Earnings Call Transcript - POR Q4 2025

Operator, Operator

Good morning, everyone, and welcome to today's conference call with Portland General Electric. Today is Tuesday, February 17, 2026. This call is being recorded. For opening remarks, I will turn the conference call over to Portland General Electric's Manager of Investor Relations, Nick White. Please go ahead, sir.

Nick White, Manager of Investor Relations

Thank you, Daniel, and good morning, everyone. Thank you for joining us today on short notice. Before we begin, I would like to remind you that we issued a press release this morning and have prepared a presentation to supplement our discussion, which we will be referencing throughout the call. The press release and slides are available on our website at investors.portlandgeneral.com. Referring to Slide 2, some of our remarks this morning will constitute forward-looking statements. We caution you that such statements involve inherent risks and uncertainties, and actual results may differ materially from our expectations. For a description of some of the factors that could cause actual results to differ materially, please refer to our press release and our most recent periodic reports on Forms 10-K and 10-Q, which are available on our website. Turning to Slide 3. Leading our discussion today are Maria Pope, President and CEO; and Joe Trpik, Senior Vice President of Finance and CFO. Following their prepared remarks, we will open the line for your questions. Now I'll turn things over to Maria.

Maria Pope, President and CEO

Thank you, Nick. Good morning, and thank you all for joining us very early today to discuss our expansion into Washington State and the proposed acquisition of PacifiCorp's utility assets. We will begin by covering this exciting news as well as RFP results, guidance for 2026, and our 2025 financial results. I'll start with Slide 4. Earlier today, we announced a definitive agreement to acquire the Washington electric utility business from PacifiCorp for $1.9 billion. This includes select generation, transmission, distribution and other utility assets in Washington State. We are partnering with Manulife Investment Management and its affiliate, John Hancock, an insurance and investment company, who will be a 49% minority partner in the Washington business. Manulife brings broad financial expertise and energy infrastructure and has owned and invested in agriculture, timberland, and other businesses in both Oregon and Washington for over two decades. This transaction represents a key step in our strategy and complements the work that Portland General team does every day, prioritizing safe, reliable, increasingly clean electricity to serve customers at the lowest possible cost, enabling economic development and strengthening energy infrastructure across the Pacific Northwest and creating value for customers, communities, and shareholders. In this time of unprecedented electricity demand, PGE's commitment to the Pacific Northwest and our excellent service and energy infrastructure will benefit Central and Southeastern Washington. Our overall portfolio will grow by approximately 18%, and the acquired operations will continue to operate as a Washington-regulated utility, serving 140,000 Washington customers. These additions bring benefits of scale and operational expertise to both Oregon and Washington service areas. We look forward to working together with the 140 dedicated employees who will continue to serve Washington customers. This transaction is forecast to be accretive in the first year, while diversifying and broadening our growth opportunities, underscoring long-term EPS and dividend growth of 5% to 7%. The acquisition will be subject to industry-standard regulatory approvals, including from Washington, Oregon, and other jurisdictions, which we expect will take approximately 12 months after regulatory filings are submitted. This is a unique opportunity during a pivotal moment for our region and industry. We are excited to bring PGE's operational expertise, customer focus, and reliable energy delivery to Washington. Before Joe and I go further into the details of the transaction, we will cover our 2025 earnings results, 2026 guidance, and highlights from the year. Turning to Slide 6. For the full year, we reported GAAP net income of $306 million or $2.77 per diluted share and non-GAAP net income of $336 million or $3.05 per share. Our 2025 results were impacted by unprecedented warm weather in November and December as seen elsewhere across the West. We saw the warmest temperatures on record since we started recording 85 years ago. In total, this abnormal fourth quarter weather reduced earnings by $0.17. Despite these conditions, our teams worked throughout the year to execute, advancing our cost management programs, achieving multiple constructive regulatory outcomes, and accelerating clean energy procurement to maximize federal tax benefits for customers. Importantly, we continue to see strong growth in our service area. Total weather-adjusted load growth was about 5%. Large customers, including high-tech manufacturers and especially data centers ramped their energy usage throughout the year, driving industrial growth of 14% compared to 2024. This combination of operating performance and strong fundamentals in our service area underpins our 2026 earnings guidance of $3.33 to $3.53 per share. We are also reaffirming our long-term earnings and dividend growth guidance of 5% to 7%. Turning to Slide 7. Our 5 strategic priorities. First, our team advanced multiple key regulatory proceedings in 2025. We received approval of the Seaside battery project and reached constructive stipulation for the distributed system plan. We are making continued progress on data center tariff updates that support residential and small business customer affordability, which I'll cover shortly. Discussions are ongoing regarding our holding company and transmission company proposals. We will be meeting with parties at settlement conferences later this week and in early March as we work towards resolution of the process around the end of June. Second, we're focused on O&M and capital cost management. In 2025, we worked to realize efficiencies and improve productivity in delivering safe, reliable service at the lowest possible cost. Net of transformation costs, our teams exceeded targets and reduced PGE's overall cost structure by about $25 million. Third, as I noted, customer growth continues to accelerate in our service area. In the fourth quarter and early 2026, we executed 5 additional contracts with data center customers totaling 430 megawatts. These contracts further strengthen our pipeline of large load customers who are invested in the region, constructing facilities, and energizing their operations. Our large customer group is forecast to grow energy usage by about 10% compounded annually through 2030. Enabling this growth is transmission capital investment and extensive work to unlock capacity through the use of AI analytics, dynamic line ratings, and other grid-enhancing technologies. Alongside this work and in conjunction with Oregon's recent data center legislation, the POWER Act, our proposed large load tariff, UM 2377, is tracking towards completion in the second quarter of this year. This includes the creation of a separate data center customer class, sharpening the cost allocation framework, and enabling contracting flexibility. Our tariff proposal includes a 25% price increase for data center customers, which in turn would reduce residential and small business customer prices. Fourth, today, we are announcing 4 new energy projects and executed agreements. We have signed build transfer agreements to construct a combined 125-megawatt solar and 125-megawatt battery storage facility at Biglow. We also signed a build transfer agreement to construct a combined 240-megawatt solar and 125-megawatt battery facility as part of the Wheatridge Expansion project. PGE will own 175 megawatts and procure the remaining 190 megawatts via a PPA. Both projects are slated to come online by the end of 2027 and are eligible for federal investment tax credit between 30% and 40%, enabling additional clean energy at significantly lower cost to customers. In addition, we are procuring 400 megawatts of battery capacity through 2 capacity storage agreements. We are also taking steps forward in the 2025 RFP and hope to have announcements later this next year. And fifth, we continue our year-round data center wildfire risk mitigation approach, hardening and modernizing the grid and reducing risk through strong operational performance. With that, I'll turn it over to Joe to cover 2025 results and 2026 guidance in more detail before we return to discuss our acquisition.

