Portland General Electric(US:POR)2022-10-25 00:44PART I — FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements, including income, balance sheet, and cash flow statements Condensed Consolidated Statements of Income and Comprehensive Income PGE's Q3 2022 net income rose to $58 million, driven by higher total revenues from increased customer prices and wholesale sales Q3 & YTD 2022 vs 2021 Income Statement Highlights (in millions, except EPS) | Metric | Q3 2022 | Q3 2021 | YTD 2022 | YTD 2021 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $743 | $642 | $1,960 | $1,788 | | Income from Operations | $92 | $83 | $310 | $277 | | Net Income | $58 | $50 | $182 | $178 | | Diluted EPS | $0.65 | $0.56 | $2.04 | $1.98 | Condensed Consolidated Balance Sheets Total assets grew to $9.85 billion as of September 30, 2022, primarily due to an increase in electric utility plant assets Balance Sheet Summary (in millions) | Account | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Assets | $9,849 | $9,494 | | Total Current Assets | $750 | $688 | | Electric Utility Plant, Net | $8,292 | $8,005 | | Total Liabilities | $7,089 | $6,787 | | Total Current Liabilities | $990 | $768 | | Long-term Debt, Net | $3,286 | $3,285 | | Total Shareholders' Equity | $2,760 | $2,707 | Condensed Consolidated Statements of Cash Flows Net cash from operations was $574 million for the nine months ended September 30, 2022, with a net decrease in cash of $34 million Cash Flow Summary - Nine Months Ended Sep 30 (in millions) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $574 | $582 | | Net Cash used in Investing Activities | ($528) | ($502) | | Net Cash used in Financing Activities | ($80) | ($43) | | (Decrease) Increase in Cash | ($34) | $37 | | Cash and Cash Equivalents, End of Period | $18 | $294 | Notes to Condensed Consolidated Financial Statements The notes detail accounting policies, revenue recognition, regulatory matters, and the impact of new legislation like the Inflation Reduction Act Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses financial performance, strategic decarbonization initiatives, regulatory impacts, and capital resource allocation - PGE's strategy focuses on three key initiatives: decarbonizing the power supply to meet 2040 zero GHG emissions targets, electrifying other economic sectors like transportation, and performing efficiently to deliver 5-7% average long-term EPS growth156 - Net income for Q3 2022 increased to $58 million from $50 million in Q3 2021, driven by higher revenues from customer price increases and strong wholesale market prices241242244 - The company plans capital expenditures of $750 million in 2022, increasing to an estimated $1.15 billion in 2023, which includes $415 million for the Clearwater Wind project272275 Overview and Company Strategy PGE's strategy centers on decarbonization to meet Oregon's 2040 clean energy goals and achieving 5-7% long-term EPS growth - PGE is preparing a Clean Energy Plan (CEP) to meet Oregon's HB 2021 targets of 80% GHG reduction by 2030 and 100% by 2040153158 - The 2021 All-Source RFP seeks ~1,000 MW of renewable and non-emitting resources to meet a projected need of 2,500-3,500 MW of clean resources by 2030159 - PGE has entered into agreements to construct a 311 MW wind facility (Clearwater Wind), of which it will own 208 MW with an investment of approximately $415 million165 Regulatory Matters This section details the financial impacts of the 2022 General Rate Case and significant cost deferral balances - The 2022 GRC, effective May 9, 2022, approved a $74 million annual revenue requirement increase and eliminated the decoupling mechanism188190 - As a result of earnings tests from the GRC order, PGE recorded a $17 million pre-tax, non-cash charge in Q1 2022 by releasing deferrals from 2020194 Key Regulatory Deferral Balances (as of Sep 30, 2022) | Item | Deferred Balance | | :--- | :--- | | COVID-19 Impacts | $34 million | | 2020 Labor Day Wildfire | $31 million | | February 2021 Ice Storm | $73 million | | Wildfire Mitigation | $25 million | Operating Activities and Results Total retail energy deliveries increased 3% year-to-date, driven by the industrial sector, while higher power costs impacted expenses Energy Deliveries Growth (YTD Sep 30, 2022 vs 2021) | Customer Class | % Increase in Energy Deliveries | | :--- | :--- | | Residential | 0% | | Commercial | 1% | | Industrial | 11% | | Total Retail | 3% | - Wholesale revenues for the nine months ended Sep 30, 2022 increased by $95 million (51%) due to higher average sales prices and a 9% increase in sales volumes249 - Generation, transmission, and distribution expenses for the nine months increased by $22 million, including a $16 million impact from the release of previously deferred amounts following the 2022 GRC earnings test259 Liquidity and Capital Resources The company maintained total liquidity of $797 million as of September 30, 2022, supported by a new $260 million term loan Available Liquidity as of Sep 30, 2022 (in millions) | Source | Available | | :--- | :--- | | Revolving Credit Facility | $650 | | Letters of Credit | $129 | | Cash and Cash Equivalents | $18 | | Total Liquidity | $797 | - On October 21, 2022, PGE obtained a $260 million 366-day bridge term loan to support its capital requirements283 - PGE's common equity ratio was 45.3% as of September 30, 2022, with a long-term target of approximately 50%284 Quantitative and Qualitative Disclosures About Market Risk There have been no material changes to the company's market risks since the 2021 Annual Report on Form 10-K - There have been no material changes to the Company's market risk exposures since the 2021 Form 10-K filing290 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2022 - The CEO and CFO concluded that as of September 30, 2022, the company's disclosure controls and procedures were effective291 - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls292 PART II — OTHER INFORMATION Legal Proceedings This section refers to Note 8 of the financial statements for details on contingencies and various governmental investigations - For details on legal proceedings, the report refers to Note 8, Contingencies, in the financial statements294 Risk Factors The company reports no material changes to the risk factors disclosed in its 2021 Annual Report on Form 10-K - There have been no material changes to the company's risk factors since the 2021 Form 10-K filing295 Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase any shares of its common stock during the third quarter of 2022 - PGE did not repurchase any of its common stock during the third quarter of 2022296 Exhibits This section lists exhibits filed with the Form 10-Q, including a new credit agreement and CEO/CFO certifications - A new 366-Day Bridge Credit Agreement dated October 21, 2022, is included as Exhibit 10.1297