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spk08: Good morning, everyone, and welcome to Portland General Electric's company's first quarter 2024 earnings results conference call. Today is Friday, April 26, 2024. 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 session. If you would like to ask a question during this time, you simply press star 1 1 on your telephone keypad. If you would like to withdraw your question, please press star 11 again. If you do intend to ask a question, please avoid the use of the speakerphone. For opening remarks, I'll turn the call over to Portland General Electric's Manager of Investor Relations, Nick White. Please go ahead, sir.
spk38: Thank you, Norma. Good morning, everyone. I'm happy you can join us today. Before we begin this morning, I would like to remind you that we have prepared a presentation to supplement our discussion which we will 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 Form 10-K and 10Q, which are available on our website. Turning to slide three, leading our discussion today are Maria Pope, President and CEO, and Joe Terpich, Senior Vice President of Finance and CFO. Following their prepared remarks, we will open the line for your questions. Now it's my pleasure to turn the call over to Maria.
spk14: Thank you, Nick, and good morning, everyone. Thank you for joining us. Portland General Electric is on track in 2024, and the stage is set for steady normalized growth. After tough weather and extensive customer restoration in January, our results this quarter speak to strong execution. Beginning with slide four, I'll speak to our financial results and key drivers. For the first quarter, we reported GAAP net income of $109 million or $1.08 per diluted share. On a non-GAAP basis, net income was $123 million or $1.21 per diluted share. This compares with first quarter 2023 gap net income of $74 million, or $0.80 per diluted share. First quarter 2024 gap results excluded the 20% non-recoverable cost of the reliability contingency event incurred in the January storm event. Results this quarter, which Joe will discuss in his remarks, were driven by robust low growth from semiconductor and data center customers and our focus on operational execution. This focus was evident throughout the quarter and no more so than during the January storms. Our PGE team members navigated regional resource constraints, gas network disruptions, severe winter conditions that resulted in hundreds of thousands of customer outages. I'd like to again commend and thank my colleagues for their extraordinary work during this challenging event. As we look ahead to the balance of the year and beyond, we remain focused on three main areas. First, rapid transformation of our energy system propelled by continued investments in our service territory by semiconductor and digital infrastructure customers. Second, executing our capital plan to meet customers' priorities for clean energy and increased grid resilience. And third, delivering on our ongoing commitment to operational discipline by reducing risk, controlling cost, driving efficiency, and managing customer affordability. This is a period of rapid growth and transformation for both our energy system and our region. The robust growth of the semiconductor and digital sectors will enable system-wide infrastructure and reliability investments, and will continue to engage our customers, regulators, and other stakeholders to ensure that this growth benefits all customers, industrial, commercial, and residential alike. We continue to see significant residential transformation in our region as well, with strong growth of rooftop solar and electric vehicle adoption. Together, these changes are requiring us to think differently and innovate as we build and upgrade transmission and energy infrastructure on a scale reminiscent of when our industry first electrified the West. Moving to slide five, industrial growth. First, industrial load growth increased 4.9% compared to the first quarter last year. State and federal investments are bolstering semiconductor expansion in our service area. This quarter, Intel announced investments across four states, backed by $8.5 billion in federal funding. Intel expects that $36 billion will be spent in Hillsborough, Oregon, in the western part of our service territory. This is in addition to the significant semiconductor investments by analog devices, microchip, and many others. This will drive economic growth for years to come, hoping to cement Oregon's Silicon Forest as the premier hub for semiconductor manufacturing, research and development. These investments will have broad benefits across our region, strengthening our communities, creating jobs, providing workforce development and higher education opportunities. Moreover, Oregon continues to reinforce its position as a hub for the digital infrastructure that underpins our global economic growth, fueled by generative AI. A recent study by Cushman and Wakefield ranked Oregon as the fifth largest data center market nationally and eighth globally. With this mature digital ecosystem in our area, we've been fortunate to enable growth observe emerging trends, and plan accordingly. Last year, as part of our combined clean energy and integrated resource plan, we increased our expectations for industrial energy usage in our service territory by over 40%, anticipating the rapid growth that we are seeing today. Additionally, these plans emphasize the need for expanded transmission investments which we highlighted in our recent capital plan update. As industry continues to reshore and expand, we recognize the importance of electric infrastructure, clean energy supply, and reflecting our region's focus on sustainability, economic security, and transformative opportunities for our next generation. Capital plan execution. The ambition and clean energy goals of our customers underscore the importance of Portland General Electric's commitment to transform our energy systems, to pursue clean energy resources and expand transmission, and invest in grid resilience. These investments not only position us for long-term growth, but also create significant benefits for all customers. Our generation, battery storage, and grid infrastructure projects are great examples. The forthcoming comfortable and seaside battery storage projects will play a critical role in matching variable renewable production with customer demand. The flexibility these batteries provide will allow us to navigate increasingly frequent and costly periods of power cost volatility. Similarly, the clear water development that came online in January has allowed PGE to generate more wind energy than ever before and will lead to customer price reduction while providing important geographic resource diversity. We're also continuing to modernize and harden our grid to accommodate emerging technologies and to improve resilience in the face of severe winter and summer weather. These investments on behalf of customers from battery storage to grid modernization and resiliency projects are at the center of our 2025 general rate case filed in February, which Joe will touch on shortly. Operational discipline. As we advance critical investments to strengthen our system, affordability remains squarely in focus. This means finding opportunities to drive efficiencies and savings through power cost management and operational discipline. In March, EG announced plans to join other Western utilities in the KISO extended day ahead market. EDAM offers us a larger operational footprint that will enhance reliability and help alleviate power cost pressure. On the operational front, TGE teams are deploying technology to prioritize work, optimize business processes, and focus on key risks like cybersecurity and wildfire mitigation. For example, as we progress through our year-round wildfire program, we are enhancing our vegetation management and investing in system hardening, situational awareness, and operational practices. This includes AI-equipped cameras, weather stations, reclosers, fire mesh pole wrap, and early fall detection. As we look ahead, we have a solid first quarter, and we are focused on execution and delivering on expectations. Our plans are exciting, achievable, and we're going to get it done. With that, I'll turn it over to Joe, who will walk us through our financial results in more detail. Thank you.
