Bill Valach - Director of IR Jim Piro - President and CEO Jim Lobdell - SVP, Finance, CFO and Treasurer.

Michael Weinstein - UBS Paul Ridzon - KeyBanc Michael Lapides - Goldman Sachs Andrew Weisel - Macquarie Capital Sarah Akers - Wells Fargo Lauren Duke - Deutsche Bank Mark Barnett - Morningstar Equity.

Good morning, everyone and welcome to Portland General Electric Company’s Third Quarter 2015 Earnings Results Conference Call. Today is Tuesday October 27, 2015. 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’d 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, Vickie and good morning, everyone. We’re very pleased that you’re able to join us today. And before we begin our discussion this morning, I’d like to remind you that we have prepared a presentation to supplement the discussion, which we will be referencing as we go through the call.

The slides are available on our website at portlandgeneral.com.

Referring to slide two, I’d 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 that are not based on 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. And 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 our Form 10-Q.

Portland General Electric's third quarter earnings release was released via our earnings press release and Form 10-Q before the market opened today and the release and the Form 10-Q are available at our website.

The company undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise and the Safe Harbor Statement should be incorporated as part of any transcript of this call.

As shown on slide three, leading our discussion today are Jim Piro, President and CEO; and Jim Lobdell, Senior Vice President, Finance, CFO and Treasurer. Following their prepared remarks, we will open our lines up for your questions. And now, it’s my pleasure to turn the call over to our CEO, Jim Piro..

Thank you, Bill. Good morning, everyone and thank you for joining us. Welcome to Portland General Electric’s third quarter earnings call.

On today’s call, I’ll provide an overview of our financial and operating performance, give an update on the economy in our operating area, discuss construction progress on our new Carty Generating Station and provide updates on other initiatives affecting PGE.

I’ll then turn the call over to Jim Lobdell, who will provide more details on our financial performance and general rate case. As presented on slide four, we reported net income of $36 million or $0.40 per diluted share in the third quarter of 2015, compared with net income of $39 million or $0.47 per diluted share in the third quarter of 2014.

Although our financial results were lower quarter-over-quarter, I'm pleased with our solid operating performance and strong load growth, supported by continued positive economic trends in Oregon. Construction on our Carty Generating Station is proceeding on budget and is expected to be completed in the second quarter of 2016.

We have now settled all items for our 2016 general rate case with the OPUC staff and interveners and we are affirming our full-year 2015 earnings guidance of $2.05 to $2.20 per diluted share. Moving to slide five, our overall system performance was excellent for the third quarter, including achieving generating plant availability of 99%.

Additionally, Uptime Magazine named PGE the best reliability engineering for our maintenance program for generations. The award recognizes organizations that demonstrate excellence in managing equipment reliability using advanced strategies and high tech sensing technologies.

I’m also pleased to report PGE continues to be ranked in the top quartile for customer satisfaction metrics for residential, business and key customers, according to Market Strategies International and TQS Research. We are continually striving to meet our customers' energy needs by delivering products and service that reflect their values.

Earlier this month, we enhanced our nationally recognized renewable power program by offering a new voluntary renewable power option for our customers called Green Future Solar. This program enables customers to support solar generation by participating in a program that is sourced through a shared local solar facility.

In September, we released our 2014 sustainability update. It provides our 2014 highlights and key metrics, including five years of performance data and it is designed to feature some of the ways we work to balance social, environmental and economic impacts of our business decisions. This update is available for you at portlandgeneral.com.

Now, let’s move to slide six for an update on the economy and our customers. Oregon continues to exhibit positive economic trends. In August, Oregon’s annual job growth reached a 10-year high, expanding by more than 60,000 jobs over the past 12 months.

This is a 3.5% increase, it is a milestone that hasn't been hit since 1997 during Oregon’s high tech boom. September growth slowed slightly to 2.9% year-over-year, however Oregon still added nearly 50,000 jobs. The unemployment rate of 5.4% on our service area for September compared favorably to Oregon at 6.2% and slightly above the US at 5.1%.

PGE’s average customer count continues to increase at approximately 1% year-over-year. Portland State University Population Research Center reports 2014 population growth in PGE’s service area at 1.4%.

