管理層發言
Good morning, everyone, and welcome to today's conference call with Portland General Electric. Today is Friday, July 31, 2026. This call is being recorded. For opening remarks, I will turn the conference call over to Portland General Electric's Senior Manager of Investor Relations, Erin Schwartz. Please go ahead.
Thank you, Didi. Good morning, everyone, and thank you for joining us today. Before we begin, I would like to remind you that we issued a press release this morning and have prepared a presentation to supplement our discussion, which we will be referencing throughout the call. The press release and slides are available on our website at investors.portlandgeneral.com. Referring to Slide 2, some of our remarks this morning will constitute forward-looking statements. We caution you that such statements involve inherent risks and uncertainties, and actual results may differ materially from our expectations. For a description of some of the factors that could cause actual results to differ materially, please refer to our press release and our most recent forms 10-K and 10-Q, which are available on our website. Turning to Slide 3. Leading our discussion today are Maria Pope, President and CEO; and Joe Trpik, Senior Vice President of Finance and CFO. Following their prepared remarks, we will open the line for your questions. Now I will turn things over to Maria.
Thank you, Erin, and good morning, everyone. We appreciate you joining us today. The second quarter was marked by continued execution across our strategic priorities. Strong industrial demand growth of 11% when compared to the second quarter of last year, advancement of key regulatory proceedings, disciplined cost management and continued progress on resource planning. Beginning with Slide 4, I'll speak to our financial results and key drivers. For the second quarter, we reported GAAP net income of $68 million or $0.59 per diluted share and non-GAAP net income of $74 million or $0.64 per diluted share. Our non-GAAP results exclude business transformation, optimization and acquisition-related expenses, which are not reflective of ongoing operational performance. These costs relate to the holding company formation, the pending Washington acquisition and our customer affordability work. These results were in line with our expectations for the quarter and reflect strong execution. As a result, we are reaffirming our full year earnings guidance of $3.33 to $3.53 per diluted share and our long-term earnings and dividend growth guidance of 5% to 7%. Turning to Slide 5 for updates on our five strategic priorities. First, industrial demand growth remains an important element of our long-term outlook. Today, we serve 12 different data center customers, which make up approximately one-third of our total industrial usage. Total industrial load growth was approximately 10% compounded annually over the last five years. We continue to see strong demand from technology, semiconductor and data center customers with approximately 10% compounded annual growth expected through 2030. This outlook is supported by customers who are under contract and who are already energized or actively advancing construction and facility development in our service area. Second, affordability remains a national focus. We've taken proactive steps to address customer cost pressures, mitigate stranded asset cost risk and enable growth that supports the long-term strength of our communities and continued economic development. In Q2, the OPUC issued a final order approving PGE's New Large Load Tariff effective in July, raising average prices approximately 30% for data centers, while lowering rates for all other customers and capping several years of legislative and regulatory work. This important framework aligns infrastructure costs on an ongoing basis to customers driving new system investments while helping reduce costs for residential and small business customers. The tariff also creates greater certainty for large load customers by providing a clear pricing framework, which supports investment decisions and continued economic development across our region. In addition to the changes implemented with our large load tariff, we continue to focus on operating costs and executing across our financial and operational priorities, which Joe will cover in more detail in a minute. Third, we're advancing our 2025 renewable RFP. During the quarter, the OPUC acknowledged the short list, marking an important milestone in the procurement process. The short list includes a diverse mix of wind, solar, battery storage and hybrid resources with both purchase power and company-owned structures under consideration. We are now moving into commercial negotiations and expect to execute contracts by early 2027, subject to final negotiations and approvals. Fourth, our year-round wildfire mitigation work remains on track. We continue executing the actions identified in our 2026 through 2028 wildfire mitigation plan and remain engaged with policymakers and stakeholders regarding long-term wildfire policy discussions. Across Oregon, there are several active wildfires, and we appreciate the significant actions that first responders and local communities are taking. None of these wildfires are in PGE's service territory. And fifth, next week, we will file our 2027 general rate case. As proposed, the case would result in approximately a 4.8% overall increase relative to currently approved prices effective July 1, 2027, with residential customers seeking an approximately 3.9% increase. The residential increase would have been higher but for the large load tariff. The rate case increase is expected to be partially offset by lower net variable power costs, which are addressed separately through the annual update cost tariff and are