Good morning, everyone and welcome to Portland General Electric Company third quarter 2010 earnings results conference call. Today is Thursday, October 28, 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, Catina, and good morning everyone. We are very 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 and commentary. That 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 third 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 also 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 discussion by providing an overview of the quarter's results and our strategic capital projects. Then Maria will provide more detail around the quarterly results and key regulatory proceedings. Following prepared remarks, we will open the lines up for your questions. And I’m pleased to turn the call over to Jim, this morning.

Thank you, Bill. Good morning and thank you for joining us. Welcome to Portland General Electric’s third quarter 2010 earnings call. PGE’s net income for third quarter 2010 was $49 million or $0.65 per diluted share, compared to $32 million or $0.43 per diluted share for the third quarter of 2009. We are increasing our full-year 2010 earnings guidance by $0.25, from the prior guidance of $1.40 to $1.55 per share, to $1.65 to $1.80 per diluted share. The key driver to the increase in quarterly earnings and the revised guidance is the effects of the newly passed Federal Legislation regarding 2010 bonus depreciation on the Senate Bill 408 tax calculation. Senate Bill 408 accounts for approximately $0.20 per share increase in the 2010 guidance and approximately $0.16 per share increase in the third quarter results. Maria will provide more details later in the call. We will initiate 2011 earnings guidance on the fourth quarter earnings call in late February next year. By waiting until the next quarter we will have more information to base our earnings forecast on, including initial Hydro conditions and customer retail demand. This timeframe also puts us more in line with our peers for initiating guidance. I am very pleased with our strong operational performance during the third quarter as well as the productive regulatory process for the 2011 general rate case. Let me give you a few highlights on both. We continue to deliver excellent operating performance company wide. Our system operated well, our distribution metrics remain strong, and plant availability was high at our generating facilities. The 2011 general rate case process has been constructive. If the settlements we have reached with all parties are proved by the commission, it will result in an outcome that is fair and reasonable for customers and…

Thank you, Jim. Good morning. Today we’ll cover the quarter’s financial results, review the agreements on our general rate case, discuss financing and liquidity, and conclude with details on the increase in our 2010 earnings guidance. Third quarter 2010 net income was 49 million or $0.65 per diluted share. This compares to 32 million or $0.43 per diluted share for the third quarter of 2009. Operating results for the quarter were positively impacted by Senate Bill 408 and strong power supply operations which were partially offset by cooler than normal temperatures and the continued effects of a weak economy. Retail revenues increased 6% in the third quarter of 2010 compared to the third quarter of 2009. And a majority of this increase is related to the positive impacts of federal tax law changes regarding the extension of bonus depreciation and its effects on Senate Bill 408. PGE recorded a collection from customers of 20 million or approximately $0.16 per diluted share for the third quarter, of which 15 million was related to bonus depreciation. Also, contributing to the increase in retail revenue is the return of a large direct access industrial customer to PGE for its energy supply in 2010. We continued to see customer growth with the addition of approximately 4,000 retail customers since the third quarter of 2009. As we’ve discussed in prior quarters, when differences exist between taxes paid and taxes collected in customer prices, a surcharge or a refund to customers is required. A key element in SB408 is the protection of Federal Tax Normalization Rule. For the year, PGE estimates that it has additional accelerated tax depreciation of approximately 75 million due to the recent federal tax law change allowing for 50% bonus depreciation in 2010. Due to the increase in tax depreciation, tax normalization…

Thank you, Maria. Our third quarter results reflect our continued progress on key initiatives. Customer satisfaction, system reliability, and generation plan availability remain high. We completed our Biglow Canyon Wind Farm on time and under budget, and we continue a constructive regulatory process on our 2009 integrative resources plan, including Boardman, and our 2011 general rate case. The outcome of the rate case, if approved by the OPUC is fair and reasonable, aligning our customer prices with our cost structure and providing mechanisms that reduce volatility and are in line with the stipulated ROE. Looking ahead, we will continue to position the company for future growth opportunities that deliver value to our customers and shareholders. Operator, we’d now like to open the call to questions.

(Operator Instructions)

Operator?

Operator, are you there?

Yes, can you hear me now? Hello, can you hear me now? Hello?

