Portland General Electric Co

Good morning, everyone, and welcome to Portland General Electric Company's first quarter 2020 earnings results conference call. Today is Friday, April 24, 2020. This call is being recorded, and as such, all lines 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 star then 1 on your touchtone telephone. If you'd like to withdraw your question, please press the pound key on your telephone keypad. If you do intend to ask questions, please avoid the use of speaker phones. For opening remarks, I will turn the conference call over to Portland General Electric's Director of Investor Relations and Treasury, Chris Little. Please go ahead, sir.

Thank you, Jonathan. Good morning, everyone. I'm pleased that you're able to join us today. Before we begin this morning, I'd like to remind you that we have prepared a presentation to supplement our discussion, which we'll be referencing throughout the call. The slides are available on our website at investors.portlandgeneral.com Referring to slide two, I would like to remind everyone that some of our remarks this morning will constitute forward-looking statements. We caution you that such statements involve inherent risks and uncertainties, and actual results may differ materially from our expectations. For a description of some of the factors that could cause actual results to differ materially, please refer to our earnings press release and our most recent periodic reports on Forms 10-K and 10-Q, which are available on our website. Leading our discussion today are Maria Pope, President and CEO, and Jim Lobdell, Senior Vice President of Finance, CFO, and Treasurer. Following their prepared remarks, we will open the line for your questions. Now it's my pleasure to turn the call over to Maria.

Thank you, Chris, and good morning, everyone. Welcome to Portland General Electric's first quarter 2020 earnings call. Today I'll share an update on the impact of the COVID-19 pandemic and how PGE is responding. I will also cover our first quarter financial results, revised earnings guidance, the economy in our service territory, including expected electricity usage, and the integrated resource plan, which was acknowledged by the Oregon Public Utility Commission in March. Jim will provide more detail on the quarter's results, the thinking behind our earnings guidance and dividend announcement, our financial position and strong balance sheet, You will also cover the company's O&M and capital reductions as well as our regulatory environment. Turning to slide four. For the first quarter of 2020, we reported net income of 81 million or 91 cents per share, an increase of nine cents per share compared to 2019 results. The strong first quarter was driven by an increase in high tech and digital services demand as well as lower power costs and operating expenses. While we had a good quarter, our reality today is very different. And as such, we are revising our guidance down to $2.20 to $2.50 per share, from $2.50 to $2.65 per share, reflecting the significant uncertainty and downward economic pressure caused by COVID-19. Despite this revision, we are reaffirming our long-term earnings growth guidance of four to six percent. Moving to slide five. All sectors of the economy, our customers, and the communities we serve are facing unprecedented challenges. As an essential service provider, we are focused on continuity of service, seamlessly generating Transmitting and delivering safe, reliable, and affordable electricity. At the same time, we have a great respect and appreciation for our leadership role, both as a vital service provider and as a partner to Oregon communities. Given the economic impact we are facing, we've taken steps to provide support and assistance, including Suspending service disconnections and late fees and providing flexible payment plans. To support our community partners, PGE and the PGE Foundation have committed over $1 million to local food banks, educational programs, and other immediate community needs. As a business, we are also not immune. In response to the recessionary impacts, we have taken steps to ensure a strong balance sheet and liquidity by raising capital, holding our dividends flat, and reducing O&M and capital spending. Our entire management team is taking aggressive actions to reduce operating costs in 2020 and 2021, which will allow us to operate efficiently despite uncertain economic conditions as well as help mitigate further customer price increases and achieve our 2020 revised earnings guidance. In terms of energy delivery, in the first quarter, industrial demand driven by high tech and digital services grew 9.5%. Residential and commercial deliveries also increased, resulting in net growth of 3.5% weather adjusted. Given mild temperatures, actual deliveries decreased half a percent in the first quarter. Most recently, since our stay-at-home, stay-safe order, we estimate a drop in energy consumption of approximately 10% from the closures of small businesses and the commercial sector. And when combined with increases in residential energy usage of about 5%, and modest decreases from the industrial sector overall, energy delivery is down approximately 4%. Overall for 2020, we are expecting energy deliveries for the year to decline 1% to 2% relative to 2019. Whereas prior to COVID-19, we had expected an increase of 0.5% to 1.5%. Jim will spend more time on the details of our energy delivery scenarios and our revised guidance. As we have previously discussed, we are fortunate to operate in a service territory with strong customer growth, driven by high-tech and digital services. We're continuing current substation build-up, and there is an ongoing interest in new facilities throughout our service area. This growth, along with expected return to strong regional in-migration after the pandemic passes, are the primary drivers of our long-term energy delivery growth expectations of 1% annually. Turning to slide six, we continue to execute on our long-term strategy. The Wheat Ridge Renewable Energy Facility continues to progress The wind portion of the facility is on track to be completed by the end of this year. Our integrated operations center, which will centralize key operations in one secure facility, is also on track. Civil work is well underway, footings are complete, and the seal structures are being constructed. Our 2019 Integrated Resource Plan was acknowledged by regulators and includes additional renewable resources, energy efficiency, flexible load programs, and clean energy technologies that will enhance grid reliability and stability. We anticipate procurement activities for renewables and new capacity to begin later this year and into 2021. We're also engaged in productive discussions with regional operators of existing resources to enter into capacity contracts. With that, I'll turn the call over to Jim. Thank you.