Balance Sheet Components (Notes)

3 Months Ended

Mar. 31, 2023

Inventories

PGE’s inventories, which are recorded at average cost, consist primarily of materials and supplies for use in operations, maintenance, and capital activities, as well as fuel, which includes natural gas, coal, and oil, for use in the Company’s generating plants. Periodically, PGE assesses whether inventories are recorded at the lower of average cost or net realizable value.

Accounts Receivable, Net

Accounts receivable, net includes $115 million and $131 million of unbilled revenues as of March 31, 2023 and December 31, 2022, respectively. Accounts receivable, net includes an allowance for credit losses of $13 million and $12 million as of March 31, 2023 and December 31, 2022, respectively. The following summarizes activity in the allowance for credit losses (in millions):


	Three Months Ended March 31,
	2023
Balance as of beginning of period	$	12
Increase in provision	3
Amounts written off	(3)
Recoveries	1
Balance as of end of period	$	13

Other Current Assets

Other current assets consist of the following (in millions):


	March 31, 2023		December 31, 2022
Prepaid expenses	$	89	$	69

Assets from price risk management activities	113		313
Margin deposits	30		116


Other current assets	$	232	$	498

Assets from price risk management activities and related unrealized gains as well as Margin deposits decreased during the three months ended March 31, 2023 due to decreases in wholesale natural gas and electricity prices. For further information, see Note 5, Risk Management.

Electric Utility Plant, Net

Electric utility plant, net consists of the following (in millions):


	March 31, 2023		December 31, 2022
Electric utility plant in-service	$	12,704	$	12,421
Construction work-in-progress	411		467
Total cost	13,115		12,888
Less: accumulated depreciation and amortization	(4,504)		(4,423)
Electric utility plant, net	$	8,611	$	8,465

Accumulated depreciation and amortization in the table above includes accumulated amortization related to intangible assets of $513 million and $499 million as of March 31, 2023 and December 31, 2022, respectively. Amortization expense related to intangible assets was $14 million and $15 million for the three months ended March 31, 2023 and 2022, respectively. The Company’s intangible assets primarily consist of computer software development and hydro licensing costs.

Battery storage agreement—On April 26, 2023, PGE entered into a battery storage purchased power agreement (PPA) that will be accounted for as a lease upon commencement. The lease is expected to commence in December 2024 and has a term of 20 years. The expected total fixed contract consideration will approximate $737 million over the lease term.

Regulatory Assets and Liabilities

Regulatory assets and liabilities consist of the following (in millions):


	March 31, 2023					December 31, 2022
	Current			Noncurrent		Current			Noncurrent
Regulatory assets:
Price risk management	$	—		$	22	$	—		$	1
Pension and other postretirement plans	—			95		—			95

Debt issuance costs	—			21		—			21
Trojan decommissioning activities	—			133		—			133
February 2021 ice storm and damage	12			61		10			64
Power cost adjustment mechanism	16			10		14			14
2020 Labor Day wildfire	5			26		4			27
COVID-19	12			10		—			22
Wildfire mitigation	—			31		—			28
Other	20			72		26			68
Total regulatory assets	$	65		$	481	$	54		$	473
Regulatory liabilities:
Asset retirement removal costs	$	—		$	1,145	$	—		$	1,136
Deferred income taxes	—			190		—			194

Asset retirement obligations	—			9		—			7

Price risk management	12			—		195			—
Other	34			54		39			52
Total regulatory liabilities	$	46	*	$	1,398	$	234	*	$	1,389

* Included in Accrued expenses and other current liabilities in the condensed consolidated balance sheets.

Wildfire Mitigation represents incremental costs and investments made by PGE under SB 762, which was passed in the 2021 legislative session with an effective date of July 19, 2021. SB 762 instructs public utilities to develop, implement, and execute a wildfire protection plan, in which reasonable costs can be recovered through the prices to all customers. The outcome of PGE’s 2022 GRC provided an annual amount of $24 million to be collected in base rates in regards to wildfire mitigation efforts. On July 1, 2022, PGE filed an application for reauthorization of OPUC Docket UM 2019 to defer incremental wildfire mitigation costs which exceed the amount granted in base rates. As of March 31, 2023 and December 31, 2022, PGE’s deferred balance related to wildfire mitigation was $31 million and $28 million, respectively. While the Company believes the full amount of the deferral is probable of recovery, the OPUC has significant discretion in making the final determination of recovery. The OPUC’s conclusions of overall prudence, or application of a potential earnings test, could result in a portion, or all, of PGE’s deferral being disallowed for recovery. Such disallowance would be recognized as a charge to earnings.

