Portland General Electric Co

Good morning, everyone, and welcome to today's conference call with Portland General Electric. Today is Tuesday, February 17th, 2026. This call is being recorded, and all lines have been placed on mute to prevent 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, press star, then the numbers 11 on your telephone keypad. To withdraw your question, please press star 11 again. 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 Manager of Investor Relations, Nick White. Please go ahead, sir.

Thank you, Daniel, and good morning, everyone, and thank you for joining us today on short notice. Before we begin, I would like to remind you that we issued a press release this morning and have prepared a presentation to supplement our discussion which we will be referencing throughout the call. The press release and 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 press release and our most recent periodic reports on 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, I'll turn things over to Maria.

Thank you, Nick. Good morning and thank you all for joining us very early today to discuss our expansion into Washington State and the proposed acquisition of Pacific Core's utility assets. We will begin by covering this exciting news as well as RFP results, guidance for 2026, and our 2025 financial results. I'll start with slide 4. Earlier today, we announced the definitive agreement to acquire the Washington Electric Utility business from Pacificor for $1.9 billion. This includes select generation, transmission, distribution, and other utility assets in Washington State. We're partnering with Manulife Investment Management and its affiliate, John Hancock, an insurance and investment company who will be a 49% minority partner in the Washington business. Manulife brings broad financial expertise and energy infrastructure and has owned and invested in agriculture, timberland, and other businesses in both Oregon and Washington for over two decades. This transaction represents a key step in our strategy and complements the work that Portland General Team does every day prioritizing safe, reliable, increasingly clean electricity to serve customers at the lowest possible cost, enabling economic development and strengthening energy infrastructure across the Pacific Northwest, and creating value for customers, communities, and shareholders. In this time of unprecedented electricity demand, PGE's commitment to the Pacific Northwest and our excellent service and energy infrastructure will benefit central and southeastern Washington. Our overall portfolio will grow by approximately 18 percent and the acquired operations will continue to operate as a Washington regulated utility serving 140,000 Washington customers. These additions bring benefits of scale and operational expertise to both Oregon and Washington service areas. We look forward to working together with the 140 dedicated employees who will continue to serve Washington customers. This transaction is forecast to be accretive in the first year while diversifying and broadening our growth opportunities, underscoring long-term EPS and dividend growth of five to 7%. The acquisition will be subject to industry standard regulatory approvals, including from Washington, Oregon, and other jurisdictions, which we will expect will take approximately 12 months after regulatory filings are submitted. This is a unique opportunity during a pivotal moment for our region and industry. We are excited to bring PGE's operational expertise, customer focus, and reliable energy delivery to Washington. Before Joe and I go further and further into the details of the transaction, we will cover our 2025 earnings results, 2026 guidance and highlights from the year. Turning to slide six. For the full year, we reported gap net income of $306 million or $2.77 per diluted share. and non-GAAP net income of $336 million or $3.05 per share. Our 2025 results were impacted by unprecedented warm weather in November and December as seen elsewhere across the West. We saw the warmest temperatures on record since we started recording 85 years ago. In total, this abnormal fourth quarter weather reduced earnings by 17 cents. Despite these conditions, our teams work throughout the year to execute, advancing our cost management programs, achieving multiple constructive regulatory outcomes, and accelerating clean energy procurement to maximize federal tax benefits for customers. Importantly, we continue to see strong growth in our service area. total weather-adjusted load growth was about 5%. Large customers, including high-tech manufacturers and especially data centers, ramped their energy usage throughout the year, driving industrial growth of 14% compared to 2024. This combination of operating performance and strong fundamentals in our service area underpins our 2026 Earning Guidance of three dollars and 33 cents to three dollars and 53 cents per share we are also reaffirming our long-term earnings and dividend growth guidance of five to seven percent turning to slide seven our five strategic priorities first our team advanced multiple key regulatory proceedings in 2025 We received approval of the seaside battery project and reached constructive stipulation for the distributed system plan. We are making continued progress on data center tariff updates that support residential and small business customer affordability, which I'll cover shortly. Discussions are ongoing regarding our holding company and transmission company proposals. We will be meeting with parties at settlement conferences later this week. and in early March as we work towards resolution of the process around the end of June. Second, we're focused on O&M and capital cost management. In 2025, we work to realize efficiencies and improve productivity in delivering safe, reliable service at the lowest possible cost. Net of transformation costs, our teams exceeded targets and reduced PGE's overall cost structure by about $25 million. Third, as I noted, customer growth continues to accelerate in our service area. In the fourth quarter and early 2026, we executed five additional contracts with data center customers, totaling 430 megawatts. these contracts further strengthen our pipeline of large load customers who are invested in the region constructing facilities and energizing their operations our large customer group is forecast to grow energy usage by about 10 percent compounded annually through 23. enabling this growth is transmission capital investment and extensive work to unlock capacity through the use of ai analytics data excuse me dynamic line ratings and other grid enhancing technologies alongside this work and in conjunction with oregon's recent data center legislation the power act our proposed large load tariff um 2377 is tracking towards completion in the second quarter of this year this includes the creation of separate data center customer class sharpening the cost allocation framework and enabling contracting flexibility our tariff proposal includes a 25 percent price increase for data center customers which in turn would reduce residential and small business customer prices fourth today We are announcing four new energy projects and executed agreements. We have signed build transfer agreements to construct a combined 125 megawatt solar and 125 megawatt battery storage facility at Bigelow. We also signed a build transfer agreement to construct a combined 240 megawatt solar and 125 megawatt battery facility as part of the wheat bridge expansion project. PGE will own 175 megawatts and procure the remaining 190 megawatts via a PPA. Both projects are slated to come online by the end of 2027 and are eligible for federal investment tax credit between 30 and 40 percent, enabling additional clean energy at significant lower cost to customers. In addition, we are procuring 400 megawatts of battery capacity through two capacity storage agreements. We're also taking steps forward in the 2025 RFP and hope to have announcements later this next year. And fifth, we continue our year-round data center wildfire risk mitigation approach, hardening and modernizing the grid, and reducing risk through strong operational performance. With that, I'll turn it over to Joe to cover 2025 results and 2026 guidance in more detail before we return to discuss our acquisition.

