PGE reports 60 percent drop in Q4 earnings

Portland General Electric Co. on Thursday reported a 60 percent decline in fourth-quarter earnings thanks to a weak economy and the write-off of certain replacement power costs.

The Portland-based electric utility (NYSE: POR) said quarterly income fell to $8 million, or 11 cents per share, on $483 million in revenue. That’s compared to income of $20 million, or 32 cents per share, on $449 million in the same quarter last year.

Analysts polled by Thomson Financial Network expected earnings of 19 cents per share and $452 million in revenue.

The quarterly earnings were hit hardest by an $18 million write-off of deferred excess replacement power costs related to a forced outage at the company’s coal-fired plant near Boardman in late 2005 and 2006. Earnings were also hit by a one-time $6 million charge related to a construction delay on its selective water withdrawal project.

Those costs were partly offset by a $9 million increase in the value of non-qualified benefit plan assets.

Despite that decline, PGE’s year-end earnings grew by 9 percent to $95 million, or $1.31 per share. But that follows a 2008 in which its earnings of $87 million, or $1.39 per share, represented a 40 percent decline from the previous year.

Also Thursday, PGE lowered its 2010 earnings guidance from a range of $1.50 to $1.65 earnings per share to $1.30 to $1.45 earnings per share.

The reduced guidance comes as PGE now expects to have a lower amount of low-cost power this year than initially forecast, while retail margins are expected to fall after a warmer-than-expected start to the year brought reduced energy load. Both of those factors could result in lower income taxes, which would require PGE to issue customer refunds under Oregon utility tax law.

The company said it expects to spend $540 million in capital next year: $260 million for upgrades to its power generation, transmission and distribution network; $210 million for the third phase of the Biglow Canyon wind farm in Sherman County; and $40 million for the continued distribution and implementation of smart meters.

PGE last month issued $70 million in debt as part of an expected $250 million to be issued this year to finance capital expenses.

Last week the company filed a rate case with the Oregon Public Utilities Commission, seeking to raise rates by 7.4 percent starting in January 2011, which would generate $125 million in revenue to finance further investment in energy resources and infrastructure.

Shares fell 1 percent Thursday to $18.51. The company’s shares have traded between $13.45 and $21.39 in the past 52 weeks.