Joseph Trpik, Senior Vice President of Finance and CFO

Thank you, Maria, and thank you, everyone, for joining us to hear about today's important developments. Turning to Slide 8. 2025 was another year of strong energy demand in our service area. This significant growth again was led by the diverse and growing data center and high-tech customers that Maria highlighted earlier. From 2020 to 2025, PGE's industrial customers have grown at 10% compounded annually. This same group is expected to continue at this pace through 2030, highlighting the strength of our large customer pipeline. These trends speak to the attractiveness of our service area and our team's ability to serve growing customer needs, invest in critical assets, and enable benefits for the entire system. In 2025, total load increased 3.8% overall and 4.7% weather-adjusted compared to 2024. Industrial load increased 14%, residential load decreased 1.8% year-over-year but increased 0.4% weather adjusted. Residential customer count increased by 1.3%, and commercial load remained largely flat. Turning to Slide 9, where I'll quickly cover year-over-year earnings drivers. Overall, our full-year 2025 results reflect meaningful industrial demand growth, improved recovery of assets serving our customers, differing power cost conditions as compared to 2024, our team's strong execution of cost management programs, ongoing rate base investment and financing, other items, and business transformation and optimization costs as we work towards reducing our cost structure. These drivers bring us to GAAP EPS of $2.77 per diluted share. After adjusting for business transformation and optimization expenses, we reached our 2025 non-GAAP EPS of $3.05 per diluted share. As Maria mentioned, our full-year results were impacted by the unprecedented warm weather conditions in the last quarter of the year. December alone accounted for $0.14 of the $0.17 EPS impact in Q4 as it was the warmest December on record for our region with 24% fewer heating degree days than average. Turning to Slide 10 for an overview of the executed 2023 RFP projects, the Biglow Optimization and Wheatridge Expansion, which will widen our generation capabilities to meet the needs of our customers. Both projects will be in construction this year and are expected to be serving customers by the end of 2027. We are also advancing our 2025 RFP, and we'll be submitting the final shortlist to the OPUC this week. The shortlist includes a variety of renewable and non-emitting capacity projects totaling approximately 5 gigawatts. As we proceed to negotiations, we will prioritize projects that include renewable generation, close earlier in the eligibility period, and maximize tax credits. We expect the final selection to be a blend of build transfer agreements and PPAs that total approximately 2,500 megawatts. On to Slide 11 for our 5-year capital forecast, which now includes 2026 and 2027 spend for the incoming RFP projects. I will note that this view does not contemplate CapEx from the Washington utility business from the transaction we announced today. On to Slide 12 for our liquidity and financing summary. Total liquidity at the end of the year was $954 million. Our investment-grade credit ratings remain unchanged. Our outlook from Moody's has improved from negative to stable. We continue to maintain strong cash flow metrics with estimated 2025 CFO to debt metrics above 19%. As we look ahead to 2026, we continue to expect a base equity need of $300 million as we work towards our authorized capital structure. Our plan considers the constructive regulatory outcomes in 2025 and continued robust operating cash flows in 2026. These factors will enable solid progress in our equity ratio and ultimately arrival at our target capital structure earlier than anticipated. As such, we expect base needs to taper to approximately $50 million in 2027. We anticipate financing the 2023 RFP projects in line with our 50-50 cap structure, net of tax credit monetization, resulting in $350 million of total equity needs in 2026 and 2027. I will note these financing expectations do not contemplate the potential holding company for investment in the Washington utility. In recent years, we've effectively utilized our at-the-market program to opportunistically fund accretive