Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)

Portland General Electric Company (NYSE:POR)

Q1 2010 Earnings Call

May 4, 2010 11:00 am ET

Executives

Bill Valach - Director, IR

Jim Piro - President and CEO

Maria Pope - SVP of Finance, CFO and Treasurer

Analysts

Brian Russo - Ladenburg Thalmann

James Bellessa - D.A. Davidson & Company

Operator

Good morning, everyone, and welcome to Portland General Electric Company's first quarter 2010 earnings results conference call. Today is Tuesday, May 4, 2010. (Operator Instructions)

For opening remarks, I would like to turn the conference call over to Portland General Electric's Director of Investor Relations, Mr. Bill Valach.

Bill Valach

Before we begin our discussion this morning, I'd like to make our customary statements regarding Portland General Electric's written and oral disclosures and commentary that there will be statements in this call that are not based on historical facts and as such constitute forward-looking statements under current law. These statements are subject to factors that may cause actual results to differ materially from the forward-looking statements made today.

For a description of some of the factors that may occur that could cause such differences, the company requests that you read our most recent Form 10-K and Form 10-Qs. The Form 10-Q for 2010 was available this morning at portlandgeneral.com.

The company undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise, and this Safe Harbor statement should be incorporated as part of any transcript of this call. Portland General Electric's first quarter earnings were released before the market opened today and the release is available at portlandgeneral.com.

Leading our discussion today are Jim Piro, President and CEO; and Maria Pope, Senior Vice President of Finance, CFO and Treasurer. Jim will begin today's presentation by providing a general overview of the quarter's results and our strategic capital projects. Then Maria will provide more detail around the quarter's results and key regulatory proceedings. Following those prepared remarks, we will open the lines up for your questions.

Now it's a pleasure to turn the call over to Jim.

Jim Piro

Welcome to Portland General Electric's first quarter 2010 earnings call. PGE's net income for first quarter 2010 was $27 million or $0.36 per diluted share compared to $31 million or $0.47 per diluted share for the first quarter of 2009. We are reaffirming our full year 2010 earnings guidance of $1.30 to $1.45 per diluted share.

As we discussed in our last call, we continue to face challenges due to weather-related events and the effects of the weak economy. During the first quarter, the Portland metropolitan area experienced the third warmest average temperature on record. This warmer weather led to a decline in residential energy deliveries. The continued effects of the economic downturn also led to a decline in commercial and industrial energy deliveries.

Hydro conditions continued to be below normal quarter-over-quarter, and the current hydro forecast indicates that we're about 75% of normal. However, better than expected thermal plant operations helped to partially offset this impact. Maria will go into more details later on the call.

In Oregon, the unemployment rate came in at 10.6% in March, down from the recession high of 11.6% in mid-2009. This compares to the national unemployment rate of 9.7% for the same period. The drop in Oregon's recent jobless rate results from a stabilization of Oregon's labor force and improving job market. Oregon continued to attract in-migration, ranking second after Washington, D.C.

Despite continued customer growth of approximately 1.5%, total retail energy deliveries decreased by 9% or 3.3% on a weather-adjusted basis quarter-over-quarter. For 2010, we project that weather-adjusted retail energy deliveries will remain essentially flat relative to 2009. We expect energy deliveries to paper product manufacturers to be lower than 2009. However, this decline will be offset by a moderate increase in deliveries to other existing industrial customers, including those in the high-tech sector.

Looking ahead, we are seeing some positive signs. The high-tech sector, our largest industrial sector, is expected to benefit from strong demand. Locally, SANYO and Genentech are expected to ramp up to full capacity by mid-2010.

Now an update on our strategic initiative. Overall satisfaction with both residential and general business customers remains high, and we continue to receive positive feedback that tells us we are meeting our customers' needs.