It appears that we’ve lost the operator. We’re trying to connect to the operator. Give us a moment.

Hello. Can you hear me now?

Is the operator there?

Yes. I have been having technical issues. Can you hear me know?

We’re just in the process of trying to contact the operator. They must have just stepped away.

Hello, can you hear me know? Hello, can you hear me know? Hello, can you hear me know?

It appears that have lost contact with the operator, we’re trying to get her back online. Interesting. Hang on for a minute, folks. We do have people on the call list, so hang on. We’re not going to leave until we get the operator back online. It appears that they’re having technical difficulties, so they’re working on it right now, so it should just be a few moments hopefully.

Hello, can you hear me now?

We’re working on a technical difficulty. Give us a few more moments. If not, I know we’ll be at EEI next week and we can probably answer many of your questions, but just hang on for a second and we’ll see if we can get this thing resolved.

Hello, can you hear me now? Hello? Hello?

It appears there must be a connect problem between here and the line. I think we’re connected. Yeah, there are people up on the queue. We’ll give it a few more minutes here, it not, as I mentioned, we’ll be at EEI – Maria and I will both be back at EEI next week and if necessary we can catch up with you on your calls.

And we also can see who’s in the queue for asking questions and we’ll call everyone back.

Yeah, that’s a good point. Give us a few more moments here and we’ll see where it goes. You guys can hear us out there. Okay, let’s start with Brian Russo. Why don’t you open up the question for Brian. Brian Russo – Ladenburg Thalmann : Yes, hello. Can everybody hear me?

It works. For some reason we just can’t hear the operator, but maybe we can get the questions coming through. Brian Russo – Ladenburg Thalmann : Okay. I’m just curious, what’s the – it looks like you’ve recorded –

Brian, are you there? Brian Russo – Ladenburg Thalmann : Yes. I’m here. Can you hear me?

It doesn’t appear to be coming through. Brian Russo – Ladenburg Thalmann : Hello? Hello?

Brian is talking but we can’t hear you. Brian it looks – Brian Russo – Ladenburg Thalmann : Yes, I’m trying.

I wonder if we should call back in? Call back into the number? You know, I don’t want to lose everything. So it appears that we can’t get the questions coming, so we’re just going to take a pause, try to call back in. If you could just be patient for a second, we’ll call back into the number to see if we can connect. If we miss the connection, then we will catch up with you today, Bill will call you all back who have questions and then we’ll also be at EEI next week. So you want to try and recall this thing? Okay. So we’ll hang up.

Hello, Sir, are you in the conference now?

Yes, we are.

Okay. And you can hear me now?

Yes, I can.

Okay, wonderful. Okay, we do have the next question from Jennifer Sokoloff from McAdams Wright, Ragen.

Thank you all for your patience. It sounds like we’re back on line. Jennifer, go ahead. Thank you. Jennifer Sokoloff – McAdams, Wright, Ragen: I think I kind of cut in front of Brian Russo there.

That’s okay. I hope he’ll come back on. Jennifer Sokoloff – McAdams, Wright, Ragen: All right. Very good. I just wanted to ask some questions just for clarity because I want to make sure that I understand it. You mentioned the federal tax normalization in your last transcript, but I don’t think I was paying attention because you know, in my mind, if you have depreciation on your tax bill, actually you would need to give a refund to customers. So could you just explain this normalization rules that you’re talking about?

Maria will do that.

Hi, Jennifer. So one of the principles behind the normalization rule created by the federal government a number of decades ago was that the funds that were directed towards utilities through tax incentives or production tax credits or whatnot, were to be for the construction of plant equipment or employment of individuals. And particularly directed towards the expansion of renewables throughout the country. And a primary aspect when 408 was created was to ensure that those normalization rules are not violated under any 408 issues in the State of Oregon. And so what we’re essentially doing as we increase our deferred taxes is that we take the – either taxes collected in rates versus the deferred tax amount and we make some adjustments, and essentially we use the greater-of calculation to make sure that we don’t violate that amount. So that’s how you get to the collection within customer prices. Jennifer Sokoloff – McAdams, Wright, Ragen: And then how do customers see that in their bills; it smooths out over time? It may be the magnitude of your average bills aren’t very much. I’m just curious if there’s any risk of backlash, is this a large amount for customers?

