Portland General Electric Co. President and CEO Maria Pope said her company has made management changes, brought in an outside expert and beefed up staffing to make sure a power trading loss the utility experienced in the third quarter never happens again.
As a heat wave stretched power supplies across the West and sent wholesale power prices soaring, PGE found itself on the wrong side of trading that caused it to sustain a sudden $127 million loss on Aug. 24. The news sent the stock price of the company tumbling.
In an Oct. 30 third-quarter earnings call, Pope said the company moved swiftly to consolidate and isolate events associated with the trading loss and to confine it to the third quarter. She stressed that the loss "had no impact on our operations."
Pope said the company has reconfigured its chain of command with respect to power trading so risk management now reports to her and power operations reports to CFO and Treasurer Jim Lobdell, although she acknowledged that he will retire at the end of the year. Lobdell, a 36-year veteran of PGE, has played an important part in creating the Western wholesale power market, along with other utility leaders, she said.
Jim Ajello, the former executive vice president and CFO of Hawaiian Electric Industries Inc., has been appointed senior advisor at PGE, effective Nov. 30, and will step into the CFO role on Jan. 1, 2021, Pope said.
Pope noted that the utility's board of directors immediately formed a special committee to review the energy trading situation following the August loss event and said that review is ongoing. "At the time, our team worked quickly, and in early September we announced that we no longer had net market exposure," Pope continued.
Lobdell during the earnings call said despite the impact of the trading loss to the company's purchase power and fuel expense, core operational results were strong. Energy trading losses represented a negative impact of $1.09 per diluted share, or $127 million, for the quarter, he said. Pope clarified that the $127 million is a pretax number.
While losses directly associated with the trading issue were confined to the third quarter, Lobdell said the company still is expected to incur some additional costs related to the special committee's review as well as defending against lawsuits that may result from the trading. However, he noted that all the trading positions involved in the loss have been closed so no market exposure will carry over into the fourth quarter.
In discussing the impacts of wildfires that ravaged the state in September, Pope said the utility continues to invest in hardening its system, including installing steel poles, upgrading substations, and automating distribution systems. Lobdell noted that PGE continues to make repairs to wildfire-damaged facilities.
Pope said to the company's knowledge, "None of our equipment ... contributed to any of the wildfires."