Good morning everyone and welcome to Portland General Electric Company second quarter 2010 earnings results conference call. Today is Thursday, August 5th, 2010. This call is being recorded and as such all lines has 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 Sara and good morning everyone. I am pleased that you are able to join us today. Before we begin our discussion this morning I'd like to make our customary statements regarding Portland General Electric's written and oral and disclosures in commentary. There will be statements in this call that are not based on the historical facts and as such constitute forward-looking statements under current law. These statements are subject to factors that may cause actual results to differ materially from the forward-looking statements made today. For a 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's. The Form 10-Q for the second quarter of 2010 was available this morning at portlandgeneral.com. The company undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise and this Safe Harbor statement should be incorporated as part of any transcript of this call. Portland General Electric's second quarter earnings were released before the market opened today and the release is available at portlandgeneral.com. Leading our discussion today are Jim Piro, President and CEO; and Maria Pope, Senior Vice President of Finance, CFO and Treasurer. Jim will begin today's call by providing an overview of the quarter's results and our strategic capital projects. Then Maria will provide more detail around the quarter's results and key regulatory proceedings. Following those prepared remarks we will open the lines up for your questions. And now it's my pleasure to turn the call over to Jim.

Thank you, Bill. Good morning everyone and thank you for joining us. Welcome to Portland General Electric's second quarter 2010 earnings call. PGE's net income for second quarter 2010 was $24 million or $0.32 per diluted share compared to $24 million or $0.31 per diluted share for the second quarter of 2009. We are increasing our full year 2010 earnings guidance by $0.10 to $1.40 to $1.55 per share up from the prior guidance of $1.30 to $1.45 per share. Increased guidance reflects the positive impact of improved hydro conditions, strong thermal operations and Senate Bill 408. The guidance also reflects the margin impact from a down revision to the 2010 load forecast. Maria will talk more about guidance later in the call. Now an update on our 2011 general rate case filing. I am very pleased with the productive and open dialogue we've experienced during this regulatory process. We are making good progress and have reached agreement on all revenue requirement items resulting in an overall increase of approximately $52 million in annual revenue. This will cover inflationary cost increases, the effects of reduced loads, new rate based investments and provide the company with the opportunity to earn a fair return on equity. Excluding future updates to net variable power cost an update to the 2011 load forecast. This represents an approximate 3% overall increase in customer prices, subject to OPUC approval. We've also reached agreement with the parties in the case on several policy issues. We made progress on the power cost adjustment mechanism resulting in a fixed deadband range of $15 million below to $30 million above base line net variable power cost which will not expand as rate base grows. We also agreed on the cost of capital with the capital structure of 50% tax and…

Good morning. Bill covered the increase in our 2010 earnings guidance, the quarter's financial results, as well as update on our general rate case and conclude with a discussion on financing and liquidity. As Jim, discussed we are increasing our 2010 earnings guidance by $0.10 to $1.40 to $1.55 per diluted share. The guidance change reflects four key drivers. First, hydro conditions have improved as a result of the worst June on record in the Pacific Northwest. We specifically have seen material improvements on the Clackamas River and the Deschutes Rivers. Second, PGE's plans are operating well. This is primarily due to favorable market prices of both power and gas as well as plant availability. We should provide an additional opportunity to economically dispatch our thermal operation. Offsetting these positive factors, we continue to experience a negative effect of the recession. We have reduced our 2010 weather adjusted load forecast from approximately flat to down 1% to 1.5%. And finally the last factor is the positive impact of Senate Bill 408. Hydro condition, Thermal plant operations and SB 408 each represents approximately $0.05 in EPS, with the decline in retail margin representing a negative $0.5, for the combined guidance of $0.10 per share for the year. Now on to second quarter results. Second quarter 2010 net income was $24 million or $0.32 per diluted share. This compares to $24 million or $0.31 per diluted share for the second quarter of 2009. Similar to full year expectations operating results for the quarter were positively impacted by coolers in normal temperatures, strong power supply operation and impacts of SB 408, all of which were partially offset by the continued effect of a weak economy. Retail revenues increase 7% in the second quarter of 2010 compared to the second quarter of 2009. A…

Thank you, Maria. Our second quarter result show we are making solid progress on several key projects. Customer satisfaction continues to be high. Construction at Phase III of our Biglow Canyon Wind Farm is on time and under budget and we continue to work constructively through the regulatory process on our 2011 general rate case and the 2009 integrated recourse plan including Boardman. Looking ahead, we will continue to position the company for future growth opportunities that deliver value to our shareholders and our customers. Operator, we now like to open the call for question.

