EEI Spring Budgeting & Forecasting Meeting Utility Growth: Opportunities & Challenges

May 17, 2016

2

Agenda

PGE Overview

Generation Portfolio

Demand

Regional Environment

National Overview

Demand Growth

Electric Vehicles

Renewable Portfolio Standards

Oregon SB 1547

U.S. Tax Extender

Energy Storage

Distributed Energy Resources / Disintermediation

Potential Solutions

Q&A

PGE Overview

PGE at a Glance

Vertically integrated generation, transmission and distribution

852,164 customers(1)

46% of Oregonians

Majority of Oregon’s commercial and industrial activity

4(1) As of 12/31/2015

Quick Facts:

Financial Snapshot(1):

Revenue: $1.9 billion

Earnings per share: $2.04

Net Utility Plant Assets: $6.0 billion

GasHydro Coal

WindService territory

BeaverPort Westward 1 & 2

WASHINGTONOREGON

Portland

Faraday

Oak Grove

I-5

26

84Columbia River

SandyRiver

Salem

North Fork

River MillT.W. Sullivan

Colstrip 3 & 4Montana

Eastern Oregon

Madras, Oregon

WashingtonTucannon RiverWind Farm

Coyote Springs

Biglow Canyon

Boardman

Carty

PeltonRound Butte

5

Changes driven by: New generation: Port Westward Unit 2 (natural gas, Q4 2014), Tucannon River (wind, Q4

2014), and Carty Generating Station (natural gas, July 2016)

(1) Based on an estimated forecast which includes new generation from Carty Generating StationNote: For both charts, hydro and wind/solar include PGE owned and contracted resources

Hydro21%

Coal19%

Natural Gas47% Wind & Solar

13%

PurchasedPower35%

Hydro17%

Wind & Solar 8%

Natural Gas18%

2013 Power Sources as aPercent of Retail Load

(2013 Actuals)

Coal22%

2017 Power Sources as aPercent of Retail Load

(2017 Estimate)(1)

4 years later

Changing Generation Portfolio

6

Load Growth

2,000

2,500

3,000

3,500

4,000

4,500

5,000Annual MWa - Avg Annual Growth of 1.2%Summer MWa - Avg Annual Growth of 1.2%Winter MWa - Avg Annual Growth of 1.1%Summer Peak - Avg Annual Growth of 1.1%Winter Peak - Avg Annual Growth of 0.9%

7

Regional Environment

Energy Imbalance Market (California ISO – market operator): Current:

PacifiCorp NV Energy

Announced (entry): Puget Sound Energy (2016) Arizona Public Service (2016) Portland General Electric (2017) Idaho Power (2018)

Drivers: Increased renewable resources to meet RPS

Impact of California mandates and rooftop solarpenetration

Bonneville Power Administration controlled grid

8

SWOT Analysis: PGE’s Position in the Marketplace

Strengths Demand / appealing service

territory Relative low cost provider Diverse generation portfolio Plentiful renewables Single state jurisdiction

Opportunities Leverage positive customer

relationships New technologies Data-driven decision making New legislation

Weaknesses Conservative corporate culture Siloed company structure Loss of expertise (turnover due to

retirements) Difficulties attracting and retaining

talented workforce

Threats New markets entrants / non-

conventional business models Competitive offerings Disruptive technology Disintermediation

National Overview

Demand Growth

Actual (1990-2014):1.4% CAGR

Projected (2015-2040):0.7% CAGR

10 Source: U.S. Energy Information Administration (April 2016)

Residential

Commercial / Other

Industrial

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2012 2019 2026 2033 2040

(bill

ion

kilo

wat

thou

rs)

Electricity Sales

Electric Vehicle Demand

11 Sources: IEE Whitepaper “Forecast of On-Road Electric Transportation in the U.S. (2010 – 2035)” (April 2013)

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2010 2015 2020 2025 2030 2035