Additionally, the housing construction forecast from the Oregon office of economic analysis calls for a strong growth in the coming years, with housing starts in Oregon increasing from 15,000 in 2015 to almost 18,000 in 2016 and 23,000 annually over the extended horizon.

Historically, approximately half of Oregon’s building permits translates into new PGE customers. Energy deliveries weather adjusted are down 1.1% for the third quarter and up 2.8% year-to-date 2015 versus 2014. We continue to see strong growth in the industrial sector, driven primarily by high-tech manufacturing.

This is related to the growth of semiconductor and solar manufacturing as well as the opening of two new data centers in PGE’s service area in 2015. Additionally, gains were seen in transportation equipment, driven by an increase in the number of ships and dry-dock on the Willamette River this year.

There continues to be a lot of attention on the unseasonably warm temperatures in Oregon. While weather was warmer-than-normal this quarter, it was comparable to the third quarter of 2014. However, PGE did reach the second-highest summer peak on July 30 of this year when temperatures reached 103 degrees.

Based upon the results of year-to-date energy deliveries and current economic indicators, PGE now expects 2015 weather adjusted load growth to be approximately 2% over 2014 levels. This is net of approximately 1.5% in energy efficiency and also excludes one large paper customer, who recently announced they are now suspending operations indefinitely.

Moving to slide seven, we have provided an update on the Carty Generating Station, our 440 megawatt natural gas base-load resource under construction near Boardman, Oregon. Construction is on budget, and the plant is expected to be placed into service during the second quarter of 2016 at an estimated cost of $450 million, excluding AFDC.

We completed assembly of the heat recovery steam generator and successfully completed hydrostatic testing, an important milestone to test piping integrity. Overall, construction on the project is 70% complete and we're starting the commissioning process.

On slide eight, we have provided a summary of the company's capital expenditure forecast from 2015 to 2019. And we are currently evaluating additional opportunities to invest in projects that provide value to our customers.

As outlined on slide nine, the need for new resources to meet our customers' future energy needs will be evaluated through the 2016 integrated resource planning process and detailed in a resulting action plan. This planning process involves stakeholder engagement, research and analysis.

It will evaluate many issues, including the need for additional energy efficiency, opportunities for demand side actions, and replacing the output of our Boardman plant, which will seize the use of coal at the end of 2020.

In addition, the process will address how we plan to meet Oregon's renewable portfolio standard of 20% by 2020, which could be met through a combination of physical resources and the use of renewable energy credit. The plan will also evaluate the need for additional capacity to meet our customers' winter and summer peaks.

We will file the IRP with the Oregon Public Utility Commission in 2016 with the resulting action plan targeted to be acknowledged by the Commission in Q1 of 2017. Last week, the final EPA Clean Power Plan was published in the Federal Register. The final rule change significantly from the draft rule and resolved most major issues raised by PGE.

Our company intends to be actively engaged with our stakeholders and the state’s interagency team as we work together to determine Oregon’s best path forward in implementing the plan.

Now, I’d like to turn the call over to Jim Lobdell, who will discuss our financial results for the third quarter and provide you an update on the 2016 general rate case. Following those prepared remarks, we will open the lines for your questions.

Jim?.

annual weather-adjusted load growth of approximately 2% over 2014, excluding one large paper company; below average hydro conditions for the year; normal thermal plant and wind operations for the remainder of the year; depreciation and amortization expense between $300 million and $310 million; and capital expenditures of approximately $580 million.

Back to you Jim..

Okay.

We continue to focus on successful execution of our initiatives that drive value for customers and shareholders, including delivering operational excellence by meeting our 2015 performance target, continuing construction of the Carty Generating Station achieving an on budget second quarter 2016 in-service date and working collaboratively with all our stakeholders to prepare our 2016 integrated resource plan and its associated action plan to meet our customers' future energy needs with resources that provide the best long-term balance of cost and risk.

And now operator, we are ready for questions..

Our first question comes from the line of Michael Weinstein with UBS. Your line is now open. .

How are you doing? Hey, on the settlement, the rate case settlement, how do you anticipate the settlement will enable you to earn the authorized ROE of 9.6%?.

What we see is, it’s more of a true-up because of the fact that we’ve been the rate case after rate case, our O&M expenses and other corporate expenses are closer to what we're incurring because of the true-ups that we've had with the general rate case.

