Participants

Nick White; Investor Relations; Portland General Electric Co

Maria Pope; President, Chief Executive Officer, Director; Portland General Electric Co

Joseph Trpik; Chief Financial Officer, Senior Vice President - Finance; Portland General Electric Co

Julien Dumoulin Smith; Analyst; Jefferies

Mike Lonegan; Analyst; Evercore ISI

Richard Sunderland; Analyst; JPMorgan Securities

Nathan Richardson; Analyst; Barclays

Anthony Crowdell; Analyst; Mizuho

Gregg Orrill; Analyst; UBS

Presentation

Operator

Good morning everyone and welcome to Portland General Electric Company's first quarter 2025 earnings results conference call. Today is Friday, April 25th, 2025. This call is being recorded and as such all lines have been placed on mute to prevent any background noise. (Operator Instructions) 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.

Nick White

Thank you, [Shannon]. Good morning, everyone. We're 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 2, 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 Form 10-Q, which are available on our website.
Turning to slide 3, leading our discussion today are Maria Pope, President and CEO; and Joe Trpik, 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.

Maria Pope

Good morning and thank you all for joining us today. Portland General Electric announced advanced key priorities in the first quarter, laying the foundation for solid results, diligent cost management, and strong execution in 2025 and beyond.
Beginning with slide 4, I'll speak to our financial results and key drivers. For the first quarter, we reported GAAP net income of $100 million or $0.91 per diluted share. This compares with first quarter 2024 GAAP net income of $109 million or $1.08 per diluted share, and non-GAAP net income of $123 million or $1.21 per share.
Our first quarter results reflect the continuation of strong load growth from high tech and data center customers who drove 4.6% total load growth, and industrial load growth of 16.4% compared to the same quarter last year. PGE serves five large semiconductor customers and over 10 significant data center providers that are spread across dozens of sites, making up nearly 25% of our total deliveries.
This growth is driving important capital improvements and upgrades across our transmission and distribution systems. These investments advance critical energy security and resource adequacy goals shared by customers and the communities we serve and also address aging infrastructure needs and enable the economic engine of our service territory.
Many of these customers have aggressive clean energy goals that align with our municipal and residential customers who make our clean energy program number one in the country, according to NREL. Our strategy drives our work to build the reliable, affordable, and increasingly clean grid of the future, including the ongoing 2023 and 2025 RFPs and the forthcoming 2025 IRP update.
Customer prices are central to our strategy and are playing, and we are paying close attention to the evolving federal policy landscape and advocating for the continuation of renewable investment and production tax credits. Credit transferability and other provisions under the IRA and IIJA, as well as closely following the ongoing tariff situation.
Our commitment to address system resilience, advanced clean energy priorities, and provide safe, reliable, and affordable energy for every customer we serve is as important today as ever. Turning to wildfire risk, we're actively engaged with key stakeholders, including legislators, the governor's office, the OPUC the Oregon Department of Forestry, first responders, and other utilities, and customers as we work towards solutions that address the societal risk of wildfires and other extreme weather.
Our mature year-round wildfire mitigation work is advancing as we deploy lessons learned from recent wildfires and sharpen our practices ahead of summer. In 2025, we plan to spend over $120 million on wildfire mitigation, including capital investments and O&M. We're working with elected officials and stakeholders on legislation to address the financial risk from wildfires.
A bill was introduced in February to create a standard of care for utility wildfire mitigation and establishes a safety certificate process to be managed by the OPUC and tied to our wildfire mitigation plan. Creating clear standards for the work utilities do to prevent wildfires and keep communities safe is essential.
A clear standards reduce the likelihood of wildfires being triggered by utility equipment as well as enhanced services liability, lowers customer costs and provides economic stability for Oregon's communities. We're pleased to see continued progress on this important policy. While proposed legislation to create a catastrophic wildfire fund has not moved forward, the ongoing dialogue with stakeholders represents productive progress.
Pacific Northwest states are just beginning to grapple with the liability issues related to wildfire risk. And as I said in our last call, these policies may take more than one session to achieve. The work we're doing to address and manage risk by executing on our wildfire mitigation plan and working to find societal solutions for the risk of wildfire in extreme weather helps with affordability and protects customers.
When it comes to affordability, there are several areas that also come together to reduce upward customer bill pressure. Growth, serving a growing customer base allows us to spread out operating costs and investments over larger volumes of business. Cost management. Our company-wide work to reduce O&M costs is well underway.
We're evaluating every program and reducing costs to help keep customer prices as low as possible. Joe will cover this work in greater detail in his remarks. As discussed on our previous call, we're working towards updating PGE's corporate structure to enable a holding company. This is a common structure in the industry, in fact, the most common structure, and will help enable increased flexibility in how we finance our business.
As we look ahead, The Portland General Electric team is focused on managing our business with discipline and foresight, deals only controlling costs and risk management, and seeking competitive returns to effectively attract investment, delivering value to customers, communities, and shareholders. With that, I'll turn it over to Joe. Joe?