currently forecast to reduce customer prices by approximately 2.4% beginning January 1. The filing is based on a proposed 50% debt, 50% equity capital structure and a 9.75% return on equity. It reflects a balanced approach that supports continued investment in reliability, resiliency and infrastructure needed to meet growing customer demand while maintaining affordability and delivering the financial foundation necessary to serve customers safely and effectively over the long term. In parallel, we continue to advance our proposed holding company structure. We expect the final order at the end of August. The proposed structure will enhance financing flexibility and support our ability to invest in clean energy and meet significant customer and infrastructure needs over time. Lastly, our teams remain focused on the regulatory work to obtain approvals for the Washington acquisition and continue to target a mid-2027 closing. As we move through the second half of 2026, we remain focused on delivering safe, reliable and affordable service while advancing clean energy investments, our expansion into Washington and completing the formation of the holding company. At the same time, we are operating to our plan and executing on actions to deliver on shareholder and customer commitments. With that, I'll turn things over to Joe. Thank you.
Thank you, Maria, and good morning, everyone. Turning to Slide 6. Our second quarter results were consistent with our guidance and reflect solid execution across the business. Beginning with load trends year-over-year. Total retail energy deliveries increased 3.9% compared to the second quarter of 2025 on a nominal basis and were up 2.7% weather adjusted. As Maria mentioned, we continue to see strong demand from our technology, semiconductor and data center customers with approximately 10% annual large customer capacity growth expected through 2030. Industrial demand remained a key driver in the second quarter, increasing 11.2% year-over-year, reflecting continued demand from high-tech and data center customers. Residential deliveries increased 1.3% on a nominal basis and were down 1.4% on a weather-adjusted basis, while commercial deliveries decreased 2% nominally and were down 2.8% weather adjusted. Overall, weather-adjusted load across customer classes was largely consistent with our expectations. Therefore, we are reaffirming our 2026 weather-adjusted load growth guidance of 1.5% to 2.5%. Now I'll cover the primary year-over-year earnings drivers for the quarter. A $0.18 decrease from power cost was primarily driven by expected intra-year timing of revenue collection and power cost recognition. We experienced a $0.22 increase in retail revenues, including a $0.10 increase from industrial demand, and a $0.12 increase from additional cost recovery, reflecting the Seaside battery asset included in customer rates beginning in November 2025 and the distribution system planning recovery that began in April of 2026. Note that there was not a meaningful impact to our revenues from changes in residential or commercial customer usage over the year. A $0.12 decrease from other capital and financing costs in support of our ongoing rate base investments was made up of $0.07 from higher depreciation and amortization, $0.03 from dilution and $0.02 of additional interest expense, and a $0.06 increase from O&M, reflecting strong cost management and productivity improvements across the organization. On to Slide 7 for our five-year capital forecast, which includes the 2026 and 2027 spend from the incoming 2023 RFP. I will note that this view does not contemplate CapEx from the 2025 RFP or the Washington acquisition, which, as Maria noted, are progressing as expected. On to Slide 8 for financing. We remain well positioned. We have completed the majority of our 2026 financing activity, providing clear visibility to our funding needs for the year, and this included $550 million equity issued under forward sale, a $500 million ATM facility to further support the equity needs, a $350 million 24-month term loan satisfying our 2026 financing needs and a $680 million delayed draw term loan related to the Washington acquisition available until specific acquisition milestones are achieved and maturing 364 days after funding. And our investment-grade credit ratings remain unchanged. In July, the Board of Directors declared a quarterly common dividend of $0.55125 per share, representing an increase of 5% on an annualized basis. We remain committed to paying a competitive dividend in line with our 60% to 70% payout target while balancing overall financing needs. Our plan focuses on maintaining strong operating cash flows while supporting continued investment in customer-focused capital projects, all while advancing us towards our authorized capital structure. As we look to the second half of the year, we have a clear path to deliver on our guidance. We are providing quarterly guidance as the shape of our earnings is different than it has been in prior years. First, we expect improved power costs over the remainder of 2026, helping offset the first half timing headwind. Second, in Q4 2025, the weather detriment is not expected to recur with our 2026 forecast assuming normal weather. Third, we expect margin improvement from the New Large Load Tariff approved earlier this year. Fourth, we expect continued increased regulatory recovery, including the Seaside and DSP alternative recovery mechanisms. And finally, we are executing management actions across operating and power costs to support earnings through the remainder of the year. We remain focused on safe, reliable and efficient operations, advancing our strategic priorities and delivering value for our customers, communities and shareholders. And now, operator, we are ready for questions.
