Executive Summary / Key Takeaways

• Growth Driven by High-Tech Demand: Portland General Electric (PGE) is experiencing robust industrial load growth, particularly from data centers and semiconductor manufacturers in Oregon, driving its strategic expansion and capital investments. The company updated its weather-adjusted 2025 load growth guidance to 3.5% to 4.5% and long-term guidance to 3% through 2029.
• Commitment to Clean Energy and Innovation: PGE is aggressively pursuing Oregon's decarbonization goals, investing significantly in renewable energy and battery storage. Its technological advancements, including AI-enabled grid flexibility tools, are enhancing system capacity and reliability.
• Solid Financial Performance and Disciplined Cost Management: The company reported strong Q3 2025 GAAP net income of $103 million and non-GAAP net income of $110 million, supported by revenue growth and ongoing cost management initiatives aimed at reducing structural regulatory lag.
• Strategic Capital Deployment: PGE's five-year capital expenditure forecast of $6.5 billion, including significant investments in transmission and distribution, is expected to drive substantial rate base growth, with annual capital expenditures projected to range from $1.22 billion in 2025 to $1.44 billion by 2029.
• Evolving Regulatory and Competitive Landscape: PGE is proactively engaging in regulatory proceedings to enhance predictability and financing flexibility, including a proposed holding company structure, while leveraging federal tax credits and strategic partnerships to maintain its competitive edge.

Oregon's Powerhouse in Transition: Fueling a High-Tech Future

Portland General Electric Company (PGE) has been a cornerstone of Oregon's energy infrastructure since its establishment in 1889, operating as a vertically-integrated electric utility responsible for generation, transmission, distribution, and retail electricity sales across the state. The company serves approximately 957,000 retail customers within a 4,000 square mile service area. PGE's strategic trajectory is deeply intertwined with Oregon's ambitious clean energy mandates and the burgeoning demand from the high-tech sector, positioning the utility at the forefront of a dynamic energy transition.

The Pacific Northwest, and Oregon specifically, has emerged as a critical hub for data centers and semiconductor manufacturing, a trend that is profoundly shaping PGE's growth story. This industrial expansion is not theoretical; PGE serves five large semiconductor customers and over ten significant data center providers, collectively accounting for nearly a quarter of its total energy deliveries. In Q3 2025, industrial load surged by 13%, or 13.2% on a weather-adjusted basis, building on over a decade of high-tech manufacturing and infrastructure expansion in the region. This robust demand underpins PGE's updated weather-adjusted 2025 load growth guidance of 3.5% to 4.5% and a long-term forecast of 3% annual growth through 2029. The state of Oregon is further supporting this growth with $500 million in funding, complementing billions in federal capital, to accelerate the onshoring and reshoring of tech manufacturing.

PGE's Technological Edge: Smart Grid and Storage Innovations

PGE is not merely a passive beneficiary of this demand; it is actively innovating to meet it. The company's core technological differentiation lies in its advanced smart grid capabilities, extensive deployment of battery energy storage systems (BESS), and the strategic integration of artificial intelligence (AI) to optimize its infrastructure. PGE will soon command over 500 megawatts of battery capacity, with key projects like the 200 MW Seaside Battery Energy Storage System placed in service in July 2025, and the 75 MW Constable BESS and 200 MW Sundial BESS (under a Power Purchase Agreement) reaching commercial operations in December 2024. These BESS facilities are vital tools for renewable integration, enhancing system reliability, and stabilizing energy prices, significantly aided by federal investment tax credits (ITCs) and production tax credits (PTCs).

A notable technological differentiator is PGE's collaboration with AI start-up GridCARE, which leverages generative AI forecasting to unlock additional system capacity. This initiative has already freed up approximately 80 megawatts in a narrow portion of PGE's system, enabling data center facilities to come online and scale operations years earlier than previously possible. This innovative application of AI, alongside dynamic line ratings that provide real-time information on temperature and wind speeds, allows PGE to maximize the output from both existing and new transmission infrastructure. The company also achieved a first-of-its-kind solution with Calibrant Energy and Aligned Data Centers to deliver a battery system to Aligned's campus, further demonstrating its commitment to leveraging technology for customer benefit.

Decarbonization Imperative: A Green Future for Oregon

PGE's growth strategy is deeply intertwined with Oregon's aggressive decarbonization goals, mandated by House Bill 2021, which targets an 80% reduction in greenhouse gas (GHG) emissions by 2030 and 100% by 2040. The company's customers are strong proponents of clean energy, with over 228,000 residential and small commercial customers voluntarily participating in PGE's Green Future Program, recognized as the nation's largest renewable power program by participation.