COVID-19—The COVID-19 pandemic led Oregon’s Governor to declare a state of emergency on March 8, 2020. Due to the adverse impacts of COVID-19 on economic activity, PGE experienced an increase in bad debt expense, lost revenue, and other incremental costs. On March 20, 2020, PGE filed an application with the OPUC for deferral of lost revenue and certain incremental costs, such as bad debt expense, related to COVID-19. PGE, other utilities under the OPUC’s jurisdiction, intervenors, and OPUC staff held discussions regarding the scope of costs incurred by utilities which may qualify for deferral under Docket UM 2114, Investigation into the Effects of the COVID-19 Pandemic on Utility Customers. The result of those discussions was an Energy Term Sheet (Term Sheet), which

dictates costs in scope for deferral but is silent to the timing of recovery of such costs. On September 24, 2020, the Commission adopted a proposed OPUC Staff motion for Staff to execute stipulations incorporating the terms of the Term Sheet. PGE’s deferral application was approved by the Commission on October 20, 2020 with final stipulations for the Term Sheet approved on November 3, 2020. As of both March 31, 2023 and December 31, 2022, PGE’s deferred balance was $22 million, comprised primarily of bad debt expense in excess of what is currently considered and collected in customer prices. The Company has released deferrals associated with the year ended 2020, resulting in a pre-tax charge to earnings for 2022 in the amount of $2 million. The amount recorded represents the Company’s estimate based on its understanding of the OPUC’s intent to apply an earnings test to certain elements of utility COVID deferrals. PGE filed a request for amortization of deferred amounts on December 16, 2022, which reflected a $12 million adjustment primarily related to bad debt write-offs being lower than estimated. During the March 14, 2023 public meeting, Staff recommended the Commission approve PGE's filing of Advice No. 22-45 associated with the recovery of the COVID-19 deferral. On March 21, 2023, Advice No. 22-45 was approved by the Commission, allowing for amortization of deferred amounts over a two-year period, which began April 1, 2023.

Deferral of Boardman revenue requirement—In October 2020, intervenors filed a deferral application with the OPUC that would require PGE to defer and refund the revenue requirement associated with the Company’s Boardman coal-fired generating plant (Boardman) then included in customer prices as established in the Company’s 2019 GRC. The application stated a deferral was required for customers to adequately capture the reduction in revenue requirement beginning on October 15, 2020, the date Boardman ceased operations. PGE estimated the revenue requirement for Boardman to be $14 million for the year ended December 31, 2020, an additional $66 million for the year ended December 31, 2021, and $23 million for the year ended December 31, 2022. In the 2022 GRC Order, the OPUC found that the deferral was warranted with amortization subject to an earnings test. On July 27, 2022, the Company filed an application, which, subject to OPUC approval, showed that the Company did not exceed the earnings test threshold for 2020 or 2021 and consequently, no refund would be required for those years. Customer prices resulting from the 2022 GRC Order no longer include any revenue requirement related to Boardman after new customer prices took effect on May 9, 2022. Although still subject to OPUC review, PGE does not believe it exceeded its regulated return on equity under the earnings test for 2022. On October 24, 2022, PGE and parties submitted a stipulation with the OPUC reflecting an agreement that resolved all matters related to 2021 under this deferral and states that no refund remains necessary for that year. The stipulation remains subject to OPUC approval. Review and determination of potential refund for the periods related to 2020 and 2022 remain outstanding.

In November 2022, the OPUC granted a motion by PGE to suspend the procedural schedule and directed the Company to file a status update no later than February 16, 2023. In granting the ruling the OPUC noted that it expects to resolve this matter, addressing both the 2020 and 2022 deferrals, within the first half of 2023. The status update on February 16, 2023 stated that a settlement conference had been scheduled and parties anticipated filing with the OPUC another status update, settlement agreement, or proposed procedural schedule by March 14, 2023. On March 13, 2023, PGE notified the OPUC that settlement discussions had been productive and the parties are progressing toward resolution of the matter before the end of the first half of 2023. Based on the application of an earnings test, PGE has not recorded a refund related to Boardman for 2020, 2021, or 2022. PGE believes the range of reasonably possible refund is limited to the Boardman revenue requirement for the year 2020. The OPUC has significant discretion in making the final determination of the application of the earnings test for 2020, 2021, and 2022 and could require additional refunds that would be recognized as a charge to earnings, which could be material.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in millions):