Joseph Trpik

Thank you, Maria, and good morning, everyone. Turning the slide 5 in our Q1 results reflect strong energy demand from our industrial customers and ongoing system investments. Q1 2025 loads increased 4.6% overall or 4.4% weather adjusted as compared to Q1 2024. Q1 2025 residential load decreased 0.8% quarter over quarter or 1% weather adjusted.
Residential customer count increased by 1.6%, which was offset by energy efficiency driving lower usage per customer. Commercial load remained relatively flat with a slight increase of 0.8% or 0.3% weather adjusted. We observed another quarter of choppy growth from the industrial class this quarter. Industrial load increased 16.4% on both a nominal and weather adjusted basis, as recent load growth trends from data centers and semiconductor customers continued.
These results are aligned with our 2025 plan, and as such, we are reaffirming our 2025 weather adjusted low growth guidance of 2.5% to 3.5% and our long-term low growth guidance of 3% through 2029 based on our current expectations. I'll now cover our financial performance quarter over quarter.
We experienced a $0.07 increase in total revenues driven by a 14% increase from the 4.6%, 4.6% growth in deliveries, partially offset by a $0.07 decrease in revenues due to delivery composition changes. A decrease from power cost of $0.08 driven by a $0.17 EPS decrease due to power cost performance in 2024 that reverses for this comparison and a $0.09 increase from favorable conditions which drove lower power costs than anticipated in the annual update tier.
Overall, we are slightly below the PCA baseline in Q1. An $0.18 EPS decrease from operating expenses made up of $0.04 of O&M, net of improved recovery, and deferral related items driven primarily by the timing of wages and benefits and professional service costs.
$0.11 from higher depreciation and amortization, and $0.03 from higher interest expenses driven by higher debt balances in support of the ongoing capital investments. And lastly, an $0.11 decrease from other items, including $0.08 from dilution from recent equity draws and $0.03 from other miscellaneous items.
Turning to slide 6 for our five-year capital forecast, which remains consistent with our last disclosure. The incoming seaside battery remains on track to come in service at the end of June and will complement our existing battery portfolio during peak summer usage.
We are advancing our regulatory strategy for seaside in Q2, consistent with their expedited option introduced in the 2025 GRC order, as we will seek recovery of this important asset that will soon serve customers. Beyond that, we're constructively engaging with parties as we evaluate our long-term regulatory path.
While the timing and scope remains fluid, we are focused on options that balance our commitment to affordability while recovering key capital investments serving customers. On the resource planning and procurement fronts, we are continuing through negotiations with the 2023 RFP bidders and still expect contract finalization in the second half of the year and projects and service by the end of 2027 under current conditions.
Filing of the 2025 IRP update will be made later this quarter and will support the 2025 RFP process, which has advanced through preliminary stages and will fully launch in the second half. As Maria mentioned, we are keeping an eye towards federal policy developments, including tariffs, changes in the Inflation Reduction Act, tax policy, and other relevant legislation that may impact our base capital plans for renewable procurement.
This is clearly a dynamic situation, but we are engaged in all fronts with suppliers, customers, regulators, policymakers, and other stakeholders as we evaluate collective impacts. On the slide 7, our liquidity and financing summary.
Total liquidity at the end of March was $948 million and our credit ratings and outlook remain unchanged from the last quarter. We executed $310 million of first mortgage bonds at the end of March and anticipate up to $140 million more of debt financing later this year to support our capital investment plan and general corporate purposes.
We priced an additional $87 million under the ATM program in Q1 as we deliberately execute our base financing plan which remains at $300 million per year for 2025 and 2026. The growing needs of customers, clean energy progress, and our commitment to affordability are pushing us towards new solutions that unlock value for our customers and stakeholders.
Expanding our financing flexibility remains a priority, and as Maria noted, we are pursuing updates to our structure, including a holding company formation. After making solid headway in Q1, our teams remain focused on advancing key priorities for the balance of 2025. This includes deploying intentional cost management measures to realize lasting efficiencies and the right cost structure.
This builds on the foundation we laid in 2024 to identify strategies that improve the efficiency and effectiveness of our work and support lasting strong performance. Implementing this plan is challenging but important, as we find ways to streamline our operations, utilizing tools and technology to do high impact work at lower costs.
This is critical to support our commitment to customer affordability and bolster our culture of to consistently deliver our on expectations. Given our progress to date, we are confident in the path forward and our strategy that underpins our near-term and long-term outlook.
As such, we are reaffirming our 2025 adjusted earnings guidance of $3.13 to $3.33 per diluted share and our long-term earnings and dividend growth guidance of 5% to 7%. We look forward to continued execution for the remainder of the year as we focus on safely delivering reliable, increasingly clean and affordable energy to our customers and the communities we serve. And now, operator, we're ready for questions.

