to meet RES requirements Oregon RES vs. PGE Resource Need (Based on 5% in 2011, 15% in 2015, 20% in 2020, 25% in 2025) (“New renewables” are after K2
Slide 46: Summary
Summary Growing demand creates investment opportunity New resources further portfolio diversity Opportunities for customer participation through efficiency and demand-response Continued flexibility to capture value for customers and shareholders
Slide 47: Financial Overview
Financial Overview Jim Piro Executive Vice President, Finance, Chief Financial Officer and Treasurer
Slide 48: How We Work Together
How We Work Together Portland General has an established operating framework for effectively and efficiently managing and controlling the business • Officer Interaction – Weekly meeting(1) – Quarterly business review • Management of Power Supply Risk and Position – Risk Management Committee – Power
Slide 49: Recent Financial Results
Recent Financial Results Financial Summary Year ended December 31 Three months ended March 31 ($ in millions, except per share amounts) Revenues $1,520 $1,743 $436 $471 Net Operating Income Net Income EPS (basic and diluted) $1.14 $2.33 $0.88 $0.44 Factors Impacting Results($ earnings per diluted sh
Slide 50: Regulatory Update
Regulatory Update Recent Key Actions by the OPUC 2008 Annual Update of Power Costs Biglow Canyon Wind Farm Phase I BPA Residential Exchange(1) Energy Efficiency Tariff Advanced Metering Infrastructure (smart meters) Senate Bill 408 for Year 2006 Prices Effective January 2008 January 2008 April 2008
Slide 51: Key Regulatory Dockets at the OPUC
Key Regulatory Dockets at the OPUC 2009 General Rate Case • Docket UE 197 • Decision: December 2008 Annual Update Tariff for 2009 Power Costs • Docket UE 198 • Decision: Fall of 2008 Approval for Amortization of Boardman Deferral • Docket UE 196 • Decision: Q3 – Q4 2008 Trojan Remand • Docket DR10,
Slide 52: 2009 General Rate Case
2009 General Rate Case General Rate Case: UE 197 • Filed February 27, 2008, with a 2009 test year • If approved, price increase of 8.9% expected effective January 1, 2009 • Requested: – Average rate base: $2.366 billion(1) – Allowed ROE: 10.75% – Capital structure: 50% equity / 50% debt – Weighted a
Slide 53: Recovery of Power Costs
Recovery of Power Costs Annual Power Cost Update Tariff • Annual reset of rates based on forecast of net variable power costs (NVPC) for the coming year; following OPUC approval, new prices go into effect on or around January 1 of the following year Power Cost Adjustment Mechanism Power cost sharing
Slide 54: Trojan Remand Case
Trojan Remand Case • PGE collected a “return on” Trojan from April 1995 through September 2000; effective September 30, 2000, Trojan was removed from the balance sheet along with several largely offsetting regulatory liabilities (2000 Settlement) • The OPUC is addressing two judicial remands: – What
Slide 55: Trojan Class Action Suit
Trojan Class Action Suit • Two class action suits were filed in Marion County Circuit Court in January 2003 on behalf of current and former electric service customers. The suits seek to recover damages to customers for PGE charging OPUC-approved rates that included a “return on” the Company’s Trojan
Slide 56: Forward Capital Expenditures Driving Rate Base Growth
Forward Capital Expenditures Driving Rate Base Growth Capital Expenditures • Attractive growth opportunities through capital investment in core utility assets • Earnings expected to grow 6 to 8 percent over the long term starting with 2008 • New capital investments funded through cash from operation
Slide 57: Rate-Base Growth Opportunities
Rate-Base Growth Opportunities Capital Expenditures ($ mm) $194 $255 $371 $455 $401 2008E(1) Debt/Capitalization 60% 55% 50% 45% 40% 35% 30% S&P “BBB”: 50% - 60% 42% 43% 47% 50% 50% 2008E(1) Approved/Projected Avg. Rate Base ($ mm) $2,400 $2,200 $2,000 $1,800 $1,600 $1,766 $2,009(2) $2,237(3) $2,366
Slide 58: Summary
Summary Systematic process to manage and control costs Capital investment opportunities Strong balance sheet; investment-grade credit ratings
Slide 59: Earnings and Dividends
Earnings and Dividends 2008 Earnings Guidance •$ 1.75 to $1.85 per diluted share • Earnings expected to grow 6 to 8 percent over the long term beginning in 2008 Common Stock Dividend History – Portland General emerged as publicly traded company – Declaration of initial quarterly dividend of 22.5 cen
Slide 60: Summary
Summary Experienced management team focused on operational excellence Strong economic and load growth in service area Satisfied customers Supportive regulatory environment $2.3 billion of planned Capital Expenditure 2008-2012 Investments in prudent rate base assets drive earnings and dividend growth
Slide 61: Executive Officers
Executive Officers Peggy Fowler Chief Executive Officer and President Jim Piro Executive Vice President, Finance, Chief Financial Officer and Treasurer Jim Lobdell Vice President, Power Operations & Resource Planning Steve Quennoz Vice President, Nuclear, Power Supply & Generation Steve Hawke Senior
Slide 62: Portland General Electric
Portland General Electric
Slide 63: Investor Relations Contact Information
Investor Relations Contact Information William J. Valach Director, Investor Relations 503.464.7395 William.Valach@pgn.com Portland General Electric Company 121 S.W. Salmon Street Suite 1WTC0403 Portland, OR 97204 www.PortlandGeneral.com