Earnings Call Transcript - POR Q2 2022

Operator, Operator

Good morning, everyone, and welcome to Portland General Electric Company's Second Quarter 2022 Earnings Results Conference Call. Today is Thursday, July 28, 2022. This call is being recorded, and as such, all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. For opening remarks, I would like to turn the conference call over to Portland General Electric's Senior Director of Finance Investor Relations and Risk Management, Jardon Jaramillo. Please go ahead, sir.

Jardon Jaramillo, Senior Director of Finance Investor Relations and Risk Management

Thank you, Jonathan. Good morning, everyone. I'm happy you can join us today. Before we begin this morning, I would like to remind you that we have prepared a presentation to supplement our discussion, which we will be referencing throughout the call. The 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 earnings press release and our most recent periodic reports on Forms 10-K and 10-Q, which are available on our website. Leading our discussion today are Maria Pope, President and CEO; and Jim Ajello, Senior Vice President of Finance, CFO, Treasurer, and CCO. Following their prepared remarks, we will open the line for your questions. Now it's my pleasure to turn the call over to Maria.

Maria Pope, President and CEO

Thank you, Jardon, and good morning, everyone, and thank you for joining us today. Beginning with Slide 4, I'll start by discussing our strong quarter and provide some operational and regulatory highlights. We reported GAAP net income of $64 million or $0.72 per share compared with net income of $32 million or $0.36 per share in the second quarter of last year. Due to these strong results, we're revising our GAAP earnings guidance to $2.60 to $2.75 per share. Additionally, after further evaluating the first quarter write-off of the 2020 wildfire and COVID deferrals and after receiving further clarification from the Oregon Public Utility Commission, we are also initiating non-GAAP adjusted earnings guidance of $2.74 to $2.89 per share. This addition reflects our ongoing work to provide the most meaningful comparison of our earnings and assessment of ongoing financial performance. Our results this quarter reflect several key drivers. We're seeing continued growth in energy deliveries, particularly on the industrial side with semiconductor, high-tech, and digital customers. Several new and existing semiconductor manufacturers are expanding their operations in our region. This builds upon decades of investment in the state and extends a longer secular trend in migration and business growth. Many of our investments at Portland General are critical to the infrastructure that supports the technology sector. As we discussed in the first quarter call, operating expenses are also higher due to wildfire mitigation as well as grid resilience and enhancements to customer and other digital technologies. On the power and fuel expense front, we've had a great hydro year and benefited from the very favorable power market conditions. As many of you know, our region experienced the wettest second quarter in the last 81 years as well as record-breaking spring snowfall. Moving to Slide 5. As we look to the future, we're focused on three key areas: advancing investment that drives growth in alignment with the state's energy policies, enhancing performance and operating efficiency, and operating our system with a focus on risk management. We are pleased with the operational and financial progress we're making in these areas, and we're well positioned as we execute through year-end and beyond. Let me start with growth. We're living in a transformational moment in the energy industry. Portland General Electric is leading the way by advancing the state's policy goals and investing strategically to build a clean energy future. We continue to see opportunity related to resource acquisition as we seek to reduce greenhouse gas emissions to meet the 2030 emissions targets. On July 15, the OPUC verbally acknowledged our RFP shortlist. Given inflationary pressures, our process is underway for parties to refresh their bids. While we hope this is short, we will need to be patient as we work with independent evaluators to ensure the best price and lowest risk for customers while maintaining the attractive diversity of wind, solar, battery, and pump storage resources. We remain optimistic that we will announce executed agreements by the end of this year. The projects are expected to be in service by the end of 2024 to capture expiring federal production tax credits for the benefit of customers. While the process is ongoing, any new generation capacity ownership opportunities will have an impact on our equity needs in 2023 and beyond, which Jim will discuss shortly. The RFP process represents an important step in accelerating the clean energy transformation and is a key aspect of our ability to decarbonize our power supply while continuing to provide reliable, affordable energy to everyone we serve. While the ink is not yet dry, we are also looking ahead and expect to issue our next integrated resource plan and file our inaugural clean energy plan in early 2023. Turning to performance. During a period of significant inflation and growth, we are all the more disciplined in managing our costs. Like most companies, we're dealing with the impacts of a strong labor market and high inflation. We are focused on driving operational productivity and performance while holding overall cost trends stable. As an example, on the T&D side, crew productivity is up about 1/3 since 2018, thanks to better use of technology, investments in the grid, and improvements in overall workflow. Today, we are getting a lot more work done at the same cost. Much of our digital improvements have been focused on customers. We have improved web-based solutions, payment options, communications, and better reliability through greater visibility and distributed automation. On the generation side, our thermal plant operating performance has remained high over the last five years. Today, our peaker plant utilization has more than tripled to support renewable adoption, all the while saving money and maintaining availability. While we're operating more efficiently, we're also improving safety. Safety statistics, including vehicle incidents, have shown an 80% improvement over the last five years. Now turning to risk management. As the work we're doing to manage costs supports our ability to invest in robust and improved risk management. First, as a vertically-integrated utility, we're well positioned. For example, while commodity prices, in particular natural gas prices, have shown significant volatility throughout 2022, our regulatory mechanisms, hedging strategies, strong balance sheet, and credit ratings have all helped to mitigate potential impacts on customers and shareholders. In late April, the OPUC approved our 2022 Wildfire Mitigation Plan, which was timely in light of the Oregon Department of Forestry's recent declaration that all of Oregon is now in wildfire season. While wildfire season typically extends from May through October, wildfire-related planning is year-round. Our mitigation initiatives this year are well underway and showing results. This work is paired with long-term investments in wildfire cameras, automated reclosers, and weather stations, all to increase situational awareness and provide visibility in high-risk fire zones. Our risk mitigation, of course, goes beyond wildfires. Our climate is becoming more extreme in every season. The investments we're making today are making our system more resilient and reliable. Our integrated operations center is a great example as it allows us to monitor and control our entire system in real-time. It centralizes a range of vital functions that are critical to resource and system integration. It helps us manage and improve reliability with daily grid management, and it serves as a central hub to support efforts to increase resilience and security. As you have all seen in the press, we are in the middle of an extreme heat wave in the Pacific Northwest. This facility, our integrated operations center, is improving our ability to respond to these circumstances, which put a great deal of stress on the grid. Finally, I'd like to touch on our focus areas in the coming quarter. Market conditions for power costs are favorable, as they were in the second quarter, and our outlook for the third quarter is solid. We're monitoring the possibility of constraints in regional power markets that could produce significantly higher energy costs, such as we saw last year. We're laser-focused on closely managing O&M in light of our run rate in the first half of the year and our current inflationary environment. And finally, yesterday, we filed for the amortization of major deferral expense balances related to the 2022 Labor Day wildfire, the February 2021 ice storm, and the 2021 power cost adjustment mechanism, or PCAM. All of these represent a total of $132 million of outstanding major deferrals. Additionally, we plan to file for amortization of a $34 million COVID-19 deferral in late 2022 or early 2023. As we close the books on a solid quarter, it's worth noting that the key to our success is focusing on what matters most: safe, reliable, affordable, clean energy with customers at the center of all we do, enabling their well-being and the advancement of the communities we serve, all the while creating opportunities to invest, delivering value for all stakeholders and shareholders alike. With that, thank you, and let me turn it over to Jim.