Question and Answer Session

Operator

(Operator Instructions)
Julien Dumoulin Smith, Jefferies

Maria Pope

Hey, good morning.

Julien Dumoulin Smith

Hey, good morning. Appreciate the time, guys. Hey, just wanted to come back on the legislative and just wildfire context. Obviously, I heard the comments earlier. How are you thinking about the progress and, more importantly just where you're making progress?
Where you aren't specifically in setting expectations whether this year or next year just to lay the groundwork because obviously I think that's kind of the linchpin of some of the other subsequent decisions, right, like a Holdco it seems from a timing perspective.

Maria Pope

So it's that you're spot on with regards to the timing. With regards to progress that we're making, one of the things I think that has really been evident is there are a lot of legislators that really were not aware of the extensive wildfire mitigation plans that we put in place, the extensive increase in vegetation management and the work that we've done in some hardening over the number of past number of years.
And so there was a lot of discussion over really what it takes, the costs and the significant increase in costs over the last couple of years for wildfire prevention and mitigation. One of the things that I think is also interesting is that wildfire presents itself very differently in different parts of the state. So we've had a lot of discussion by experts as well as others.
Where we have really excelled is with regards to a certificate process and that has been very important in terms of establishing a well-known and well understood standard of care, not unlike what you would see in the medical fields or in engineering fields or in many other fields.
And then where we have much more work to do is with regards to a fund and then also limitations of liabilities associated with accessing that type of funds, so that customers can get access to funds much faster than they would through other processes. We have a lot more work to do there, and I think you'll see that the continuation of discussions even after the legislation, legislative session should be very productive.

Julien Dumoulin Smith

Excellent thank you and then just on the if I can if I can follow that up real quickly here with where you stand, I mean you've got the 5Kger to 7Kger out there and certainly that's dependent on seeing the financing come through with a certain level of dilution. When you think about the decision to follow through on CapEx as we see today, I just wanted to get your sense of confidence, right?
We have, public statements here from others saying we're going to focus on affordability. At the same time we're not seeing the follow through on the wildfire legislation whether in '25, maybe it happens in '26, but at what point do you say, look, we're going to pull back on growth because the broader construct is telling us to reassess here?
I mean, it's a difficult backdrop. I appreciate what you guys are doing, especially from a cost containment perspective, and I want to highlight that here, but at the same time, so many different pressure points here. Is there a certain moment where you say we're going to reassess?

Maria Pope

I think it's a good question, Julian. It's one that we ask ourselves continually. I just as a reminder, we talked about this pretty extensively on the second quarter, on the first quarter call in February as well as previous. We always thought that the discussion with regards to addressing wildfire in Oregon would take two sessions.
And I'm very appreciative of representatives Marsh and Mannix for the tireless work that they have done with regards to both bills, but in particular with regards to safety certification. As we move forward, you're right, we're looking at our ability to be able to adequately recover costs and deliver competitive returns and competitive growth, for investors.

Julien Dumoulin Smith

Excellent. Well, look, I, maybe just last quick one on timing on the RFPs and any updates there, just as far as it goes, because obviously that your outlook is pretty sensitive to that. Just you can just clarify what you're seeing on the front and I'll leave it there.

Maria Pope

So we couldn't be more pleased with the negotiations as they're progressing. Obviously, in the external and global as well as national environments, there's a lot of noise, but our customer base is growing. Our customer base continues to be focused on clean energy, and we look forward to concluding the negotiations as we go through the balance of the year and bringing on projects in the 2027 time period.
I would note that from the last projects we've brought on, we're already seeing tremendous advantages of the battery storage and in fact we've seen upwards of just under 10% in certain periods of time coming from our battery storage, enabling a lower cost energy to be delivered to customers and really taking advantage of the variability across the entire West.

Julien Dumoulin Smith

Awesome hey thanks for the time, guys. Hang in there, we'll speak soon, right? All the best.