rate base investments. We continue to see value in this tool and the strategy, and we are refreshing our ATM, which we've upsized to $500 million in support of our diverse and robust CapEx plan. This facility enables issuances over multiple years and like our previous programs, will include a forward component. We also expect debt issuances throughout 2026 of up to $350 million, focused on funding our capital expenditures. Turning to Slide 13 for an overview of our 2026 guidance. Overall, our focus on managing cost structure, robust load growth, and rate base investment catalysts underpin our expectations for 2026 and the years ahead, including 2026 earnings guidance of $3.33 to $3.53 per share, 2026 weather-adjusted load growth guidance of 2.5% to 3.5%, long-term load growth guidance of 3% through 2030, and reaffirming our long-term EPS and dividend growth guidance of 5% to 7%. Now let me turn it back to Maria for continued discussion on this morning's announcement.

Maria Pope, President and CEO

Thank you, Joe. Turning to Slide 15. We will be adding 140,000 customers across a 2,700 square mile service area anchored around Yakima, Walla Walla, and other Washington communities. The portfolio of generation assets in this transaction is a valuable mix of natural gas and wind resources that provide safe, reliable, and affordable power. These assets will complement PGE's 1.8 gigawatts of natural gas generation over 1 gigawatt of wind assets, including PGE's Tucannon River Wind project located midway between the Marengo and Goodnoe Hills wind farms. On to Slide 16. This acquisition is a great fit. First, it's an excellent opportunity to expand our service to Washington State and acquire generation, transmission, and distribution assets we know very well. The Washington Utility and Transportation Commission will continue regulatory oversight of the Washington utility operations. Washington's regulatory jurisdiction includes many positive components, including multi-year rate plans, competitive ROEs, constructive fuel mechanisms, and frameworks for clean energy investment. We look forward to working with Washington regulators and stakeholders in enabling economic development and advancing clean energy policy goals. Second, enhanced scale and reach and operational capabilities will position us for rate base and customer growth. Central and Southeast Washington are home to dynamic communities and industry, including agriculture, manufacturing, and technology businesses that serve regional and global markets. We will have the opportunity to support economic growth in these regions and bring further investment for grid modernization and renewable energy acquisition to serve growing customer demand. Third, we anticipate meaningful customer upside. Portland General Electric brings a track record of effective operational performance, including strong plant availability, first quartile safety, commitment to wildfire and other risk mitigation, top 10 customer service programs, and first quartile reliability. The expertise of Washington employees who are deeply familiar with Washington customers and assets will be supported by PGE's administrative, finance, energy management, and other system-level expertise. We also expect that the increased scale will deliver benefits from shared corporate functions, enhanced purchasing power, and efficient financing for system investments. And fourth, clear shareholder value that will sustain further customer-focused investment. PGE expects EPS accretion in the first full year, while enhancing PGE's long-term EPS and dividend growth of 5% to 7%, supporting strong investment-grade credit ratings. Manulife's partnership is a key element in the acquisition's strength. They bring significant expertise in this region and in our sector. Turning to Slide 17. The broadening of our service area footprint represents an exciting moment for our company and shareholders. As I noted, our overall portfolio increases by 18%, a 22% increase in generation and transmission, a 14% increase in distribution, and a 15% increase in the number of customers. This transaction fortifies our key strengths, broadens opportunities for growth, and delivers benefits for all customers and communities we serve. With that, I'll turn it back to Joe. Thank you.