The National Renewable Energy Laboratory just released its annual rankings yesterday, and I am pleased to announce that PGE is first in the nation for the number of renewable power customers. And for the fifth year in a row, PGE sold more renewable power to residential customers in any of the utility in the United States. These rankings reflect our customers' commitment to green power and our commitment to delivering them renewable resource options.

Also key to customer satisfaction is power quality and reliability. During the first quarter, our system-operated well, our distribution metrics remained strong. And through our generation excellence program, we've made continuous improvement in our generation facilities by focusing on safety, plant reliability and process improvement.

Now an update on our key capital projects. Our effort to install smart meters throughout our operating area is currently ahead of schedule with approximately 670,000 new meters installed as of the end of April. We expect our smart meter project to be completed by yearend and within its capital budget.

Construction of Phase III of our Biglow Canyon Wind Farm is on schedule. We expect to bring the first turbines of Phase III online in the second quarter and to complete this entire project by the third quarter of this year.

Phase III has an estimated total cost of $390 million, including $20 million of AFDC an installed nameplate capacity of 175 megawatts. With the completion of Phase III, renewable energy will meet approximately 11% of our load, ahead of Oregon's renewable energy standard first benchmark of 5% by 2011. The next benchmark is 15% by 2015, with the final benchmark of 25% by 2025.

Renewable resources like Biglow Canyon are an important part of our overall resource strategy, which is detailed in our 2009 Integrated Resource Plan filed in November with the Oregon Public Utility Commission.

The proposed 2015 action plan includes meeting approximately 50% of our load growth over the next decade through energy efficiency measures as well as the following generation and transmission actions: a natural gas facility to meet additional baseload requirements estimated at 300 megawatts to 500 megawatts; a natural gas facility for additional peak load requirements estimated up to 200 megawatts; an additional 122 average megawatt of renewable resources to meet Oregon's RES requirements of 15% by 2015 and a new transmission project called Cascade Crossing.

Upon receipt of a commissioned acknowledgement of our IRP Action Plan, we plan to conduct three separate RFP bidding processes, the first for new renewable resources, the second for baseload generation, and the third for peaking generation. In each of the RFPs, we plan to include our own self-filled options to compete with the market bids.

In April, we filed an addendum to our IRP, originally filed with the OPUC in November of 2009. The addendum recommends ceasing coal-fired operations at the Boardman plant by 2020. This is contingent upon receiving the Oregon Environmental Quality Commission's approval for our proposed revision to the current Regional Haze rule for Boardman along with other events.

In April, we submitted a petition to the Department of Environmental Quality, requesting a revision to the existing Regional Haze rule for Boardman, to re-revision calls for the installation of certain limited emission controls using lower sulfur coal and then ceasing coal-fired operations by the end of 2020 to meet the best available control technology standard.

We believe the 2020 plan is best for our customers and for Oregon. In addition to the environmental and cost benefits, this option will give PGE an adequate amount of time to find cost effective, reliable and environmentally-sound replacement resources.

In the event our proposed revision to the existing Regional Haze rule is not approved by the EQC, PGE has requested OPUC acknowledgement of the plan as presented in the original IRP, which calls for the installation of extensive emission controls to comply with the existing Regional Haze rule and continue the operation of the plant to at least 2040.

Now I'd like to turn the call over to Maria Pope, our Chief Financial Officer, to discuss our financial results in more detail.

Maria Pope

Good morning. First quarter 2010 net income was $27 million or $0.36 per diluted share. This compares to $31 million or $0.47 per diluted share for the first quarter of 2009. Operating results for the first quarter were impacted by warmer weather, the continued effects of a weak economy and unfavorable hydro conditions relative to the first quarter of 2009.

While we saw customer growth of about 0.5% compared to first quarter of 2009, retail revenues were affected by weather, the economy and lower retail pricing. Residential energy sales increased 13%.

Warmer than normal weather in the first quarter of 2010 compared to colder than normal in the first quarter of 2009 and resulted in an 11% impact, while the weak economy resulted in a 2% impact. The effects of a weak economy contributed to a 5% decrease in energy deliveries to commercial and industrial customers quarter-over-quarter.