Sure. You know, in the overall history of 408 for Portland General Electric, if you include the full amount that we are now estimating for 2010, we’re right about even. Actually, a refund to customers of about a million dollars if you go back to the beginning of 2007. So we have had two years with surcharges since this began and we’ve had three years with collections. So it’s – it will take a while for us to work this out through the OPUC. We have submitted our filings for 2009; 2010 tax pure filings would be submitted next October and then customer prices are affected, you know, thereafter. It takes through April of each year to resolve this with the Commission. So we sort of have an ongoing balancing account with customers. Jennifer Sokoloff – McAdams, Wright, Ragen: Okay, very good. And then just one little question. I saw Portland Tribune had an article about community, individual and group support for your 2020 plans. A letter was written. Is this an iteration of existing support, or is there any new news there?

Well, it’s actually a new support. We’ve never had the letter from the – some of the key stakeholders to the DEQ that reinforces our plan for a 2020 phaseout on coal. So the major parties was Angus Duncan with the Bonneville Environmental Foundation, the head of the Global Warming Commission in Oregon, Andrea Durbin from Oregon Environmental Council and Renewable Energy Group also supported that. So it is kind of a major step in the process to get them to support our 2020 plan. The change in the plan was just additional efforts to put additional controls on the plant to get lower sulfur reductions between 2018 and 2020, and a commitment by us at that plant, if approved, we would take the 2040 kind of ongoing plan off the table. So it is a milestone agreement. It represents – I would also mention that Census Utility Board singed on that letter also we’ve got broad-based support for our 2020 plan and that’s something new that we haven’t had that visible support from all those parties at this point. Jennifer Sokoloff – McAdams, Wright, Ragen: Very good. Thanks so much. See you in a few days.

Thanks.

Your next question comes from Brian Russo with Ladenburg Thalmann.

Hi, Brian. Brian Russo – Ladenburg Thalmann : How are you?

Thanks for sticking with us. Brian Russo – Ladenburg Thalmann : No problem. I’m just curious. I’m sorry if you may have discussed this earlier, I got on the call a little bit late. But the – the industrial sales pick up year over year, what’s driving that, and you know, is that kind of considered, you know, sustainable over the next couple of quarters?

Maria, you want to –

Sure. There’s a couple key issues that are taking place. The first, which is actual revenues, but not necessarily our bottom line, is the return of a large industrial customer to our cost disturbance. They’ve previously been purchasing their energy elsewhere. The biggest impact to our bottom line is the pickup in one of our local paper manufacturer’s operating rates. And then secondarily, we are continuing to see continued upward trends in our high-tech and solar sector as they work through the economic downturn. Brian Russo – Ladenburg Thalmann : Okay. And was this kind of captured in the recently-concluded rate case with the 2011 test year?

Yes, it was. We update our estimates, which for this year are approximately 1.5 percent below last year for total load. Those are updated in September when we had all of this information. And for 2011, we are expecting that year to be fairly slacked with where we are in 2010. Brian Russo – Ladenburg Thalmann : Okay. And then just on this bonus depreciation, and the SB408, that hasn’t been – has it technically hit the cash flow statement, and is that kind of the impact of bonus depreciation – is that kind of discounted in that 46% equity ratio you quoted for the September ’10 period?

Sure. There’s two aspects of bonus depreciation, which we’ve had for a couple of years as well as accelerated depreciation product tax credits. The first is that we are building our deferred tax liability on our balance sheet and have received a tax refund, which we carry back tax losses to prior years. We’ve noted that on the last couple of calls, and consistent with many other utilities. What’s different for us is the effects of SB408 and what we’re seeing with the continuation of both depreciation 2010 is that we’re hitting a higher level, prompting the impact of the normalization floor. SB408 in the current year is a non-cash item and it’s not until after we file with the OPUC next October, finish the process in April of 2012 for 2010 and then prices go into – or the impact for customer prices take effect. So there’s quite a bit of lag on the cash side. Brian Russo – Ladenburg Thalmann : Okay. And is there any opportunity to identify other assets that I guess, you know, are currently under construction or would fit in with the bonus depreciation tax laws? And then what are your thoughts on the equity issues instead, you know, that you’re considering in late 2011? Does this bonus depreciation have any impact on that?