spk31: Thank you, Maria, and good morning, everyone. Turning to slide six, our Q1 results reflect continued demand growth from industrial customers, dynamic weather, and ongoing efforts to de-risk our operations. Weather in our area was variable throughout the quarter, with colder conditions in January, followed by more mild conditions in February and March. Overall, heating degree days for the quarter were 8.9% lower than in Q1 2023. Q1 2024 loads decreased by 0.9%, but increased by 1.2% weather-adjusted compared to Q1 2023. 2024 residential load decreased 3.6% year-over-year due to mild weather, but increased by 0.5% weather-adjusted. Residential customer account increased 1.3%. Commercial load decreased 2.1%, or 1.3% weather-adjusted. driven largely by lower commercial activity during the January winter storm. The industrial class sustained its momentum, with load increasing 4.9% for 5.2% weather adjusted. Demand growth for digital and semiconductor customers supports this growth trend, reinforced by the ungrowing investment Maria Hyland. We maintained good visibility to our robust pipeline of incoming projects and remain confident in the strength of our service territory. Given these factors, we are reiterating our 2024 weather-adjusted load growth guidance of 2% to 3%, and our long-term growth guidance of 2% through 2027. I'll now cover our financial performance quarter over quarter. We observed a 3 cent decrease in revenues, primarily due to weather-driven decreases in deliveries. An $0.18 increase resulting from the right sizing of our cost structure and improved recovery of wildfire mitigation, vegetation management, other O&Ms, and capital assets serving customers. Power costs drove a $0.30 increase in EPS driven by a $0.13 EPS increase due to power cost detriments in Q1 2023 that reversed for this comparison and a $0.17 increase in EPS from lower power costs than anticipated in the annual update tariff, driven by de-risking actions taken throughout the quarter. We had a 4 cent decrease in other items, including the diluted impacts of recent equity draws, lower regulatory program interest, and higher property taxes, partially offset by higher AFUDC and lower income tax expense, generally from PTC impacts. And lastly, a 13-cent decrease to GAAP EPS resulting from the 20% portion of non-recoverable January storm RCE costs, bringing us to a GAAP EPS of $1.08 per diluted share. After adjusting for this 13-cent impact, we reach our Q1 2024 non-GAAP EPS of $1.21 per diluted share. On to slide seven. for our current capital forecast. Our plan for 2024 remains on track, including progress on the Constable and Seaside Battery Project, as well as our transmission and base system investments. The ongoing RFP is moving ahead as we seek additional resources to serve customer growth and make progress on our clean energy targets. Bid submissions will conclude in April, and we will then move to the evaluation and scoring as selection criteria continue to focus on least cost and least risk. Submission of a short list for acknowledgement by the OPUC is expected in early Q3, and bid selection is anticipated in the third or fourth quarter. We will keep you updated as the RFP progresses. As we've noted previously, the figures in our capital plan do not include any potential forthcoming RFP projects. Turning to slide 8 for a summary of the 2025 general rate case filed in late February. This filing is largely focused on the recovery of our incoming battery storage project and continued system investments for reliability, resiliency, and grid modernization. A procedural schedule has been posted for the rate review docket, and we look forward to engaging stakeholders at upcoming settlement discussions, the first beginning next week. Review of the filing will continue through the year and all items remain subject to OPUC approval. New customer rates are anticipated at the beginning of 2025. On to slide 9 for a summary of our liquidity and finances. Total available liquidity at March 31 is $1.1 billion. Our investment grade credit ratings, stable credit outlook, and balance sheet strength remain static since our last disclosure. In late February, we executed $450 million in long-term debt issuances, and in March, we drew $78 million previously priced under our ATM program, focused on rate-based investments. The ATM continues to provide adequate capacity and flexibility to support our ongoing base capital plan, and our access to both equity and debt capital markets remains strong. Capital structure maintenance careful solution management, and capital deployment for accretive rate-based investments remain the pillars of our financial strategy. We'll continue to calibrate our approach as investment opportunities evolve, including from the RFP, and we will keep you informed as we proceed. Reflecting on Q1, our results represent a solid step forward in our long-term growth trajectory. This plan is underpinned by our continued focus and operational efficiency, thoughtful cost management, and strategic capital investment. The strength of our region, highlighted by the continued low growth expectations I noted earlier, as well as our focus on consistent execution and performance, give us confidence in our performance for the year and beyond. As such, we are reaffirming our 2024 adjusted guidance of $2.98 to $3.18 per share, and our long-term earnings and dividend growth guidance of 5% to 7%. Regarding dividends, we recently announced a $0.10 annual dividend increase in line with our targeted growth range and our 60% to 70% payout ratio target. As we turn to the balance of 2024, we remain centered on our strategic plan that will deliver results and value for our customers, shareholders, and the communities we serve. And now, operator, we are ready for questions.
spk08: Thank you. As a reminder, to ask a question, you'll need to press star 11 on your telephone. To withdraw your question, please press star 11 again. Please wait for your name to be announced. Please stand by while we compile the Q&A roster. Our first question comes from the line of Richard Sunderland with JP Morgan. Your line is now open.
spk39: Hi, good morning. Can you hear me?
spk15: Yes, we can.