(tho

usan

ds o

f ele

ctrif

ied

light

y du

ty v

ehic

les)

Electric Vehicles

Low Medium High

147 TWh

112 TWh

33 TWh

Cumulative Electricity Use

WA: 15% x 2020*

OR: 25%x 2025* (large utilities)

CA: 50% x 2030

MT: 15% x 2015

NV: 25% x2025* UT: 20% x

2025*†

AZ: 15% x 2025*

ND: 10% x 2015

NM: 20%x 2020 (IOUs)

HI: 100% x 2045

CO: 30% by 2020 (IOUs) *†

OK: 15% x 2015

MN:26.5% x 2025 (IOUs)

31.5% x 2020 (Xcel)

MI: 10% x 2015*†WI: 10%

2015

MO:15% x 2021

IA: 105 MW IN:10% x 2025†

IL: 25% x 2026

OH: 12.5% x 2026

NC: 12.5% x 2021 (IOUs)

VA: 15% x 2025†

KS: 20% x 2020

ME: 40% x 2017

29 States + Washington DC + 3 territories have a Renewable Portfolio Standard (8 states and 1 territories have renewable portfolio goals)

Renewable portfolio standard

Renewable portfolio goal Includes non-renewable alternative resources* Extra credit for solar or customer-sited renewables†

U.S. Territories

DC

TX: 5,880 MW x 2015*

SD: 10% x 2015

SC: 2% 2021

NMI: 20% x 2016

PR: 20% x 2035

Guam: 25% x 2035

USVI: 30% x 2025

NH: 24.8 x 2025VT: 75% x 2032

MA: 15% x 2020(new resources) 6.03% x 2016 (existing resources)

RI: 14.5% x 2019CT: 27% x 2020

NY: 29% x 2015

PA: 18% x 2021†

NJ: 20.38% RE x 2020 + 4.1% solar by 2027

DE: 25% x 2026*

MD: 20% x 2022DC: 20% x 2020

Renewable Portfolio Standards

Source: dsireusa.org / October 201512

Oregon Senate Bill 1547

13

Increased the Renewable Portfolio Standard requirements

Prior:15% by 201520% by 202025% by 2025

Current:27% by 202535% by 203045% by 203550% by 2040

Requires Energy Service Suppliers to comply with standard

Allows energy storage to be included in the Renewables Adjustment Clause

Creates opportunity to update projection of Production Tax Credits included in rates annually

U.S. Tax Extender

14

Signed into law December 2015

5-year extension of the Production Tax Credit with a phase out

ITC extension for solar projects through 2022 (normalization remains an impediment). Start of construction:

Before 1/1/2020 – 30% Before 1/1/2021 – 26% Before 1/1/2022 – 22%* After 1/1/2022 – 10%

Begin before 1/1/2017

100%

Begin before 1/1/2018

80%Begin before 1/1/2019

60%Begin before

1/1/202040%

Begin after 1/1/2020

0%

*10% if beginning construction before 1/1/2022, but placed in service after 12/31/2023

PTCs

Energy Storage

15

AB2514 / California Procurements 1.325 GW of energy storage by 2020 Utilities may own no more than half of the

storage procured

SCE 235MW Lithium-ion 25.6MW ice storage

PG&E 42MW Lithium-ion 20MW flywheels 13MW zinc-based

PJM 246MW of battery storage 20MW flywheels Evaluating thermal storage and EVs

Distributed Energy Resources / Disintermediation

16

Distributed Generation Rooftop PV Community Solar Dispatchable Standby Generation Combined Heat and Power Fuel Cells Micro turbines

Distributed Storage

Electric Vehicles

Demand Response

Energy Efficiency

Disruptive Technologies / Business Models

Potential Solutions

17

Regulatory Changes to pricing structure to align fixed costs with fixed charges Incentive mechanisms for utilities to support Transition Adjustments for DERs

Partnerships with emerging technology firms

Anticipate structural / disruptive changes; develop / revise business model