Good morning everyone and welcome to Portland General Electric Company’s Third Quarter 2013 Earnings Results Conference Call. Today is Friday, November 1, 2013. This call is being recorded. And as such, all lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer period. (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. Please go ahead, sir.

Thank you, Noah and good morning to everyone. And we are very pleased that you are able to join us this morning. Before we begin our discussion this morning, I would like to remind you that we have prepared a PowerPoint presentation to supplement our discussions today and we will be referencing those slides throughout the call and then for those of you accessing the call over the phone, those slides are available on our website at investors.portlandgeneral.com and it’s under the Events and Presentations tab. Referring to Slide 2, I’d also 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 are not based on historical facts and as such constitute forward-looking statements under current laws. These statements are subject to factors that may cause actual results to differ materially from the forward-looking statements made today and for 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-Q. PGE’s third quarter earnings were released before the market opened today and the release is available on our website. The company undertakes no obligations to update publicly any forward-looking statements whether as a result of new information, future events or otherwise and the Safe Harbor statements should be incorporated as part of any transcript on this call. As shown on Slide 3, leading our discussions today are Jim Piro, President and CEO and Jim Lobdell, Senior Vice President of Finance, CFO and Treasurer. Jim Piro will begin today’s presentation by providing a review of our performance in the third quarter and an update on our strategic initiatives. Then Jim Lobdell will follow and will additional detail around the quarter’s results and our expectations for the remainder of 2013. Following these prepared remarks, we will open the lines up for your questions. And now, it’s my pleasure to turn the call over to Jim Piro.

Thanks Bill. Good morning and thank you for joining us. Welcome to Portland General Electric’s third quarter 2013 earnings call. I’d like to start with a brief update on our Board of Directors. On Wednesday, Corbin McNeill announced his retirement as Chairman of PGE’s Board of Directors effective October 31. Current board member, Jack Davis has been elected as the new Chairman. Corbin joined our board in 2004 and has provided outstanding leadership, perspective and guidance during his tenure as Chairman. Our company has benefited from his deep knowledge of and passion for the electric utility industry. On behalf of all our employees, I’d like to thank Corbin for a decade of dedication and service to our customers, shareholders and employees. We wish him well during his retirement. Our new Chairman, Jack Davis joined the board in June 2012 and brings extensive regulated utility experience to PGE. During his 35 years at Arizona Public Service Company, Jack held management positions in various areas of the company, including commercial operations, generation and transmission, customer service and power operations. He most recently served as Chief Executive Officer at Arizona Public Service Company for six years. Jack is a great asset for PGE and I look forward to working with him in his new role. Now, let’s move on to Slide 4. On today’s call, I will provide you an update on the construction of our new generation resources, summarize the progress we made on the 2014 general rate case, give you an update on our operations and discuss the economy in our service area. And Jim Lobdell will give you a financial update discussing the quarter’s results and our outlook for the remainder of 2013. As presented on Slide 5, we recorded net income of $31 million or $0.40 per share compared…

Thanks Jim. Turning to Slide 13. For the third quarter of 2013, we recorded net income of $31 million or $0.40 per diluted share compared to net income of $38 million or $0.50 per diluted share for the third quarter of 2012. This decrease was driven by several pre-tax items. An $8 million increase in purchase power and fuel expense primarily due to the three plant outages that Jim mentioned. A $5 million increase in delivery system expense due to service restoration work and other plant expenses and a $7 million decrease in revenue related to the 2011 PCAM refund reduction in the third quarter of 2012. These items were partially offset by a $6 million benefit from increased AFDC on our new generation projects and investment gains on our benefit plan assets. Moving to Slide 14, total revenues for the quarter were $435 million, down $15 million from the same period last year. A small increase in retail energy deliveries was more than offset by a decrease in average retail prices. When adjusted for weather, energy deliveries were approximately flat quarter-over-quarter. Although we have seen growth in residential deliveries and steady deliveries to the commercial and industrial sectors during the year, energy demand is not growing at the rate we originally expected. Our year-to-date weather adjusted loads were also approximately flat compared to the first nine months of last year. And we expect this to continue for the balance of the year. Purchase power and fuel expense increased $8 million quarter-over-quarter driven by approximately $11 million of incremental replacement power cost for our plant outages in the third quarter of 2013. These outages drove net variable power costs above our 2013 annual power cost update tariff forecast for the third quarter. For the full year, including incremental replacement power…

Thanks. While the generating plant outages have been challenging this year, I am pleased that the balance of the company’s operations have been very strong. Our performance and distribution reliability and customer satisfaction is top quartile. We reached a reasonable settlement on all issues in our 2014 general rate case. And we have made great progress on the construction of our three new generation resources to meet our customers’ needs. Now operator we are ready for questions.

Thank you. (Operator Instructions) Let’s take our first question from Neil Mehta with Goldman Sachs.

Good morning Neil.