spk39: Great. Thank you for the time today. You'll appreciate the color on the RFP process. I'm curious if the projects come through at the pace you expect, what could that potential equity need be? And just for comparison's sake, how should we think about that equity versus equity for the base plan as it stands today?
spk14: Sure. Let me have Joe talk to you about our financing plans and how we've reflected them. But overall, with the RFP process, we expect a really robust pipeline of renewable and capacity projects. We should probably have a good short list as well as sort of conclusions around the second, late second quarter, beginning of the third quarter. And we would hope to be able to have contracts executed towards the end of the year, maybe even spilling into the first quarter. Joe, with regards to equity?
spk27: Good morning, Richard.
spk31: As it relates to equity, any equity need coming from the RFP would be incremental to our plan. And we have said that we expect to finance that in both a solution management approach matching the cash flows to the needs as well as possible, as well as maintaining a 50-50 cap structure balance. As it relates to pricing, you know, we will wait and see how this sizes out. I mean, I think our guidance that we, or I'm sorry, our illustrative presentation that we give on rate-based growth in our investor deck is probably our best proxy to build off of as it relates to equity. To Maria's comment, you know, we do, you know, anticipate a pretty active RFP process, and timing-wise and cash flow-wise, as you think about it, we are looking for projects that are able to come online by the end of 2027 that also align with what is our preferred portfolio.
spk39: Okay, understood. Thank you for the color there. And then turning to the rate case, I appreciate it's early, but how is the process unfolding so far? I'm hoping you can frame the revenue-esque here versus the prior few cases in thinking across size and composition of say capital, O&M, and power. And then given this follows last year's case, is settlement the expected outcome here? How should we think about that?
spk31: So sure, I'll start us off on the rate case. So the rate case focus that we have this case is mainly about capital. So I would think of it as 65% of this case is capital, and then 25% O&M and 10% for our power costs. This is a change from our last case. Our last case upon ultimate settlement, over half of the case was power costs. So we really look at this case as making sure that we're as efficient as possible and really looking for recovery of putting these assets in service, including the battery projects that we've talked about that really drive benefits for the customer. You know, and then as it relates to the settlement, the settlement processes will, you know, start next week, as I mentioned previously. You know, and we hope to get aligned with parties to be able to settle. But, you know, each case, you know, stands on its own. And we just, you know, we hope to have a pretty open and productive dialogue with all interested parties starting soon.
spk39: Okay. Got it. That's, I'll leave it there for now. Thank you very much for the time.
spk08: Thank you. Thank you. One moment for our very next question. Our next question comes from the line of Shar Perez with Guggenheim Partners. Your line is now open. Hey, guys.
spk22: Good morning, Maria. Maria, I know this year has kind of a shorter session for the legislature. Can you give us any updates on efforts around maybe a state wildfire fund and what the groundwork, if any, looks like for the longer legislative session ahead? I mean, given what you know today, is this something you could see get done by 25? Thanks.
spk14: Sure. We are working on legislative solutions both at the state and the federal level. And on the state side, we have been talking with a number of parties from the horse organization to representatives, senators, to our customers, and to leadership across the entire state. Clearly, wildfire is a societal risk, and we want to address it from a societal, as a solution, not just one that's solely focused on the utility, but a broad set of solutions that really works for Oregon. And then also on the federal side, there's a lot of discussions taking place from how our forest lands are managed nationally through the U.S. Forest Service and the Bureau of Land Management to also ensuring that not only utilities have access to insurance, but also homeowners and others. This area is combined with all of the operational work that we're doing. The very important operational work we're doing is our number one priority.
spk22: to keep our customers and the communities that we serve safe got it perfect perfect perfect perfect thank you for that and then um just on power cost I mean you had a substantial deferral during the storms in January and the MVPC is otherwise kind of below the baseline can you remind us is there a cap on the amount you could defer under the RCE construct can we just I guess, can we just put a finer point on what you saw during the event and how it interacts with the NVPC? And then secondly, how are things, you know, hydro snowpack looking for the summer peak? Thanks.
spk14: Sure. So let me take the first one in terms of the conditions during the January period of time. It was really extraordinary. Early on the January event, Alberta came very close to a true energy crisis, and that spilled over into the Pacific Northwest. Later on, a couple days later, a major storage facility in the Pacific Northwest came offline. And so generators throughout the entire region scrambled. We maximized energy flows coming in from the desert southwest and California, but we hit a number of transmission constraints. And we also brought in much higher levels of power out of British Columbia. Most of that was hydro-based. What we have seen is that our experience was not too different from some other large investor-owned utilities. Through our RCE mechanism, we are able to defer 20% – excuse me, we're able to defer 80%, and then we retain 20% which flows through the PCAM mechanism. There is no cap on that. And we are overall really focused on managing power costs. We've seen them come up quite significantly and a big issue for us as well as for others. With regards to hydro conditions, they're pretty similar to where they were last year. Obviously, we're in the springtime, and so we'll see hydro pick up in the second quarter. And quite frankly, we have stronger flows than we expected in the first quarter. As you look towards the summertime, There is very little snowpack in Canada and in British Columbia in particular where most of our hydro comes and what drives the market price of power through the region. So even though you see year-to-year similarities, I think we are setting up for a very tough power cost summer. Overall, hydro throughout the entire region is about 80% of normal.
spk21: Got it. Perfect. Thank you, Mary. I appreciate the color. Thanks so much. We'll see you soon.
spk08: Thank you. One moment for our next question, please. Our next question comes from the line of Paul Fremont from Ladenburg-Thalman. Your line is now open.
spk04: Paul Fremont Thank you very much. I guess my first question has to do with some of the demand that you're seeing on the data center side. Is that demand fully at this point incorporated into the IRPs that you filed or, you know, do you see sort of incremental demand above what you're projecting? Sure.