We will continue to have a drag on the 9.6% associated with disallowed costs, there is about anywhere from 65 to 70 basis points that we’ll be experiencing once we approach about $4.5 billion rate base, but that’s – we are feeling pretty good about it Michael. .

Okay, great. Just looking at the trailing 12 months, we’re coming in – it looks like towards the low-end of the guidance range. I know that you said that the – you're expecting a higher overall weather-normalized sales growth for the year now.

What are the positive factors that we’re going to look for in the fourth quarter to make sure that we're still in the range, especially considering the higher share count?.

Well, as you pointed out, we are looking at strong growth. When you look at the second quarter versus the fourth quarter, there is a little bit of activity going on there in regards to adjustment. So as we pointed out earlier strong growth on the revenue side.

We also – we’re continuing to push on the O&M expenses associated with the organization and we think between the combination of low growth and cost management that we’ll be able to land within our revised guidance..

And one final question about the IRP, I know you guys talked about renewable credits versus a new generation I suppose, being able to satisfy clean power plant requirements going forward.

And is there any way that you can quantify what the statuses of your available credits – the credit – I guess, how many credits you have, how long did they last, how many year's they have in them and what that might mean in terms of new generation opportunities going forward?.

So we haven’t disclosed the actual numbers, but we continue to build our [indiscernible] because our loads have been under what our forecast was and the resources that have been operating.

So right now we think that there is enough credit that could take us two to three years beyond 2020, and the question really is how do we utilize those credits in an economic fashion [ph].

A lot of it will be dependent on the discussions in integrated resource plant on the timing of adding a physical resource to meet our obligation and how we might smooth that out using those credits.

So there's a lot of discussion to have with the parties on what’s the right way to use that balance, but if we will just use the balance, it would be potentially defer the need for resource out to couple of years..

That also – go ahead. .

That is in the final decision, that’s just the way the numbers work out really, but the conversation has to be included in the IRP, and why that may have to deal with how the production tax credit kind of play out over time..

And does that also assume and it seems that Oregon remains at a 20% RPS, right?.

That is also true. There has been a ballot measure that’s been filed with the Secretary of State that would potentially increase that renewable standard, but that’s really just in the early stages of discussion. .

Interesting. Okay, thank you for much..

And our next question comes from line of Paul Ridzon from KeyBanc. Your line is now open..

Good morning.

Can you kind of talk about what’s going on with the wholesale sales volumes, is it price or is it volume, both?.

Yeah, Paul, what happened with the $10 million decrease in the wholesale revenues is the fact that when you look at our port -- generation portfolio, most of our generation was committed to meeting our loads and when we saw higher loads in the third quarter because of all the temperature and exactly how the temperature showed up, that meant that we're more of a buyer on the marketplace than we were a seller.

And in addition to that there were some movement in the overall wholesale prices in itself. .

And looking at year-to-date volumes, industrial sales are up 7.6%, is there anything chunky in there or is that kind of similar to same-store sales or if you had – what’s driving that?.

What’s driving it is the continual expansion of hi-tech we are seeing. We’ve got a couple of data centers that have come into the service territory. In addition to, we are seeing more transportation manufacturing, basically ship repair going on in our service territory. You know, those can be some --..

But nothing like you had a big customer down for an outage last year and it came back this year, it’s all real organic?.

Yes. .

Okay. And then just back to Michael’s question, on the fourth quarter, so you’ve got growth in some O&M controls.

Can you kind of point which half of the guidance you think you could end up there?.

I could really couldn't do that at this point, Paul but I appreciate the question..

Okay. Thank you very much for your help..

And our next question comes from the line of Brian Chin from Bank of America. Your line is now open..

I noticed that for the guidance reiteration of page 15, you're looking at normal thermal plant and wind operations for the remainder of the year. A couple of your peers have commented on the impact of El Niño on wind operations.

Are you just not really seeing that or can you comment on that at all?.

I just don't think we know yet, it’s still a very inexact science. Obviously wind has been down for the entire year. In the third quarter, we were actually pretty close to normal. So it's hard to tell what’s going to happen in the fourth quarter.

So we have been trying to pick a number, we just said, we’re going to keep it at expected levels consistent with our budget and we just have to see where it plays out. These resources are fairly new and we’re still learning a lot about how they operate in a very complex weather system..

