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Earnings Miss at Portland General, Cuts View

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Based in Portland, Oregon, Portland General Electric Company (POR - Free Report) reported third quarter 2013 operating earnings of 40 cents per share, missing the Zacks Consensus Estimate of 44 cents by 9.0%. The quarterly figure was also down 20.0% from the year-ago profit of 50 cents per share.

The decline reflects higher power costs due to plant outages and increased delivery system costs due to service restoration work and other planned expenses.

Operational Performance

Portland General Electric Company’s quarterly revenues were $435.0 million, missing the Zacks Consensus Estimate of $452.0 million by 3.8%. The reported figure also declined 3.3% year over year. The downside reflects lower average prices and a decoupling mechanism that led to a $1 million refund in the third quarter of 2013 compared with a $2 million potential collection recorded in the third quarter of 2012. However, these negatives were partially offset by higher wholesale revenues and an increase in the volume of retail energy delivered primarily due to the effects of weather.

Residential energy deliveries were up 2.0%, while commercial deliveries declined 2.0% and industrial deliveries were down 7.1% year over year.

Total operating expenses were $382 million, up 3.8% year over year. The increase in total operating expenses reflects a 4.4% year-over-year increase in purchased power and fuel and a 10.2% rise in production and distribution expenses.  

Business Highlights

Currently, the company is progressing well on three new generation projects. Both Port Westward Unit 2 which is a 220 megawatt (MW) natural gas-fired capacity and a wind farm on Tucannon River are under construction. The Carty Generating Station, a 440 MW natural gas-fired energy resource, is under engineering and design with construction expected to begin in early 2014.

During the quarter, the company experienced a few generation plant outages. The Boardman and Colstrip coal-fired plants experienced an outage on Jul 1, 2013 due to equipment failures. Boardman came back online at the end of July; however, Colstrip is expected to come back online in the first quarter of 2014. Another outage at Coyote Springs occurred in late August due to cracks in the steam turbine rotor.

Financial Condition

Portland General Electric Company’s cash and cash equivalents as of Sep 30, 2013 were $91.0 million versus $12.0 million as of Dec 31, 2012.

Long-term debt, net of current portion, was $1,761.0 million as of Sep 30, 2013 versus $1,536.0 million as of Dec 31, 2012. The long-term debt-to-capitalization ratio was $47.5%.


The company lowered its 2013 earnings guidance to $1.20–$1.30 per share from its prior expectation of $1.25–$1.40 per share. The company expects capital expenditure in the range of $710.0 million to $730.0 million.

At the Peer

American Electric Power Company Inc. (AEP - Free Report) reported third quarter 2013 operating earnings of $1.10 per share, beating the Zacks Consensus Estimate of $1.08 by 1.9%. The quarterly figure also improved 7.8% from the year-ago profit of $1.02 per share. The improved performance reflects positive returns from the investments made in the company’s regulated operations.

Zacks Rank

Portland General Electric Company currently has a Zacks Rank #3 (Hold). Stocks that look better positioned are UNS Energy Corp. and Alliant Energy Corp. (LNT - Free Report) . While UNS Energy carries a Zacks Rank #1 (Strong Buy), Alliant Energy holds a Zacks Rank #2 (Buy).

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