(Operator Instructions) Your first question comes from the line of Brian Russo with Ladenburg Thalmann.

You mentioned earlier kind of the timing of the equity issuance and it's kind of towards the latter end of 2011 and the contingent on the IRP approval. But I thought you mentioned earlier in your comments that the three individual RFP process, you hope to complete by year end 2011 or early 2012. Is the equity offering contingent on completion of that or are there other factors as well, like trends you see in your equity ratio from now until then?

Its a combination of both Brian but really its be driven by the RFP and whether we are successful on those projects, and I think that's really the key point here is that if we are successful with the RFP then we wouldn't need to issue equity and the timing of that would be towards the end of '11 or into 2012. It appears from the process that we have lost some slippage in terms of the IRP process and the IRP is going to take some time. So, things tend to be slipping a little bit but again it will be depending on RFPs primarily.

So we just kind of look for the final RFP outcomes as kind of the signal as to maybe the timing that you might issue equity.

That said in RFP we have three RFPs going forward and so each of those will play. If just the peakers were successful in then maybe we wouldn't need to issue equity. If we get the peaker there in the base load generation and also the renewable then obviously we will need to issue equity. So a lot of them is depended on the outcome of that RFP process.

And then you mentioned part of the increase in guidance was the result of improved performance of your thermal plant. And I think you also mentioned lower market prices. And I am just curious with the above average run-off in June. Were you able to just not run some of the thermal plans and buy low cost power to sell to your customers, just curious about dynamic works.

The way it works Brian is, when we see that heavy hydro conditions we are able to shutdown our thermals and take advantage of lower market prices. We also saw lot of wind during the second quarter and that again allowed us to back up on thermals. Our wind generation was significantly higher than the first quarter. And the combination of good hydro and favorable wind conditions really allowed us to back up our thermal plants and leave them as a back stop for our system. We are able to sell the gas or not bring the coal and keep that in inventory. So that was clearly a factor that helped the second quarter, that flexibility that we have in our system that allows us to take advantage of good market conditions.

Lastly you mentioned some of these new technology related customers that you are optimistic will start up soon. Is that captured in this 2011 test year rate case sales assumption or will that kind of be incremental to what you guys settle down, yesterday?

The way the load forecast were accessed we try to continue to update it through the process. We will do another update based on the September data from the state, so we will continue to watch the economic conditions in Oregon. We do have the opportunity as part of the regulatory process in this general rate case to update the load forecast as well as net variable power cost later in the year. So we will continue to monitor those customers to see how their plans are advancing as well as the pace of their growth. In many cases, we have the solar company, SolarWorld and Sanyo and then Genentech they are ramping up but not ramping up as fast as we had expected. We will try to get the best information when we update our load forecast to make sure that our prices are in line with the expected loads for 2011. And so we get that opportunity in the September timeframe.

Your next question comes from the line of (inaudible).

There was an article that Oregon in July about a sudden surplus wind power coming out of the cores in May. Two parts of the question, one I am assuming the BPA could force you to shut down Biglow Canyon. I just want to ask if that's true and b) I am wondering where the power will come from. To what extent you will be able to self generate or would you need to buy power and as also discussed back to the PCAM its great but the deadband is fixed but still quite wide. And I am just wondering how you think about forecasting supply and power cost as a reliance on wind power grows over time?