Jim Ajello, Senior Vice President of Finance, CFO, Treasurer, and CCO

Thank you, Maria, and good morning, everyone. Moving to Slide 6. Our second quarter results reflect the strength of our service territory and a dynamic and favorable power market, as well as broader economic conditions. The regional economy continues a trend of strong growth. And within migration, industrial development is driving rising demand. You saw the unemployment rate in our service territory decline to 3.2% in June of 2022 compared to 5% in June of 2021. We also continue to witness strong growth fundamentals in our service territory highlighted by high growth in the industrial sector. Overall, Q2 2022 loads increased by 1%, weather adjusted, compared to Q2 2021. Residential load decreased 3.2% year-over-year, weather adjusted as we began to witness a moderation from usage patterns during the peak of the pandemic. Residential customer count growth remained steady at 1.3% compared to Q2 2021. Commercial load decreased 1.7% year-over-year, weather adjusted, due in large part to decreased need for irrigation in 2022 after record rainfall during the spring. The high-tech and digital services sectors continued on their existing growth trajectory as we saw over 9.8% higher industrial loads, weather adjusted, year-over-year. On a weather-adjusted basis, total load increased 0.4% year-over-year. Weather-adjusted retail deliveries were up 2.7% year-over-year for the first half of 2022. Beyond the continued strength of our region, we observed significantly more favorable power market conditions in Q2 of 2022 relative to the prior year. These conditions, coupled with deliberate actions by our power operations team to manage purchase power and fuel costs on behalf of customers, led to improved financial results compared to last year. As we look at the broad economy, we are closely watching the impacts of inflation. In the near term, we are managing inflation pressures on O&M by focusing on an efficient spend throughout our business and believe that O&M pressures are manageable within our current guidance. I'll note that from 2017 to 2022, our base O&M increased at a compounded annual growth rate of approximately 1%. If one adds in non-deferrable vegetation management wildfire mitigation expenses, the CAGR is closer to 2% based on the midpoint of 2022 O&M guidance, yet I think we could do better. As we look to the remainder of 2022 and beyond, we are focused on creating more efficient operations and effectively managing commodity risks to minimize the impact of cost pressures on customers. I will now cover our financial performance quarter-over-quarter. We experienced a $0.05 increase in total revenues attributed to the previously mentioned increase in deliveries, led by industrial customers. While load was up 0.4% quarter-over-quarter, the significant increases in industrial load were partially offset by decreases in residential and commercial loads, resulting in some offsetting effects due to the composition of customer prices. This created a $0.07 decrease in total revenues. As noted earlier, Q2 2021 power cost conditions were challenging, as $0.31 of the quarter-over-quarter earnings change relates to headwinds in 2021 that did not recur. $0.19 is attributed to a more favorable power market in the current quarter driven by strong hydro conditions in the region as well as conditions and company strategies that allowed us to resell power and gas into the market at optimal times and prices. This includes the strategic dispatch of our generation fleet, which gives us the opportunity to respond to market conditions, reducing power when it is cheaper relative to market rates and selling excess power when market prices are advantageous. This is all to mitigate risk and volatility and manage costs for the benefit of our customers. It was a $0.07 decrease in EPS from higher operating expenses. Q2 '22 OEM drivers include $0.02 of additional wildfire mitigation, reflecting incremental work performed in 2022 to implement our recently approved wildfire mitigation plan. $0.02 of customer services spend related to transportation electrification, enablement, and enhancements to the digital customer experience, $0.02 of additional outside service and labor costs for grid reliability, and finally, $0.01 decrease of higher administrative expenses primarily driven by insurance cost increases. It was a $0.04 decrease due to lower market-driven returns on the nonqualified benefit trust compared to Q2 2021. Finally, we achieved a $0.01 decrease for other miscellaneous items. Turning to Slide 7, which shows our capital forecast through 2026. We have again increased our capital expenditure