Balance Sheet Components (Notes)

3 Months Ended

Sep. 30, 2021

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 $80 million and $97 million of unbilled revenues as of September 30, 2021 and December 31, 2020, respectively. Accounts receivable, net is net of an allowance for credit losses of $27 million and $16 million as of September 30, 2021 and December 31, 2020, respectively. The following summarizes activity in the allowance for credit losses (in millions):


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021		2021
Balance as of beginning of period	$	22	$	16
Increase in provision	11		26
Amounts written off	(7)		(19)
Recoveries	1		4
Balance as of end of period	$	27	$	27

Other Current Assets

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


	September 30, 2021		December 31, 2020
Prepaid expenses	$	44	$	57

Assets from price risk management activities	194		33
Margin deposits	5		8


Other current assets	$	243	$	98

Electric Utility Plant, Net

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


	September 30, 2021		December 31, 2020
Electric utility plant	$	11,334	$	10,974
Construction work-in-progress	503		429
Total cost	11,837		11,403
Less: accumulated depreciation and amortization	(4,064)		(3,864)
Electric utility plant, net	$	7,773	$	7,539

Accumulated depreciation and amortization in the table above includes accumulated amortization related to intangible assets of $432 million and $388 million as of September 30, 2021 and December 31, 2020, respectively. Amortization expense related to intangible assets was $44 million and $47 million for the nine months ended September 30, 2021 and 2020, respectively and $14 million and $16 million for the three months ended September 30, 2021 and 2020, respectively. The Company’s intangible assets primarily consist of computer software development and hydro licensing costs.

On June 30, 2021, PGE entered into a hydroelectric power purchase agreement (PPA) that later went into effect on October 19, 2021, after certain conditions precedent were met. The PPA will modify an existing operating lease by effectively extending the term of the lease from 2024 to 2040 and increasing the capacity payments in the extension period. In the fourth quarter, PGE will reclassify the lease from operating to finance, and the Company will record an additional lease liability and right-of-use (ROU) asset of approximately $140 million on PGE’s condensed consolidated balance sheets. The energy portion of the PPA is considered variable and will not be included in the calculation of the lease liability and right-of-use asset. Any material differences between expense recognition and timing of payments will be deferred as a regulatory asset or liability in order to match what is anticipated to be recovered in customer prices for ratemaking purposes.

Regulatory Assets and Liabilities

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


	September 30, 2021					December 31, 2020
	Current			Noncurrent		Current			Noncurrent
Regulatory assets:
Price risk management	$	—		$	11	$	—		$	124
Pension and other postretirement plans	—			223		—			240

Debt issuance costs	—			24		—			25
Trojan decommissioning activities	—			99		—			95
Incremental storm costs	—			58		—			—
Power cost adjustment mechanism	—			27		—			—
Wildfire	—			36		—			15
COVID-19	—			27		—			10
Other	14			62		23			60
Total regulatory assets	$	14		$	567	$	23		$	569
Regulatory liabilities:
Asset retirement removal costs	$	—		$	1,035	$	—		$	1,016
Deferred income taxes	—			213		—			239

Asset retirement obligations	—			54		—			37

Price risk management	155			—		18			—
Other	32			68		5			77
Total regulatory liabilities	$	187	*	$	1,370	$	23	*	$	1,369

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

Incremental storm costs represent the costs not previously included for recovery in customer prices related to major storm damage incurred during the nine months ended September 30, 2021. Such costs were incurred to repair damage to PGE’s transmission and distribution systems and restore power to customers as a result of the historic

storms that ultimately led Oregon’s Governor to declare a state of emergency on February 13, 2021. On February 15, 2021, the Company filed an application for authorization to defer emergency restoration costs for the February storms (Docket UM 2156). PGE does not expect an OPUC decision on the February storm deferral until 2022. While the Company believes the full amount of the deferral is probable of recovery as PGE’s prudently incurred costs were in response to the unique and unprecedented nature of the storms, the OPUC has significant discretion in making the final determination of recovery and their conclusions of overall prudence, including an earnings review, and could result in a portion, or all, of PGE’s deferral being disallowed for recovery.