Maria Pope

Great, thanks Julien.

Operator

Mike Lonegan, Evercore ISI

Maria Pope

Morning.

Mike Lonegan

Yeah. Good morning. Thanks for taking the question. You have, so obviously you've seen strong industrial sales growth driven by semiconductors and data centers. You reiterated your 3% long term load growth forecast.
But given the tariffs and concerns about economic development, just wondering, are you prepared for a potential slowdown in this low growth and a slowdown in capital projects? Just wondering if you could talk about the options you have for capital potential reallocation and then also what you're expecting in terms of capital inflation.

Maria Pope

Yeah, so first of all, with regards to our industrial base, it's primarily three areas. The first is a quarter of it is really traditional industrial customers. A quarter and our fastest growing area is semiconductors, excuse me, is Data centers, that's the fastest growing area by far, and then about half is semiconductors.
We are watching the global market for semiconductors very closely, and between all three of those sectors we remain very confident in our growth as we move forward. In terms of overall inflation, we've actually seen a moderating of inflation in terms of costs that are impacting us.
I would imagine that our customers are seeing somewhat of the same thing. Obviously that does not take into consideration all the discussions with regards to tariffs that are taking place nationally and globally.

Mike Lonegan

Great thanks and then you've talked about monetizing tax credits, to manage your financing plan just wondering how much monetization does your plan currently account for per year and then in the event you know there was no longer any transferability. What would be your approach to plugging that GAAP, potentially more equity?

Maria Pope

Joe, you want to address that?

Joseph Trpik

So as it relates to our base plan, the only tax credits are really contemplated in our financing are the ones related to the seaside project that's about to come online. After that, our base plan and investments in our base plan do not have any additional ITCs or PTCs. We do have, I shouldn't, I should say a small monetization of our PTCs over time, but they're not significant to our financing.
As it relates to our growth, when we consider the potential participation in the RFP, we would anticipate, that there are -- there can be ITCs in there, but we look at those first as a benefit to a cost reduction to our customers, and then they obviously do have the ability to take some pressure off of our financing.
I should say with the ITCs and TTCs that we, we've had, that we've monetized to date and the ones that are coming, we continue to see strong interest in the ability to monetize those investments. So I mean, in short, base plan, other than seaside does not rely on the ITCs and long term that really the ICCs or ITCs are as much about affordability for our customers and effective prices.

Mike Lonegan

Great thanks for taking my question.

Maria Pope

Thank you.

Operator

(Operator Instructions)
Richard Sunderland, JPMorgan

Maria Pope

Good morning.

Richard Sunderland

Hey, good morning. Thanks for the time today. Picking up the RFP conversation, do you see any need or potential to pivot resources out of the 2023 RFP and into the 2025 RFP to update pricing for let's say tariff for supply chain impacts?

Joseph Trpik

Hey good morning. As it relates to pricing, and this isn't very dissimilar from what we saw in 2021, that these types of changes are contemplated. So, we don't at this point think there's a need to roll forward. We have a pretty adaptable process. The dialogue that we have with the RFP group right now continues to contemplate these uncertainties.
So, at least at this point in time, we believe there are enough vehicles within the actual standing RFP process to adjust as we move in 2021. If you recall, there were some pricing increases as well as some clarity in the IRA. There was a net increase that we were able to work through subsequent to the RFP process getting through into the selection.

Richard Sunderland

Got it. Does that hold true for the batteries in the 2023 RFP? I mean, are those being sourced from China?

Joseph Trpik

As it relates to the batteries, we haven't disclosed where they're sourced from yet, but obviously, batteries overall have a majority coming from overseas. But, in our dialogue with the parties, we are contemplating ways to address the way that tariffs could impact their batteries, assuming that you have that exposure. And we continue with that dialogue to be on track here, to be able to execute here in the second half of the year for these RFPs.

Richard Sunderland

Okay, got it. That that's helpful. And then turning back to some of the comments in the opening script, Marie, I know you mentioned growth as one angle to address affordability. I'm curious if you could speak a little bit more to, I guess the relationship with that data center customers and how you're getting the right structure with them on minimum guarantees, costs overall and, sort of avoiding that cross subsidization onto existing ratepayers.
What's the overall landscape look like in terms of sort of paying your fair share if that makes sense?