Joe? Thank you, Maria, and thank you, everyone, for joining us to hear about today's important developments. Turning to slide eight, 2025 was another year of strong energy demand in our service area. This significant growth, again, was led by the diverse and growing data center and high-tech customers that Maria highlighted earlier. From 2020 to 2025, PG&E's industrial customers have grown at 10% compounded annually. This same group is expected to continue at this pace through 2030, highlighting the strength of our large customer pipeline. These trends speak to the attractiveness of our service area and our team's ability to serve growing customer needs, invest in critical assets, and enable benefits for the entire system. In 2025, total load increased 3.8% overall and 4.7% weather-adjusted compared to 2024. Industrial load increased 14%. Residential load decreased 1.8% year-over-year, but increased 0.4% weather-adjusted. Residential customer count increased by 1.3%, and commercial load remained largely flat. Turning to slide 9, where I'll quickly cover year-over-year earnings drivers. Overall, our full-year 2025 results reflect meaningful industrial demand growth, improved recovery of assets serving our customers, differing power cost conditions as compared to 2024, our team's strong execution of cost management programs, ongoing rate-based investment in financing, other items, and business transformation and optimization costs as we work toward reducing our cost structure. These drivers bring us to GAAP EPS of $2.77 per diluted share. After adjusting for business transformation and optimization expenses, we reach our 2025 non-GAAP EPS of $3.05 per diluted share. As Maria mentioned, our full-year results were impacted by the unprecedented warm weather conditions in the last quarter of the year. December alone accounted for 14 of the 17 cent EPS impact in Q4 as it was the warmest December on record for our region with 24% fewer heating degree days than average. Turning to slide 10 for an overview of the executed 2023 RFP projects, the Big Low Optimization and Wheat Ridge Expansion, which will widen our generation capabilities to meet the needs of our customers. Both projects will be in construction this year and are expected to be serving customers by the end of 2027. We are also advancing our 2025 RFP and will be submitting the final shortlist to the OPUC this week. The shortlist includes a variety of renewable and non-emitting capacity projects totaling approximately 5 gigawatts. As we proceed to negotiations, we will prioritize projects that include renewable generation, close earlier in the eligibility period, and maximize tax credits. We expect the final selection to be a blend of billed transfer agreements and PPAs that total approximately 2,500 megawatts. On to slide 11 for our five-year capital forecast, which now includes 2026 and 2027 spend for the incoming RFP projects. I will note that this view does not contemplate CapEx from the Washington utility business from the transaction we announced today. On to slide 12 for our liquidity and financing summary. Total liquidity at the end of the year was $954 million. Our investment grade credit ratings remain unchanged. Our outlook from Moody's has improved from negative to stable. We continue to maintain strong cash flow metrics. with estimated 2025 CFO to debt metrics above 19%. As we look ahead to 2026, we continue to expect a base equity need of 300 million as we work towards our authorized capital structure. Our plan considers the constructive regulatory outcomes in 2025 and continued robust operating cash flows in 2026. These factors will enable solid progress in our equity ratio and ultimately arrival at our target capital structure earlier than anticipated. As such, we expect base needs to taper to approximately $50 million in 2027. We anticipate financing the 2023 RFP projects in line with our 50-50 cap structure net of tax credit monetization, resulting in $350 of total equity needs in 2026 and 2027. I will note these financing expectations do not contemplate the potential holding company or investment in the Washington utilities. In recent years, we've effectively utilized our at-the-market program to opportunistically fund accretive rate-based investments. We continue to see value of this tool and the strategy, and we are refreshing our ATM, which we've upsized to $500 million in support of our diverse and robust CapEx plans. This facility enables issuances over multiple years and, like our previous programs, will include a forward component. We also expect debt issuances throughout 2026 of up to $350 million focused on funding our capital expenditures. Turning to slide 13 for an overview of our 2026 guidance. Overall, our focus on managing cost structure Robust load growth and rate-based investment catalysts underpin our expectations for 2026 and the years ahead, including 2026 earnings guidance of $3.33 to $3.53 per share, 2026 weather-adjusted load growth guidance of 2.5% to 3.5%, long-term load growth guidance of 3% through 2030, and reaffirming our long-term EPS and dividend growth guidance of 5% to 7%. Now let me turn it back to Maria for continued discussion on this morning's announcement.

