Portland General Electric Co

Good morning, everyone, and welcome to Portland General Electric Company's fourth quarter 2021 earnings results conference call. Today is Thursday, February 17th, 2022. 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 the time, simply press the number one on your touchtone telephone. If you would like to draw your question, please press the pound key on your touchtone telephone. If you do intend to ask a question, please avoid using the speakerphone. For opening remarks, I will now turn the call over to Portland General Electric Senior Director of Investor Relations, Treasurer and Risk Management, Jordan Jaramillo. Please go ahead, sir.

Thank you, Valerie. 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 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, Jardell. And thank you all for joining us today. 2021 was a year of strong growth and execution against the backdrop of the ongoing pandemic, the historic ice storm and record heat. We focused on grid hardening and new technologies to improve reliability and resiliency. Turning to slide four, for the full year 2021, we reported net income of $244 million or $2.72 per share. This compares with $155 million or $1.72 per share for the full year 2020. For the fourth quarter, net income was $66 million or $0.73 per share. This compares with $52 million or $0.57 per share for the fourth quarter of 2020. Our region is growing, particularly the tech and digital sectors, driving overall revenue growth. Net variable power costs were also higher, reflecting regional power market volatility, particularly in the third quarter. Operating administrative expenses increased due to higher wildfire and vegetation management expenses and the cost of several storms outside of the large major storm deferral. Finally, employee wages and benefit expenses were higher, reflecting inflation pressures and improved performance over 2020. Given our region's attractive environment for high-tech and digital companies and ongoing in-migration, we expect growth to remain very strong. Power market challenges will also likely continue. We've taken several steps to reduce our exposure through, first, forward pricing updates to the annual update tariff mechanism, second, new forecasting methodologies that better reflect wind and other volatility, reflected through our rate case. And third, plant operating improvements. And finally, fourth, procurement of additional forward capacity. Operating efficiency is a focus, and as we address rising customer expectations as well as inflationary pressures, will be increasingly important. All this combines to inform our 2020 22 earnings guidance of $2.75 to $2.90 per share. Later in the call, Jim will go into much more detail on both 2021 results and our 2022 outlook. I would like to now talk to a couple of highlights that were significant from an operational, legislative, and regulatory standpoint. First, opening The new integrated operations center and launching the advanced distribution management system were key milestones. These investments established the foundation for intelligent energy network that enables the integration of greater amounts of renewable energy, distributed energy resources, and increases system flexibility and resiliency. Second, we advanced our digital capabilities across the enterprise. to improve performance and deliver exceptional customer experiences. We've simplified our work and reduced costs by equipping field crews with new digital tools, upgrading supply chain systems, and increasing call center performance. Together, these advances allow us to get more work done and drive operational efficiency. Through advanced data analytics and smart grid technologies, we're increasing the reliability of our systems. even under uncertain and extreme weather conditions. Third, our path to decarbonization was further catalyzed by the passage of Oregon's clean energy legislation. Working with a broad coalition of stakeholders, aggressive carbon reduction goal targets were established that are consistent with our goals and aligned to the International Panel on Climate Change, or IPCC's Sixth Report. PGE was also the first utility in the country to sign the climate pledge, committing to achieving net zero emissions across our company operations by 2040. And for the 13th consecutive year, our voluntary renewable energy program was ranked number one in the U.S. by the National Renewable Energy Laboratory. Fourth, we initiated an RFP in April, for up to 500 megawatts of renewable energy and 375 megawatts of not emitting capacity. Initial bids were submitted in January with a short list expected to be issued in the second quarter and a final decision by the end of the year. While many of you have lots of questions on the bids, we are in the very early stages of evaluation and all bids are subject to NDAs. In collaboration with customers and stakeholders, we issued our inaugural distributed system plan focused on modernizing our grid to accelerate distributed energy resources and maximize grid benefits for all customers and community members. Fifth, as part of our 2022 general rate case, we recently reached an agreement that subject to OPUC final approval will resolve the annual revenue requirement, average rate-based, capital ratios, and corresponding increases in customer prices. And finally, this year we've relaunched our guiding behaviors, first established more than 25 years ago, and our ongoing and longstanding commitment to diversity, equity, and inclusion. We are increasing the representation of black, indigenous, and people of color, as well as women in leadership across our company. We're also continuing our long-standing focus on environmental stewardship, and during the past year, PGE employees completed over 15,000 hours of community service, and employees, retirees, the PGE Foundation, and our company donated $4.8 million to support our communities. As we look to the future, we anticipate continued economic growth and load increasing 2 to 2.5 percent in 2022, with longer-term growth of approximately 1.5 percent. Ongoing focus on digital and other technologies, operational improvements, and efficiencies which could help mitigate inflationary cost pressures. Overall, we're well-prepared with improved reliability, resiliency, and operating performance as we rapidly transform to address urgent climate change challenges and lead a clean energy future across our region. I'll now turn the call over to Jim. Thank you.