Great question Jennifer, I think it is one of the big challenges in the region as we continue to add more wind resources in the region. I think we are close to about 3,000 megawatts total in the Pacific Northwest. And then obviously raising some challenges to Bonneville to try and then operate as system with such a variable resource. And it's something we are all working on in the region looking for ways of storing wind through your pump storage or compressed air or looking to add in peakers to manage the flexibility in the variability of wind. What happened in June, as we did have a tremendous amount of hydro and Bonneville does have operational control to back off wind if there is not sufficient load, but they have constraints on the hydro system. They have certain fish constraints that they need to meet on the hydro system and maintain certain flows and the motivator run that water through the generators as opposed to spilling which causes dissolved gas problem. And so they can back off on wind that tends to be kind of intermittent and the extent they back off wind that usually assigns that there is a lot of hydro in the region, I mean prices are getting bid down, pretty low in the marketplace and so what we all do in those cases if they were to curtail us, we would then be able to buy secondary power in the marketplace. So usually when that occurs, we are in a situation in the spring. We have lots of hydro and potentially lots of wind and so market prices are pretty favorable at that point. Sometimes crisis can actually go negative because of the need for wind generators try to generate the capture production tax credit.…

Your next question comes from the line Gavin Tam with Macquarie.

Question on electric output data. So the Pacific Northwest seems to be pretty weak. Wondering your sales outlook, does it increase July? And then could you go over your customer exposures. What do you expect for commercial industry in the second half? And then what portion of that 4% commercial decline is covered by your decoupling mechanism? Thanks.

Let me take the take a high-level then I'll let Maria get into more of the detailed numbers. We have seen weakness in the economy. We look at our industrial customers in the group but half are up and half are down relative to their forecast and in many cases its just the slower pace of growth that we had anticipated, others have just kind of trim back as we are highly dependent on manufacturing and they turn back a little bit of their production. Kind of on the bright side, Intel continues to operate and be strong as customer of ours, Nike has done well. Genentech and the solar companies continue to grow but I'll be at a slower pace so those are all been positive science. And as we mentioned, the commodity businesses have struggled a little bit primarily in the paper and steel side. On the commercial side, the weakness is then, it is just a secondary impact of a slow economy where the population isn't going out and buying as they previously had and when we seen recovery and so it has been slow. We do have as I mentioned early the opportunity to update our load forecast to reflect those changes that will hopefully put us in a good position to allow us to recover our cost in 2011 and we will continue to watching that. There is a report out from Kim Dui University of Oregon. It seems indicative softness in the Oregon economy but our state economist Tom Potiowsky still believes that we will see slow growth in 2011 albeit we've taken a little bit of pause here. Marie, do you want to go into kind of numbers and the decoupling issue.

Just for a perspective if we look back on the first quarter of the year, we were down in all segments residential, commercial and industrial. And industrial was down quite significantly at about 6%. Industrial in the second quarter was almost flat where it was second quarter last year. Residential continues to decline and then also commercial was slightly worse. So with that improvement in industrial that we were pleased with in the second quarter. On average, quarter-on-quarter, each of the quarters was similar in terms of where they were versus last year. If you remember last year it was sort of the June, July time period where our industrial and then laid a commercial customers began to take a much more significant down turn in their low. And residential actually held up all the way until the first quarter of this year. For the latter half of the year, we are forecasting residential to be roughly flat with last year. Commercial will be roughly flat and then industrial to have a slight improvement for combined and on the full year of 1% to 1.5%. Not all of this will affect our bottom-line. We do have the decoupling mechanism which covers all of our residential and this are small commercial for back 60% of our customer base in total.

But not all the commercial is covered by, just a very small portion, so very small piece of the commercial reduction is covered in de-coupling.

Your next question comes from the line of James Bellessa with Davidson & Co. James Bellessa - DA Davidson & Co.: Cascade Crossing transmission line, can you give us some highlights of what that might look like? How many miles? What kind of pullable which you might install? What might be the cost? What's your partnership splitting might be or how much do you think you can handle yourself?