Joseph Trpik, Senior Vice President of Finance and CFO

Thank you, Maria. As you can see from this view, PGE's acquisition of PacifiCorp's Washington operations presents a structured, executable transaction with clear advantages for our customers and stakeholders. The key upsides include additional scale, diversification into a constructive jurisdiction, and enhanced capacity for system improvements to serve customers. Overall, we expect both operational synergies and incremental rate base growth opportunities. Notably, we will now step into the Washington RFP process to pursue varied ownership structures that deliver least cost, least risk options, drive towards the state's goals, and support customers' energy and capacity needs. Moving to Slide 18 for a summary of the transaction structure. The acquisition is structured as a sale of certain assets serving customers in PacifiCorp's Washington service area. Due to PacifiCorp's existing structure, we expect customary regulatory approvals in each of their jurisdictions as well as from FERC. I will note that due to the asset purchase nature of the acquisition and PacifiCorp's multistate structure, we will be assuming relatively few liabilities as part of this transaction. Upon closing, which is expected 12 months after regulatory filing submission, PGE and Manulife will form a joint venture to own the regulated utility in Washington, which PGE will operate. While our ongoing corporate structure update, including the creation of a holding company and a transmission company, are not prerequisites for this transaction to close, we see the holding company structure as supported by this scenario. In the coming months, we will submit regulatory filings in both Washington and Oregon for approval of the transaction. We look forward to engaging stakeholders during the approval process, and we'll provide status updates as part of our typical disclosure. Turning now to Slide 19 for our planned financing approach for the transaction. First, concurrent with the agreement signing, PGE obtained commitments for the full $1.9 billion purchase price, including bridge financing from Barclays and JPMorgan and commitments from Manulife. For our permanent financing plan, we expect to utilize a combination of $600 million equity contribution from Manulife, $700 million secured debt at the Washington utility, and $600 million raised at the proposed holding company. This approach strikes the right balance across financing channels. It strengthens accretion, manages risk, and supports investment-grade credit ratings, which are expected across all entities. On to Slide 20 for an overview of Manulife Investment Management and the partnership agreement. Manulife IM and its affiliate, John Hancock, is a leading direct investor in U.S. infrastructure. Their presence in the Pacific Northwest is notable, having invested in infrastructure, agriculture, and timberland in our region for over two decades. Beyond these important local ties, this partnership structure brings value both during the transaction window and after closing, particularly reducing overall capital markets exposure and equity needs, introduction of another cost-efficient source of capital, preservation of PGE's strong balance sheet, and strong support for further investment and growth opportunities at the Washington utility. Overall, the partnership is structured as a traditional arrangement with familiar features for our sector. PGE will manage and operate the Washington business and will also be a 51% owner, with Manulife owning the remaining 49%. PGE will also hold the majority of seats on the 5-person Board. Moving on to Slide 21 for our operational track record and approach to business integration that supports this acquisition. PGE has captured significant organic growth within the Oregon service area over the last two decades, adding over 180,000 customers and expanding the generation portfolio by 2.4 gigawatts of utility-owned generation. As Maria mentioned earlier, we are excited to welcome the highly skilled Washington employees who will be an important part of the integration and go-forward operation. Our growth and ability to serve robust customer demand have been supported by the company's investment in integrated operations. These encompass several critical functions that enable low-cost access to market power, renewable energy integration, and reliability. PGE has recently implemented and enhanced several technologies that enable the smooth addition of business units and are expected to help streamline the technical integration of the Washington service area. I'll also highlight the experience of our leadership team. Many of our officers bring expertise from large organizations, including multi-jurisdictional utilities and have executed many transaction integrations. We will draw upon this experience to deliver a seamless transition for our customers. Now let me turn things over to Maria to close.