Power Cost Adjustment Mechanism—PGE is subject to a Power Cost Adjustment Mechanism (PCAM), as approved by the OPUC. Pursuant to the PCAM, future customer prices can be adjusted to reflect a portion of the difference between: i) NVPC forecast each year and included in customer prices (baseline NVPC); and ii) actual NVPC for the year. NVPC consists of the cost of power purchased and fuel used to generate electricity to meet PGE’s retail load requirements, as well as the cost of settled electric and natural gas financial contracts, all of which is classified as Purchased power and fuel in the Company’s condensed consolidated statements of income, and is net of wholesale sales, which are classified as Revenues, net in the condensed consolidated statements of income. The Company is subject to a portion of the business risk or benefit associated with the difference between actual and baseline NVPC by application of an asymmetrical deadband, which ranges from $15 million below to $30 million above baseline NVPC. To the extent actual NVPC, subject to certain adjustments, is outside the deadband range, the PCAM provides for 90% of the excess variance to be collected from, or refunded to, customers. Pursuant to a regulated earnings test, a refund will occur only to the extent that it results in PGE’s actual regulated return on equity (ROE) for the given year being no less than 1% above the Company’s latest authorized ROE, while a collection will occur only to the extent that it results in PGE’s actual regulated ROE for that year being no greater than 1% below the Company’s authorized ROE. Any estimated refund to customers pursuant to the PCAM is recorded as a reduction in Revenues, net in PGE’s condensed consolidated statements of income, while any estimated collection from customers is recorded as a reduction in Purchased power and fuel expense. For the nine months ended September 30, 2021, actual NVPC was $60 million above baseline NVPC. Based on forecast data, NVPC for the year ending December 31, 2021 is currently estimated to be above the baseline, and outside the established deadband range. Pursuant to the PCAM and related earnings test, as of September 30, 2021, PGE has deferred $27 million which represents 90% of the excess variance expected to be collected from customers. A final determination regarding the 2021 PCAM results will be made by the OPUC through a public filing and review in 2022. The OPUC has significant discretion in making the final determination of recovery and their conclusion of overall prudence, including an earnings review, and 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.

Wildfire—In 2020, Oregon experienced one of the most destructive wildfire seasons on record, with over one million acres of land burned that ultimately led Oregon’s Governor to declare a state of emergency on August 20, 2020. As a result, PGE has incurred costs to replace and rebuild PGE facilities damaged by the fires, as well as addressing fire-damaged vegetation and other resulting debris and hazards both in and outside of PGE’s property and right-of-way. Ongoing costs include replacing equipment, enhanced tree and brush clearing, and making emergency plans in close partnership with local, state, and federal land and emergency management agencies to further expand the use of a public safety power shutoff (PSPS), if the need should arise. On October 20, 2020, the OPUC formally approved PGE’s request for deferral of such costs (Docket UM 2115). As of September 30, 2021 and December 31, 2020, PGE’s cumulative deferred costs related to the wildfire response was $36 million and $15 million, respectively. PGE continues to assess the damage to its infrastructure and expects regulatory recovery of prudently incurred restoration costs. PGE believes the full amount of the 2020 and 2021 deferrals is probable of recovery as the Company’s prudently incurred costs were in response to the unique and unprecedented nature of the wildfire events leading to the deferral. The OPUC has significant discretion in making the final determination of recovery and their conclusion of overall prudence, including an earnings review, could result in a portion, or all, of PGE’s deferrals being disallowed for recovery. Such disallowance would be recognized as a charge to earnings.