We have decided to go forward with, at least at this point in the planning phase, the double circuit line which could have a capacity of up to 2,500 to 2,700 megawatts. We've decided that that's a good move because of the need for transregional transmission. Our PacifiCorp has indicated an inertest for about 600 megawatts of that capacity and we're in the conversation wit them. I'm trying to reach a definitive agreement on a partnership where they could own that share of the project. We are also in conversation with the other potential partners that we can't disclose at this point but hope to find some additional partners. Besides that we've had a number of interconnection requests from generators who would like to interconnect in the system, which again is a positive sign for us, in terms of the project (inaudible) it roll over 200 miles, double circuit line a major portion through an existing right away; I think we are on $825 million assuming all phases of the project are completed. So those are preliminary. The construction timeframe is in the 2013 to 2016 timeframe but as you can imagine we have to get through all the permitting and licensing phase of that which we are working on right now. It is important to get a partner on this project and we are pleased that PacifiCorp has entered into the MoU for those conversations. As you know they have a load in Southern Oregon that they need to serve and this would allow them to move power into that service territory. So we are making good progress on the project. We got long ways to go to get to the finish line. We have not yet got full approval to move forward on the project. We are still in the licensing phase and until we get licenses secured and from net gain and final ratings for the project it's still in the planning stage. James Bellessa - DA Davidson & Co.: What does this takes receiving incentive compensation for transmission?

A lot of that will depend on how the ultimate structure of the line is. If it's a first-regulated line it would go under first jurisdiction. Typically our transmission has been used to serve retail load only and so then it gets regulated as a retail rate based investment in our Oregon rate base. So depending on the final structure of the line and how its ultimately developed, and later be under FERC Regulation which at this point gets the premium return on equity or it could be under Oregon jurisdiction if its just fully used for Oregon customers and that's something we continue to look at as we move forward to determine what is the appropriate place to regulate that line and a lot will depend on the structure that we end up with and that's still in the preliminary conversations. But I think for Europe you should just assume a regulated rate based item in Oregon. James Bellessa - DA Davidson & Co.: And Eastern (inaudible) so this is in your Boardman Plant?

Actually it starts the Coyote Springs which is Northeast of Boardman a few miles like 40-50 miles I think, maybe like the 20 miles. It will pick up the Coyote Springs. It might interconnect with the Idaho line that comes from Idaho and then it will go through Maupin and then into the Salem area which is a southern part of our system. So, that's the route that we are looking at and that's the preferred route. What's the good think about this is, we will create some diversity of transmission. Right now all the transmission tends to go up the gorge. So it's going east to west and so this will clearly provide some diversity and some reliability value to our system which as we add more and more wind recourses is critical for the region. James Bellessa - DA Davidson & Co.: You've been considering I think in your Boardman from gas-fired facilities is tying into those.

Yes, we have a project called Carty which we are planning for as a potential self-build option in the RFP. Carty would be reciting the two unit gas-fired base load generation units. The first unit would be bid into the RFP as part of the self-build option; the second unit at this point of back stop for Boardman contingency if in case we have to close Boardman down earlier, we are looking at two routes. For Carty we are looking at both Bonneville transmission as well as Cascade Crossing. So we still haven't made a final decision and until we get our final determination on Cascade, we want to keep our options open for transmission. So, we can either interconnect Carty with Bonneville or we could connect Carty into Cascade Crossing.

Your next question comes from the line of Chris Ellinghaus with Wellington Shields. Chris Ellinghaus - Wellington Shields & Co.: Jim just as you're mentioning Carty. Carty 1 is part of the IRP is that correct?

It would be a self-build option to meet the base load generation in the RFP as part of our IRP. So it will be bid in as a self-build option for base load generation. Chris Ellinghaus - Wellington Shields & Co.: I just want to clarify Carty 2 is the Boardman replacement option.

That's a back stop for Boardman and we have yet to determine, if Boardman has a early closure whether we have to go through an RFP or we would just move quickly to use Carty 2 as its replacement resource. Chris Ellinghaus - Wellington Shields & Co.: Would that be similar scale to Carty 1.

We sited the 900 megawatt dual unit site, so yes. Chris Ellinghaus - Wellington Shields & Co.: The whole Boardman issue is very confusing which is here on outside, I can only imagine what it's like for you. Can you give us some more clarity on how you view the situation?