Okay, got it. Secondly, I noticed that there was a little bit of timing changes in some of the Capex in terms of what year some of the Capex spending would happen, it looks like some stuff that was in ‘15 got pushed out into ‘16.

I apologize if you commented on this in your prepared remarks because I missed part of the call but is there any additional color you can provide on that. And if you have already commented it, then I'll just go back and look at the transcript..

You’ve got it right Brian, there was just a bit of movement from 2015 to 2016. We did include in our Capex table this time around a replacement of our customer information in Meter Data Management System but a lot of it is just a timing..

And last one because I want to be respectful of the queue. Last quarter you commented on bridge spending, the $58 million and obviously it's probably little too soon for you guys to give an update on that.

But just how confident do you feel that there are additional opportunities on bridge spending that can be captured over the next call it like two to three years before the Boardman replacement question comes into play..

I always feel like in the distribution area, this is an opportunity for us to catch up on some of our reliability work that even the assistance they gets shaped, our underground needs to be addressed. We have the environmental Capex that we're going to need to do.

So there is a number of things that we are looking at and trying to balance managing our prices as well as managing the reliability of our system. So we haven't got a lot of visibility, a lot of work going on internally, I’m looking at projects that we need to advance.

And hopefully on our call next year, we’ll be able to give you more clarity on that as we kind of solidify those plans on what we need to do..

Alright thanks a lot..

And our next question comes from the line of Michael Lapides with Goldman Sachs. Your line is now open..

Hey guys congrats on a good quarter. Real quick, I want to make sure I understood the commentary about thinking about the drag on earnings -- on authorized earnings.

Are you saying you still expect to have about 60 to 75 basis points of drag relative to the 9.6% authorized ROE for next year?.

It's actually 65 to 70 basis points associate with the authorized ROE. And again its expenses like lobbying and advertising and incentives and little bit of capital structure in there. When you’re up around $4.5 billion rate base that's what it pretty pencils out..

So that would imply you’re here in somewhere close to about 9% ROE next year.

When we think about 2017, is there much of a step up in the weighted average rate base in 2017 over 2016?.

Rate base right now looks like it's going to be relatively constant until we get to the next decisions around the IRP resources.

We’ll be doing some of that, I mentioned earlier some work on the distribution system, some reliability and environmental ads, but I think generally we’ll keeping it relatively flat until we get some clarity on the new resources and go through the RFP process..

Right, but the $4.4 billion that's a weighted average that only has half a year of Carty in it.

And therefore the second half, that alone would potentially give a little bit of an uptick in ‘17 or am I miss thinking about this?.

I think that $ 4.4 billion includes the full-year of Carty..

At the beginning of the year, it’s about $4 billion and by the time you get to mid-year you’re at $4.4 billion. So you're about $4.2 billion average for the year..

Okay. Got it, okay. I appreciated it guys thank you..

And our next question comes from the line of Andrew Weisel with Macquarie Capital. Your line is now open..

You've touched on a lot of big issues but I've got a couple small relatively corky questions I just want to get your quick thoughts on. First there was a comment in the press release that the rate case is predicated on Carty entering service by the end of July.

What happens if hypothetically you get a little bit of a delay on Carty and it runs pass there?.

Well, right now its July 31 as the end date, we have to have an in-service by that date. If not, it really will depend on what the reasons for the delay are. But in the kind of the worst-case we’d have to refile a rate case to include that into our prices. But again, it has to be circumstantial; we don't see that as being very likely.

We have to see what would be the cause of the delay whether it's on factors that we had control of or something that totally outside of our control like some type of weather events or force majeure type of an event.

So, right now all indications the plan will be completed by that date but if we’re not then we’d have to go to the regulators and talk to them about some type of interim rate release or rate case filing..

Okay, hopefully that won’t come into play. Next question, the tax rate was relatively low in the quarter.

Just if you can comment on your expectations for the full year and may be looking beyond to next year for tax rates?.

For this year, I would think about an effective tax rate of 20% to 25%. PTCs are coming in a little bit better because the wind ticked up in the third quarter. So that was a good positive for us. Going forward, beyond the current year, I’d just look at the statutory rate at this particular point in time.

There are too many moving pieces for us to give any guidance..

