Portland General Electric Co

Welcome to Portland General Electric Company's second quarter 2024 earnings results conference call. Today is Friday, July 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 period. If you'd like to ask a question during this time, simply press star the numbers 1-1 on your telephone keypad. If you'd like to withdraw your question, simply press star 11 again. If you do intent on asking a question, please avoid the use of speaker phones. For opening remarks, I will turn the conference call over to Portland General Electric's Manager of Investor Relations, Nick White. Please go ahead, sir.

Thank you, Jonathan. 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 Forms 10-K and 10-Q, 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 is my pleasure to turn the call over to Maria.

Thank you, Nick, and good morning, everyone. Thank you for joining us today. Our second quarter results reflect our focus on execution and steady growth trajectory in 2024 and beyond. Starting with slide four, I'll highlight key drivers of our second quarter financial results. For the quarter, we reported gap net income of $72 million, or $0.69 per diluted share. This compares with second quarter 2023 gap net income $39 million or $0.39 per diluted share and non-GAAP net income of $44 million or $0.44 per share. These results, which Joe will discuss in detail, were driven by three areas. First, continued growth in demand from industrial customers, primarily semiconductor manufacturing and data centers. Second, second quarter's mild weather and solid power cost performance. And third, our continued focus on cost management and risk mitigation. While these results mark an improvement from 2023, we recognize that there is still more work to do. We remain focused on meeting expectations for the year and improving our ROE towards authorized levels. Turning to slide five, I'd like to start by recognizing my PGE colleagues who worked extremely hard during the regional heat wave. In early July, we saw five consecutive days of record high temperatures, consistent with other areas across the West. Our resilience during this intense period of high heat underscores the value of new processes and training, procurement of additional hydro supply and diverse wind resources, as well as capital investments and technology deployments that strengthened equipment reliability and energy supply management. These targeted investments also speak to our focus on affordability and how careful planning has reduced painful energy price volatility during extreme events. I also want to recognize the important role that our customers played in this event. They took significant demand response actions to reduce energy consumption by 109 megawatts during peak periods of the heat event, the largest electricity demand shift we've seen. These collective actions during this period of extreme weather made a huge difference. Additionally, throughout this hot period and all of the dry conditions that we are seeing, wildfire mitigation remains a key focus. Our year-round program of system hardening, managing vegetation, and sharpening operational practices are key to this risk-based approach. With wildfire season officially declared in June, we've deployed enhanced system protection and control settings, including reclosers and switches and other equipment. These enhancements act in conjunction with our monitoring tools and include panoramic AI cameras and weather stations that provide important data and situational awareness to our teams local agencies, and first responders, as wildfire remains a critical issue for our industry. Requiring continued cooperation with regulators, legislators, insurers, public sector agencies, as we address this societal wide risk. Shifting to growth. Our ongoing renewable generation and capacity RFP remains squarely in focus as we work to achieve our clean energy goals. Bid submission concluded in April and bid evaluation culminated in initial project shortlist filed with the OPC in early June. We're again seeing strong subscription for both generation and capacity resources with a mix of wind, solar, battery, and pumped hydro projects that will move forward for further evaluation. A final project shortlist is expected in August, with bid selection this winter. We're excited to build upon the momentum of the recent RFP projects, including Clearwater Wind and three battery projects, to provide customers with the next generation of safe, reliable, affordable, clean energy resources. Beyond the RFP, PGE is pursuing options to advance the clean energy transition, and excess low-cost renewable energy. On our last call, I highlighted PGE's participation in the KISO Extended Day Ahead Market, or EDAM, aimed at achieving additional renewable energy integration across the West. Additionally, our transmission work, focused on improvements within our footprint, is moving forward to support customer growth. And we're also collaborating with tribal partners, Bonneville Power Administration, and other regional utilities and stakeholders to make progress on critical transmission expansion that will facilitate more cost-effective renewable energy supply. For example, in May, PGE signed an MOU with Grid United and Elite for development of the North Plains Connector that connects three regions, SPP, MISO, and WECC. These plans highlight the important work our sector is undertaking to build a cleaner and more reliable energy system that enables economic growth for all. Our resource planning work, especially important in the context of the load growth that we're experiencing across the region, is progressing well. We're seeing further validation of our service territory's trajectory, underscored by robust industrial load growth from semiconductor manufacturing and technology infrastructure customers. In the second quarter, industrial load increased 6.2% weather adjusted compared to the same quarter in 2023. Oregon's leaders remain focused on capturing the benefits of recent legislation and industry tailwinds. These efforts are bearing fruit with additional federal and state CHPSAC funds flowing to local projects. In addition to Intel's recent $36 billion announcement, Lam Research is completing a new R&D facility in Tualatin, and analog devices in Siltronic are expanding in Beaverton and Portland, respectively. We're also seeing meaningful growth among our region's data center sector. These customers are enabled by the Trans-Pacific subsea fiber landings on the west side of our service territory. similar to the transatlantic network landings in North Virginia. Growth from both these important sectors represents an exciting opportunity for our region, bringing quality jobs and infrastructure improvements at a level we have not seen in over 50 years. I'll now turn briefly to our 2025 general rate case, which Joe will cover further in his remarks. Our teams received OPUC staff and intervener testimony earlier this month, and we'll be building off of recent constructive conversations during upcoming settlement conferences. Elaboration with customers, interveners, regulators, and legislators to find creative solutions to opportunities and challenges unfolding in our service territory and industry is key. We look forward to continuing these discussions including a workshop later today. As we look to the second half of 2024, our strategy remains firmly rooted in transforming our local system to address growing customer needs, effectively deploying resources to increase our resiliency to extreme weather, managing affordability for all customers. We remain focused on achieving our targets executing our plan, and delivering value for customers, communities, and shareholders. With that, I'll turn it over to Joe.