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.