Okay great. Then two other quick news items I just wanted to see if you can comment on. One, up onto the utilities are suing the Oregon Department of State over this quartzite tax, the energy supplier assessment.

Is that anything that could move the needle either for investors or for ratepayers?.

Now it's a really small -- relatively small tax, it obviously affects the PUDs quite a bit. I think the -- it’s going to be a tough battle for them to win that issue but it’s going to be small..

Okay great. Then lastly, there is an issue from some environmental groups to eliminate all coal-fired resources.

Obviously you have your plants for Boardman, but in terms of some of the stuff over the wires is that something that might affect your long-term planning?.

We have obviously consider the ballot measure has been filed with the secretary of state, there is no call by wire by 2030. We’re obviously owners in coal strip three and four, which would be our only remaining coal resources. We own 20% of units three and four that would have an impact on our ability to use cold strip to meet our customers load.

It doesn’t talk anything about shutting the plants down. And so those plants under this legislation will still be available for some purpose. I‘m not clear what in terms of probably wholesale sales or some other market activity.

The other part of that measure is the increase in the renewable portfolio standard to about 50% by 2040 kind of ramps in overtime. Again, that’s just a measure, it hasn’t got the signatures yet, and the title hasn't been confirmed.

So those are things that are moving forward, I will tell you we are in conversations with environmental groups and others about kind of where we need to be and the progress we’re making on the current RPF standard..

Okay, great if that RPS where to be increased, is your assumption that you would continue to own some portion of the renewables in rate base?.

Our preference would be to own these resources, they’re very strategic located, these are usually the best sites as they kind of get kicked off and picked off. And so our desire because this RPS standard is not going to go away it’s going to be a long-term obligation of the company.

We really like to own these sites because that preserves the value of those resources for our customers long-term.

But again we would have to go through an RFP process, we would likely put in our own benchmark resources to compete in the market but our desire would be to own resources to meet that obligation because of the long-term nature of that obligation..

Okay thank you so much..

And an expression of the line of Sarah Akers with Wells Fargo. Your line is now open..

With the RFPs commencing in ’17, how long do those processes typically last and when is the earliest you could begin construction on any of the related self-build projects there?.

So the way I would think about is, assuming that we get that order from the commission Q1 of ’17, it’s going to take us probably 3 to 6 months to get the RFP prepared and ready for the marketplace. And so we probably issue the RFP towards the end of ’17.

Hopefully by the end of middle of ‘18 we'd be able to reach a decision on the RFPs and start progress on the project. So, hopefully by the middle of ‘18 possibly towards the end of ’18, again, Boardman shutdown at the end of 2020 that's the real key important date.

As it relates to the renewables as we mentioned earlier, we have some flexibility on, we need to add the renewable. The timing of the renewables will depend on the discussions with all the stakeholders as well as kind of what's going on in the market related to production, cash credits and other projects that might be competing for those renewables..

Got it, thank you..

So that’s kind of timing as we look ahead..

Perfect. And then a follow-up to Brian's question on the bridge spend.

Is rate-basing of gas reserves still on the table and if so would that be addressed in the IRP?.

We are not addressing in the IRP, we pulled it out of the IRP. We are conducting discussions with all the stakeholder groups about where we see the value of the long-term hedging.

And that’s really where the conversation started is, we think where gas prices and the fact that we have a pretty significant need for natural gas to fuel our power plant that a long-term hedge would provide value for our customers of some percentage.

So we’re in discussion with the stakeholders on kind of the structure of that hedge, how we would do it, what risks and rewards we take and the customers take around gas reserves strategy.

And so those conversations are going forward and so we're doing it outside of the IRP process and we're still working with all the customer groups in terms of trying to understand how we would execute on that plan. So hopefully we’ll continue to make progress and the team is working hard on that strategy..

Great, and then last, can you just give the EPS impact of weather versus normal for the quarter?.

For the quarter, really was $0.07 but really -- we looked at this quite a bit and you really need to take the third quarter and the second quarter of 2015 and put the two of them together and if you recall, the second quarter was down $0.07, and now the third quarter is up $0.07, you're really net zero for 2015.

And then when you compare it to 2014, we were down $0.05 in the end Q2 and up $0.03 for Q3, so you are really down a total of $0.02. So you kind of look at the comparison of year-over-year from normal and say, we're better by $0.02.

Hopefully that helps?.