On a weather-adjusted basis, total retail energy deliveries decreased a combined 3.3% quarter-over-quarter, 2.2% for residential customers, 3.3% for commercial customers and 6% for industrial customers.

In the first quarter, overall customer prices decreased approximately 1.2%. This consisted of a 4.1% decrease as a result of our annual update of the net variable power cost, offset by a 2.5% increase primarily from Biglow Canyon Phase II coming into process, as well as a 0.6% increase related to the Selective Water Withdrawal project.

Average variable power cost decreased 6% in the first quarter of 2010, compared to the first quarter of 2009, due to an increase in the power provided by PGE-owned generating resources and a decrease in the cost of fuel used in natural gas-fired production.

For the first quarter of 2010, we saw an approximate 11% decrease in the average cost of natural gas-fired production, as well as good performance from PGE's thermal operations. For the first quarter, thermal plant availability was 92%, and thermal generation was approximately 3% higher than the first quarter of 2009.

For all PGE-owned and operated generating facilities, the combined average availability of our thermal, wind, and hydro plants was approximately 95%. Offsetting this decrease in the average variable power cost was a 17% decrease in energy received from hydro generation.

Regional hydro conditions were below normal in the first quarter of 2010. PGE-owned hydro production, and energy received from contracts from the Mid-Columbia hydro projects were down 5% and 26% respectively compared to the first quarter of 2009.

Poor hydro conditions in the first quarter of 2010 had a negative $6 million pre-tax impact over the first quarter of 2009, and were approximately $11 million, pre-tax, below normal.

While we saw an increase in wind generation, primarily as a result of Biglow Canyon Phase II becoming operational in 2009, wind production for the first quarter of 2010 was lower than expected. Since wind is a relatively new resource for the company, we will continue to study and refine our wind forecast throughout the year.

For 2010, the Power Cost Adjustment Mechanism or PCAM has deadband ranges for approximately $17 million below to $35 million above the baseline for net variable power costs.

As of March 31st, the difference between actual and base line for net variable power costs was approximately $7 million above the base line. Accordingly, no amount was recorded for collection from retail customers during the first quarter of 2010.

For decoupling, we recorded a collection from customers of $5 million in the first quarter of 2010. This was primarily due to lower weather adjusted use for residential customers than that approved in the 2009 general rate case.

Now, an update on regulatory items. On February 16th, PGE filed a general rate case with the OPUC based on a 2011 test year. We proposed a $125 million increase in revenue requirements, representing an approximate 7.4% overall increase in prices.

We are requesting a capital structure of 50% debt-to-equity, a return on equity of 10.5%, for a total cost to capital of approximately 8.3%. We are also proposing several key policy objectives, including regulatory mechanisms that better compare other utilities across the country, and balance customer and shareholder interest consistent with our return on equity.

Regulatory review is underway, and data discovery is going on. Settlement discussions begin in May, and staff and interview, and testimony is due in early June. A final order is expected to be issued by mid-December, and new prices are expected to become effective January 1, 2011.

Now the renewable adjustment cost mechanism. On April 1st, we submitted our renewable adjustment cost filings primarily for Biglow Canyon Phase III. As these assets come online during 2010, we will defer the net revenue requirement currently estimated at $17 million, which will be amortized over a period of one year.

The impact of Biglow Canyon Phase III on the 2011 net revenue requirement is included in our general rate case filing.

As we look at the full year 2010, I'd like to discuss SB 408. Senate Bill 408 is a complex tax law. As we discussed in the past, when differences exist between taxes paid and taxes collected and customer prices, a [surcharge] or a refund to customers is created. A key element in SB 408 is the protection of federal tax normalization rules.

As a result, in 2010, due to the production tax credit and significant accelerated tax depreciation, the protection of normalization will come into effect, which impacts the calculations.