forecast for 2022 by an additional $70 million, by $105 million compared to the original forecast of $650 million. This reflects additional opportunities for plant and grid resiliency investment. As a reminder, our current investment plan calls for over $3.3 billion of capital investment over the next five years, primarily related to system resiliency and transportation electrification, but this number does not include any expenditures related to the possible RFP ownership options. Turning to Slide 8. We continue to maintain a solid balance sheet, including strong liquidity and investment-grade credit ratings accompanied by a stable credit outlook. Total available liquidity at June 30 is $870 million, and we remain in a strong liquidity position. We plan to fund investments from cash from operations and an issuance of $220 million of debt later in 2022. This debt is expected to be issued under our green financing framework as we continue to seek out opportunities to tie our long-term debt to our sustainability strategy in capital investments. On to Slide 9. As we look forward to our capital needs in 2023 and beyond, we are assessing the equity needs, primarily related to the potential RFP investments as well as creating balance sheet flexibility. Previously, we've discussed the long-term equity needs to rebalance our capital structure for regulatory purposes and to maintain strong credit ratings. We believe a strong balance sheet creates important benefits for both shareholders and customers, including optimal financing costs while facilitating growth options, most notably where successive rounds of RFP investment opportunities are needed to achieve the 2030 DCA goals. While our ultimate equity needs will be linked to RFP investment opportunities, our capital structure will likely need to align with the historical regulatory ranges over time. We are excited about our growth prospects for the new generation and capacity assets, which are in addition to the $3 billion base CapEx to be spent between '22 and '26. As mentioned by Maria, we are revising our GAAP basis earnings guidance from $2.50 to $2.65 to a new number of $2.60 to $2.75 per diluted share. We also received additional information after our first quarter call that allowed us to further evaluate our earnings guidance, particularly related to the deferral reductions recorded in Q1 2022 as a result of the general rate case order. Importantly, we received clarification from the OPUC that reiterated that the commission has an established practice of evaluating deferrals on a case-by-case basis, and we'll continue to employ this fact-specific approach on each case going forward. In light of this clarification, as we look ahead to the second half of '22, we are also initiating non-GAAP basis adjusted earnings guidance of $2.74 to $2.89, which excludes the impact of the release deferrals associated with the year ended 2020. The second quarter results reflect continued loan growth and strong power cost performance. As we will pass the midpoint of the year, we remain focused on strong execution for the balance of 2022. We anticipate continued economic growth in our region, driving weather-adjusted retail load growth of 2% to 2.5%, led by continued high tech and digital growth and continued in-migration. We will further employ our power cost framework, which yielded successful risk management strategies in the second quarter and helped dampen the impact on customer prices and the runoff of commodity prices in the current year. Operating cost challenges remain, and we are continuing to take proactive measures to manage O&M for the remainder of '22, including continued focus on operational efficiency and high-return O&M activities, leveraging technology and digital solutions to manage customer needs while optimizing performance and managing costs. I am confident we are on the right track as we continue to drive efficiencies through the end of the year, which, coupled with continued load growth, will allow us to achieve our long-term earnings guidance growth of 4% to 6%. We will evaluate this growth rate as we get certainty around the RFP process. I'm optimistic our outlook for the second half of '22 and beyond is strong. Our near-term growth, investment opportunities, and the ability to raise capital for growth are also strong. The ongoing commitment to providing clean, reliable, and affordable energy and the long-term focus to decarbonize the grid and electrify the economy is unwavering. We have established a framework for PGE to accomplish our long-term financial goals and deliver value to our customers, investors, and communities. And now, operator, we're ready for questions.