Perfect. Understood. Thank you..

Thanks, Sarah. .

And our next question comes from line of Lauren Duke with Deutsche Bank. Your line is now open..

Good morning, Lauren..

Hi, good morning.

So following up on the weather impact discussion you were just having with Sarah, can you give us the weather impact versus normal for Q4 last year because I believe it was quite warm?.

For Q4, it about down $0.04..

Okay. And then can you talk a little bit your rate case plan going forward now that you have the new plans kind of addressed under the rate cases that are past and the one that’s still underway.

Can you talk about how we should think about your rate case plan if you are going to try to stay out until you have major rate base sources or if we should think about you kind of continuing to file fairly regularly?.

So the way we think about it is couple ways. First of all you have to understand that we do track in power cost each year through our annual update tariff, so changes in power cost would be adjusted each year through the annual update tariff and so that will continue forward.

So to the extent natural gas prices go up or down or energy prices for electricity go up or down, those would be passed on to customers through AUT filing. So the other thing we have to addresses is our O&M increases and any changes in rate base and so that is really going to be dependent on load growth.

To the extent we continue to have strong load growth that will provide us some marring and cover those increases in inflationary cost. And to the extent we have flat load growth or declining load growth, then that will be kind of pressure on our prices.

So typically as we’ve looked at the company about every other year there would go in for a general rate case, but a lot of it depends on those our factors, our ability to control O&M where load growth is and kind of what the inflationary pressures are on our cost. So we would hope to stay out for ’17.

We are just putting our budgets together for 2017, we haven’t made a final decision on that yet, but we're looking at everyone’s budgets for ‘17 and looking at our load growth for ‘17 to kind of get a sense of whether we can take a period off for ‘17 and we will probably make that decision late this year, early next year.

We don't -- we really wouldn’t have to file a rate case till February of 2016 for 2017 price change.

So that’s kind of what we are thinking about right now, but if you looked historically when we don't have new resources coming online every other year, every couple of years it’s kind of what our pattern would be, but again it’s depending on those factors that I just discussed. .

Thank you very much.

One final question, with load growth coming in significantly stronger than you guys had originally forecasted this year, is that something that seem sustainable at least for the next year or two or are you kind of still in wait and see mode to see if this can carry through to next year?.

A lot it’s been driven by some of our large customers specifically Intel and the growth they have seen at it, Intels grow with D1X in their facility. So I don’t think that’s ultimately sustainable. I think there are some really good factors going on in Oregon around economic growth. This is really a hub for hi-tech and software developers.

So we’ve seen a lot of in-migration and good strong growth. Whether that continue long term, there is many factors that affect that. You have to understand that that growth right now will be picked up in our 2016 rate case as we adjust our forecast. So our loads and our costs will be aligned going into 2016..

Okay, great. Thank you guys very much..

Thanks, Lauren..

And our next question comes from the line of Mark Barnett with Morningstar Equity. Your line is now open..

Good morning, Mark..

Hey, good morning, everyone. Thanks for all the detail today on the call.

I just want to ask a question that perhaps you won't be able to give too much color on, but we're talking about availability of resources in the region and you had addressed maybe the core issues in the future bringing it into the state, but Colstrip itself in its own state is also under pressure.

I am just wondering how you see that developing with the kind of few builds that we've seen introduced in the Washington legislature this year..

Well, besides the legislation that’s been discussed up in Washington, Montana got a significant challenge through the Clean Power Plan. If you look at that plan, Montana had some pretty significant hurdles that they have to achieve and that’s going to also have an impact on the coal projects in Montana.

So there are – obviously Montana has challenged that legislation in the course along with a number of other states. So we are going to have see how that all plays out. Peugeot and the conversations they have been having up in Washington.

Peugeot is 50% owner of units 1 and 2 and so that’s been kind of the early talk around what’s the fate of units 1 and 2. So those are the older more inefficient units up there.

So there's lots of conversations going on around Colstrip and it’s hard to tell how that’s all going to play out and kind of have to watch Peugeot’s lead up in Washington as they think about their strategy and working with their legislature..

Okay, but ultimately it makes sense to kind of view the Clean Power Plan as the larger risk to availability of that over the longer term I’d imagine?.