分析師問答
Our first question comes from Julien Dumoulin-Smith of Jefferies.
It's Brian Russo on for Julien. I was just curious, if you could comment on the slide presentation, you have 1.7 gigawatts of additional data center pipeline. What kind of investment would be needed to support that? Is it generation and is it part of the '25 RFP? I just want to understand if that's like another bucket of potential growth investments for you guys.
Sure. First of all, let me give you a little bit of background on the 1.7 gigawatts. The investments are in a number of different counties across our service territory. And the vast majority of that represents projects that are already in the permitting process. Many projects already have land ownership and are progressing really nicely. The 1.7 gigawatts will also be under UM 2377, which enables growth, or our peak growth modifier and the most recent higher customer prices for data centers. But we have not included any of the additional generation. And you can see some transmission investments in our forecast, but not all of them and some of them are beyond the 2030 time period.
Okay. Great. And then just on the upcoming multiyear rate plan filing. Looking ahead to the framework, are there any key areas to focus on in terms of the mechanisms to help you maintain that inherent lag, which I think is you're trying to close that gap to 50 basis points on the structural side. Just wondering what we might expect in terms of proactive mechanics in the MRP filing?
Brian, the multiyear framework, considering that it lists out for five years, our focus will be making sure it has flexibility for us to operate the business as expected and to be able to adapt to change. But before we get to the multiyear, the way I focus on this is we have the general rate case this year that will cover a period of time. And then we're proposing a bridge mechanism to get to the multiyear because the multiyear rate would not be filed until 2029 and would have rates effective in 2030. So we're focused on this GRC, which would have rates effective July of next year and then a bridge mechanism that would bridge 2028 and 2029. Starting with the bridge mechanism, the design here is to be able to address inflation and cost between these full GRC-type cases. And then for the multiyear, as I said, it's really about being able to balance and make sure that we can adapt considering it's five years and there's an amount of uncertainty in that that will occur. So having the flexibility to balance and adapt will be key for us.
Okay. Great. And then just lastly on wildfire legislation as we quickly approach the 2027 legislative session. What's going to be the key focus for you or how you're preparing for that to make some constructive steps in the upcoming session?
Sure. It's a great question, and we will continue the discussions that we've been having over the last couple of years with a variety of stakeholders. One thing I would note that's really constructive and an improvement this year is the Oregon Public Utility Commission's work — they've hired Boston Consulting Group to do a study on wildfire and utilities. We look forward to the results of that report probably in the early fall time period and are very encouraged with that next good step as well as working with stakeholders across the state and key customers as well.
Our next question comes from Shar Pourreza of Wells Fargo Securities.
Maria, just on the Salem data center, since the state's pullback only affects kind of the state-owned portion of the site, not the private land, does that kind of change how you think about the 1.6 gigawatt large load queue at all? Should we expect that to convert at the pace you guided to or some haircut — the right way to think about it?