Management currently expects that any amounts refunded to customers or collected from customers related to 2010 results will not be material.

Financing and liquidity: We had $600 million in revolving lines of credit, of which $367 million was unused as of March 31st. In addition, at quarter end, we had no commercial paper outstanding or direct draws on our revolvers.

We are active in the wholesale marketplace, entering into forward contracts for natural gas and power. Thanks to our March 31st energy prices, in relationship to our portfolio we required to post 302 million in collaterals with wholesale counterparties, which consisted of $89 million in cash and $213 million in letters of credit.

If market prices remain unchanged, and as contracts sell, we would anticipate that 42% or approximately $109 million in letters of credit and $18 million in cash to no longer be required at year-end 2010, and another 38% to roll off in 2011.

During the first quarter of 2010, we issued long-term debt of a $191 million. This included issuing $70 million of First Mortgage Bonds at 3.4% due in 2015, and $121 million of Pollution Control Bonds at 5% due 2033. In addition, we repaid a $149 million of maturing unsecured notes.

This summer, we expect to issue the remaining $59 million of anticipated $215 in long-term debt for the year. While we are periodically higher or lower over the long-term, we target a capital structure of 50% debt and 50% equity. At quarter end, our equity ratio was 46.5%.

Our 2010 capital expenditures are estimated at $495 million and include Biglow Canyon Phase III at $175 million, smart meter purchase at $40 million, and upgrades to replacement, generation, transmission and distribution infrastructure estimated at $255 million. During the quarter, we completed $92 million of the $495 million in capital expenditures expected for the year.

I would now like to transition to the topic of healthcare reform and the bill passed in March. A significant issue facing corporations related to House Bill's negative re-effects of tax and accounting treatment as employers receiving Medicare Part D Retiree Drug Subsidy. Due to the way we fund our retirement plans, we will not be impacted by the elimination of this tax deduction. For 2010, the new legislation will have no material impact on our healthcare plans for active or retiree employees.

In closing, we continue to focus our financial objective that support our core utility business, including adequate liquidity to maintain our investment-grade credit ratings, readily available access to capital markets, to support our growth initiatives and spare in a reasonable regulatory outcome, which earning competitive rate of return on our invested capital.

Jim Piro

Thank you, Maria. During this first quarter, we continued to make progress on executing strategic investments such as Biglow Canyon Wind Farm and some smart meters projects. Through a constructive regulatory process, we're working towards positive outcomes for both our 2011 general rate case and our 2009 Integrated Resource Plan.

Looking ahead, we continue to position ourselves for upcoming growth opportunities, including significant investments in generation, transmission, distribution and new technology.

Operator, we'd now like to open the call for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from the line of Brian Russo with Ladenburg Thalmann.

Brian Russo - Ladenburg Thalmann

Could you just remind us the sales forecast embedded in the 2011 rate case? And given at the first quarter of this year, are you still comfortable with it?

Jim Piro

As you know, we put the lower forecast to gather lead late last year, and that's put into the rate case. And then during the year, we update that forecast as we get more information from the Oregon Economic Development Commission in terms of what that growth looks like in Oregon. So that's what going on there. And so we do get a chance to update. Maria, do you have the specifics on that?

Maria Pope

Sure. Just for background, our lows were obviously off in 2009, the base year, that we used for our 2011 rate case filings. We have projected largely flat for 2010 as well as for 2009. And as we look at the split between the residential, commercial and industrial, we had expected residential to continue to be slightly down, while commercial and industrial to be slightly up, as we expect to be coming out of the recession off of the lows in 2009.

Jim Piro

Essentially flat 2011?

Maria Pope

Flat 2011.

Brian Russo - Ladenburg Thalmann

And any updated thoughts on the timing and the size of the expected 2011 equity offerings? Did you bag the 50% equity ratio?