	March 31, 2023		December 31, 2022
Accrued employee compensation and benefits	$	52	$	66
Accrued taxes payable	30		29
Accrued interest payable	46		31
Accrued dividends payable	42		42
Regulatory liabilities—current	46		234
Margin deposits from wholesale counterparties	—		140
Other	105		99
Total accrued expenses and other current liabilities	$	321	$	641

The current portion of Regulatory liabilities and Margin deposits from wholesale counterparties decreased during the three months ended March 31, 2023 due to decreases in wholesale natural gas and electricity prices. For further information, see Note 5, Risk Management.

Credit Facilities

As of March 31, 2023, PGE had a $650 million revolving credit facility scheduled to expire in September 2027. The Company has the ability to expand the revolving credit facility to $750 million, if needed, subject to the requirements of the agreement. Pursuant to the terms of the agreement, the revolving credit facility may be used for general corporate purposes, including as backup for commercial paper borrowings and to permit the issuance of standby letters of credit. PGE may borrow for one, three, or six months at a fixed interest rate established at the time of the borrowing, or at a variable interest rate for any period up to the then remaining term of the applicable credit facility. The revolving credit facility contains a provision that requires annual fees based on the Company’s unsecured credit ratings, and contains customary covenants and default provisions, including a requirement that limits consolidated indebtedness, as defined in the agreement, to 65% of total capitalization. As of March 31, 2023, PGE was in compliance with this covenant with a 54.2% debt-to-total capital ratio and the aggregate unused available credit capacity under the revolving credit facility was $582 million. In addition, the credit facility offers the potential for adjustments to interest rate margins and fees based on PGE’s achievement of certain annual sustainability-linked metrics related to its non-emitting generation capacity and the percentage of management comprised of women and employees who identify as black, indigenous, and people of color. The Company believes these potential adjustments will have an immaterial impact on PGE’s results of operations.

The Company has a commercial paper program under which it may issue commercial paper for terms of up to 270 days. The Company has elected to limit its borrowings under the revolving credit facility in order to allow for coverage of any potential need to repay any commercial paper that may be outstanding at the time. As of March 31, 2023, PGE had $68 million commercial paper outstanding.

PGE typically classifies borrowings under the revolving credit facility and outstanding commercial paper as Short-term debt on the condensed consolidated balance sheets.

In addition, PGE has three letter of credit facilities that provide a total capacity of $220 million under which the Company can request letters of credit for original terms not to exceed one year. The issuance of such letters of credit is subject to the approval of the issuing institution. Under these facilities, letters of credit for a total of $135 million were outstanding as of March 31, 2023. Letters of credit issued are not reflected on the Company’s condensed consolidated balance sheets.

Pursuant to an order issued by the FERC, the Company is authorized to issue short-term debt in an aggregate amount of up to $900 million through February 6, 2024.

Long-term Debt

On October 21, 2022, PGE obtained a 366-day term loan from lenders in the aggregate principal of $260 million under a 366-Day Bridge Credit Agreement. The term loan bore interest for the relevant interest period at the Term Secured Overnight Financing Rate (SOFR) plus Term SOFR Adjustment Rate of 10 basis points and applicable margin of 87.5 basis points. The interest rate was subject to adjustment pursuant to the terms of the loan. On March 1, 2023, this term loan was repaid in full with proceeds from the Equity Forward Sale Agreement described in Note 7, Shareholders’ Equity.

On November 30, 2022, PGE entered into a Bond Purchase Agreement related to the sale of $200 million in First Mortgage Bonds (FMBs), $100 million of which were funded in full on January 13, 2023.

Defined Benefit Retirement Plan Costs

Components of net periodic benefit cost under the defined benefit pension plan are as follows (in millions):


	Three Months Ended March 31,
		2023		2022
Service cost		$	3	$	4
Interest cost*		9		7
Expected return on plan assets*		(11)		(12)
Amortization of net actuarial loss*		—		4
Net periodic benefit cost		$	1	$	3

* The net expense portion of non-service cost components are included in Miscellaneous income (expense), net within Other income on the Company’s condensed consolidated statements of income and comprehensive income.