Maria Pope, President and CEO

Thank you, Joe. We've covered a lot of ground today, both what we've accomplished and what lies ahead for Portland General Electric. Let me close today's discussion on Slide 22. The strength of our existing approach and the opportunities in Washington are all rooted in PGE's 5 strategic priorities. We are deeply committed to the Pacific Northwest region and continued investment, which will expand to include assets and operations in Washington State. We remain focused on delivering safe, reliable power at the lowest possible cost, efficient and effective operations, realizing economies of scale and regulatory frameworks that support customer affordability. We are advancing critical infrastructure investments that support economic development and build upon a base of growing data center and high-tech customers. We are integrating clean energy resources to satisfy customer and policy-driven goals, executing RFPs and reducing customer price impacts by maximizing federal tax credits. And we are deploying our mature data-driven wildfire risk mitigation programs, modernizing the grid and reducing risk through strong operational execution. We are excited for the road ahead. We are affirming our trajectory of strong financial results and look forward to delivering for customers, communities in both Oregon and Washington for years to come. And now, operator, we're ready for questions.

Operator, Operator

Our first question comes from Shar Pourreza with Wells Fargo Securities.

Shar Pourreza, Analyst

Congrats on the deal. It's definitely interesting, really good transaction here, so unexpected. So Maria, just let me ask you. So the deal is done at 1.4x, and you expect the deal to sort of be accretive in year 1. Can you just touch a bit on the accretion drivers and maybe frame the sensitivities to items like regulatory timing, financing, transaction, transition costs, et cetera, so we can kind of better understand upside, downsides around the numbers.

Maria Pope, President and CEO

Sure. First of all, there are several key areas. The first is our permanent financing plans that we laid out today. We also are expecting our cost management plans to continue to be executed, and the integration of this new company will really help our cost structure. And then we will be bringing data center and other customers to the area and development. It's a great operational opportunity and fit for us as we expect first-year accretion.

Shar Pourreza, Analyst

And then just on the language, Maria and Joe, around just the enhancements to the EPS growth rate. I guess, can you define maybe a little bit on what you mean by enhancement in this context? Is it sort of a step-up in the growth rate, a higher midpoint within the existing range, a lengthen and extend scenario? I guess, can you just be a little bit more specific on the accretion?

Maria Pope, President and CEO

Sure. So we have a combination of factors that give us confidence to be squarely above the midpoint of our guidance range of 5% to 7%.

Shar Pourreza, Analyst

Big congrats on the deal.

Operator, Operator

Our next question comes from Julien Dumoulin-Smith with Jefferies.

Julien Dumoulin-Smith, Analyst

Maybe just a few different questions here, more housekeeping than anything else. But just at the outset, how do you think about earned ROEs? What's the ability? What do you think the opportunities over time here as you think about extracting the full extent of the value from this transaction? What's the normalized ROE to think of over time? And then maybe a couple of credit ones just to chime in on here. How do you think about new metrics from the rating agencies given the diversification that this offers? How the agency is thinking about maybe some of the benefits from a wildfire diversification perspective? Yes, I'll leave it there.

Joseph Trpik, Senior Vice President of Finance and CFO

Regarding the return on equity, their last general rate case established an imputed allowed ROE of 9.5%. We believe that, over time, as we integrate the organization and improve our cost management and regulatory filings, we can expect it to perform in a manner comparable to our current performance. This integration will take some time, but we anticipate achieving a level of efficiency that meets or slightly exceeds our standards. Concerning credit metrics, we have initiated discussions with rating agencies and have clearly communicated our goal of achieving investment-grade credit ratings and maintaining strong credit metrics across the organization. We will continue these discussions as we progress, as it is our intention to ensure that these organizations maintain relatively high credit metrics.

Julien Dumoulin-Smith, Analyst

Got it. Let me quickly address your questions. Where have recent returns been? Additionally, how long do you anticipate it will take to reach a lag of about 50 basis points? Also, can you clarify if there are break fees in case you do not receive approval? Lastly, how does this relate to the ongoing process concerning the HoldCo Transco? Please elaborate on that.

Joseph Trpik, Senior Vice President of Finance and CFO

Sure. I’ll start with the earned returns. This company has a subsidiary that hasn’t been fully detailed, but their earned returns have been somewhat affected primarily due to the recovery costs associated with power. It’s important to note that the power cost recovery was part of their allocated structure, rather than a specific method based on individual plants and contracts. Regarding break fees, yes, there are break fees associated with both sides of the transaction, which we have included in some disclosures. These fees apply under certain conditions where the transaction may not close, such as a lack of FERC or regulatory approval. Additionally, if the rate base approved by the regulator differs from what’s agreed upon in the contract, there are also break fees for that. There are several other nuanced break fees as well, which are generally balanced and typically valued at $35 million if a break fee is applicable.

Operator, Operator

Our next question comes from Chris Ellinghaus with Siebert Williams Shank.

