Portland General Electric is seeking to cover rising demand in its service territory by investing nearly $1 billion into grid upgrades and adding more renewable energy.Source: S&P Global Market Intelligence Even as the nation's largest wildfire continues to rage in southern Oregon and Gov. Kate Brown declared a state of emergency across 23 counties because of another dangerous heat wave, things are looking up for Portland General Electric Co., the state's largest investor-owned utility.
Fueled by Oregon's economic recovery, increasing power use amid record temperatures and a growing high-tech sector in its service territory, the utility on July 30 boosted its business growth and profit outlook for 2021.
Citing an expected jump in energy deliveries this year to between 2.5% and 3% from a prior growth forecast of 1% to 1.5%, Portland General Electric lifted its earnings expectation for 2021 to a range of $2.70 to $2.85 per diluted share. Previously, the utility, known as PGE, said it anticipated earnings between $2.55 and $2.70 per share.
Improved 2021 metrics, combined with second-quarter revenues above expectations and a long-term growth picture buoyed by the anticipated need for new infrastructure investments, including electric-vehicle charging, clearly impressed analysts during a July 30 earnings call. One analyst suggested the utility probably has "the best service territory within the continental 48."
"We've been talking for a couple of years about the robust nature of our service territory," PGE President and CEO Maria Pope said on the call. "We are very fortunate to operate and to serve an area where people want to be, where they are expanding their businesses, particularly in digital and high tech, where we see people interested in moving to."
"The outlook for the near-term economic growth is the strongest in decades, if not generations," added CFO Jim Ajello.
Seeking nearly $1 billion for grid upgrades
Amid an unprecedented heat wave in June, PGE set a new all-time peak demand record of 4,441 MW, roughly 9% higher than its previous peak load record of 4,073 MW from more than two decades ago, Pope said. The utility parlayed rising demand for power into a 14% jump in revenues to $537 million from a year ago. On average, analysts had expected revenues of just $484 million in the period, according to S&P Capital IQ's consensus estimate.
The utility met analysts' consensus estimate for adjusted net earnings with 36 cents per share. That was down from 43 cents per share a year ago, however, as record power use during the heat wave forced additional power purchases at higher market prices.
PGE is looking to fill its need for more power with additional renewable energy resources, aligned with Oregon's new clean power law that requires the utility to zero out its greenhouse gas emissions by 2040 while increasing infrastructure investments to accommodate rising demand for electricity and bracing for more climate change-driven heat waves and wildfires, according to the executives.
In its 2022 general rate case filed with state regulators in early July, PGE requested a 3.9% increase in customer prices for 2022 to cover nearly $1 billion in planned investments "to upgrade our system to deliver safe, reliable, and clean electricity to customers," Ajello said.