Sure. So first of all, the 1.7 gigawatts is not in our guidance. It would be in addition and upside to our guidance. And just for those of you who are not tracking everything that's taken place with regards to the data centers in Oregon, for the Salem region, one of our large customers had anticipated purchasing some state land, and the governor will be reviewing that sale and has not made any final determination at this point in time. That is just a portion of the land that they own or plan on owning. The bulk of their investment would actually be on non-state land. In addition, there has been some discussion in Hillsboro on a data center moratorium. Most of our customers that are not in our forecast, but that we are working with for additional upside, are actually already in the existing permitting process and grandfathered.
Got it. Okay. That's helpful. That clears up some confusion this morning. And then just with the holdco approval process now kind of getting to the finish line, how are you thinking about maybe updating the Street and what it means to the current plan, including maybe the balance sheet, EPS, financing flexibility? I mean it's obviously accretive. So how should we think about a plan update? Or do you want to wait for other items to kind of play out like the Washington acquisition, Seaside, et cetera?
Shar, we will give as much of an update as this process resolves itself; we will give an update to the extent we can. But you're right, Shar, we have multiple growth and earnings catalysts that sit in front of us that would have an interplay here. So any type of guidance we give will be somewhat of a flexible view of the world — we don't want to front-run the other processes that are out here. I agree with you that having a holding company to align us with where the industry is and give us the flexibility to drive benefits for our customers is important. We'll balance how we guide this as these items in front of us are critical to its true ability to drive value.
Our next question comes from Sophie Karp with KeyBanc.
So I wanted to ask you, with the large load ramp that you may be seeing, is there a scenario where this incremental load and associated cash flow offset some of your financing needs? And is there a line of sight to that or is it too early to speculate?
Yes, that's a great question. It's probably too early to speculate, but we're really pleased with the cooperation we had from all of our customers, the partnership with the PUC, and the legislative changes that were made that resulted in a 30% customer price increase for data centers effective in early July. The resulting impact of that as we move forward through the general rate case as well as future years will be very helpful as we move forward to our overall P&L.
Okay. And then on the holdco outcome, I guess the hearings have concluded, as I understand. We heard the positions. So everybody kind of set their piece. At this point, what do you see as the most likely outcome? And how would you frame the positive impact from it as you see it today versus maybe where you started?
Sure. First of all, it has been a process that's gone on for over a year, and we've had many discussions, and we hope to conclude by the end of August. The most recent discussions that you're referring to were some concluding public testimony where people pretty much reiterated their earlier public statements. There have been a number of settlement conferences. Some of these are confidential, and we are really pleased with being able to come to an alignment on a number of important governance conditions as well as customer benefits and other items. The case overall has great merit. Much of what we have proposed and agreed upon is similar to Northwest Natural and other utilities' concluded results, and in some instances, absolutely identical in the types of conditions and aligned with the precedents that have been set.
Our next question comes from Aidan Kelly of JPMorgan.
If I could, maybe just picking up again on the holdco front. Just how would you characterize the delta between Portland and key stakeholders at this point? And do you see any risk of the proceeding getting further delayed or punted into next year at all? Or do you feel firm on that August 25 deadline?
So I think as we are working backwards here, all the key facts and all the key dialogue are really laid out pretty cleanly in the testimony. I think the facts are there to be considered pretty cleanly. When you talk about the delta here, it obviously varies by party. But there's pretty good alignment as it relates to a lot of the conditions that would fall through on the case. There's always a bit of a delta on what I'll call the bid-ask spread on what is the benefit to the customers or what is the rate credit to the customer. But fundamentally, as to the conditions, we're relatively aligned. I think it comes down to some of the finer points on the conditions and then the bid-ask spread — that's really where we sit. You can see that clearly in some of the testimony from some of the parties. We're pretty satisfied with the way we've laid out the case. We think it's pretty clear on the benefits that are available to the customers. We haven't seen any indicators yet that it would extend, but obviously, we're waiting to see just like you would be.