Christopher Ellinghaus, Analyst

What do you expect the filing cadence to look like?

Maria Pope, President and CEO

We expect the filings to take place in the next 30 to 60 days. The regulatory process should take about 11 months to 12 months.

Christopher Ellinghaus, Analyst

With the new proposed data center tariff, can you give us any kind of metric on how that helps on the residential side as an offset?

Maria Pope, President and CEO

Sure. The data center tariff you mentioned, UM 2377, is part of the POWER Act we established with legislative partners in 2025. We've revisited this several times. Currently, data centers constitute about 6% of our customer load and nearly 4% of our peak, which benefits residential and small business customers. Initially, this will result in approximately a 2% reduction, which is expected to increase over time as data centers expand in the area. It also enables direct contracting and includes a mechanism we refer to as the Peak Growth Modifier. We are fortunate to collaborate with various stakeholders and all our data center customers to ensure this benefits everyone throughout Oregon. We also aim to apply this approach to our customer relationships and regulatory and economic development efforts in the new Washington area.

Christopher Ellinghaus, Analyst

The $25 million cost reduction that I think Joe quoted, can you give us any kind of sense of how that sort of prorated over time to get a sense of when that's effective essentially?

Joseph Trpik, Senior Vice President of Finance and CFO

Sure. So the $25 million cost savings in 2025, it was a program that started in 2025. So we expect that to grow. So when you do the run rate on that as a general rule, probably more of like use a half-year convention since a lot of these cost programs were put in sort of the second to the third quarter. The key to our cost management program here is a cumulative approach. So the savings that we had in '25 that we will do two things. They will become full-year savings as they come into '26 and they are permanent. And then we will be building upon those savings as we've been doing a rollout plan here as we plan to manage our costs for the next several years. So we will be introducing a new set of cost management for different portions of the organization that will do that same thing again. We'll have programs that are implemented in '26 that will have benefits in '26 that then grow to full-year in '27 as we have this thoughtful rollout to drive this efficiency and be able to manage inflation over a multiyear period. To date, the program has been very successful. As we noted, we exceeded our targets. And if you normalize our O&M for 2026, we even did a little better just on not spending money in places, maybe not per se aligned to the efficiency program. But pretty excited about the execution and would say that the program for '26 is more mature than '25 because in '25, we were developing as we were going in '26 has an established plan in place already for the year.

Christopher Ellinghaus, Analyst

Great. That helps, Joe. Maria, lastly, can you just sort of talk about how you see the Washington acquisition aiding or providing an opportunity for additional large load growth?

Maria Pope, President and CEO

Yes. So Eastern Washington is focused on economic development. We also hope to leverage our existing relationships. As you can see, we have quite a broad and diverse set of high-tech and data center customers, and we'll work closely with them in the area of Washington as we have throughout our service area in Oregon.

Operator, Operator

Our next question comes from Anthony Crowdell with Mizuho.

Anthony Crowdell, Analyst

Congrats on the transaction. If I could just squeeze hopefully, 3 quick questions. If you could help us out, when I look at Slide 19, the $600 million raised at the HoldCo, is that all debt, all equity structure, like 50-50 of a utility? How should we think of that $600 million financing?

Joseph Trpik, Senior Vice President of Finance and CFO

Sure. So as it relates to that $600 million, think of it as a balanced mix of the investment, be it at the HoldCo or other structure, but it will be a balanced mix of debt, equity, potentially hybrid or other securities that align to the capital structure that we'll be focused towards.

Anthony Crowdell, Analyst

Got it. And then you've given out an EPS CAGR of 5% to 7% for a number of years. The thought was the holding company that you're going to create was going to provide efficient financing for the Oregon utility. Now you're potentially adding in already taken some of the debt capacity based on the $600 million. Could you tell us maybe in '27 and '28, how much debt do you forecast being held at the holding company now?

Joseph Trpik, Senior Vice President of Finance and CFO

Right now, I don't want to preempt the regulatory approval process for the holding company, which may have its own requirements. However, I want to connect this to our earnings growth trajectory. Whether we consider the Washington transaction or the holding company, both of these are positive contributions to our earnings growth rate. As they develop, we will continue to assess whether they merely enhance the growth rate or exert upward pressure on it. We need to allow some time for both to stabilize. The regulatory approval process could introduce factors that influence either positively or negatively. As we gain more clarity on these matters, we will reassess. I recognize that each of these has the potential to enhance our earnings growth.

