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Portland General seeks nearly $86M revenue increase

Portland General Electric Co.'s request for an $85.9 million revenue increase starting in 2019 seeks to recover costs tied to better serving customers and building a smarter, more resilient system, a company executive said Feb. 16.

During a call to discuss the company's fourth-quarter 2017 earnings, Jim Lobdell, PGE's senior vice president of finance, CFO and treasurer, said one of the the primary elements of the request now before Oregon regulators includes an upgrade to PGE's customer information and meter data management systems. Others include replacing and upgrading electrical equipment that poses reliability risks and adding infrastructure to support growth in the region, he said.

The rate case filed with the Oregon Public Utility Commission on Feb. 15 would result in an overall customer price increase of 4.8% after adjusting for the effect of tax reform, and reflects a return on equity of 9.5% and rate base of $4.86 billion. If approved, the new rates would take effect Jan. 1, 2019.

"We are respectful of the impact price increases have on our customers, and we are committed to protecting affordability and reliability," Lobdell said.

PGE expects regulators will spend much of 2018 reviewing the request and issue a final order by year's end, he said. (Oregon PUC Docket No. UE 335)

On the topic of tax reform, Lobdell said PGE filed a deferral application with the Oregon commission in late December 2017.

The intent of the filing is to defer all regulatory items with 2017 and 2018 financial impacts for a future refund to customers. If the deferral application is approved as requested, any refund to customers associated with the tax reform would be subject to an earnings test and limited by the company's previously authorized and regulated return on equity, he said.

More specifically, the change in the federal corporate tax rate from 35% at 21% results in a reduction to net deferred tax liabilities of $340 million, Lobdell said.

RFP for renewables coming

PGE President and CEO Maria Pope said in December 2017 that the commission acknowledged the company's revised proposal to acquire 100 average MW of renewable portfolio standard-compliant renewable resources.

PGE will now move forward with acquisition of the resources and has prepared a request for proposals, or RFP, that would enable the capture of expiring federal tax credits, she said. The solicitation will be overseen by an independent evaluator and reviewed by the Oregon commission.

Pope said PGE will consider proposals for RPS-qualified resources with multiple structures, including power purchase agreements and utility ownership. The RFP process is expected to begin early this year, with a decision by the end of 2018.

The company also made headway in its search to meet capacity needs, having executed contracts for 300 MW, she said. The agreements include 200 MW of annual capacity with five-year terms, beginning in 2021, and 100 MW of seasonal peak capacity during the summer and winter periods with a five-year term starting in 2019.

"We expect our remaining capacity needs to be filled by acquisition of energy storage, capacity contributions from renewables procured through the RFP, contracts with qualifying facilities and market purchases," Pope said.

The company reported fourth-quarter 2017 earnings of $42 million, or 48 cents per share, missing the S&P Capital IQ consensus normalized EPS estimate of 65 cents. The result compares to earnings of $61 million, or 68 cents per share, in the fourth quarter of 2016.