Thank you, Joe. Turning to slide 15. We will be adding 140,000 customers across 2,700 square mile service area anchored around Yakima, Walla Walla, and other Washington communities. The portfolio of generation assets in this transaction is a valuable mix of natural gas and wind resources that provide safe, reliable, and affordable power. These assets will complement PGE's 1.8 gigawatts of natural gas generation over 1 gigawatt of wind assets, including PGE's Two Cannon River Wind Project, located midway between the Marengo and Goodenough Hills wind farms. On to slide 16. This acquisition is a great fit. First, an excellent opportunity to expand our service to Washington State and acquire generation, transmission, and distribution assets we know very well. The Washington Utility and Transportation Commission will continue regulatory oversight of the Washington utility operations. Washington's regulatory jurisdiction includes many positive components including multi-year rate plans competitive roes constructive fuel mechanisms and frameworks for clean energy investment we look forward to working with washington regulators and stakeholders in enabling economic development and advancing clean energy policy goals second enhanced scale and reach, and operational capabilities will position us for rate-based and customer growth. Central and Southeast Washington are home to dynamic communities and industry, including agriculture, manufacturing and technology businesses that We will have the opportunity to support economic growth in these regions and bring further investment for grid modernization and renewable energy acquisition to serve growing customer demand. Third, we anticipate meaningful customer upside. Portland General Electric brings a track record of effective operational performance, including strong plant availability, first quartile safety, commitment to wildfire and other risk mitigation, top 10 customer service and programs, and first quartile reliability. The expertise of Washington employees who are deeply familiar with Washington customers and assets will be supported by PGE's administrative, finance, energy management, and other system-level expertise. We also expect that the increased scale will deliver benefits from shared corporate functions, enhanced purchasing power, and efficient financing for system investments. And fourth, clear shareholder value that will sustain further customer-focused investment. PGE expects EPS accretion in the first full year. while enhancing PGE's long-term EPS and dividend growth of 5% to 7%, supporting strong investment credit rates. Manulife's partnership is a key element in the acquisition's strength. They bring significant expertise in this region and in our sector. Turning to slide 17. The broadening of our service area footprint represents an exciting moment for our company and shareholders. As I noted, our overall portfolio increases by 18%, a 22% increase in generation and transmission, a 14% increase in distribution, and a 15% increase in the number of customers. This transaction fortifies our key strengths, broadens opportunities for growth, and delivers benefits for all customers and communities we serve. With that, I'll turn it back to Joe. Thank you.