Operator, Operator

And our first question comes from the line of Julien-Dumoulin-Smith from Bank of America. Your question, please.

Ryan Greenwald, Analyst

It's Ryan standing in for Julien. Thank you for the update. Regarding the last point, Jim, when it comes to reassessing the long-term growth rate, is the final resolution of the RFP process the only existing barrier at this moment? Are there other factors that are more variable and influencing your perspective?

Jim Ajello, Senior Vice President of Finance, CFO, Treasurer, and CCO

Yes. Thanks, Ryan. I think that is the net item for us. We'll determine where we are with the RFP awards in the fourth quarter. We'll focus in on a more precise vision of our financing plan. And obviously, we're modeling scenarios now, but we're already operating, as you all know, and see the new guidance in the plus 5% range right now. So we're comfortably inside the current guidance, and I think the RFP will give us an opportunity on balance to grow the growth rate even more. So, yes, in a word.

Ryan Greenwald, Analyst

Excellent. Any shift in the macro backdrop that's impacting the process and how you're thinking about ability to participate here?

Jim Ajello, Senior Vice President of Finance, CFO, Treasurer, and CCO

Maria mentioned that bidding is being refreshed, and it's probably no surprise to anyone given what's happening in the macro environment with the cost of money, supply chain issues, inflation, and the like. We think that's a natural part of the process. We think it could be dispatched pretty quickly, and we still are confident that we can get resolution by the end of the fourth quarter with awards in place, but the macroeconomic environment, to no one's surprise, is affecting these bids as you might expect.

Ryan Greenwald, Analyst

Yes. Understood. And then maybe just lastly any way to quantify how you're thinking about the impact of getting rid of decoupling here and how that could factor into your longer-term trajectory?