Can you talk about when in the first quarter you are targeting Colstrip to actually come online? And is there rule of thumb for every month into 2014 what the economic impact would be?

We are looking at probably towards the end of January as the timing the plant will come back online. And it’s roughly around $2 million a year – a month from there – $2 million a month for replacement power costs. A lot of that will depend on hydro conditions next year as well as temperature in the region but that’s a good rule of thumb. But right now that’s what we are looking at.

Alright and then just in terms of the outages have you done your own internal review how you thought about this being a structural, operational issue versus just a coincidence, unfortunate coincidence that we had three outages this year?

It’s really just – I think it’s just a coincidence. If you look at the history of these plants they had a long track record of high availability and Boardman was just a short outage, it was a failure of a valve that caused the problem. We have repaired that and made the correction and the plant is running well again. The Coyote Springs plant, if you look at it historically that plant is built I think in ’94 or so. It had a great record of running and the rotors had no problem, so this crack is very unusual to happen, but we have got the repairs and we don’t expect the problem going forward, plants that are really solid performer. And in Colstrip the same thing, we are still looking at the root cause of the failure. But it looks like just a one-off item that happened and just an unfortunate situation. But again when you look at the history of those plants they have all had a long track record of high availability.

Neil, to put a little bit finer point it’s been over 90% for these plants.

Perfect. And then finally in terms of regulatory strategy can you go asset by asset from the RFPs and say – talk about how you are thinking about actually getting final recovery on each of those?

Here is our current thinking for regulatory strategy. Right now and we just had our Board meeting this week. We talked to our Board about this I think they are comfortable what our strategy which is file a general rate case in February of 2014 that would include both overall general cost increases to the extent there are any and then the inclusion of Port Westward Unit 2 and the Tucannon River Wind Farm in that filing. The rates for those projects would not go into service or would not go into customer prices until those plants go fully operational. And the price increase for Port Westward 2 is roughly in the 3% range and for Tucannon River Wind Farm is roughly in the 2% to 3% price range. We are still playing with the numbers a little bit. But not significant price increase a lot of that will depend on what power prices are as we kind of formalize next year’s forecast, but relatively small increases given the size of the resources going in. We will probably for Tucannon River Wind Farm some of the streams we are going to service in late 2014 we will use renewable adjustment clause to track in the further cost during 2014 for those streams that get completed. And then again we will put that plant into service and the customer prices when it goes fully operational probably late first quarter 2015. As for Carty the current schedule they have that plant come on in mid-2016. Again we would have to file a general rate case to include that in customer pricings. We haven’t decided exactly how we will do that whether we will run it full general for 2016 or is that your test year. We just have to look at what fits that project the best. The price increase there is somewhere between 6% and 7%. Again it will be dependent on gas prices and kind of what’s going on in the market at that time that’s kind of roughly what we are thinking about.

Thanks Neil.

And we will take our next question from Paul Ridzon with KeyBanc.

Following on that question, when does Port Westward go on?

Port Westward Unit 2 will – it’s either – its right in the first quarter of 2015. It might be right in January. Things are going well in the construction assuming we have good construction weather and so forth. We would look like we will get that thing done in maybe even in 2014, but likely early 2015, January.

So, with that would you have put Westward and Tucannon in at the same time, as soon as one goes operational it goes in regardless of what’s happening at the other plant?

The plan right now is to basically put those prices into – put the costs into customers’ prices when the project becomes operational. We would happily certify to the commission that the plant is operational and then we would make a price change. The same thing with Tucannon and River Wind Farm, when it’s fully operational we would put into customer prices at that point. Using the rack to bridge that period of time till the plant goes fully operational for Tucannon River Wind Farm. So that’s the way we would do it. If the commission and the parties don’t want to go that direction on Tucannon River Wind Farm we could use the renewable adjustment clause in 2015 also, but we would rather not create a deferral that we have to recover in a subsequent period that is to put it right into customers’ prices.

And as far as financing your forward sales fully will meet the needs for the equity portion of these assets?

Yeah, between the equity forward that we have got and some additional first mortgage bonds financing, we should be able to cover everything we need to do in 2014.

But what about beyond ’14?

Beyond ‘14 really depends on what the capital needs of the company is. Whether if we have got additional capital projects that we need it will cover the three generating projects and then base CapEx.

Got it, okay, thank you very much.

We will take our next question from Lauren Duke with Deutsche Bank.

Good morning.

Good morning Lauren.

Good morning.

So you mentioned weather adjusted sales kind of being flat year-to-date, what were weather adjusted sales kind of if you also adjust for the leap year, did you see a bigger uptake when you kind of adjusted for that impact?

It’s just about the same. There is not that much of a difference. You are just looking at the nine months versus looking at the quarter. We talked about that quite a bit on the prior call for the prior quarters also.

Okay and in the third quarter did you see some improvement in sales that kind of helps give you confidence in your 2014 outlook?