Thank you, Maria. As you can see from this view, PGE's acquisition of Pacificorp's Washington operations presents a structured, executable transaction with clear advantages for our customers and stakeholders. The key upsides include additional scale, diversification into a constructive jurisdiction, and enhanced capacity for system improvements to serve customers. Overall, we expect both operational synergies and incremental rate-based growth opportunities. Notably, we will now step into the Washington RFP process to pursue varied ownership structures that deliver least cost, least risk options, drive towards the state's goals, and support customers' energy and capacity needs. Moving to slide 18 for a summary of the transaction structure. The acquisition is structured as a sale of certain assets serving customers in Pacific Corp's Washington service area. Due to Pacific Corp's existing structure, we expect customary regulatory approvals in each of their jurisdictions as well as from FERC. I will note that due to the asset purchase nature of the acquisition and Pacific Corp's multi-state structure, we will be assuming relatively few liabilities as part of this transaction. Upon closing, which is expected 12 months after regulatory filing submission, PGE and Manulife will form a joint venture to own the regulated utility in Washington, which PGE will operate. While our ongoing corporate structure update, including the creation of a holding company and a transmission company, are not prerequisites for this transaction to close, we see the holding company structure as supported by this scenario. In the coming months, we will submit regulatory filings in both Washington and Oregon for approval of the transaction. We look forward to engaging stakeholders during the approval process and will provide status updates as part of our typical disclosure. Turning now to slide 19 for our planned financing approach for the transaction. First, concurrent with the agreement signing, PG obtained commitments for the full $1.9 billion purchase price, including bridge financing from Barclays and J.P. Morgan and commitments from Manulife. For our permanent financing plan, we expect to utilize a combination of $600 million equity contribution from Manulife, $700 million secured debt at the Washington utility, and $600 million raised at the proposed holdco. This approach strikes the right balance across financing channels. It strengthens accretion, manages risk, and supports investment grade credit ratings, which are expected across all entities. On to slide 20 for an overview of the Manulife Investment Management and the Partnership Agreement. Manulife IM and its affiliate John Hancock is a leading direct investor in U.S. infrastructure. Their presence in the Pacific Northwest is notable, having invested in infrastructure, agriculture, and timberland in our region for over two decades. Beyond these important local ties, this partnership structure brings value both during the transaction window and after closing, particularly reducing overall capital markets exposure and equity needs, introduction of another cost-efficient source of capital, preservation of PGE's strong balance sheet, and strong support for further investment and growth opportunities at the Washington utility. Overall, the partnership is structured as a traditional arrangement with familiar features for our sector. PGE will manage and operate the Washington business and will also be a 51% owner with Manulife owning the remaining 49%. PG will also hold the majority of seats on the five-person board. Moving on to slide 21 for our operational track record and approach to business integration that supports this acquisition. PGE has captured significant organic growth within Oregon service area over the last two decades, adding over 180,000 customers and expanding the generation portfolio by 2.4 gigawatts of utility-owned generation. As Maria mentioned earlier, we are excited to welcome the highly skilled Washington employees who will be an important part of the integration and go-forward operation. Our growth and ability to serve robust customer demand have been supported by the company's investment in integrated operations. These encompass several critical functions that enable low-cost access to market power, renewable energy integration, and reliability. PGE has recently implemented and enhanced several technologies that enable the smooth addition of business units and are expected to help streamline the technical integration of the Washington service area. I'll also highlight the experience of our leadership team. Many of our officers bring expertise from large organizations, including multi-jurisdictional utilities and have executed many transaction integrations. We will draw upon this experience to deliver a seamless transition for our customers. Now, let me turn things over to Maria to close.

Thank you, Joe. We've covered a lot of ground today, both what we've accomplished and what lies ahead for Portland General Electric. Let me close today's discussion on slide 22. The strength of our existing approach and the opportunities in Washington are all rooted in PGE's five strategic priorities. We're deeply committed to the Pacific Northwest region and continued investment, which will expand to include assets and operations in Washington state. We remain focused on delivering safe, reliable power at the lowest possible cost. Efficient and effective operations realizing economies of scale and regulatory frameworks that support customer affordability. We are advancing critical infrastructure investments that support economic development and builds upon a base of growing data center and high tech customers. We are integrating clean energy resources to satisfy customer and policy driven goals executing RFPs and reducing customer price impacts by maximizing federal tax credits. And we are deploying our mature data-driven wildfire risk mitigation programs, modernizing the grid and reducing risk through strong operational execution. We are excited for the road ahead. We are affirming our trajectory of strong financial results and look forward to delivering for customers, communities in both Oregon and Washington for years to come. And now, operator, we're ready for questions.

Thank you. Please stand by while we compile the Q&A roster. Our first question comes from Char Perez with Wells Fargo Securities. Your line is open.

Morning, Char.

Morning, guys. Congrats on the deal. It's definitely an interesting, really good transaction here, so unexpected. Maria, just let me ask you, so the deal is done at 1.4 times and you expect the deal to sort of be accretive in year one. Can you just touch a bit on the accretion drivers and maybe frame the sensitivities to items like regulatory timing, financing, transaction, transition costs, et cetera, so we can kind of better understand upside downsides around the numbers. Thanks.

Sure. First of all, there's several key areas. The first is our permanent financing plans that we laid out today. We also are expecting our cost management plans to continue to be executed, and integration of this new company will really help our cost structure. And then we will be bringing data center and other customers to the area and development. It's a great operational opportunity and fit for us as we expect first-year accretions.

Got it. Okay. Perfect. Perfect. And then just on the language around just the enhancements to the EPS growth rate, I guess, can you define maybe a little bit on what you mean by enhancement in this context? Is it sort of a step up in the growth rate, a higher midpoint within the existing range, a lengthen and extend scenario? I guess, can you just be a little bit more specific on the accretion? Thanks.

Sure. So we have a combination of factors that give us confidence to be squarely above the midpoint of our guidance range of 5% to 7%.

Okay. Got it. All right. I think that answers it. Thanks, guys. Big congrats on the deal. Bye.

Thank you. Our next question comes from Julian DeMullen-Smith with Jefferies. Your line is open. Good morning, Julian.

Hey, good morning, Keith. Hey, thanks for the time. I appreciate it. Nicely done. Maybe just a few different questions here, more housekeeping than anything else. But just at the outset, how do you think about earned ROEs? What's the ability? What do you think the opportunities over time here as you think about extracting the full extent of the value from this transaction? What's a normalized ROE to think of over time? And then maybe a couple credit ones just to chime in on here. How do you think about new metrics from the rating agencies, you know, given the diversification that this offers? How are the agencies thinking about maybe some of the benefits from a wildfire diversification perspective? Yeah, I'll leave it there.