Yeah, I think that – I mean clearly those are rules that have to be promulgated and as I understand, the Clean Power Plan, if the state doesn’t take action, the federals can move in put their own federal implementation plan in place. They are very stringent up in Montana, I am not sure how Montana is going to achieve those goals.

They clearly would require some shutdown at the coal plants to meet the mass-based coals that have be set for Montana. So more to watch on that obviously. Let’s see how the rules play out in the courts and I think we are early in the game and this process. So more to come..

All right, thanks..

And our next question comes from line of [indiscernible] Your line is now open..

Hi, guys..

Good morning..

I can’t let it go by without asking a dividend question.

So I believe you guys talked dividend policy once a year in the spring meeting is that correct?.

That's correct..

And so obviously with CapEx coming down, you guys have talked about the next wave of CapEx opportunities you want to hold back on that, but just if you do the simple math your current run rate on modest earnings growth next year gets you to the lower band of the 50 to 70.

So I am just curious, you talked about 5% to 7% divi growth, but if earnings kind of grow at that rate any way how does that percentage move up over time?.

Well, as you mentioned, every spring we do a complete dividend review, we look at our CapEx forecast, we look at the capital structure, we look at that need for equity as we think about another construction cycle and potentially not having to go the equity market to finance that.

So those are all the factors that go into that and we want to make sure we have a balanced cap structure, but we also want to allows ourselves some flexibility going into a construction program. So it’s hard to handicap it right now, a lot of it depends on earnings too, so there is many things that go into that and we are committed to the dividend.

We are committed to good payout ratio that’s within the range that we've provided. And so we will continue looking at that.

So, those are all the factors that go in there and you will hear more about it next April 2016 when we release the final number, but you are asking my questions, same questions we are asking and we will take those all into account as we make the decision..

Well, I think most people understand and appreciate that wanting to hold that back for ERP, given it's not that far away, but the fact that I mean, unless you guys think and I don’t think you do that earnings should grow at some rate below that, that percentage won’t move all things equal, right.

It will always be at the lower band, at the lower end of the band..

Okay, I think you are right and we will have to continue looking at it..

Thank you..

[Operator Instructions] We have a follow-up question from Michael Lapides with Goldman Sachs Your line is now open..

Hey, guys a little bit of just an accounting question. Interest rates are in treasury yields and corporate bond yields are obviously down.

Can you walk us through what the impact on pension would be for the future, meaning next year maybe a little even beyond?.

Well, it’s the greatest impact for attention for us is the discount rate and if we see a forward movement upward in short-term interest rates – just not short term, but in interest rates then we will see the funding associated with it go up. It’s for the funding status that is associated with the pension plan go up.

Beyond that we don't see much other changes because it’s a closed plan..

Got it.

So in another words, there's no real O&M impact on next year given the fact that 10 year is hovering around 2% and corporate bond yields are back to kind of historical lows?.

Yeah, the only movement again would be the returns in the plan and the discount rate..

And maybe just an update for you on the PUC process, why don’t you give him –.

So we had a pension docket down at the Oregon Public Utility Commission associated with trying to get not only recovery of the expense associated with the pension service costs for the plan, but also a return on investments that we have made and basically the contributions we’ve made into the pension plan.

The outcome of that docket was the decision in August that basically said, what we will recover is only the FAS 87 expense associated with the plan. So right now our FAS 87 expense and what we are recovering in rates is pretty much on top each other at this point..

Got it. Okay. Last thing, I want to make sure I understand, you talk about in the Q1 and in some of your prior details, some rate credits and kind of regulatory amortizations, two tranches of $28 million of credits that roll off, how much of that goes to reduce D&A next year and how much is for other items..

Well, most of it is just revenue reduction, I mean it seems like the settlement associated with the spent fuel at the Trojan Nuclear Plant, it has the residential credit from the Bonneville that we have out there and there's a whole series of others.

I can have Bill Valach give you a follow-up, because there is a lot of details back behind it, a lot of small pieces..

Happy to do follow up. Thanks guys. Much appreciated..

Thank you, Michael. Okay, I think that’s ends, that’s all the questions we had in the queue, so let’s close this up. We appreciate your interest in Portland General Electric and we look forward to seeing many of you at the upcoming EEI Annual Finance Conference in Florida. Thanks a lot and have a great day..

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You many all disconnect. Everyone have a great day..