Jim Ajello, Senior Vice President of Finance, CFO, Treasurer, and CCO

Yes, good question. Clearly, we have a stub year that we're present in new rates and the decoupling mechanism elimination, although there's a tracker there. You probably have seen that for the balance of the year. It reflects a year where it's not fully effective, let's put it that way. So starting next year, the lack of decoupling will be fully effective. And just to remind everyone, we bargained for that result because we think on balance, we're one of the growth-tier utilities, so if I can use that word. There's tremendous growth tier. So I think that we want to be able to realize on that return capital to invest in the business. I don't have a quantification for you right now. Look for that in the year guidance that we'll publish in February of '23, pardon me.

Operator, Operator

Thank you. One moment for our next question. And our next question comes from the line of Insoo from Goldman Sachs. Your question, please.

Insoo Kim, Analyst

Good morning, Maria. For my first question, as we consider the guidance and performance for 2022 and into 2023, it seems that the adjusted guidance, which excludes regulatory items and reflects strong performance on the power side, aligns closely with the original guidance for the year. The benefits from power appear to counterbalance some of the inflationary impacts on operational and maintenance costs. If I understood correctly, your third quarter is looking promising from a power perspective as well. How are you strategizing for 2023, particularly regarding potential upfront costs? What leverage do you have in that regard? Additionally, do you have any preliminary insights on whether your positioning for 2023 is improved or about the same compared to the start of the year?

Maria Pope, President and CEO

Sure. Your analysis of our current position is accurate, and it's a great question. We are intensifying our focus on managing costs while continuing to invest in the business. It's crucial for both our customers and our overall performance. In terms of power costs, we are concentrating on technology that enhances our market visibility and equips us with better tools to navigate a more unpredictable landscape. We are also ensuring that we have the necessary hedges and strategies to protect the Company and our customers from potential spikes caused by supply shortages, high temperatures, or extreme cold. We are indeed operating in a significantly more volatile environment. Therefore, our power operations practices, along with our hedging efforts and overall visibility management, are critical. It's clear that we, along with all businesses in America, are dealing with rising inflation, labor challenges, and economic hurdles that we haven't encountered in a long time, and we are addressing these issues directly.

Jim Ajello, Senior Vice President of Finance, CFO, Treasurer, and CCO

Just to add one thing, Insoo, we anticipate transitioning to the adjusted-only presentation into '23, right? So please keep our framework today in mind as we go forward there.

Insoo Kim, Analyst

Yes. No, that makes sense. As you talk about the potential for additional investments through the RFP and the equity financing needs that may take place. As we think about just the legislative potential build in the hopper right now as of last night and the different components of it, any initial look on the net impact to the financing considerations if whatever versions out there were to take place?

Maria Pope, President and CEO

Sure. So I think on the energy side, there's still a lot to work through. As you know, we have been strong advocates for a clean energy policy at the federal level, everything from sort of tech-neutral to the ability for utilities to utilize investment tax credits on an equal playing field. We also are really encouraged with what's happened with regards to chipsets, and so what you may not realize is that about 15% of semiconductor manufacturing actually takes place in Portland General service territory. Intel has very large operations, and much of their R&D is done here. In particular, they're investing in their advanced lithography, and we have several other companies who service the semiconductor industry or who are semiconductor manufacturers themselves who are increasing their investments. And you can see our quarter-on-quarter growth in that area, and we would expect it to only continue and to be quite robust, not just for the next couple of years, but really for the decade to come.

Jim Ajello, Senior Vice President of Finance, CFO, Treasurer, and CCO

I think, Insoo, the prospect of legislation, the so-called mentioned deal arrangement from last night, the inflation bill portends potentially significant benefits with PTC, ITC extensions and the like. And so I think this plays into our strategy very, very well, as does IIJA, which we've been examining for a number of months now. So yes, we have a lot of capital to deploy. Yes, that will bring a lot of financing. But I also think that these legislative tailwinds, if they become enacted, could be very significant for us.