Good morning, Julian. As it relates to ROE, from their last general rate case, they have an imputed allowed ROE of 9.5%. We do believe that over time as we work into the organization as it relates to our Our cost management programs, our cost structure, as well as the regulatory filings, we would expect it to perform in a, you know, work towards a gap similar to what we're seeing performance-wise over time here. I mean, it will take a little bit of a, you know, a time period as we integrate them in, but that is the expectation that we can, you know, we can work them into a relative level of efficiency to ours or a little better. As it relates to the credit metrics, we have had preliminary conversations with the rating agencies. We've been very clear with the rating agencies about our desire to have investment-grade credit ratings and quality credit metrics across the organization. We'll continue to have discussions with them as this matures, but it is fully our intent to have structured these organizations to have relatively high credit metrics.

Got it. And just to come back to you real quickly here, where have earned returns been of late and how do you think about what that, you know, how long it would take to get to that 50 plus, you know, call it 50-ish basis points lag or wherever you're exactly, you know, pinning that down. And then if I could just quickly also clarify on the, are there break fees in the event that you don't get approval here? I mean, and how does this fit into the process you have underway already regarding the Holdco Transco? Yeah. Just if you could elaborate a little bit around that.

Sure. So I'll start with your earned returns. You know, this company has a portion of the subsidiary, obviously not a bunch out there to show in detail, but they have had, you know, their earned returns have been a little off, mainly due to the cost recovery on the power cost side of the equation. Understanding that that power cost recovery was part of the allocated structure that they had, as opposed to what we'll see as a very specific, you know, plant and contract-based cost recovery method. As it relates to break fees, yes, there are break fees that go on both sides of this transaction that we've included in some of the disclosures. There are break fees for certain reasons if the transaction does not close. If there is not IRC or regulatory approval, there are break fees that are out there as well as if the rate base that is approved by the regulator is not equal to what is, which is agreed to within the contract. And there's a few other nuanced break fees out there, relatively symmetrical. And again, all generally valued at $35 million to the extent there's a break fee.

Thank you.

Our next question comes from Chris Ellinghouse with Siebert Williams Schenck. Your line is open.

Hey, everybody. How are you? Good morning.

Good morning, Chris.

What do you expect the filing cadence to look like?

We expect the filings to take place in the next 30 to 60 days. The regulatory process should take about 11 months to 12 months.

Okay. With the new proposed data center tariff, can you give us any kind of metric on how that helps on the residential side as an offset?

Sure. Chris, the data center tariff which you mentioned is UM 2377 and it follows the power act that we put in place with parties through the legislature in 2025. We've had several passes added, and overall, the increase in data centers, which today is about 6% of our customer load and about 4% of our peak, directly benefits residential and small business customers. Initially, it's about a 2% reduction, and that should grow over time as the data centers continue to grow in the area. It also allows for direct contracting and something that we call in the filings, the peak growth modifier. So we're fortunate to be able to work with parties as well as with all of our data center customers to ensure this works with everyone across the state of Oregon. And we hope to take some of this kind of work around customer relationships, regulatory, and economic development to the New Washington area.

Great. That helps a lot. The $25 million cost reduction that I think Joe quoted, can you give us any kind of sense of how that sort of prorated over time to get a sense of when that's effective essentially?

Sure. So the $25 million cost savings in 2025, it was a program that started in 2025. So we expect that to grow. So when you do the run rate on that as a general rule, probably more of like use a half year convention since a lot of these cost programs were put in sort of the second to the third quarter. The key to our cost management program here is a cumulative approach. So the savings that we had in 25 that will do two things. They will become full-year savings as they come into 26 and they are permanent. And then we will be building upon those savings as we've been doing a rollout plan here as we plan to manage our costs for the next several years. So we will be We will be introducing a new set of cost management for different portions of the organization that will do that same thing again. We'll have programs that are implemented in 26 that will have benefits in 26 that then grow to full year in 27 as we have this thoughtful rollout to drive this efficiency and be able to manage inflation over a multi-year period. To date, the program's been very successful. As we noted, we We exceeded our targets, and if you normalize our O&M for 2026, you know, we even did a little better just on, you know, not spending money in places maybe not per se aligned to the efficiency program. We're pretty excited about the execution and would say that the program for 26 is more mature than 25 because in 25 we were developing as we were going, and 26 has an established plan in place already for the year.

Great. That helps, Jim. Maria, lastly, can you just sort of talk about how you see the Washington acquisition aiding or providing an opportunity for additional large load growth?

Yes, so Eastern Washington is focused on economic development. We also hope to leverage our existing relationships. As you can see, we have quite a broad and diverse set of high-tech and data center customers, and we'll work closely with them in the area of Washington as we have throughout our service area in Oregon.

Okay, great.

Thanks for the call. I appreciate it. Thank you.

