Portland General Electric provides business update

• Third Quarter Realized Losses of $104 Million and Unrealized Mark-to-Market Losses of $23 Million in the Company’s Energy Trading Portfolio as of August 24, 2020

• Total Third Quarter Losses in the Portfolio are Estimated to be Up to $155 Million Subject to Market Conditions

• No Impact on Customer Prices or PGE's Ability to Serve Customers

• Board Forms Special Committee to Undertake Review

• Lowers Full-Year 2020 Guidance to $1.30 to $1.60 per Diluted Share

• No Impact Expected to Dividend Guidance or Long-Term EPS Growth Rate; Company Remains Financially Sound, with Ample Liquidity

Portland, Ore. – Portland General Electric Company (NYSE: POR) (“PGE” or the “Company”) today provided a business update in connection with energy trading activity in certain wholesale electricity markets that has resulted in realized and unrealized losses of $127 million as of August 24, 2020.

Background and Formation of Special Committee

PGE personnel entered into a number of energy trades during 2020, with increasing volume accumulating late in the second quarter and into the third quarter, resulting in significant exposure to the Company.

In August 2020, this portion of PGE’s energy portfolio experienced significant losses as wholesale electricity prices increased substantially at various market hubs due to extreme weather conditions, constraints to regional transmission facilities, and changes in power supply in the West. During this time period, the California Independent System Operator (CAISO) declared a Stage 3 Electrical Emergency and ordered the first rolling blackouts in the state of California since 2001.

As a result of the convergence of these conditions, the Company’s energy portfolio, as of August 24, 2020, has experienced realized losses of $104 million and unrealized, mark-to-market losses of $23 million. Total third quarter losses in the portfolio are estimated to be up to $155 million subject to market conditions – although the ultimate amount of losses could exceed that amount.

The increase in net variable power costs due to this trading activity will be recognized in PGE’s results of operations. There will be no impact to customer prices, as the Company will not pursue regulatory recovery. The Company noted that the loss does not impact PGE’s ability to serve customers.

Promptly upon learning of the issue, the PGE Board of Directors formed a Special Committee comprising five independent Board members (John Ballantine, Jack Davis (Chair), Kathryn Jackson, Neil Nelson and Charles Shivery) to review the energy trading that led to the losses and the Company’s procedures and controls related to the trading, and to make recommendations to the Board for appropriate action. The Special Committee has retained Simpson Thacher & Bartlett LLP as its independent legal advisor, which expects to engage additional advisors on behalf of the Special Committee during the course of this review.

Skadden, Arps, Slate, Meagher & Flom LLP is serving as the Company’s legal advisor, and J.P. Morgan Securities LLC is serving as its financial advisor. PGE has engaged and is actively working with an external consultant to perform a full operational review of the Company’s energy supply risk management policies, procedures and personnel. In addition, PGE has placed two individuals on administrative leave, pending review, and enhanced oversight including implementing immediate supervisory and reporting changes in advance of the conclusion of a broader evaluation.

Annual Earnings Guidance

PGE is revising its full-year 2020 guidance from $2.20 to $2.50 per diluted share to $1.30 to $1.60 per diluted share due to the impacts of higher net variable power costs. This guidance is based on the following assumptions:

• Higher third quarter net variable power costs of up to $155 million;

• Annual retail deliveries flat, weather adjusted, year over year;

• Average hydro conditions for the year;

• Wind generation based on five years of historical levels or forecast studies when historical data is not available;

• Normal thermal plant operations;

• Operating and maintenance expense between $550 million and $570 million, which includes a full-year forecasted bad debt expense of $15 million due to moratoriums on collection activities and customer disconnects; and

• Depreciation and amortization expense between $410 million and $430 million.

The Company believes the impact of this event is isolated to 2020, and reaffirms 4% to 6% long-term diluted earnings per share growth based on previous guidance. The Company does not expect any change to its dividend guidance.

Financing and Liquidity

PGE continues to have a strong balance sheet and ample liquidity.

As of August 24, 2020, the Company maintains short-term liquidity of $155 million cash, a $500 million revolving credit facility, which has a maturity date of November 2023, and a $220 million letter of credit facility, of which $172 million remains available. The Company has $75 million of commercial paper outstanding.

PGE expects to fund estimated capital requirements with cash from operations, issuances of long-term debt securities of up to $325 million, and the issuance of commercial paper, as needed.

PGE believes that the issuance of secured long-term debt, as well as other sources of liquidity, such as borrowings under its revolving credit facility, the expected ability to issue short-term debt, such as commercial paper, and unsecured long-term debt, and cash expected to be generated from operations provide ample liquidity to meet the Company’s anticipated capital and operating requirements.