spk14: So, as you know, we did our first ever plan and follow on IRP last year. This, about this time last year, we filed a supplemental to that and took up the energy demand by about 40% from what we were projecting previously. After you look at the efficiency of combined technologies and what we were seeing in some of the new deployments that we have, as well as how we're using the distribution system more effectively, that came down to about 14% overall. But it's a 40% increase in demand. It is a huge increase. And it certainly got everybody's attention. And I think that it's absolutely what we're going to be, probably the floor on what we'll see as we move forward. Just for perspective, of our industrial customer base, about 20% are digital data center type customers. The real bulk of our industrial base is actually semiconductors. And about 15% of semiconductors in the U.S. are actually manufactured in our service territory. And most recently, the state of Oregon created a matching fund to the CHIPS Act. It's about $240, $250 million. And 85% of the allocation of those funds, which goes to specific companies, are companies who have operations in our service territory. So we... continued growth from not only from data centers, but also from semiconductor manufacturers through the next decade that will probably only get higher, not lower.
spk17: Great.
spk04: And I guess the most likely period if you were to settle in the rate case, would that be before hearings?
spk14: No, I would imagine that we'll probably have a number of discussions and workshops with staff and parties. You know, we try and settle before we ever get to, you know, a commission or order or whatnot. You know, we generally are a pretty collaborative state as we work through issues. Obviously, customer prices has always been and will continue to be a major focus for us, and we've had some pretty big increases. So these conversations are going to be a challenge.
spk04: And then last question for me, can you just reiterate, you know, in terms of M&A, whether, you know, what the company would be open to or not open to in the future potentially? Sure.
spk14: As you know, we don't comment on any sorts of discussions along those lines, and we're not changing our policies.
spk05: Great. I think that's it for me. Thank you.
spk08: Thank you. One moment for our next question, please. Our next question comes from the line of Greg Orrell with UBS. Your line is now open. Morning, Greg.
spk03: Good morning. Thank you. Back to the drivers for the quarter, there was the management of power costs, which was a 17-cent benefit. How does that flow through the PCAM, or where does the PCAM stand?
spk31: Morning, Greg. This is Joe Terpich. So as you may recall, the PCAM has a deadband, an asymmetric deadband of $15 million below before 2020. a sharing calculation is under $30 million above. Where we sit currently, so during the quarter, really what we saw was the pretty productive management of cost and also a stable market. We didn't see the volatility that we had seen in prior periods on gas prices and things like that. So where we sit currently is we are $19 million below the PCAM baseline currently. Now, part of that is due to the shaping of the way that the rates are set in the automatic adjustment tariff as it goes through the year. We've disclosed in the 10Q that we think we'll be somewhere around the edge of the baseline by the end of the year.
spk32: But we do sit that $19 million stable baseline currently.
spk02: Okay. Thanks, Joe.
spk08: Thank you. As a reminder, to ask a question, you'll need to press star 11 on your telephone. And please wait for your name to be announced. One moment for our next question. Our next question comes from the line of Willett Granger with Mizuho Securities. Your line is now open.
spk36: Hi, good morning, everybody. Maybe just one, if you can unpack for us a little bit. Understand there's two buckets with costs associated with the January storms. You have the 75 million RCE associated with the RCE event and then a separate 48 million. Could you maybe talk to how you're thinking about the timing of the recovery of those dollars?
spk17: Sure.
spk31: Good morning, Willard. The reason that they are separate like that and I'll talk to you is they are recovered under two different regulatory mechanisms that they're covered under. I'll start with the 75. $5 million deferral. The $75 million deferral is an RCE deferral under the PCAM. As it relates to the timing, that recovery will be assessed in a process that will go through mid-2025, and we would expect currently that the recovery of whatever amount is settled in that process would start in 2026. The reason I say expect, the RCE mechanism is new and And the methods of recovery will be part of that discussion. Separately, we incurred $48 million in O&M in capital costs as related to the physical restoration of the system during that storm period. In Oregon, there are provisions that allow for the recovery of those costs when a state of emergency is declared and there's such damage. T. Proceeding has started and that sort of that that cost proceeding has started, but if the timeline is not set. So there's a filing made T. There's a timeline underway, you'll be if I hadn't put an expectation at some period in 2025 once it's settled, there would be a recovery. But right now there's not a set close date for the proceeding for me to be able to say what date that recovery would occur. Nor do we have until the proceeding ends what the time period of that recovery could be. It could be a short period or up to several years based on what decisions are made.
spk36: Appreciate the color. And then maybe one more on the extended day ahead market proposal to join the Cal ISO. Would that allow you to get any sort of FERC add, ROE adder, or any sort of incremental transmission bill to the capital plan? And maybe how should we be thinking about that? Thank you.
spk14: That's a good question. No, it would not. It's a part of an ISO. There is no RTO in the west, and we're probably quite a ways off from that if we ever do get to an RTO. It allows us to move from the energy and balance market, which is essentially a real-time market, to the day ahead. And there's some pretty significant customer benefits that we'll realize from that, but also some important operational benefits. As we maximize the diverse renewable resources from the desert southwest and extensive solar the Pacific Northwest hydro and all of the wind energy in between. So it allows for really a more planful portfolio effect, and it builds upon the really good work that has already been done through the energy imbalance market.
spk18: Great. Thank you.
spk08: Thank you. Thank you. I'm currently showing no further questions at this time. I'd like to hand the conference back over to Maria Pope President and Chief Executive Officer for closing remarks.
spk14: Great. Thank you for joining us today. We appreciate your interest in Portland General and we look forward to connecting with you soon. Thank you very much.
spk08: This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day. you Thank you.