To meet these targets, PGE is executing a multi-pronged resource procurement strategy through All-Source Request for Proposals (RFPs). The 2021 RFP resulted in significant additions, including PGE's 208 MW ownership in the Clearwater Wind Development and the aforementioned BESS projects, which are expected to generate approximately $262 million in combined ITC and PTC benefits. The 2023 RFP saw an updated final shortlist filed in October 2025, encompassing a 250 MW solar/battery project, a 365 MW solar/battery hybrid (175 MW PGE-owned), and a 400 MW battery project, all slated for in-service dates by the end of 2027. The 2025 RFP, launched in July 2025, is currently evaluating bids for additional non-emitting dispatchable capacity and renewable generation, with a proposed final shortlist expected in Q1 2026.

Beyond generation, PGE is making substantial investments in transmission infrastructure. This includes evaluating and implementing upgrades to existing networks and pursuing major projects like the North Plains Connector, a proposed 415-mile high-voltage direct-current (HVDC) transmission line where PGE expects a 20% ownership share in the approximately $3.2 billion total investment. This project has already been awarded a $700 million grant from the U.S. Department of Energy. Additionally, PGE is a subrecipient of a $250 million grant to upgrade the Bethel-Round Butte Transmission line to 500 kV, further enhancing grid resiliency and enabling new generation.

Financial Performance: Fueling Growth and Managing Costs

PGE's financial performance in 2025 reflects its strategic execution amidst a dynamic operating environment. For the third quarter of 2025, the company reported GAAP net income of $103 million, or $0.94 per diluted share, and non-GAAP net income of $110 million, or $1.00 per share. This represents a 4.4% year-over-year increase in GAAP diluted EPS compared to Q3 2024. For the nine months ended September 30, 2025, total revenues increased 3% to $2,687 million, driven primarily by price changes from the Annual Power Cost Update Tariff (AUT) and higher customer demand.

Retail revenues saw broad-based growth, with industrial up 23.4%, commercial up 6.9%, residential up 3.4%, and direct access customers up 36.4% for the nine-month period.

However, wholesale revenues declined by 30.6% to $324 million for the nine months ended September 30, 2025, primarily due to lower average sales prices from market volatility and milder weather, alongside reduced environmental credit sales and lower sales volume. Purchased power and fuel expense decreased by $26 million for the nine-month period, benefiting from an 8% decrease in the average cost of purchased power and a 1% decrease in the average cost for PGE's own generation. Net Variable Power Costs (NVPC) for the nine months ended September 30, 2025, were $3 million below baseline, falling within the established deadband, meaning no customer refund is expected under the Power Cost Adjustment Mechanism (PCAM) for 2025.

Operational expenses are under close scrutiny through PGE's multi-year cost management and optimization program, which has already led to a reduction of 330 employed and contracted positions in Q2 2025. The company expects 2025 O&M expenses to range from $795 million to $815 million, which includes $135 million of earnings-neutral regulatory deferral amortizations and wildfire mitigation costs. This initiative aims to reduce structural regulatory lag, which management estimates to be around 70 basis points or less, a compression from historical levels.

PGE's capital allocation reflects its growth ambitions. Capital expenditures for the nine months ended September 30, 2025, totaled $899 million. The company plans $1.20 billion in capital expenditures for the full year 2025, with a five-year forecast ranging from $1.22 billion in 2025 to $1.435 billion by 2029. These investments are crucial for driving rate base growth, which is projected to average 7% from the 2024 base year, with potential to reach 9% including incremental RFP opportunities.

The company maintains a strong liquidity position, with total available liquidity exceeding $1 billion as of Q3 2025. Net cash provided by operating activities for the nine months ended September 30, 2025, was $970 million, a significant increase of $362 million year-over-year. PGE's financing strategy includes a $750 million unsecured revolving credit facility and ongoing equity issuances through its at-the-market (ATM) program. The company issued $310 million in First Mortgage Bonds in March 2025 and has completed its ATM pricing activity for 2025, drawing $49 million in August and an additional $72 million in October, satisfying its base equity needs for the year. PGE aims to maintain a common equity ratio of approximately 50% over time, with its current ratio at 45.50% as of September 30, 2025.