Sure. With regards to our analysis, I think we’re fairly – this is fairly straightforward from a [inaudible] depreciation standpoint. That is not complicated in – our capital expenditures for 2010 are well known. The complexity really comes in with SB408 and I think that there’s a lot of issues to continue to resolve there, and continuation of bonus depreciation looking forward, will continue to have the same effect that we have seen in this quarter on SB408. In terms of its impact on our equity offerings, we have been factoring in increased in deferred taxes in our estimates for some time. The biggest impact for us in terms of equity will really be the timing of our capital expenditures. As Jim noted, we are getting towards the tail end of the IRP processes, but we have not yet begun the RSP processes. And due to the amount of time it takes, we are delayed in that and we will need to wait until we see more resolution with regards to those projects before we can be more certain in regards to timing. Additionally, our stock price capital market earnings will all have a factor. Brian Russo – Ladenburg Thalmann : All right Thank you very much.

Thanks.

Your next question comes from James Bellessa with DA Davidson and Company. James Bellessa – DA Davidson & Co. : Good morning.

Good morning, James. About this large customer that came back onto your system, why did they leave in the first place and what incented them to come back?

The large customer, all or our large customers have the ability to go directly to the market. The market availability for power for these customers has shrunk in the number of companies that they can purchase from, and they frequently will depend – see what they can get in the marketplace, and – versus what they can get from us and take the best economic deal, and we offered the best economic deal.

And even though they do go to the market, they still pay their transmission and whatever distribution component of that rate to us. So the only thing that’s different is we will purchase less power in the future, or more power, depending on whether we’re serving them or not. That’s part of the Open Access Tariff that we have, or the competitive rates that we have. James Bellessa – DA Davidson & Co. : You were numerating the change in the guidance, and one of the factors, I think, was a reversal of a tax deferral. I think that’s what I heard. What might that have been?

Sure. We have a, you know, periodically have a number of one-time items and that was one of them. We had been expecting it for some time, although we weren’t exactly certain what quarter it would fall in. It is a tax [inaudible] that goes back a number of years and at that time we [inaudible] whether we would have a refund to customers for it, but we were not at the ROE amount so we’ve been able to reflect that on our – the decision was made by the OPUC about a month and a half ago. James Bellessa – DA Davidson & Co. : And what quarter did that hit the – did that hit the most recent quarter?

Yes, it was in the third quarter. James Bellessa – DA Davidson & Co. : And how much was that in dollar amount, or per-share basis?

It was about 5 ½ million.

The tax kicker occurred in 2005, that’s where we got it back and as part of the regulations when you do a referral, you do an earnings test to determine whether you have to refund or return those dollars, or surcharge customers for those dollars under deferrals. And the earnings at that time are low, therefore they decided that we did not need to refund that kicker. James Bellessa – DA Davidson & Co. : So did that help you third quarter earnings by $0.15 a share? Is that what – I mean –

No, Jim, it helped us by $0.04 a share. The other number that you’re looking at relates to the SB408 impact from bonus depreciation, which is the much more significant number. When bonus depreciation was extended for 2010, we picked up another $75 million of deferred taxes and roughly about a third of that has an impact on the year and we reflected about $0.16 in the quarter. James Bellessa – DA Davidson & Co. : Yeah. I can see where I did my arithmetic wrong. But it came out – I took the 5 ½ million divided by your shares and I came up with the $0.06 or $0.07 cents. Is there a tax effect to the reversal of a tax deferral?

Yes, there is. James Bellessa – DA Davidson & Co. : Is that what happened?

Yes, exactly. James Bellessa – DA Davidson & Co. : Okay. And then I see where the Public Utility Commission filed with the legislature by annual reports saying that they think that you can get your greenhouse gases down by the year 2020 and that to do so, to meet certain guidelines, you’d have to close both Boardman and Cole Strip and increase your rates somewhere between 10 and 38% by 2020. Do you have any comments on that? I guess it’s a report recommendation or something like that from the public utility commission to the legislature.