spk12: Thank you.
spk08: Good morning, everyone, and welcome to Portland General Electric's company's first quarter 2024 earnings results conference call. Today is Friday, April 26, 2024. 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 session. If you would like to ask a question during this time, you simply press star 1 1 on your telephone keypad. If you would like to withdraw your question, please press star 11 again. If you do intend to ask a question, please avoid the use of the speakerphone. For opening remarks, I'll turn the call over to Portland General Electric's Manager of Investor Relations, Nick White. Please go ahead, sir.
spk38: Thank you, Norma. Good morning, everyone. I'm happy you can join us today. Before we begin this morning, I would like to remind you that we have prepared a presentation to supplement our discussion which we will 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 Form 10-K and 10Q, which are available on our website. Turning to slide three, leading our discussion today are Maria Pope, President and CEO, and Joe Terpich, Senior Vice President of Finance and CFO. Following their prepared remarks, we will open the line for your questions. Now, it's my pleasure to turn the call over to Maria.
spk14: Thank you, Nick, and good morning, everyone. Thank you for joining us. Portland General Electric is on track in 2024, and the stage is set for steady, normalized growth. After tough weather and extensive customer restoration in January, our results this quarter speak to strong execution. Beginning with slide four, I'll speak to our financial results and key drivers. For the first quarter, we reported GAAP net income of $109 million or $1.08 per diluted share. On a non-GAAP basis, net income was $123 million or $1.21 per diluted share. This compares with first quarter 2023 gap net income of $74 million, or $0.80 per diluted share. First quarter 2024 gap results excluded the 20% non-recoverable cost of the reliability contingency event incurred in the January storm event. Results this quarter, which Joe will discuss in his remarks, were driven by robust low growth from semiconductor and data center customers and our focus on operational execution. This focus was evident throughout the quarter and no more so than during the January storms. Our PGE team members navigated regional resource constraints, gas network disruptions, severe winter conditions that resulted in hundreds of thousands of customer outages. I'd like to again commend and thank my colleagues for their extraordinary work during this challenging event. As we look ahead to the balance of the year and beyond, we remain focused on three main areas. First, rapid transformation of our energy system propelled by continued investments in our service territory by semiconductor and digital infrastructure customers. Second, executing our capital plan to meet customers' priorities for clean energy and increased grid resilience. And third, delivering on our ongoing commitment to operational discipline by reducing risk, controlling cost, driving efficiency, and managing customer affordability. This is a period of rapid growth and transformation for both our energy system and our region. The robust growth of the semiconductor and digital sectors will enable system-wide infrastructure and reliability investments. and will continue to engage our customers, regulators, and other stakeholders to ensure that this growth benefits all customers, industrial, commercial, and residential alike. We continue to see significant residential transformation in our region as well, with strong growth of rooftop solar and electric vehicle adoption. Together, these changes are requiring us to think differently and innovate as we build and upgrade transmission and energy infrastructure on a scale reminiscent of when our industry first electrified the West. Moving to slide five, industrial growth. First, industrial load growth increased 4.9% compared to the first quarter last year. State and federal investments are bolstering semiconductor expansion in our service area. This quarter, Intel announced investments across four states, backed by $8.5 billion in federal funding. Intel expects that $36 billion will be spent in Hillsborough, Oregon, in the western part of our service territory. This is in addition to the significant semiconductor investments by analog devices, microchip, and many others. This will drive economic growth for years to come, hoping to cement Oregon's Silicon Forest as the premier hub for semiconductor manufacturing, research and development. These investments will have broad benefits across our region, strengthening our communities, creating jobs, providing workforce development and higher education opportunities. Moreover, Oregon continues to reinforce its position as a hub for the digital infrastructure that underpins our global economic growth, fueled by generative AI. A recent study by Cushman and Wakefield ranked Oregon as the fifth largest data center market nationally and eighth globally. With this mature digital ecosystem in our area, we've been fortunate to enable growth observe emerging trends, and plan accordingly. Last year, as part of our combined clean energy and integrated resource plan, we increased our expectations for industrial energy usage in our service territory by over 40%, anticipating the rapid growth that we are seeing today. Additionally, these plans emphasize the need for expanded transmission investments which we highlighted in our recent capital plan update. As industry continues to reshore and expand, we recognize the importance of electric infrastructure, clean energy supply, and reflecting our region's focus on sustainability, economic security, and transformative opportunities for our next generation. Capital plan execution. The ambition and clean energy goals of our customers underscore the importance of Portland General Electric's commitment to transform our energy systems, to pursue clean energy resources and expand transmission, and invest in grid resilience. These investments not only position us for long-term growth, but also create significant benefits for all customers. Our generation, battery storage, and grid infrastructure projects are great examples. The forthcoming comfortable and seaside battery storage projects will play a critical role in matching variable renewable production with customer demand. The flexibility these batteries provide will allow us to navigate increasingly frequent and costly periods of power cost volatility. Similarly, the clear water development that came online in January has allowed PGE to generate more wind energy than ever before and will lead to customer price reduction while providing important geographic resource diversity. We're also continuing to modernize and harden our grid to accommodate emerging technologies and to improve resilience in the face of severe winter and summer weather. These investments on behalf of customers from battery storage to grid modernization and resiliency projects are at the center of our 2025 general rate case filed in February, which Joe will touch on shortly. Operational discipline. As we advance critical investments to strengthen our system, affordability remains squarely in focus. This means finding opportunities to drive efficiencies and savings through power cost management and operational discipline. In March, EG announced plans to join other Western utilities in the KISO extended day ahead market. EDAM offers us a larger operational footprint that will enhance reliability and help alleviate power cost pressure. On the operational front, TGE teams are deploying technology to prioritize work, optimize business processes, and focus on key risks like cybersecurity and wildfire mitigation. For example, as we progress through our year-round wildfire program, we are enhancing our vegetation management and investing in system hardening, situational awareness, and operational practices. This includes AI-equipped cameras, weather stations, reclosers, fire mesh pole wrap, and early fall detection. As we look ahead, we have a solid first quarter, and we are focused on execution and delivering on expectations. Our plans are exciting, achievable, and we're going to get it done. With that, I'll turn it over to Joe, who will walk us through our financial results in more detail. Thank you.