Maria Pope

Sure. As you know, in our rate case, we have noted that we would be looking to issue equity in the tail-end of 2011. At this point, we don't have any updates. Obviously, depending on capital market, our performance and the outcome, most importantly of the IRP and RFP progresses, we will be evaluating what we'll do.

Brian Russo - Ladenburg Thalmann

Okay. And then lastly, just talk a little bit more about kind of the rate case cycles that you expect going forward in Oregon once this 2011 rate case is finalized. You clearly got some decent IRP-related projects, and I am wondering how the approval process of that may be dictated if and when you need to file for another general rate case?

Jim Piro

There is a couple of factors that go into the way we might file a subsequent rate case. First of all, as you know, any new renewables that we would add would go through Renewable Adjustment Clause mechanism. So those will be able to be tracked in directly.

New thermal resources, our new transmission line would have to go through a general rate case process. The current expectation on those projects wouldn't be completed till 2013 through the 2015 timeframe. So we would probably be looking at a rate case to track in those costs. And then the other factor obviously is the growth in sales and the overall economy. To the extent we have reasonable growth, we cannot set some of our increases in cost through that additional margin.

So those other factors we'll look at as we determine whether we would have to file a rate case for 2012 or '13 and beyond. So that's kind of way we're thinking about it right now.

Maria, do you have anything to add to that?

Maria Pope

No. I would say we're probably looking at the some more frequent rate cases than we have in the past and very much focused on achieving some of our policy objectives in addition to recovering our cost to meet reliable service in 2011.

Operator

Our next question comes from the line of [Eric McCarthy] with Praesidis Asset Management.

Unidentified Analyst

Just to clarify, the $17 million for Biglow, is that additive to the 125 or is that included in the 125.

Jim Piro

The $17 million is for the deferred net revenue requirements during 2010 under the Renewable Energy Adjustment Clause, which is a mechanism that allows us to track in 100% of the net cost. We're able to do that through deferred accounting during the year that the plan goes into service. And then in 2011, it is in there for a full year in our overall revenue requirements included in the general rate case.

So the 17 million is only for the partial year based on the projection of when we think those units will be coming online.

Unidentified Analyst

And then it looks like you lowered CapEx for the Biglow Canyon III by about $35 million. So what's the primary driver behind that? I'm sorry if I missed it.

Jim Piro

Okay. Maria will tell that to you.

Maria Pope

Sure. We're doing really well on executing our capital expenditure projects. And in particular, Biglow Canyon Phase III is coming in right on budget, and this is the result any contingencies as well an additional savings that we have been able to realize we are achieving and we've reduced our estimates by about $35 million at this time.

Unidentified Analyst

Okay. So it's just coming in under budget then?

Jim Piro

Yes, we had assumed some contingencies given that project, and the schedule is going forward, and we're being able to capture those contingencies based on the delivery of the turbines and the good work that contractor is going to get that project completed.

Unidentified Analyst

Okay. And then the follow-up on Brian's question. I think you said total megawatt-hour volumes were going to be flat in '10 and '11 with '09. Is what (inaudible)?

Maria Pope

Yes. Approximately that is what we have expected in the 2011 rate case.

Unidentified Analyst

And what is that total megawatt-hour volume? Is that 17.5?

Jim Piro

Maria, look it up. But just as a general course, we will continue to update the load forecast based on new economic information as we go through this year. I think the latest forecast, including the general rate case, will be in the September timeframe. So we'll continue to update it based on the economic activity, watching closely how the economy affects both our industrial and commercial customers and then how residential use for customer changes over the year. So that's kind of the plan, and we will find the number. Maria?

Maria Pope

It looks like that's approximately the number, but I will confirm with you after the call.

Unidentified Analyst

And the last question, what are the taxes -- the SB 408 issue is obviously one that's tough to follow. What are taxes that are in rates for 2010, the nominal tax dollar value?