Thank you. Our next question comes from Anthony Croudwell with Mizuho. Your line is open.

Hey, good morning. Congrats on the transaction. If I could just squeeze hopefully three quick questions. If you could help us out when I look at slide 19, the $600 million raise at the Holdco, is that all debt, all equity structure, like 50-50 of a utility? How should we think of that $600 million financing?

Sure. So as it relates to that $600 million, think of it as a balanced mix of the investment, be it at the whole core or other structure, but it will be a balanced mix of debt, equity, potentially hybrid or other securities that align to the capital structure that we'll be focused towards.

Got it. And then you've given out an APSK gear of 5% to 7% for a number of years. The thought was the holding company that you're going to create was going to provide efficient financing opportunities. for the Oregon utility, now potentially adding in, already taking some of the debt capacity based on the $600 million. Could you tell us maybe in 27 and 28, how much debt do you forecast being held at the holding company now?

So for right now, I don't want to front run the holding company regulatory approval process, which will itself potentially have stipulations. But I'll take to the comment in tying this to the earnings growth trajectory that we have, The Washington transaction that we're talking about right now or the holding company, either both taken in a vacuum together, each one is an enhancement to that earnings growth rate. And as each of them mature here, we will continue to – we will reevaluate how that – do they just enhance the growth rate or do they put upward pressure on that? But we want to give them both a little time to settle. There is – obviously, within the regulatory approval process, there could be items which on one way or the other. And so as these items come more into clarity, we will reevaluate. But I do acknowledge that each one individually does have this, you know, a level of enhancement to the earnings growth.

And just lastly, I thought, you know, my view was like 2026 talk with investors. You guys had the holding company structure going. You had such great tailwinds with coming from the RFPs. It was like a transformative year for Portland now to jump into a transaction with Just the timing of why now, I guess, because I was looking at 2026 as a very transformative year for Portland on that holding company structure, more financing. You had these RFP wins, and now it's like a 12-month freeze.

Actually, the transformational 2026 is exactly correct. I wouldn't call it a freeze at all. Joe talked about the operational work we're doing across the company. We have tremendous opportunities with regards to customer growth, and we have some RFP wins. We also continue to work with regulators on a number of topics that are constructive. and we look forward to being able to close on this transaction in mid-2027, and it gives us a unique opportunity to continue our growth trajectory.

Great. Congrats, and thanks for taking my questions.

Thank you. Thank you.

Thank you. Our next question comes from Andrew Levi with Height Hedge. Your line is open.

Good morning, Andy. Good morning. Can you hear? Hi, how are you? Can you hear me? We can. Okay, good. So a couple questions. So just on the holding company, so you have settlement talks next week, is that correct?

We do. We have them this week.

This week.

As well as in March.

Okay, so.

The discussions will probably go on through to the summer.

Okay, so. I guess my question was, you know, this transaction, does this enhance the possibility of getting the holding company approved?

Andy, good morning. Yeah, I mean, we believe that this transaction both supports the logic that was laid out in the holding company, but it also is the cleanest vehicle here to allow for the benefits of this transaction, which, you know, to the Oregon or to the Washington customers to be clearly identified. and work through the process. And we just see the holding company as just a natural way to clearly make this work. It is not required. It is not a prerequisite for this transaction, but we do think that it is very clean.

It makes for a very clean way to... Yeah, that was my question. My question was, does this enhance the possibility of settling your whole code case by having this acquisition?

Obviously, the regulators will work through the process. Do we think that this provides further validation and clarity to this? Yes. Do we believe it enhances the view of why a holding company makes sense for Portland? Yeah. And we look forward to discussing these in detail at these settlement conferences.

Okay, and then why, you know, just based on Maria's comment, why does it bleed into the summer? Why wouldn't you be able to potentially settle next week? What's kind of the sticking points? And then I have a few other questions.

Sure. I mean, Andy, I'll just do it. As it relates to timing, there are two scheduled settlement conferences that are out there. And in all honesty, to Maria's comment that there are scheduled settlement conferences to the extent that we're having constructive dialogue and those settlement conferences do not yield a result. There can be discussions that will continue up until once we get into the procedural part of a case in filing with an ultimate resolution required here at the end of June. I mean, there's nothing to say. I mean, the sticking points, in all honesty, as we've gone through on the holding company, which got a little clearer in this last round of testimony, are about what are the benefits of for the customers. And I think this, again, back to what I'd said before, is just another validating point that we had a compelling case before. This does nothing more that we believe and puts more weight on the scale because this transaction is also about benefits to Oregon.

Okay. And then on the Hancock partnership, so how should we think about that longer term? So, you know, obviously I understand partnership within Washington. But, you know, you get this holding company approved. Do you envision Hancock possibly doing a similar type of investment in Oregon? And is that kind of the longer-term goal in part of, you know, this transaction and having Hancock involved?