We have that report here. I’ll have to look at it. Oregon did set some aspirational goals. They’re trying to limit greenhouse gasses from 1990 level. Those are aspirational goals and I think what you’re referring to is if we tried to reach those aspirational goals, this is what it would mean. There’s no current requirement to meet those goals, they’re just aspirational. Again, we use integrated resource plan to plan our future resource needs and we do take into account the risks and uncertainty of the external abnormalities, things like carbon. But there’s no mandate or requirements to reach those levels and as you know, there’s no federal legislation in that area. So my guess is this is just – if you had to reach those aspirational goals, this is what it would look like. James Bellessa – DA Davidson & Co. : So no requirements? Your IRP calls for the closure of Boardman may be by 2020, but you’re not talking about Coal Strip?

No, that’s not on our radar screen at this point. That plan has been fully scrubbed and in compliance with our greenhouse gases. I think was, you know, as we see what happens with federal legislation in the future, you know, you’re going to have to evaluate all your options and determine what the cost of carbon is in terms of what your resource strategy is going forward. So again, there’s no plans at this point to close Coal Strip. As you know, we’re just a part owner of that plant. James Bellessa – DA Davidson & Co. : Thank you very much.

You’re welcome.

(Operator Instructions)

It looks like there’s no further questions. We appreciate your interest in Portland General Electric and look forward to seeing many of you at EEI in a couple of – oh wait. We got another call that just popped up. Hang on. Can I get Sarah on the line?

Your next question comes from Sarah Pegors with Wells Fargo. Sarah Pegors – Wells Fargo: First I just want to make sure I heard a couple dates correctly. Regarding the Board [Inaudible] Emissions Controls, I think I heard you say that you’re expecting a recommendation in November and then a final decision by the OED – I’m sorry, the OEQC by the end of 2010, is that correct?

That is correct. That’s the current plan. I think we’ll have to watch how this process unfolds over the next month or so, but that’s currently what we know to date. Sarah Pegors – Wells Fargo: And so in terms of the IRP acknowledgement, I think I heard you say that that would be in November. So is it – does that work correctly where they can acknowledge the IRP in November but not have the final decision until the end of 2010?

It’s kind of two separate issues. What the IRP decision was – and this is staff recommendations at this point, is they would acknowledge – the staff recommends acknowledge our 2020 plan as the least-cost lowest-risk option for customers. But it is subject to having a set of regulations that allows us to implement that 2020 plan. The staff suggested that if we do not get a workable 2020 plan, we would have to go back to the Commission and refresh our analysis and look at what other options are available to the company as we go forward. Assuming that the Environmental Quality Commission approved the 2020 plan, it would be aligned with our commission acknowledgement if the Commission acknowledges that staff recommendation, then we’d be fine. If it’s different, or we have a plan from the Environmental Quality Commission that’s different, then we will have to evaluate what those differences are and then go back to the Commission to kind of brief them on the situation. Sarah Pegors – Wells Fargo: Got it. And then one other question. Can you remind us when you originally filed the IRP looking at those two gas needs, the peaking and the base load, when those were originally thought to have been needed in service. And then with the knowledge that you have now, a better picture of the growth outlook in the economy, has that changed at all?

On the peak, we’re looking in the 2013 timeframe because that’s where we can get up pretty quickly. The gas generation would be in the probably 2015, 2016 timeframe, just depending on when we get transmission bills. [Inaudible], we have other transmission paths, but the likelihood of not getting transmissions constructed until that timeframe is what would time that resource out. In terms of the effects of a slower economy on those decisions, as you know, we are – we do have enough resources to meet our retail load. And even if loads stayed flat, we would still need additional resources as we depend on the market for about 25% of our retail needs. So we would still continue to move forward with those resource decisions and I think the commission acknowledgment of that would represent their support for that direction. Sarah Pegors – Wells Fargo: Great. Thanks a lot.

Thank you. Okay. It looks like we don’t have any further questions, so again, we appreciate your interest in Portland General Electric and for those of you who have scheduled times next week at EEI, we look forward to seeing you there. And if you have any further questions, feel free to contact Bill Valach after this call. So thanks a lot and have a great day.

Thank you for participating in today’s conference. You may now disconnect.