Jim Piro

While Maria's doing that, as you know, SB 408 is a complex rule, and we've been working on trying to better understand and simplify that process. We've been working with the other utilities to potentially address that in the next 2011 legislative session. We think that the law just really is very complex for investors to understand, and we are trying to try and resolve some of those issues around 408.

So, with that, Maria, so you want to get into this?

Maria Pope

Sure. So, we're expecting to have neither a material surcharge or refund for customers in 2010. In 2009, we had a refund of about $13 million.

Jim Piro

A specific question you asked around what taxes are in rates? The way you do that, is you go back to the 2009 general rate case and determine essentially the taxes that were included in the approved revenue requirements. And then you have to adjust that going forward for the addition of the Biglow Canyon wind farms and any other changes in our overall cost structure. That's how it's determined. Then we use that as the baseline going forward.

Unidentified Analyst

And just last question. It looks like in the first quarter we were helped by mild weather, in that hydro was weak at the same time. If we see a less mild summer, and temperatures are still up but hydro continues to be weak, how is that going to impact us on the [PKM]?

Jim Piro

Two questions; we tend to have our winter peak, which we expect cold weather. So the warmer weather actually hurt us from a consumption standpoint because residentials didn't use as much energy as they would typically use under normal weather. Added to that the reduction in hydro because of low snow a pack, those two things kind of were additive.

As we think about the rest of the year, we've assumed normal weather going through the rest of the year, and you have to just kind of play it out. If we get a warm summer like we did last year, then that would improve margins and help us on the revenue line.

On the cost side, it really depends on how generation plants operate. We expect hydro to be below normal for the rest of the year as we mentioned earlier, and so that would tend to hurt us on that side.

So, warmer summers help us, colder summers would hurt us from a revenue standpoint. And then hydro, at least our current forecast is we'll continue to be below normal through the rest of the year.

Operator

Our next question comes from the line of James Bellessa with D. A. Davidson & Company.

James Bellessa - D.A. Davidson & Company

You indicated that there was lower than expected wind generation during the first quarter. What was the capacity utilization rate? And can you blame it on the El Nino effect as another large developer is using as an excuse?

Jim Piro

There is some projections that El Nino can affect the weather patterns and the wind. We do not have enough experience yet to reach that conclusion. But we are looking at it. We're trying to understand it, because wind was down in the first quarter. So I will tell you, the last month, it looks like it's been up.

James Bellessa - D.A. Davidson & Company

Do you have specific numbers?

Maria Pope

In the first quarter we were at 14% capacity factor, and that compares to about 30% last year. And we really anticipate at a little bit more than that. Last year was interesting that it was only towards the tail-end of the year that we began to see our capacity sectors really drop. So we're watching it pretty closely, and have also seen the comments on the El Nino effect.

Jim Piro

We're trying to do some work in the area of wind to get a better forecast. We've been using the metrological data that was tracked when these projects were developed. We're trying to get better information to do a better job forecasting wind, not only for operations, but also for regulatory purposes. And a lot of work is going into that effort.

James Bellessa - D.A. Davidson & Company

Did I hear that correctly, that the utilization of the wind farm was 14%, less than a half of what it was a year ago?

Maria Pope

Yes, Jim. And that had an impact of being about $3 million less than Q1 last year.

James Bellessa - D.A. Davidson & Company

Is that 3 million the revenues or pre-tax?

Maria Pope

That was in the pre-tax.

Jim Piro

Replacement cost basically, based on expected.

Operator

Our next question comes from the line of [Steve Gambuzza with Longbow Capital].

Unidentified Analyst

The gain on the non-qualified pension plan in the quarter, the amount that you indicated in the press release, is that a pre-tax or a net income number?

Maria Pope

That's a pre-tax number.

Unidentified Analyst

Do you exclude those gains from adjusted EPS, or are they included?

Maria Pope

We don't do an adjusted EPS or report that way, so we just include it.

Unidentified Analyst

So you're not assuming anything in your guidance for that?

Maria Pope

No we have not. We just call that within the range.

