Leases (Notes)

12 Months Ended

Dec. 31, 2023

LEASES

PGE determines if an arrangement is a lease at inception and whether the arrangement is classified as an operating or finance lease. At commencement of the lease, PGE records a right-of-use (ROU) asset and lease liability in the consolidated balance sheets based on the present value of lease payments over the term of the arrangement. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent PGE's obligation to make lease payments arising from the lease. If the implicit rate is not readily determinable in the contract, PGE uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Contract terms may include options to extend or terminate the lease, and, when the

Company deems it is reasonably certain that PGE will exercise that option, it is included in the ROU asset and lease liability.

Operating leases reflect lease expense on a straight-line basis, while finance leases result in the separate presentation of interest expense on the lease liability and amortization expense of the ROU asset. Any material differences between expense recognition and timing of payments is deferred as a regulatory asset or liability in order to match what is being recovered in customer prices for ratemaking purposes.

PGE does not record leases with a term of 12-months or less in the consolidated balance sheets. Total short-term lease costs as of December 31, 2023 are immaterial. PGE has lease agreements with lease and non-lease components, which are accounted for separately.

The Company’s leases relate primarily to the use of land, support facilities, gas storage, energy storage equipment, and power purchase agreements that rely on identified plant. Variable payments are generally related to gas storage and power purchase agreements for components dependent upon variable factors, such as energy production and property taxes, and are not included in the determination of the present value of lease payments.

The components of lease cost were as follows (in millions):


	2023		2022

Operating lease cost	$	4	$	4
Finance lease cost:
Amortization of right-of-use assets	$	14	$	14
Interest on lease liabilities	15		15
Total finance lease cost	$	29	$	29

Variable lease cost	$	33	$	31

Supplemental information related to amounts and presentation of leases in the consolidated balance sheets is presented below (in millions):


	Balance Sheet Classification	As of December 31,
		2023		2022
Operating Leases:
Operating lease right-of-use assets	Other noncurrent assets	$	18	$	22

Current liabilities	Accrued expenses and other current liabilities	$	3	$	4
Noncurrent liabilities	Other noncurrent liabilities	16		18
Total operating lease liabilities *		$	19	$	22
Finance Leases:
Finance lease right-of-use assets	Electric utility plant, net	$	291	$	305

Current liabilities	Current portion of finance lease obligations	$	20	$	20
Noncurrent liabilities	Finance lease obligations, net of current portion	289		294
Total finance lease liabilities *		$	309	$	314

* Included in lease liabilities are $183 million and $186 million related to power purchase agreements for the years ended December 31, 2023 and 2022, respectively.

Lease term and discount rates were as follows:


	December 31, 2023		December 31, 2022
Weighted Average Remaining Lease Term (in years)
Operating leases	51		44
Finance leases	21		22
Weighted Average Discount Rate
Operating leases	4.1	%	3.9	%
Finance leases	4.8	%	4.9	%

PGE’s gas storage finance lease contains five 10-year renewal periods which have not been included in the finance lease obligation.

As of December 31, 2023, maturities of lease liabilities were as follows (in millions):


	Operating Leases		Finance Leases

2024	$	3	$	20
2025	1		27
2026	1		27
2027	1		27
2028	1		26
Thereafter	40		356
Total lease payments	47		483
Less imputed interest	(28)		(174)
Total	$	19	$	309

Supplemental cash flow information related to leases for the years indicated was as follows (in millions):


	2023		2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4	$	4	$	8
Operating cash flows from finance leases	15		15		11
Financing cash flows from finance leases	6		7		6
Right-of-use assets obtained in leasing arrangements:
Operating leases	$	—	$	—	$	(12)
Finance leases	—		29		153

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.