I appreciate the color there. Maybe if I could just shift to the GRC backdrop. I appreciate you guys kind of laying out your thoughts and goals there. Zooming out, how would you rate the current affordability backdrop versus the recent past and your key items in the proposal that drive that 4.8% net increase? And maybe tee that up compared to prior GRC cycles. Any thoughts going into this filing next week?
Sure. First of all, I want to note that we have not filed a general rate case in 2.5 years. We take affordability very seriously, and we have been working diligently and effectively on our operating costs through our customer affordability commitments. This rate case reflects the benefits for residential, small business and other customers from the most recent New Load Tariff under UM 2377, which raised data center prices by about 30%. Data center prices will go up significantly more than the average 4.8%, and residential customers are lower at about 3.9%. When you factor in our proposal to reduce energy costs through the annual update tariff by 2.4% effective January 1, it's really just a couple of percent net increase for our customers. We have also reflected important infrastructure investments, some smart grid and grid-enhancing technology investments, and the things that customers, particularly on the residential and small commercial side, value and have been vocal about. We look forward to proceeding over the next year through discussions collaboratively with all stakeholders in the commission.
I appreciate the color. Sorry, there's just one more question I keep getting asked: is it possible for you guys to still settle the holdco today, just a yes or no?
Absolutely. As you know, we have a record of settling many of our discussions. It's August and people are on vacation now, so my hope is that we do settle quickly, but the date is August 25. We may end up with a commission decision, and we look forward to continuing the conversations.
Our next question comes from Anthony Crowdell of Mizuho.
If I could just jump on the last question to start off. It seems that there's active settlement discussions going on. Is there any chance that the commission would move out the August 25 deadline knowing there are active settlement discussions?
One, Anthony, we haven't heard any dialogue to that effect. Settlement dialogues are always open and part of the process. This type of dialogue and settlement discussion is no different than other cases. So I'm not sure that it would be an indicator that hearings would be prolonged.
And again, are the settlement discussions going on with all the major parties? Or are you kind of focused on a smaller group of interveners?
There are discussions ongoing. Given we're in the middle of the year, there are discussions out there. I think any further detail would really front-run some items, so they're just open discussions that are out there.
Great. And then if I — and I apologize if I'm getting things confused — I believe earlier this year you had pulled a transmission case. Not to confuse the holding company approval with the transmission rate case, the holding company approval is still pending. I'm just curious on why file the general rate case now prior to possibly closing the holding company case. It seems like you pulled one case to focus on the holding company structure and now you're possibly filing another case prior to the holding company structure being resolved.
Sure. We did remain focused long term on transmission. Knowing that there was a considerable amount of work in front of the commission, we narrowed our focus to the holding company, which includes the Washington acquisition, and have had many discussions with parties regarding the general rate case and felt that this was an optimal time to file. As you may recall, led by the Citizens Utility Board and some others, we worked with parties to come up with legislation in addition to the POWER Act, which resulted in larger customer price increases for data centers without having rate increases go in during certain times of the year. Given the discussions we've had so far with parties on the general rate case, we felt that filing in August would be workable for everyone, and we have not filed a rate case for 2.5 years, so timing was appropriate.
And Anthony, a reminder: the transmission filing was a structural filing and didn't really impact how or when we collect rates on the transmission assets. Those items worked themselves through the same process as before. So any timing or pulling of things didn't have anything to do with rate recovery; it was solely structural.
Got it. So just to make sure I have the sequence right: general rate case filing, expectation holding company formation hopefully later in the month?
That is correct.
Our next question comes from Gregg Orrill of UBS.
Just regarding the reliability contingency structure, maybe you could talk to what the prospects are for continuing that and how that was viewed by the commission? Why did they decide not to continue to move forward with that? And then maybe also on the O&M reduction plan, if there's any sort of update on that and the prospects going forward, given its extension.