Unidentified Analyst

And I think you may have commented on this. With respect to the collateral postings, if we think about kind of where the balance sheet is right now, and assumed no real changes in commodity prices going forward, how much cash, forget about LC postings, but how much actual cash would come back to you between now and the year 2011?

Maria Pope

About $18 million this year, Steve, and then for next year, it is about $46 million.

Unidentified Analyst

$46 million, that's the cash. If I'm just trying to think about kind of the impact on your debt to capital of this issue, there's nothing else other than that that's kind of reflected in debt right now?

Maria Pope

No, there is not.

Operator

(Operator Instructions) Our next question comes from the line of [John Alley] with Decade Capital.

Unidentified Analyst

Just some other calls going on this morning, so I apologize if you've already gone over this. Just wanted to go over load growth from 2009 to 2010. I think you said it was flat overall, but I was kind of looking for a customer split, residential versus commercial and industrial.

Maria Pope

Sure. We're expecting load to be roughly flat in total; down for residential; pretty much flat for commercial, but down a little bit; and then for industrial, up for what was a very low base in 2009. In the first quarter, we were down in all segments by 2.2% for residential; commercial, 3.3%; and industrial, 6%; for a total of 3.3%.

Jim Piro

The forward backload cash is based on weather-adjusted information.

Maria Pope

Yes, all of that is weather-adjusted.

Unidentified Analyst

So does the decoupling protect you on the residential side of the down?

Maria Pope

Yes, it did, and we did have a decoupling adjustment in the first quarter of about $5 million. We also had a decoupling adjustment in the first quarter of last year, but not quite as significant.

Jim Piro

Just recall decoupling only deals with use per customer, does not adjust for weather. So we weather-adjust the data. So what we actually saw in the first quarter was a decline in use per customer at the residential level, and that's what we adjusted for, for the use per customer.

Unidentified Analyst

And for 2011, you said flat overall again. But what would you expect, I guess, the split to be?

Maria Pope

Flat overall, continued slight decrease in residential as people are conserving more, and then with a slight return in the economy, up slightly for commercial and a little bit more for industrial.

Unidentified Analyst

Okay. And are you seeing any residential customer growth at all?

Maria Pope

We are. We saw 0.5% of new customers in our service territory in the first quarter over the last year.

Jim Piro

What you see in Oregon is actually we do see customer growth, but that's offset by efficiency. And we are promoting efficiency in Oregon through the Energy Trust of Oregon in our programs to reduce consumption. And so we're seeing reductions in use per customer, which offsets the growth in number of customers.

Operator

Our next question comes from the line of [Eric McCarthy] with Praesidis Asset Management.

Unidentified Analyst

Just a quick follow-up on the decoupling. What's the base that that is set on?

Jim Piro

The base is from the last general rate case. So when we set rates, in this case 2009, we take that use per residential customer as the baseline. And then when we complete the 2011 rate case to the extent decoupling is in the continued program, we'll use that use per customer that comes out of that case as the baseline.

And then on the commercial side, we don't use, use per customer, we do programmatic changes. So the extent the commercial customers implement energy efficiency programs, we would identify those lost revenues and then be able to recapture those lost revenues.

Unidentified Analyst

I think the data here that I have is about 11,000 kilowatt per residential customer per year.

Jim Piro

That sounds about right from the last rate case. So that's the use per customer that we use as a baseline.

Operator

And at this time, there are no further questions. I will turn the conference over to Mr. Jim Piro.

Jim Piro

Thanks very much. We appreciate your interest in Portland General Electric and invite you to join us when we report on our second quarter results for 2010. If you have additional questions, please contact Bill Valach who will be available after this call. Thank you again for joining us.

Operator

Ladies and gentlemen, this does conclude today's conference. Thank you for your participation. You may now disconnect.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Portland General Electric Company Q1 2010 Earnings Call Transcript
This Transcript
All Transcripts