I mean, having a partner involved, this partner is focused on Washington, but having a partner involved to support growth while continuing to manage our balance sheet strength, our credit quality, that's really what the focus is. So the idea of the partner here is to give us an efficient form of capital allows us to support this growth. So, you know, we will continue to evaluate our financing options and flexibility going forward. But the key to the partner here was about continuing to have the right balance sheet strength.

Okay. And then just a couple of questions on the Oregon business. So on the 23 RFP, I guess, primary, the bigger investment is solar slash battery, is that correct? That's the 400 and whatever million dollars, right? So once that goes COD, right, that goes right into rates because it's a combined asset, right? Is that right?

Correct, Andy. There's two projects. One is Wheat Ridge and one at Bigelow, and both will use the renewable adjustment mechanism.

So does that, you know, obviously you got this distribution rate increase. Does this help continue to postpone a base rate increase or base, not base rate increase, but a general rate case, I should say?

So we will be evaluating where we are with the general rate cases. As you may remember, we have a stay out until about midsummer. But the last time we brought in energy, we actually had customer prices go down. And so that was the Clearwater project in Montana. On the regulatory side, we're also working through a multi-year framework, and we'll evaluate that also in conjunction with whether we do a rate case this summer.

Okay. And my last question is just around hyperscalers. If in the handout you talk about 430 megawatts, I think it was, of incremental load, something like that, right? Is that the number? Yes. Was that in the quarter you inked or was that for the year?

So those are five contracts. The names of the different companies are highlighted in the deck of materials. This is in the fourth quarter and then in the very first part of 2026.

Okay. And then you have up to another 1,200 megawatts of talks going on, I guess.

Yes, and we have people in our queue, and it's actually 1.7 gigawatts, Andy. Yeah, some of those are with existing customers, and some of those are with new customers.

So how should we think about that incremental load you know obviously it's under the new tariff rules um how should we think about that as far as you know your five to seven percent forecast um and whether that's actually included or whether that gets you to the high end of your forecast or above your long-term growth rate

So as I mentioned before, you know, this supports continued growth within that 5% to 7%. And it also, the data centers create additional margin that supports the capital investment needed to support them, as well as ensures affordability for residential and small commercial businesses.

Does the Washington acquisition get you, maybe not in the first year, but did you get out to 28 and 29? That's just a big step up in CapEx in Washington, especially in the outer years. Does that get you to the high end of your forecast?

Yeah, that keeps on moving us through our forecast range, supporting accretion in the first year and underlying our growth trajectory long term of 5% to 7%.

Andy, I'll just add to you, as I mentioned before, right, I take this individually. Each one of these items has enhancements within the growth trajectory. And as the dust settles a little bit here and as the Holdco works, how Washington matures itself to approval, we will reassess what these individual enhancements mean to the long-term trajectory. There are several items that we've spoken here today that all have enhancements. you know, individually positive, you know, positive pressure on the upward side of our earnings guidance.

And then, I'm sorry, I just have one last question. I'll let somebody else go. But if for some reason the whole code doesn't get approved, should we just assume hybrids at that point? Or how should we think about it?

And I do think if the holdco is not approved.

You know, the $600 million, $700 million.

That's right. I mean, I think we will do what makes sense is a combined set of financing. We will look at if we don't have the holdco based on what structure we have and where we finance, we will look to what are the right instruments and the right mix at that time that still allows us to realize the value that we see in this transaction.

Okay, thanks a lot.

Thank you, Andy.

Thank you. Our next question comes from Steve Fleischman with Wolf Research. Your line is open.

Good morning, Steve. Yeah, hi. Good morning. What are the – remind me what the approval requirements are in Oregon and Washington. Are they no harm to customers? Are they net benefits? Good morning, Steve.

So in Oregon, in Oregon is a no harm standard and think of that as both a qualitative and quantitative no harm standard with a, you know, about an 11 month approval process for Oregon. In Washington, it is a net benefit standard, that same approach of of qualitative and quantitative net benefits with an 11 month approval process with the ability under circumstances to get a four month extension.

Okay. And then just how did you get kind of comfortable on wildfire risk in the Washington Territory? Just any color on kind of the nature of that territory and the like?

Sure. So as you know, we spend a lot of time on managing wildfire risk from prevention and mitigation to early detection and working closely with first responders and have this mature a process and program as any utility. Pacific Corps also has done quite a bit of work. We calibrate with them both in Oregon and as well as work with Washington regulators They have a wildfire-approved plan for years 2024 through 2027. We will pick up that plan but also bring our expertise as well as collaboration with Washington regulators and stakeholders as we work in both states to improve the risk framework and investability of utility businesses in both states.

Great. Great, thank you.

Thanks, Steve.

Thank you. Our next question comes from Matt Davis with NorthRock. Your line is open.

Good morning.

Sorry, my questions have been asked and answered.

Thank you, Matt.

Thank you. Our next question is a follow-up from Julia DeMoulin-Smith with Jefferies. Your line is open.

Hey, guys.