spk31: Thank you, Maria, and good morning, everyone. Turning to slide six, our Q1 results reflect continued demand growth from industrial customers, dynamic weather, and ongoing efforts to de-risk our operations. Weather in our area was variable throughout the quarter, with colder conditions in January, followed by more mild conditions in February and March. Overall, heating degree days for the quarter were 8.9% lower than in Q1 2023. Q1 2024 loads decreased by 0.9%, but increased by 1.2% weather-adjusted compared to Q1 2023. 2024 residential load decreased 3.6% year-over-year due to mild weather, but increased by 0.5% weather-adjusted. Residential customer count increased 1.3%. Commercial load decreased 2.1% or 1.3% weather-adjusted. driven largely by lower commercial activity during the January winter storm. The industrial class sustained its momentum, with load increasing 4.9% for 5.2% weather adjusted. Demand growth for digital and semiconductor customers supports this growth trend, reinforced by the on-growing investment Maria highlight. We maintain good visibility to our robust pipeline of incoming projects and remain confident in the strength of our service territory. Given these factors, we are reiterating our 2024 weather-adjusted load growth guidance of 2% to 3% and our long-term growth guidance of 2% through 2027. I'll now cover our financial performance quarter over quarter. We observed a 3 cent decrease in revenues primarily due to weather-driven decreases in deliveries. An $0.18 increase resulting from the right sizing of our cost structure and improved recovery of wildfire mitigation, vegetation management, other O&Ms, and capital assets serving customers. Power costs drove a $0.30 increase in EPS driven by a $0.13 EPS increase due to power cost detriment in Q1 2023 that reversed for this comparison and a $0.17 increase in EPS from lower power costs than anticipated in the annual update tariff, driven by de-risking actions taken throughout the quarter. We had a 4 cent decrease in other items, including the diluted impacts of recent equity draws, lower regulatory program interest, and higher property taxes, partially offset by higher AFUDC and lower income tax expense, generally from PTC impacts. And lastly, a 13-cent decrease to GAAP EPS resulting from the 20% portion of non-recoverable January storm RCE costs bringing us to a GAAP EPS of $1.08 per diluted share. After adjusting for this 13-cent impact, we reach our Q1 2024 non-GAAP EPS of $1.21 per diluted share. On to slide seven. for our current capital forecast. Our plan for 2024 remains on track, including progress on the Constable and Seaside Battery project, as well as our transmission and base system investments. The ongoing RFP is moving ahead as we seek additional resources to serve customer growth and make progress on our clean energy targets. Bid submissions will conclude in April and we will then move to the evaluation and scoring as selection criteria continue to focus on lease cost and lease risk. Submission of a short list for acknowledgement by the OPUC is expected in early Q3, and bid selection is anticipated in the third or fourth quarter. We will keep you updated as the RFP progresses. As we've noted previously, the figures in our capital plan do not include any potential forthcoming RFP projects. Turning to slide 8 for a summary of the 2025 general rate case filed in late February. This filing is largely focused on the recovery of our incoming battery storage project and continued system investments for reliability, resiliency, and grid modernization. A procedural schedule has been posted for the rate review docket, and we look forward to engaging stakeholders at upcoming settlement discussions, the first beginning next week. Review of the filing will continue through the year, and all items remain subject to OPUC approval. New customer rates are anticipated at the beginning of 2025. On to slide nine for a summary of our liquidity and finances. Total available liquidity at March 31 is $1.1 billion. Our investment-grade credit ratings, stable credit outlook, and balance sheet strength remain static since our last disclosure. In late February, we executed $450 million in long-term debt issuances, and in March, we drew $78 million previously priced under our ATM program, focused on rate-based investments. The ATM continues to provide adequate capacity and flexibility to support our ongoing base capital plan, and our access to both equity and debt capital markets remains strong. Capital structure maintenance, careful dilution management, and capital deployment for accretive rate-based investments remain the pillars of our financial strategy. We'll continue to calibrate our approach as investment opportunities evolve, including from the RFP, and we will keep you informed as we proceed. Reflecting on Q1, our results represent a solid step forward in our long-term growth trajectory. This plan is underpinned by our continued focus on operational efficiency, thoughtful cost management, and strategic capital investment. The strength of our region, highlighted by the continued load growth expectations I noted earlier, as well as our focus on consistent execution and performance, give us confidence in our performance for the year and beyond. As such, we are reaffirming our 2024 adjusted guidance of $2.98 to $3.18 per share in our long-term earnings and dividend growth guidance of 5% to 7%. Regarding dividends, we recently announced a $0.10 annual dividend increase in line with our targeted growth range and our 60% to 70% payout ratio target. As we turn to the balance of 2024, We remain centered on our strategic plan that will deliver results and value for our customers, shareholders, and the communities we serve. And now, operator, we are ready for questions.
spk08: Thank you. As a reminder, to ask a question, you'll need to press star 1-1 on your telephone. To withdraw your question, please press star 1-1 again. Please wait for your name to be announced. Please stand by while we compile the Q&A roster. Our first question comes from the line of Richard Sunderland with JP Morgan. Your line is now open.
spk39: Hi, good morning. Can you hear me?