Anthony Crowdell, Analyst

I initially viewed 2026 as a pivotal year for Portland, especially with the holding company structure and the strong momentum from the RFP wins. It seemed like a transformative time to pursue a transaction. However, the timing now feels uncertain, as we are currently facing what seems like a 12-month halt.

Maria Pope, President and CEO

I agree that 2026 will be transformational. I wouldn't refer to it as a freeze at all. Joe mentioned the operational improvements we are implementing across the company. We have significant opportunities for customer growth and have achieved some RFP wins. Additionally, we are actively engaging with regulators on several constructive topics. We anticipate closing this transaction in mid-2027, which presents us with a unique chance to maintain our growth trajectory.

Operator, Operator

Our next question comes from Andrew Levi with Hite Hedge.

Andrew Levi, Analyst

Can you hear me?

Maria Pope, President and CEO

We can.

Andrew Levi, Analyst

So a couple of questions. So just on the holding company, so you have settlement talks next week. Is that correct?

Maria Pope, President and CEO

We do. We have them this week.

Joseph Trpik, Senior Vice President of Finance and CFO

As well as in March. These discussions will probably go on through to the summer.

Andrew Levi, Analyst

Okay. So I guess my question was this transaction, does this enhance the possibility of getting the holding company approved?

Joseph Trpik, Senior Vice President of Finance and CFO

Yes, I mean, we believe that this transaction both supports the logic that was laid out in the holding company, but it also is the cleanest vehicle here to allow for the benefits of this transaction, which to the Oregon or to the Washington customers to be clearly identified and work through the process. I mean we just see the holding company as just a natural way to clearly make this work. It is not required. It is not a prerequisite for this transaction, but we do think that it is very clean. It makes for a very different way...

Andrew Levi, Analyst

That wasn't my question. My question was, does this enhance the possibility of settling your HoldCo case by having this acquisition?

Joseph Trpik, Senior Vice President of Finance and CFO

Obviously, the regulators will work through the process. Do we think that this provides further validation and clarity to this? Yes. Do we believe it enhances the view of why a holding company makes sense for Portland? Yes. And we look forward to discussing these in detail at these settlement conferences.

Andrew Levi, Analyst

Okay. Based on Maria's comment, why does it extend into the summer? Why might you not be able to potentially settle next week? What are the sticking points? I also have a few other questions.

Joseph Trpik, Senior Vice President of Finance and CFO

Sure, Andy, I'll take that. Regarding the timing, there are two scheduled settlement conferences upcoming. To address Maria's point about these conferences, if we engage in constructive dialogue but don't reach a resolution, discussions can still occur until we proceed with the case's procedural aspects and file for a final resolution by the end of June. The main sticking points, as clarified in the recent testimony about the holding company, revolve around the benefits for the customers. This reinforces our earlier position that we had a strong case. We believe this adds more credibility to our argument, as the transaction also focuses on benefits to Oregon.

Operator, Operator

Our next question comes from Chris Ellinghaus with Siebert Williams Shank.

Steven Fleishman, Analyst

What are the approval requirements in Oregon and Washington? Are they not harmful to customers? Are they net benefits? About standards...

Joseph Trpik, Senior Vice President of Finance and CFO

So in Oregon is a no harm standard and think of that as both a qualitative and quantitative no harm standard with about an 11-month approval process for Oregon. In Washington, it is a net benefit standard, that same approach of qualitative and quantitative net benefits with an 11-month approval process with the ability under circumstances to get a 4-month extension.

Julien Dumoulin-Smith, Analyst

How did you become comfortable with wildfire risk in the Washington territory? Can you provide some insights on the nature of that territory?

Maria Pope, President and CEO

Sure. So as you know, we spend a lot of time on managing wildfire risk from prevention and mitigation to early detection and working closely with first responders and have as mature a process and program as any utility. PacifiCorp also has done quite a bit of work. We calibrate with them, both in Oregon as well as work with Washington regulators. They have a wildfire approved plan for years 2024 through 2027. We will pick up that plan, but also bring our expertise as well as collaboration with Washington regulators and stakeholders as we work in both states to improve the risk framework and investability of utility businesses in both states.

Operator, Operator

Our next question comes from Matt Davis with North Rock.

Unknown Analyst, Analyst

Sorry, my questions have been asked and answered.

Operator, Operator

Our next question is a follow-up from Julien Dumoulin-Smith with Jefferies.