Sorry.

Don't be the jump to... Hey, sorry. Coming right back here real quickly. Just want to make sure I heard you right. How are you thinking about that $600 million in equity financing at Holdco? What are the gating factors here? How do you think about like FFO to debt from the rating agencies? What do they want to see thus far in terms of limiting parameters here. Any comments or statements, any pro forma targets that they're at least initially giving you? Any reason that you couldn't imagine doing a fully debt financed holdco transaction, for instance?

Good morning again, Julian. So a couple things. So our discussions with the rating agencies have been preliminary. and our focus with them has been about investment grade across each of the utilities and the proposed holding company. To the specific financing plan at what would be the proposed holding company, We will evaluate what is the right mix. To your question of how you finance at the holding company, we don't want to front run the regulatory process, which may have certain requirements for reporting. But what we're committed to do is to effectively use the holding company to allow for what is a good financing structure for the company consistent with other utilities. But we would like to make sure we're aligned with our regulators and their approach. But the holding company, if you take it to its fundamental, just like you laid out, It should give us the flexibility for the choices for what are the right instruments for us. We're right now without a holding company. We do have somewhat of a limited choices as we try to manage our balance sheet, manage our credit metrics.

Okay, guys. Thank you again.

Thank you. And our final question comes from Paul Fremont with Leidenberg Dominant Co. Your line is open.

Hey, good morning. Thank you very much. Does the diversification of state regulatory risk play a role in your decision to acquire the Berkshire properties in Washington?

Yes. Not only are we gaining important economies of scale, but having two different jurisdictions to operate in is very beneficial.

Great. And then sort of following up on Andy Levy's question, obviously you haven't determined the mix of debt and equity, but should we look at the establishment of the holding company as potentially driving the mix? In other words, might there be less equity issued if you were granted approval to establish a holding company?

Good morning, Paul. So I agree. The holding company itself is this variable, the flexibility. So yes, there are opportunities at the holding company, if approved in the structure, that you could get a differing cap structure. In all honesty, if even not for the holding company, considering what structure we'll choose, we'll have a varying amount of instruments. But we do find the holding company to be really attractive because it comes back to its support the deal it supports driving the benefits clearly to the customers and it gives us the flexibility to have these these choices like we're talking about here of choosing what are the right instruments for the the situation i mean not obviously because the holding company is a proposed item right now not approved we don't want to front run the process and we just we we will evaluate and appreciate the flexibility that we expect it it will afford us and then

After the Washington utility is acquired, would you expect to use consolidated accounting or equity accounting?

Our current expectation, obviously, we will finalize and have it done. The reporting is that based on the partnership structure and our operations that we would be consolidating the utility.

Got it. And then can you tell us what was the most recent Pacific Corps Washington rate base?

It's $1.4 billion.

And that would be as of, is that at the end of 25, the end of 24? End of 2025. Okay.

I believe you'll find that that rate base was included in a fuel-type filing, an energy filing is where it was last presented. and I believe it's called their, and do not ask me for the spell, that's called their PCOR. They have been, you know, as they've disclosed, which they've talked in their release, they have been attempting to sort of restructure as, you know, their multi-state setup here. And this was a movement in the multi-state to start to realign what assets are serving what parts of their set of companies, not completely, at least partially address that. And then last question from... Oh, sorry. I was just going to say, you know, we look forward to in Washington, you know, we believe, you know, they've been, you know, pretty constructive on the regulatory front, have the opportunity for a multi-year plan and think that their mechanisms are, you know, somewhat helpful to the fuel recovery. Sorry, I just wanted to finish that thought.

Great. And then... I think in the past you've given us sort of a sense of what percent of properties in Oregon are high risk relative to wildfire. Is there a similar percent that you can share with us in the Washington properties?

You know, as we move forward, we will do the same sort of disclosure that we have. Overall, it's pretty similar to Oregon, where it's actually quite low, maybe about 2% or so. There's about 20 distribution miles. Much of the area that you can see on higher fire risk maps is actually not inhabited by individuals. It's Forest Service or tribal land.

Thank you. This concludes the question and answer session.

I would now like to turn it back to Maria Pope for closing remarks.

Thank you very much for joining us today. We remain focused on delivering efficient, effective operations, realizing economies of scale and regulatory frameworks that support customer affordability as we move forward with this exciting opportunity. We're advancing critical infrastructure investments that will support economic development both in Oregon and in Washington and builds on a base of growing data center and high-tech customers. The Washington opportunity and acquisition of Pacific Core's assets represents a strong operational fit. They're accretive in the first year and enhances our long-term EPS and dividend growth guidance of 5% to 7%, as well as credit supportive. We look forward to moving through the process with stakeholders and regulators on a number of fronts and speaking with you next quarter and probably meeting with many of you at investor conferences in the months and weeks to come. Thank you very much for joining us.

Thank you.

This concludes today's conference call. Thanks for participating.

You may now disconnect.