Navigating the Regulatory Landscape and Competitive Arena

PGE operates within a regulated environment, with the Public Utility Commission of Oregon (OPUC) overseeing retail prices, services, and other critical matters. The regulatory framework is evolving to support the state's energy transition and economic growth. The FAIR Energy Act (HB 3179), passed in 2025, aims to enhance affordability and transparency by enabling multiyear rate plans and adjusting the timing of residential price increases. The POWER Act (HB 3546) provides clarity for cost allocation and long-term contracting with large energy users like data centers, a critical development for PGE's fastest-growing customer segment.

PGE is proactively engaging with regulators and stakeholders. A Memorandum of Understanding (MOU) with OPUC staff and other intervenors governs the expedited recovery of the Seaside Battery Project and an alternative recovery mechanism for distribution system assets (DSPARM). This collaborative approach is expected to lead to a more predictable regulatory path, with the earliest filing for PGE's next general rate review anticipated after Q2 2026. Furthermore, PGE filed an application in July 2025 for a holding company reorganization, a common industry structure designed to provide greater financing flexibility and potentially allow for a separate transmission company subsidiary.

In the competitive landscape, PGE holds a strong regional market position in Oregon, leveraging its diverse generation portfolio and established transmission network. While it may not match the sheer scale of larger Western U.S. utilities like Pacific Gas and Electric (PCG), PGE differentiates itself through localized expertise, customer-centric services, and adaptability in integrating renewable energy. Its participation in the California Independent System Operator's (CAISO) Western Energy Imbalance Market (EIM) and the upcoming Extended Day-Ahead Market (EDAM) is strategic, aiming to optimize resource use and access lower-cost energy across the region. However, PGE faces vulnerabilities from its relatively limited geographic scale compared to larger rivals, which could constrain revenue growth, and ongoing infrastructure maintenance needs that may impact operational costs.

Outlook and Strategic Trajectory

PGE's outlook is one of continued growth and strategic execution. The company reaffirmed its 2025 adjusted earnings guidance of $3.13 to $3.33 per diluted share and its long-term EPS and dividend growth guidance of 5% to 7%. This guidance is supported by the robust demand from industrial customers, ongoing benefits from cost management initiatives, and a substantial capital investment plan. The company's five-year capital forecast of $6.5 billion is expected to drive significant rate base growth, with annual capital expenditures projected to range from $1.22 billion in 2025 to $1.44 billion by 2029.

The successful execution of the 2023 and 2025 RFPs, which are expected to bring over 1 gigawatt of solar and battery projects online by the end of the decade, will be critical to achieving decarbonization targets and meeting growing load. Management's focus on "structurally changing how we do our work" and "optimizing our business" underscores a commitment to operational efficiency that will be key to managing costs and enhancing profitability.

Key Risks and Mitigations

Despite a compelling growth narrative, PGE faces several pertinent risks. Wildfire risk remains a significant concern, with the company planning $120 million for mitigation in 2025. Legislative efforts are underway to establish a standard of care, create a wildfire backstop fund, and implement liability limitations, but the outcome and timing remain uncertain. The company is also facing a $375 million wrongful death claim related to the January 2024 storm.

Regulatory discretion poses a risk, as the OPUC has significant power over the recovery of deferred costs, including those from the January 2024 storm and Reliability Contingency Events (RCEs). Environmental liabilities related to the Portland Harbor Superfund site, with estimated remediation costs ranging from $1.9 billion to $3.5 billion, represent a material financial exposure, though the PHERA mechanism is in place for cost recovery. New EPA regulations for electric generating facilities could necessitate material upgrades at the Colstrip plant, potentially impacting costs and operations. Furthermore, trade tariffs and the "One Big Beautiful Bill Act" (OBBB) introduce uncertainty regarding supply chain costs and the availability of renewable energy tax credits.

Conclusion

Portland General Electric is strategically positioned to capitalize on the powerful tailwinds of high-tech industrial growth and Oregon's ambitious clean energy transition. The company's proactive investments in smart grid technologies, particularly battery storage and AI-enabled solutions, are not only enhancing grid reliability and capacity but also creating a competitive edge in serving its rapidly expanding customer base. Coupled with a disciplined approach to cost management and a focus on fostering regulatory predictability, PGE is building a resilient and efficient utility for the future.

While challenges such as wildfire risk, environmental liabilities, and an evolving regulatory landscape persist, PGE's commitment to operational excellence, technological leadership, and strategic capital deployment underpins its long-term investment thesis. The successful execution of its extensive capital plan, the integration of new renewable resources, and the continued reduction of operational costs will be pivotal in delivering on its reaffirmed earnings and dividend growth guidance, solidifying its role as a vital and growing energy provider in the Pacific Northwest.