Well right now, we are waiting for DEQ to issue a proposed final rule. They've given us some proposed rules that we don't find either financially viable for our customers or technically feasible. And so we are hoping to work with the DEQ to come up with a 2020 plan that has caused effective for our customers as only to the environment needs that the DEQ feels like are appropriate for the project. And we will have to wait to see whether the DEQ proposed rule kind of finds that midpoint. If we cannot find a reasonable the 2020 plan that could meet both the economic and environmental needs of our customers. We will be faced with either and nearly shutdown in 2015 which we think puts significant risks on our customers, moving forward with an acknowledgement for the 2040 plan, which has put all the emission controls in place. And that's where we've been from day one as we think that 2040 plan is the best plan from our customers if we really have those two options, 2015 or 2040. So we are hoping to find this interim closure plan on coal in the 2020 timeframe, that allows us enough time to replace Boardman but still meet the environmental requirement and that's cost effective. So that's kind of where we are. We'll see in the DEQ proposed rules in mid-August; they may not get published by the Secretary of State in early September but that's an important milestone in the project which will kind of set the stage where we go next with the Boardman facility. Chris Ellinghaus - Wellington Shields & Co.: Is it starting to feel like 32 is becoming more and more necessary and maybe on a faster timetable than you had originally planned?

It's hard to do it much faster than what we've got on our drawing boards. I think right now Carty-1 is planned in the 2014 to 2016 timeframe. We need to get that unit built because we are still significantly short to the market assuming it's successful in the RFP and then we would follow on with Carty-2. So we're looking at Carty-2 in the 2018 or 2020 timeframe to get that project completed just given that we haven't got turbines lined up, there's a lot of uncertainty when those projects will exactly come on line because we really haven't got into equipment suppliers and found out what the lead time is for equipment. So, we clearly want to sight that as a two unit site so we have a backup. If we lose Boardman, we will be significantly short to the market, probably in the sense of something like 40% short. And that's the place we're not comfortable as a company and so we really do need to have a back stop to project ourselves and be clear that we can provide electricity to our customers. Chris Ellinghaus - Wellington Shields & Co.: Sure. Maria, do I recall correctly in the first quarter that SB 408 was neutral to earnings?

Yes. Chris Ellinghaus - Wellington Shields & Co.: Okay. Have you got any kind of color on, you said that you expect hydro for the year to still be below normal but how do you see particularly after July where the back end of the year looks?

Sure. We are looking for obviously a positive impact in Q3 and Q4, that's really quiet unknown. Right now we're just calling it of that normal. Chris Ellinghaus - Wellington Shields & Co.: Okay. But it's a part of your guidance. Is it pretty significant swing, how your expectation through the third quarter have changed?

Sure. It would also be the second quarter expectations came in quite different from the first quarter.

Your next question comes from the line of Egor Grenandan with Semi Lucas Partners.

A bit of a follow up on the equity needs. I know that it's a bit early in the year you're waiting on the RFP result from the RFPs but just given the recently signed MoU with PacifiCorp on Cascade Crossing line and I guess you guys are seeing some more interest from other parties, is that potentially how view at your future equity need in '11, '12 timeframe?

The adjusted (inaudible) wouldn't been built in 2013 to 2016 timeframe so we are long ways from actually having to raise capital to fund that project. Clearly having the partners, which we've always anticipated, we try to get partners in our project. Really having a partner would reduce the capital requirements of the project, and that something we have assumed kind of day one that we would try to find a partner for that project because we didn't think we could take the whole project ourselves. So we really do want to get a partner. But in terms of the 2011, 2012 equity needs kept across right at the back during the bad decision.

(Operator Instructions)

Okay, I think that ends the call. So, we appreciate your interest in Portland General Electric and invite you to join us when we report our third quarter results in the third quarter of 2010. If you have any additional questions, please contact Bill Valach who will be available after this call. Again, thanks for joining the call.

This concludes today's conference call and you may now disconnect.