Insoo Kim, Analyst

Got it. Just to clarify, I guess, based on what's out there relative to, I guess, the potential amount of equity needs that you had modeled in, would this potentially reduce that? Or would there be not much of a change?

Jim Ajello, Senior Vice President of Finance, CFO, Treasurer, and CCO

Well, I'm assuming now that we are sort of on our own until we see the tangible benefits coming out of Washington, right? So we'll be sizing our needs based on the RFP awards and in addition to the balance sheet strengthening that I mentioned relative to the ratios that we'll have to achieve over time. And it's our very, very strong belief that we should be keeping stout investment-grade ratings and stable outlooks because we have the next seven years in front of us, not the next two or three only, the test of RSP opportunities. So we want to go into that period to achieve the 80% DCA goals through investment in a very strong financial part.

Operator, Operator

And our next question comes from the line of Sophie Karp from KeyBanc. Your question, please.

Sophie Karp, Analyst

I just wanted to ask you about the potential for, I guess, tax credit transferability or direct pay that I understand is there somewhere in that bill. I appreciated 700 pages and you probably it into. But historically, I think you were a little bit of disadvantage versus some of the non-regulated entities when it comes to renewable projects because of tax treatment. And does that change things for you potentially where it levels the playing field?

Maria Pope, President and CEO

Thank you for the question, Sophie. You're correct that we have production tax credit carry-forwards, and direct pay would be advantageous. We believe that creating a level playing field to utilize the same investment tax credits for solar, battery storage, and other avenues that don’t disadvantage regulated utilities is crucial for future legislation. We are very optimistic about this, especially with our senior senator from Oregon, Senator Wyden, actively participating in negotiations as chair of the Senate Finance Committee. We've communicated with him as recently as last night, indicating that we are dedicating significant time and involvement in this matter, which will positively impact our business.

Operator, Operator

Thank you. One moment for our next question. And our next question comes from the line of Anthony Crowdell from Mizuho. Your question, please.

Anthony Crowdell, Analyst

Jim, I just want to make sure I heard correctly. I believe you said going forward, the guidance that you will be providing is on a non-GAAP basis. Is that correct?

Jim Ajello, Senior Vice President of Finance, CFO, Treasurer, and CCO

Yes, I mentioned that you should anticipate that we'll carry on with that basis into 2023.

Maria Pope, President and CEO

So Jim, what you're saying is that we will exclude items that might be extraordinary or unusual and not reflective of the overall run rate of our business.

Jim Ajello, Senior Vice President of Finance, CFO, Treasurer, and CCO

That's right. In order to provide more transparency and really demonstrate what the actual earnings power of the underlying businesses.

Anthony Crowdell, Analyst

Great. Referencing Slide 6 regarding this question, the most significant variation appears to be associated with PCAM. Personally, I find it challenging to forecast this. Any thoughts on possibly excluding the PCAM, whether it positively or negatively impacts the non-GAAP measure, to emphasize the utility's earnings strength? It can often fluctuate and may distort the non-GAAP results. What are your thoughts on this exclusion?

Jim Ajello, Senior Vice President of Finance, CFO, Treasurer, and CCO

Yes, I really appreciate the question because as I look at the volatility year-over-year, right, I understand exactly why you asked that question. It did not occur to us this first time out, if you will, using adjusted earnings to do that, but maybe we can examine how to make that more transparent. Just gives me the opportunity to say, but there are dramatic differences year-over-year in terms of weather; we had a nice cool spring, we had wonderful hydro. Last year was the absolute opposite. We had an enormous heat dome at 16 degrees. When you flush through these activities and the mechanism, it really demonstrates the volatility of that. So we look at the mechanism all the time, and we'll take into account your question about how to present that. Certainly, the quarter-over-quarter differences suggest the same question to us.

Anthony Crowdell, Analyst

And just lastly, a quick follow-up. On the loan growth guidance that you have for this year, maybe going forward, are you guys assuming pre-pandemic levels? I know there was a change in the customer mix here on the margin. But is guidance based on the pre-pandemic level? Or you guys have altered it?

