Portland General Electric Co

Good morning everyone and welcome to Portland General Electric Company's second quarter 2021 earning results conference call. Today is Friday, July 30th, 2021. 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 the number one on your telephone keypad. If you'd like to withdraw your question, press the pound key on your telephone keypad. 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 Electric's Senior Director of Investor Relations, Treasury, and Risk Management, Jordan Jaramillo. Please go ahead, sir.

Thank you, Chelsea. 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, 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 Agello, 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.

Good morning and thank you all for joining us. The June heat wave and a rebounding economy tell the story for the quarter. Turning to slide four, we reported net income of 32 million or 36 cents per diluted share for the second quarter of 2021. This compares with net income of 39 million or 43 cents for the second quarter of 2020. In light of economic growth and the accelerated recovery, we're revising our earnings guidance to $2.70, $2.85 per diluted share, up from $2.55 to $2.70, and are reaffirming our 4% to 6% long-term earnings growth guidance. Total revenues increased 14% as a result of higher retail energy deliveries, as well as higher energy usage during the recent heat wave. To meet this greater demand, we purchased additional power at high prices, compounded by low hydro and wind conditions across the region. Operating expenses increased, driven by investment in resiliency in advance of the wildfire season, as well as higher administrator and other expenses. Later in the call, Jim will review second quarter results in more detail. He'll also provide regulatory and capital updates, as well as discuss the outlook for the rest of the year. For the third time within the last 12 months, we have experienced unprecedented weather events. In late June, a historic heat wave caused temperatures to soar to 116 degrees. Record heat was not only unique in its intensity, but also in its duration. On the hottest day, we served a record load of 4,441 megawatts compared to the previous record of just over 4,000 megawatts more than two decades ago. Through it all, and thanks to the dedication of our coworkers and ongoing investments in generation, grid infrastructure, improved work management processes, as well as disaster preparation and training, we maintained strong reliability. In these times, the full impact and importance of what we do is most evident. I want to acknowledge that the heat event was not just a challenge for our business and our system. It was also a human challenge for the people who live in our communities. Looking out for the safety of customers and serving our communities is and always will be our focus and priority. This June, as well as other extraordinary weather events, our team delivered. I cannot overstate my gratitude to everyone at PGE, first responders, and our community partners. While temperatures spiking to this extreme in the Pacific Northwest is unprecedented, particularly so early in the year. We were prepared. We have prioritized assistive hardening and resiliency, and we continue to see payoffs from building a smarter and more resilient grid. Our focus on preparedness is not isolated to our distribution system. We've also improved generation reliability, especially under the stress of extreme weather. Our regional partnerships and supply agreements also enabled us to leverage surplus renewable energy across these extraordinary times. Partnerships with our customers through standby generation and demand response also played a critical role in ensuring reliability. Together, these programs shaved 63 megawatts off our peak needs. Partnerships like these exemplify the spirit of Oregonians and will significantly expand as we work together to meet their growing reliability and flexibility needs. Turning to slide five. Top of mind for everyone following the extreme heat wave is wildfire. The bootleg wildfire currently burning in southern Oregon near the California border is a stark example. The vast majority of people in our service area live in highly developed urban areas, including five of Oregon's six largest cities. Our region is also geographically different from California and Southern Oregon, and historically, we do not have the same climate, vegetation, forests, or terrain. As Oregon's climate gets hotter and drier, PGE is doing more than ever to reduce risks and keep customers and Oregon safe. Prevention, detection, and response are central to our approach, including comprehensive risk analysis, infrastructure investments, as well as strong partnerships with local, state, and federal agencies. Wildfire is a top priority. We are increasing vegetation management and deploying technologies such as LIDAR and hypospatial imaging to prioritize high-risk areas. We are expanding our use of automation, remote monitoring, and early alert systems such as line sensors, reclosers, and others. We're installing fire-resistant ductile iron transmission and distribution poles in priority wildfire areas, modifying miles of transmission lines with tree wire, better clearances, and undergrounding in certain areas. Through enhanced monitoring and collaboration, we've improved detection and situational awareness. And while our focus is on prevention and investing in our grid, we're also expanding public safety power shutoffs, or PSPS, zones. As we work continuously to improve our number one priority is protecting the lives and property of our coworkers, our customers, and the communities we serve. While the actions we're taking to provide safe, reliable power are essential, there is an urgent need to address the underlying conditions driving climate change. To that end, Oregon lawmakers recently passed significant clean energy legislation enabling us to advance our shared goals of 80% reduction in greenhouse gas emissions by 2030 and 100% by 2040. While we continue to work through the IRP processes, this bill affords us the opportunity to extend our green community tariff programs, and the Transportation Electrification Bill enables us to further support EV adoption with key infrastructures up to and behind the meter. Additional important aspects of the legislation focused this past session is on low-income customers, social justice and those areas traditionally left behind, energy efficiency and the public purchase charge, as well as important modifications to outdated energy laws dating back more than two decades. Overall, this collaboration among stakeholders from across industry, the public sector, the business community, environmental organizations, social justice community, and equity groups resulted in the most significant clean energy standards in the country. We look forward to continuing these partnerships, working together, expanding our renewable energy portfolio, integrating distributed energy resources, and continuing to invest in a reliable and resilient grid. While this quarter once again presented challenges, years of investment and planning prepared us well. As we look forward, we are encouraged by the growth of our region, expanding high-tech and digital sectors, and continued in-migration. I'll now turn it over to Jim for more detail.