So the reliability contingency event or RCE was a mechanism that was afforded us in the last case that had a two-year period, which expired here. That mechanism, we felt, worked quite effectively. We had an unusual ice storm and had some significant deviations in cost, and it effectively captured those differences. It was put in initially with a two-year time frame with the expectation that we would ultimately align to broader power cost reform. That has not occurred as of yet, but the RCE did expire. I think staff viewed it as an experiment that worked as intended, and they ultimately would like to get away from that type of mechanism and address broader reform at some point in the future. So that item expired and we are not currently subject to it. Obviously, we liked that mechanism when it was available.
I do want to comment that we are aligned with staff and policymakers across the state on the impacts of extreme weather and whether that is impacting customer energy usage and power costs. We need to look more holistically at all of these things combined as we move forward.
On O&M, I'm pretty happy with where we sit. As you may recall, last year we entered into a cost management program that yielded about $25 million in benefits. Those benefits are included in the general rate case to help mitigate cost given it has been 2.5 years since we filed the case. We'll continue the program. You can see some of the results this year as they flow through the earnings waterfall year-to-date. The company has been committed not just to squeezing to find savings, but to transform, and we expect to continue this program for another couple of years. To date, the effort has been successful and aligned with our expectations and our longer-term strategy.
Our next question comes from Paul Fremont of Ladenburg Thalmann & Company.
I guess my first question is, earlier in the year and maybe toward the end of last year, you were pretty optimistic about being able to settle the holdco case. Do you feel less optimistic at this point? Or are you still in the camp that it's highly probable that you'll settle the case?
We were optimistic then, and we are optimistic now. We have a strong case, good benefits for customers and the discussions are ongoing.
During oral arguments, some commissioners asked whether there are alternative mechanisms to double leverage to fund capital spending in the future, such as securitization. Any thoughts along those lines? The focus on the holding company is that it's the structure that can yield the greatest benefits to customers by a good distance and gives us the most tools. There are always alternatives, but those alternatives will not yield as meaningful benefits to both customers and the company as the structure we proposed.
Our next question comes from Travis Miller of Morningstar.
You answered most of my questions, but just a couple of quick clarifying ones. What's the earnings impact from the large load tariff that you have in the guidance? And what was initially included in the guidance? Has that changed at all?
Initially in the guidance, we gave our broad guidance for the year before the large load tariff was proposed, so there was nothing included. As the large load tariff was approved and we moved through the year, we've incorporated the effects into our outlook. We haven't fully quantified that publicly to date, but we've incorporated the effects as a modest benefit layered into the year as a balancing item reacting to first-quarter items. There is a modest amount of benefit layered in.
Okay. And presumably that would carry over at least through the first half of next year, so it should be a little bump in growth all else equal?
That's correct.
And then one other clarifying one. The 10% five-year CAGR you're talking about at least through 2030 with the new customers, is that the ramping of existing contracted customers? Or is there an assumption of some additional large load customers that you'll get in the next couple of years?
What makes our disclosure unique is these are contracted customers. These are customers who either have constructed facilities or facilities that are under construction currently. So this ramp is really about these contracted and constructed assets, which makes it a bit different because it's not a speculative queue. There is not a speculative queue here. The ramp at 10% is solid. They have names, locations and companies attached, so we are confident in the ramp.
Perfect. And presumably those customers, at least most of them, would pay that large load tariff?
Yes. Those customers, the large load tariff is applicable to all customers that meet certain megawatt criteria. Those parties were able to respond and were engaged in the process that ultimately resulted in the large load tariff.
Thank you very much. I think with that, we are finished and don't have any more questions. We want to thank everyone for your time today. We look forward to further conversations at conferences through the balance of the quarter and the fall. Thank you for your interest in Portland General Electric.
This concludes today's conference call. Thank you for participating, and you may now disconnect.