Maria Pope, President and CEO

So overall, our guidance represents really quite extraordinary growth in the high-tech and digital areas. In particular, I noted the semiconductor company is expanding in our area. What you'll also see is commercial has been a little bit slower to come back than we would have expected, and we do see slower growth probably in the residential side. But overall, our mix is certainly shifting, and that provides opportunity not only to spread our fixed costs over higher levels of growth, but particularly the semiconductor business requires pretty substantial investment.

Operator, Operator

Thank you. One moment for our next question. Our next question comes from the line of Aditya Gandhi from Wolfe Research. Your question, please.

Steve Fleishman, Analyst

You actually have Steve Fleishman here. Can you hear me okay? Jim?

Maria Pope, President and CEO

Yes.

Steve Fleishman, Analyst

Sure. I have a couple of questions. Jim, you mentioned about getting the equity ratio back to what's reflected in your jurisdictional rates. Can you provide an update on the current equity ratio and how much equity you would need to reach the level stated in your jurisdictional rates?

Jim Ajello, Senior Vice President of Finance, CFO, Treasurer, and CCO

Yes. The first question, Steve, is pretty easy. We estimate by the end of 2022 pro forma here will be a Scotia over 46% on a regulated basis of 50%. In terms of getting it back, it depends on how we do this and how much time we have to do this. Typically, a point of equity is close to $100 million, right? But that depends on so many other things. It depends on how we grow the Company otherwise to the RFPs and the like. So I wouldn't necessarily just kind of take that out at four points.

Steve Fleishman, Analyst

Okay. That's helpful. And then on the RFP itself, you mentioned the inflation aspect and just which, I guess, to the degree you win them means more rate base growth opportunity. But just is there any way to get a sense of how meaningful the increase related to that might be in terms of like inflationary changes from what you would have thought before?

Jim Ajello, Senior Vice President of Finance, CFO, Treasurer, and CCO

Right now, Steve, those prices are being refreshed. And directionally, the bid package, I could say, is higher than the last time we went to the market back a few years ago. So they were already higher than the base of what we saw a few years back, and now I suspect they'll be refreshed upwards a little bit as well. I don't have an exact number for you now. We're still in the process of getting those new bids refreshed.

Maria Pope, President and CEO

Steve, as you can see from the materials, we do have a number of bids. We have PPA options. We have company-owned options, and we have hybrid options. It's a robust and very competitive environment. And when you go back out to refresh bids, things could change.

Jim Ajello, Senior Vice President of Finance, CFO, Treasurer, and CCO

Yes, Steve, we've really focused on this a lot lately and get a lot of inbound questions about it because we could see a very large opportunity here, right? And I want to make sure we do this in the most non-dilutive way as we possibly can. I will tell you that equity forwards make a lot of sense. The projects are going to be delivered on a build-on-transfer basis. We'll be making progress payments on them. If we're awarded them next year in '23, most of them will be delivered CODs in '24. And so the big funding requirement is in '24, and the equity forward, I suspect, and as the market program makes sense as we fill in the needs that we have. So that's my sense right now of technique. The amounts are to be determined. As I said a moment ago, we'll trigger that off for the actual RFP awards, and we want to make sure that we principally position ourselves here with growth, and over time, managing that equity ratio. There's no immediacy and no immediate pressure to do that balance sheet work, and I'd rather do it in concert efficiently issue when we have both the growth and the balance sheet stuff together.

Operator, Operator

And this does conclude the question-and-answer session of today's program. I'd like to hand the program back to Maria Pope for any further remarks.

Maria Pope, President and CEO

Great. Thank you very much for joining us today. Before we finish up, I'd like to thank Dave Robertson, our Vice President of Public Policy, who has announced his retirement and is leaving us at the end of the month after 18 years of extraordinary leadership at our company. He's been responsible for much of our clean energy future and the legislation that we benefit from today. We welcome Nick Blosser, who joins us most recently from the Biden administration in the White House, and prior to that, was a key member of the Governor's office here in Oregon. Welcome, Nick, and we look forward to working with you in the public policy and communications area. Today, we appreciate your interest in our company and hope to connect with you in the near future at some of the investor conferences. Please follow up. Thank you very much. Bye-bye.

Operator, Operator

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Have a good day.