spk15: Yes, we can.
spk39: Great. Thank you for the time today. You appreciate the color on the RFP process. I'm curious if the projects come through at the pace you expect, what could that potential equity need be? And just for comparison's sake, how should we think about that equity versus equity for the base plan as it stands today?
spk14: Sure. Let me have Joe talk to you about our financing plans and how we've reflected them. But overall, with the RFP process, we expect a really robust pipeline of renewable and capacity projects. We should probably have a good short list as well as sort of conclusions around the late second quarter, beginning of the third quarter. And we would hope to be able to have contracts executed towards the end of the year, maybe even spilling into the first quarter. Joe, with regards to equity?
spk27: Good morning, Richard.
spk31: You know, as it relates to equity, any equity need coming from the RFP would be incremental to our plan. And we have said that we expect to finance that in both a solution management approach matching the cash flows to the needs as well as as possible, as well as maintaining a 50-50 cap structure balance. As it relates to pricing, we will wait and see how this sizes out. I mean, I think our guidance that we, or I'm sorry, our illustrious presentation that we give on rate-based growth in our investor deck is probably our best proxy to build off of as it relates to equity. To Maria's comment, we do you know, anticipate a pretty active RFP process. And timing-wise and cash flow-wise, as you think about it, we are looking for projects that are able to come online by the end of 2027 that also align with what is our preferred portfolio.
spk39: Okay, understood. Thank you for the color there. And then turning to the rate case, I appreciate it's early, but how is the process unfolding so far? I hope you can frame the revenue-esque here versus the prior few cases in thinking across size and composition of, say, capital, O&M, and power. And then given this follows last year's case, is settlement the expected outcome here? How should we think about that?
spk31: So, sure, I'll start us off on the rate case. So, you know, the rate case focus that we have in this case is mainly about capital. So I would think of it as 65% of this case is capital and then 25% O&M and 10% for our power costs. This is a change from our last case. Our last case upon ultimate settlement, over half of the case was power costs. So we really look at this case as making sure that we're as efficient as possible and really looking for recovery of putting these assets in service, including the battery projects that we've talked about that really drive benefits for the customer. And then as it relates to settlement, the settlement processes will start next week, as I mentioned previously, and we hope to get aligned with parties to be able to settle. But each case stands on its own, and we hope to have a pretty open and productive dialogue with all interested parties starting soon.
spk39: Okay, got it. That's I'll leave it there for now. Thank you very much for the time.
spk08: Thank you. Thank you a moment for our very next question. Our next question comes from the line of sharp Reza with Guggenheim partners. Your line is now open.
spk22: Hey, good morning, Maria. Maria, I know this is this is this year has a kind of a shorter session for the legislature. Can you give us any updates on efforts around maybe a state wildfire fund and what the groundwork, if any, looks like for the longer legislative session ahead? I mean, given what you know today, is this something you could see get done by 25? Thanks.
spk14: Sure. We are working on solutions both at the state and the federal level. And on the state side, we have been talking with a number of parties from the horse organization to representatives, senators, to our customers, and to leadership across the entire state. Clearly, wildfire is a societal risk, and we want to address it from a societal, as a solution, not just one that's solely focused on the utility, but a broad set of solutions that really works for Oregon. And then also on the federal side, there's a lot of discussions taking place from how our forest lands are managed nationally through the U.S. Forest Service and the Bureau of Land Management to also ensuring that not only utilities have access to insurance, but also homeowners and others. This area is combined with all of the operational work that we're doing. The very important operational work we're doing is our number one priority. to keep our customers and the communities that we serve safe.
spk22: Got it. Perfect. Perfect, perfect, perfect. Thank you for that. And then just on power cost, I mean, you had a substantial deferral during the storms in January, and the MVPC is otherwise kind of below the baseline. Can you remind us, is there a cap on the amount you could defer under the RCE construct? Can we just I guess, can we just put a finer point on what you saw during the event and how it interacts with the NVPC? And then secondly, how are things, you know, hydro snowpack looking for the summer peak? Thanks.
spk14: Sure. So let me take the first one in terms of the conditions during the January period of time. It was really extraordinary. Early on the January event, Alberta came very close to a true energy crisis and that spilled over into the Pacific Northwest. Later on, a couple days later, a major storage facility in the Pacific Northwest came offline. And so generators throughout the entire region scrambled. We maximized energy flows coming in from the desert southwest and California, but we hit a number of transmission constraints. And we also brought in much higher levels of power out of British Columbia. Most of that was hydro-based. What we have seen is that our experience was not too different from some other large investor-owned utilities. Through our RCE mechanism, we are able to defer 20 percent, excuse me, we're able to defer 80 percent and then we retain 20 percent which flows through the PCAM mechanism. There is no cap on that. And we are overall really focused on managing power costs. We've seen them come up quite significantly and a big issue for us as well as for others. With regards to hydro conditions, they're pretty similar to where they were last year. Obviously, we're in the springtime, and so we'll see hydro pick up in the second quarter. And quite frankly, we have stronger flows than we expected in the first quarter. As you look towards the summertime, There is very little snowpack in Canada and in British Columbia in particular where most of our hydro comes and what drives the market price of power through the region. So even though you see year-to-year similarities, I think we are setting up for a very tough power cost summer. Overall, hydro throughout the entire region is about 80% of normal.
spk21: Got it. Perfect. Thank you, Mary. I appreciate the color. Thanks so much. We'll see you soon.
spk08: Thank you. One moment for our next question, please. Our next question comes from the line of Paul Fremont from Ladenburg-Salmon. Your line is now open.
spk17: Thank you very much.
spk04: I guess my first question has to do with some of the demand that you're seeing on the data center side. Is that demand fully, at this point, incorporated into the IRPs that you filed or, you know, do you see sort of incremental demand above what you're projecting? Sure.