COVID-19 Impacts—The COVID-19 pandemic led Oregon’s Governor to declare a state of emergency on March 8, 2020 and is still in effect. Due to the adverse impacts of COVID-19 on economic activity, PGE has 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 UM2114, Investigation into the Effects of the COVID-19 Pandemic on Utility Customers. The result of such 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 September 30, 2021 and December 31, 2020, PGE’s deferred balance was $27 million and $10 million, respectively, comprised primarily of bad debt expense in excess of what is currently considered and collected in customer prices. All other incremental expenses will be recognized in the results of operations, until a determination is made that cost recovery is probable. Amortization of any deferred costs will remain subject to OPUC review prior to amortization in customer prices and would be subject to an earnings test. PGE believes the full amount of the 2020 and 2021 deferrals is probable of recovery as the Company’s prudently incurred costs were in response to the unique nature of the COVID-19 pandemic health emergency. The OPUC has significant discretion in making the final determination of recovery and their conclusion of overall prudence, including an earnings review, could result in a portion, or all, of PGE’s deferrals being disallowed for recovery. Such disallowance would be recognized as a charge to earnings.

Accrued Expenses and Other Current Liabilities

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


	September 30, 2021		December 31, 2020
Accrued employee compensation and benefits	$	65	$	67
Accrued taxes payable	58		36
Accrued interest payable	42		29
Accrued dividends payable	40		38
Regulatory liabilities—current	187		23
Margin deposits from wholesale counterparties	102		—
Other	117		129
Total accrued expenses and other current liabilities	$	611	$	322

Credit Facilities

On September 10, 2021, PGE amended and restated its existing revolving credit facility. As of September 30, 2021, PGE had a $650 million revolving credit facility scheduled to expire in September 2026. The Company has the ability to expand the revolving credit facility to $750 million, if needed. 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 September 30, 2021, PGE was in compliance with this covenant with a 56.4% debt-to-total capital ratio and the aggregate unused available credit capacity under the revolving credit facility was $650 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 to cover any potential need to repay any commercial paper that may be outstanding at the time. As of September 30, 2021, PGE had no 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 four 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 $78 million were outstanding as of September 30, 2021. Letters of credit issued are not reflected on the Company’s condensed consolidated balance sheets.

On April 9, 2020, PGE obtained a 364-day term loan from lenders in the aggregate principal of $150 million. The term loan bore interest for the relevant interest period at LIBOR plus 1.25%. The interest rate was subject to adjustment pursuant to the terms of the loan. On March 31, 2021, this term loan was repaid in full with proceeds from the subsequent term loan described below.

On March 31, 2021, PGE obtained an unsecured 364-day term loan in the aggregate principal amount of $200 million. The term loan bore interest for the relevant interest period at LIBOR plus 0.70%, with the interest rate subject to adjustment pursuant to terms of the loan. The credit agreement was set to expire on March 30, 2022, with any outstanding balance due and payable on such date. The term loan was paid off early on September 30, 2021 with proceeds from a first mortgage bond issuance.

Pursuant to an order issued by the Federal Energy Regulatory Commission (FERC), the Company is authorized to issue short-term debt in an aggregate amount of up to $900 million through February 6, 2022.

Long-term Debt

On January 6, 2021, the Company made a scheduled $140 million repayment of a 2.51% Series of First Mortgage Bonds with available cash.

On August 11, 2021, the Company made a scheduled $20 million repayment of a 9.31% Series of First Mortgage Bonds with available cash.

On September 30, 2021, PGE issued $400 million in First Mortgage Bonds (FMBs). The Bonds consist of:

•a series, due in 2028 (the "2028 Bonds"), in the amount of $100 million that will bear an interest from its issuance date at an annual rate of 1.82%;

•a series, due in 2031 (the “2031 Bonds"), in the amount of $50 million that will bear an interest from its issuance date at an annual rate of 2.10%;

•a series, due in 2034 (the "2034 Bonds" and collectively with the 2028 Bonds and the 2031 Bonds, the "Other Bonds"), in the amount of $100 million that will bear an interest from its issuance date at an annual rate of 2.20%; and

•a series, due in 2051, (the "2051 Bonds") in the amount of $150 million that will bear an interest from its issuance date at an annual rate of 2.97%.

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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Service cost	$	5	$	4	$	15	$	12
Interest cost*	6		8		20		24
Expected return on plan assets*	(12)		(11)		(34)		(33)
Amortization of net actuarial loss*	6		4		16		12
Net periodic benefit cost	$	5	$	5	$	17	$	15

* 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.