Portland General Electric Company (POR) Q4 2016 earnings summary

Executive summary

• 2016 net income was $193M, or $2.16 diluted EPS; improved hydro and wind output, lower variable power costs and wholesale sales supported earnings despite mild winter weather and lower retail deliveries.

• Nearly 11,000 customers were added; weather-adjusted load grew 1%, while total retail deliveries fell 2.1% and reported industrial deliveries declined 8.4%.

Financial highlights

• Revenue was $1.923B, up 1.3% YoY; operating income rose to $333M from $309M, and net income attributable to shareholders increased to $193M from $172M.

• Gross margin reached 68%, up from 65%; purchased power and fuel expense fell $44M, or 7%, to $617M.

• Retail revenue increased $8M to $1.783B; the $49M rate increase and $10M decoupling benefit were partly offset by lower deliveries and the absence of prior-year deferral collections.

• Operating cash flow was $553M; capital expenditures were $584M in the financial highlights, with reported capital requirements of $596M including other items and excluding AFDC.

Outlook and guidance

• 2017 retail deliveries were forecast near 2016 weather-adjusted levels or slightly lower; long-term load growth outlook was approximately 1% annually, while the shareholder letter cited a possible 2017 decline of up to 1%.

• 2017 capital requirements were estimated at $610M; operating cash flow was expected at $450M–$500M, alongside approximately $450M of debt issuance to fund investment and $150M of debt maturities.

• The 2018 general rate case was planned for filing by February 2017, with new prices expected in January 2018; review was expected through 2017.

• The 2016 resource plan recommended at least 135 MWa of energy efficiency, up to 77 MW of demand response, ~175 MWa of renewable resources and up to 850 MW of capacity acquisitions.