spk14: So, as you know, we did our first ever plan and follow on IRP last year. This, about this time last year, we filed a supplemental to that and took up the energy demand by about 40% from what we were projecting previously. After you look at the efficiency of combined technologies and what we were seeing in some of the new deployments that we have, as well as how we're using the distribution system more effectively, that came down to about 14% overall. But it's a 40% increase in demand. It is a huge increase. And it certainly got everybody's attention. And I think that it's absolutely what we're going to be, probably the floor on what we'll see as we move forward. Just for perspective, of our industrial customer base, about 20% are digital data center type customers. The real bulk of our industrial base is actually semiconductors. And about 15% of semiconductors in the U.S. are actually manufactured in our service territory. And most recently, the state of Oregon created a matching fund to the CHIPS Act. It's about $240, $250 million. And 85% of the allocation of those funds, which goes to specific companies, are companies who have operations in our service territory. continued growth from not only from data centers, but also from semiconductor manufacturers through the next decade that will probably only get higher, not lower.
spk17: Great.
spk04: And I guess the most likely period if you were to settle in the rate case, would that be before hearings?
spk14: No, I would imagine that we'll probably have a number of discussions and workshops with staff and parties. You know, we try and settle before we ever get to, you know, a commission or order or whatnot. You know, we generally are a pretty collaborative state as we work through issues. Obviously, customer prices has always been and will continue to be a major focus for us, and we've had some pretty big increases. So these conversations are going to be a challenge.
spk04: And then last question for me, can you just reiterate, you know, in terms of M&A, whether, you know, what the company would be open to or not open to in the future potentially? Sure.
spk14: As you know, we don't comment on any sorts of discussions along those lines, and we're not changing our policies.
spk03: great i think that's it for me thank you thank you thank you one moment for our next question please our next question comes from the line of greg orrell with ubs your line is now open all right greg yes good morning thank you um so back to the uh drivers for the for the quarter um there there was you know the the management of uh power costs would which was a 17-cent benefit. How does that flow through the PCAM, or where does the PCAM stand?
spk31: Morning, Greg. This is Joe Turpik. So as you may recall, the PCAM has a deadband, an asymmetric deadband of $15 million below before 2020. a sharing calculation is done or $30 million above. Where we sit currently, so during the quarter, really what we saw was the pretty productive management of cost and also a stable market. We didn't see the volatility that we've seen in prior periods on gas prices and things like that. So where we sit currently is we are $19 million below the PECAM baseline Currently now, part of that is due to the shaping of the way that the rates are set in the automatic adjustment tariff as it goes through the year. We've disclosed in the 10Q that we think we'll be somewhere around the edge of the baseline by the end of the year.
spk32: But we do sit that $19 million stable baseline currently.
spk02: Okay. Thanks, Joe.
spk08: Thank you. As a reminder, to ask a question, you'll need to press star 11 on your telephone. And please wait for your name to be announced. One moment for our next question. Our next question comes from the line of Willett Granger with Mizuho Securities. Your line is now open.
spk37: Hi, good morning, everybody.
spk36: Maybe just one, if you can unpack for us a little bit. Understand there's two buckets with costs associated with the January storms. You have the 75 million RCE associated with the RCE event and then a separate 48 million. Could you maybe talk to how you're thinking about the timing of the recovery of those dollars?
spk17: Sure.
spk31: Good morning, Willards. The reason that they are separate like that and I'll talk to you is they are recovered under two different regulatory mechanisms that they're covered under. I'll start with the 75. $5 million deferral. The $75 million deferral is an RCE deferral under the PCAM. As it relates to the timing, that recovery will be assessed in a process that will go through mid-2025, and we would expect currently that the recovery of whatever amount is settled in that process would start in 2026. The reason I say expect, you know, the RCE mechanism is new and and the methods of recovery will be part of that discussion. Separately, we incurred $48 million in O&M in capital costs as related to the physical restoration of the system during that storm period. In Oregon, there are provisions that allow for the recovery of those costs when a state of emergency is declared and there's such damage. T. Proceeding has started and that sort of that that cost proceeding has started, but if the timeline is not set. So there's a filing made T. There's a timeline underway, you'll be if I hadn't put an expectation at some period in 2025 once it's settled, there would be a recovery. But right now there's not a set close date for the proceeding for me to be able to say what date that recovery would occur. Nor do we have until the proceeding ends what the time period of that recovery could be. It could be a short period or up to several years based on what decisions are made.
spk36: Appreciate the color. And then maybe one more on the extended day ahead market proposal to join the Cal ISO. Would that allow you to get any sort of FERC add, ROE adder, or any sort of incremental transmission bill to the capital plan? And maybe how should we be thinking about that? Thank you.
spk14: That's a good question. No, it would not. It's a part of an ISO. There is no RTO in the west. And we're probably quite a ways off from that if we ever do get to an RTO. It allows us to move from the energy and balance market, which is essentially a real-time market, to the day ahead. And there's some pretty significant customer benefits that we'll realize from that, but also some important operational benefits. As we maximize the diverse renewable resources from the desert southwest and extensive solar the Pacific Northwest hydro and all of the wind energy in between. So it allows for really a more planful portfolio effect, and it builds upon the really good work that has already been done through the energy imbalance market.
spk18: Great. Thank you. Thank you.
spk08: Thank you. I'm currently showing no further questions at this time. I'd like to hand the conference back over to Maria Pope President and Chief Executive Officer for closing remarks.
spk14: Great.
spk08: Thank you for joining us today.
spk14: We appreciate your interest in Portland General and we look forward to connecting with you soon. Thank you very much.
spk08: This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.
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