Maria Pope

It's an excellent question, and it's something that we're spending a lot of time talking about both in the regulatory and in the legislative arenas. In fact, there is legislation to address this, as we speak. Overall, the impact is in several areas.
The first is just overall infrastructure and as you can see, we've broken out a separate transmission area in our capitalization table, and it's really these new large customers, particularly data centers, that's driving a lot of the need for transmission buildouts really in the first time and sometimes decades in our service territory. So there is a benefit overall for system reliability.
With regards to distribution, some impact there certainly, but most overall what you really see is a change in the market price of power. As the increasing demand comes from data centers whether we are serving them or other utilities in Pacific Northwest and we need to be doing more direct procurement for those and we do have some programs that allow for that already and we're working directly with customers.
I would also say that the data centers bring additional stability to the grid. We have some data centers that are bringing battery stores. We have some that have backup many of backup generation. And that is something that we have been working on for years and accelerated our virtual power plant process.

Richard Sunderland

Great, thank you so much.

Maria Pope

Thank you.

Operator

Nathan Richardson, Barclays

Nathan Richardson

Hey everybody, how are you?

Maria Pope

Good morning.

Nathan Richardson

Just a couple of quick questions here. So I just wanted to clarify, so I believe you said that you intend to do an expedited seaside case. I was wondering if there was any more details about that?

Joseph Trpik

Yeah, so yes, we do plan, as you may recall, in the 2025 GRC that was proposed to us. It's a bit unique because it's not something we've done before. We're in the process of finalizing the details with the party through constructive dialogue. So we would expect that to be filed here sometime in the coming, months, days, year or so shortly.
And it's pretty simple as it as it relates to just clarifying the mechanism on when and how we recover the cost, but we think, the dialogue has been productive to date and so we look forward to being able to file this and work forward.

Nathan Richardson

Got it. That makes sense. And then last one, so sequentially the equity layer seems to have gone down a little bit. I was curious where you think you'll be at the end of the year with the current equity issuance of the plan and then part two of that is what do you think their trajectory is to get back to 50% and you have a rough timeline on that?

Joseph Trpik

So, as we mentioned before, we, we've drawn down as it relates to the to, I shouldn't say drawn down. We, we've issued under the ATM up to $100 million so far, right? Our capital plan today needs $300. Current pricing as it relates to the market, although not where we would like it to be, is somewhere that we believe we continue to make pretty, investments that are not dilutive here.
We think, as we work forward here, we continue to be committed and think even at these kinds of prices, we can work towards our fifty-fifty CAP structure, going forward.

Nathan Richardson

Got it thank you very much.

Operator

Anthony Crowdell, Mizuho

Anthony Crowdell

Hey, good morning team. My question to probably follow up on the last one, and Julien's on the holding company. I think Joe, you mentioned about targeting the fifty-fifty. Does it require the holding company to be established before you achieve the fifty-fifty?

Joseph Trpik

As it relates to that, our financing plan and our strategy to get to fifty-fifty, which would obviously be at the utility is exclusive of and does not rely upon a holding company strategy. That is just our straight up plan.

Anthony Crowdell

And then when you think about the creation of the holding company, is there a targeted level of debt that that you would look to maintain at the at the holding company?

Joseph Trpik

It's too early to get to specifics on that. Obviously, we want to use the holding company here to give us the flexibility to continue to be able to, efficiently finance and manage our cost for the customer, but today, there's nothing specific other than the focus that the holding company will drive flexibility, will continue to support a customer about.
And we expect over this process, which I think we've mentioned would take up to a year, we'll get further clarity there just and expect that we will stay within our, with our reasonable norms for those type of those types of structures.

Anthony Crowdell

And just I'm not familiar with Oregon if there's any issues in the state from a regulatory perspective on double leverage if the equity and debt ratios that the holding company differ from that of the [OPUC]?

Joseph Trpik

Today, I can't say that there's anything specific there. I do think that as we work through with the regulator here, we'll clarify through a set of agreements and stipulations on how the holding company will work. But if you ask specifically to provisions as it relates to that, I do not believe there are.

Anthony Crowdell

Great thanks so much for taking my questions.

Operator

Gregg Orrill, UBS

Maria Pope

Morning, Greg.

Gregg Orrill

Yeah, good morning, Thank you, just maybe you hit this already, just the timing of pursuing the whole code proposal.

Maria Pope

We'll be filing something in the latter part of the second quarter.

Gregg Orrill

Okay, all right. That's the only question I had. Appreciate it.

Maria Pope

Great. Thank Greg.

Operator

Thank you and I'm currently showing no further questions at this time. I'd like to turn the call back over to Maria Pope for closing remarks.

Maria Pope

Thank you all for joining us today. We appreciate your interest in Portland General Electric, and we look forward to connecting with everyone soon. Thank you very much.

Operator

This concludes today's conference call. Thank you for your participation. You may now disconnect.