Again we did see an increase and the – a slight increase and in the sales in the residential and commercial. What we are really looking at is what’s happening in the industrial sector. In that particular sector we are seeing a lot of movement in the high-tech area. We are seeing data centers are starting to pick up. But some of its just being overshadowed by the fact that we got some solar manufacturing that is causing a negative growth in our loads. But the nice thing is, nice but bad is the fact that’s becoming a smaller and smaller percentage. And so further reductions in that sector isn’t going to be as impactful.

Couple of other things, Lauren, We didn’t really talk about in the general rate case, they get extended decoupling mechanism for residential and small commercial and including the lost revenue effect. As you know we are pretty – we do a fair amount of energy efficiency in our service territory sometimes as much as 30 average megawatts. So that kind of reduces our load growth and kind of masks that there is actually growth going on which is being kind of overtaken or offset by energy efficiency by customers who are actually running a pretty aggressive LED in street lightening program right now which is a real great cost effective program for our customers that reduces energy usage, but also provides as an investment opportunity as we put those lights into service. So there is lot of things going on and it’s hard to kind of show that all in the numbers. And so that’s just something to take into account as you look at our numbers.

Thank you very much guys.

Thanks Lauren.

Thanks.

And we will take our next question from Sarah Akers from Wells Fargo.

Hey, good morning.

Good morning Sarah.

Good morning Sarah.

Hi, with the construction started on two of the RFP projects, are you able to give a better sense of how much of the remaining forward equity will be drawn down in ‘14 versus ‘15?

We think that we are going to pull down the balance of it in 2014.

Okay. And you mentioned earlier that it would be first half of or earlier in the year versus latter?

Correct.

Okay. And then as a follow-up to Neil’s question on Colstar I just want to make sure that the $2 million of incremental monthly power costs that you are – that you expect to see that should be embedded in the ’14 power costs forecast, so no impact on EPS in ’14 from the outage, correct?

No, actually it’s not to the extent that Colstar carries over into 2014 that’s not included in the annual update tariff because we have forced outage percentages. And so that will actually be a hit to EPS in the first quarter. So obviously we are very focused on bringing or helping PPL Montana bring that plant on time and back online with as little time as possible out.

Got it, thanks a lot.

We will take our next question from Andrew Weisel with Macquarie Capital.

Hi good morning. My first question is on Carty, your press release says that construction starts early next year, your Slide 8 shows $125 million of spending in 2013, can you help us understand what’s going into that $125 million before construction starts?

Yes, it’s part of the – as we have to start construction of the turbine and the generator and things with Mitsubishi. And so there is payments to the contractor to get that work started and completed or get it underway. So they are already starting to work on the turbine and the generator as well as just costs to do all the engineering and procure the equipment, so some of the prepayments are actually made before the equipment finally shows up on slide.

Okay, that makes sense. Then my other question is to follow with rate case in the books, can you give us an early look into next year what the trends might look like for O&M and D&A and how much of that will be recovered through revenues versus sort of a headwind for earnings?

So as I mentioned for ‘15, ‘14 is already covered in our rate case and so we just finished our budget for ‘14 and it’s totally aligned with what the rate cases projections are. So costs are fully aligned for ‘14. When we look at ‘15 we will file a general rate case because that’s the basis for recovering the new generating plants. We don’t expect a big increase in O&M between ‘14 and ‘15 basically just inflation.

Does that mean that in 2014 your increase in O&M as well as D&A will be roughly earnings neutral because the increase is fully recovered?

Yes, that’s correct.

Okay. Thank you.

We will take our next question from Andy Levi with Avon Capital.

I am actually all set. Thank you very much.

Thank you.

Thanks.

We will take our next question from Ashar Khan with Visium.

Hi, good morning. May I just ask could you just help us out what would be the average share count in 2014?

Jim provided that before.

We haven’t provided that before. Really depending on the equity drive and the actual timing of that the number of shares that we issued in the forward structure are…

Was about $12.7 million.

Right. So we got 12.7 million shares we got issued. Prior to that we had about we had about 75 million shares of stock. And as Jim said we will draw that during the first half of the year, but we haven’t given exact time of that draw. But you are going to see those shares are about – those shares would all be added by the end of the second half of the year.

So is that you would draw, should we think of it draw throughout the first six months or should we expect it all at one time, how should one think of it?

I would say it would be over the first six months of the year. That’s the beauty of the forward structure. We can draw as we needed to fund the cash flows in the construction. So we are not going to over draw and we will try to match it with the needs of the construction, which will then be covered through the AFDC calculation.

Yes, I mean to the extent that milestones associated with the projects move forward and move back which is timed appropriately with those.

Okay. Thank you so much.

And this does conclude today’s question-and-answer session. For any additional or closing remarks I would now like to turn it back to Jim Piro.

Thank you. We appreciate your interest in Portland General Electric and look forward to see many of you at EEI later this month. We also invite you to join us when we report our fourth quarter and full year 2013 results in February. Thanks a lot and have a great day.

And this does conclude today’s conference. Thank you for your participation.