Julien Dumoulin-Smith, Analyst

Sorry, coming right back here real quickly. Just want to make sure I heard you right. How are you thinking about that $600 million in equity financing at HoldCo? What are the gating factors here? How do you think about like FFO to debt from the rating agencies? What do they want to see thus far in terms of limiting parameters here? Any comments or statements, any pro forma targets that they're at least initially giving you? Any reason that you couldn't imagine doing a fully debt financed HoldCo transaction, for instance?

Joseph Trpik, Senior Vice President of Finance and CFO

So a couple of things. Our talks with the rating agencies have been preliminary, and our focus has been on achieving investment grade ratings for each of the utilities and the proposed holding company. Regarding the specific financing plan for the holding company, we will evaluate the right mix. To your question about financing at the holding company, we want to avoid preempting the regulatory process, which may have specific reporting requirements. However, we are committed to effectively using the holding company to create a solid financing structure for the company that aligns with other utilities, while ensuring we are in sync with our regulators. Fundamentally, the holding company should provide us with the flexibility to choose the appropriate instruments, whereas currently, without a holding company, our options are somewhat limited as we work to manage our balance sheet and credit metrics.

Operator, Operator

And our final question comes from Paul Fremont with Ladenburg Thalmann & Co.

Paul Fremont, Analyst

Does the diversification of state regulatory risk play a role in your decision to acquire the Berkshire properties in Washington?

Maria Pope, President and CEO

Yes. Not only are we gaining important economies of scale, but having 2 different jurisdictions to operate in is very beneficial.

Paul Fremont, Analyst

And then sort of following up on Andy Levi's question. Obviously, you haven't determined the mix of debt and equity. But should we look at the establishment of the holding company as potentially driving the mix? In other words, might there be less equity issued if you were granted approval to establish a holding company?

Joseph Trpik, Senior Vice President of Finance and CFO

I agree, Paul. The holding company provides a variable for flexibility. There are opportunities at the holding company that could lead to a different capital structure if approved. Even without the holding company, depending on the structure we decide on, we will have a variety of instruments available. However, we find the holding company very appealing because it supports the deal and clearly benefits the customers, giving us the flexibility to select the right instruments for each situation. Since the holding company is currently a proposal and not yet approved, we want to be cautious and will evaluate and appreciate the flexibility we expect it will provide us.

Paul Fremont, Analyst

And then after the Washington utility is acquired, would you expect to use consolidated accounting or equity accounting?

Joseph Trpik, Senior Vice President of Finance and CFO

Our current expectation, obviously, we will finalize and haven't done the reporting is that based on the partnership structure and our operations that we would be consolidating the utility.

Paul Fremont, Analyst

Got it. And then can you tell us what was the most recent PacifiCorp Washington rate base?

Maria Pope, President and CEO

It's $1.4 billion.

Paul Fremont, Analyst

And that would be as of is that at the end of '25, the end of '24?

Maria Pope, President and CEO

End of 2025.

Joseph Trpik, Senior Vice President of Finance and CFO

I believe you'll find that the rate base was included in a fuel-type filing, which is where it was last presented. I believe it's referred to in a way that I can't spell. They have been attempting to restructure their multistate setup, as disclosed in their release. This was a movement in the multistate to begin realigning the assets they serve and to partially address how they are organized within their companies.

Paul Fremont, Analyst

And then...

Operator, Operator

Last question from sorry.

Joseph Trpik, Senior Vice President of Finance and CFO

I was just going to say we look forward to in Washington, we believe they've been pretty constructive on the regulatory front, have the opportunity for a multiyear plan and think that their mechanisms are somewhat helpful to the fuel recovery. So I just want to finish that thought.

Operator, Operator

This concludes the question-and-answer session. I would now like to turn it back to Maria Pope for closing remarks.

Maria Pope, President and CEO

Thank you very much for joining us today. We remain focused on delivering efficient, effective operations, realizing economies of scale and regulatory frameworks that support customer affordability as we move forward with this exciting opportunity. We're advancing critical infrastructure investments that will support economic development, both in Oregon and in Washington, and builds on a base of growing data center and high-tech customers. The Washington opportunity and acquisition of PacifiCorp's assets represent a strong operational fit. They're accretive in the first year and enhance our long-term EPS and dividend growth guidance of 5% to 7% as well as credit supportive. We look forward to moving through the process with stakeholders and regulators on a number of fronts and speaking with you next quarter and probably meeting with many of you at investor conferences in the months and weeks to come. Thank you very much for joining us.

Operator, Operator

Thank you. This concludes today's conference call. Thanks for participating. You may now disconnect.