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Portland General Electric Company (NYSE:POR)
Q3 2018 Earnings Conference Call
Oct. 26, 2018, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, everyone, and welcome to Portland General Electric Company's Third Quarter 2018 Earnings Results Conference Call. Today is Friday, October 26, 2018. 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 period. If you would like to ask a question during this time, simply press "*1" on your telephone keypad. If you would like to withdraw your question, press "#" on your telephone keypad. If you do intend to ask a question, please avoid the use of speakerphones.

For the opening remarks, I will turn the call over to Portland General Electric's Director of Investor Relations and Treasury, Chris Liddle. Please go ahead.

Christopher Liddle -- Director, Investor Relations and Treasury

Thank you, Heather. Good morning, everyone. I'm pleased that you're able to join us today. Before we begin our discussion this morning, I'd 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 at our website at investors.portlandgeneral.com.

Referring to Slide 2, I'd like to make our customary statements regarding Portland General Electric's written and oral disclosures. There will be statements in this call that are not based on historical fact and, as such, constitute forward-looking statements under current law. These statements are subject to factors that may cause actual results to differ materially from the forward-looking statements made today. For a description of some of the factors that may occur that could cause such differences, the company requests that you read our most recent Form 10-K and Form 10-Q.

Portland General Electric's third quarter earnings were released via our earnings press release and the Form 10-Q before the market opened today, both of which are available at our website. The company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. This safe harbor statement should be incorporated as part of any transcript of this call.

Leading our discussion today are Maria Pope, President and CEO, and Jim Lobdell, Senior Vice President of Finance, CFO, and Treasurer. Following their prepared remarks, we will open the lines for your questions. Now, it's my pleasure to turn the call over to Maria Pope.

Maria Pope -- President and Chief Executive Officer

Thanks, Chris, and good morning, everyone. With the Carty settlement behind us, we're focusing our full attention on the future. In the third quarter, our operating performance, from generation to transmission and distribution, was strong and we continue to see benefits from in-migration and a healthy economy.

Turning to Slide 4, we reported net income of $53 million, or $0.59 per share, compared with net income of $40 million, or $0.44 per share, in the third quarter of 2017. This quarter we recognized $10 million of proceeds from the Carty cash settlement, or $0.07 per share, which partially offset previously expensed items.

What is most notable about the third quarter is that we saw more volatility in the energy markets across the West than we've seen in the last decade. We are very pleased with how we managed through these market fluctuations. Not only did we maintain reliability, but we were able to control costs effectively. Jim will share more details on this later.

Turning to Slide 5, I'm pleased to share that our service area continues to experience strong economic growth, with low unemployment rate of 3.3% and population growth of 1.6%. Construction activity remains steady in Portland, with current projects focused on mixed-use and residential buildings. Our service area's low cost relative to Seattle and the Bay Area continue to make this region attractive to apparel and technology companies and proximity to Asian markets and enhanced fiber connections make the area particularly appealing to data centers.

Now, turning to Slide 6, we continued to execute on our clean energy vision and our strategy to reduce greenhouse gas emissions. Our Renewable Request for Proposal for additional resources garnered highly competitive bids and we've recently submitted a short list of those proposals to the OPUC. These six bids from three bidders include a combination of wind, solar, and battery storage. Also on this short list is PGE's third-party joint bid for 36 average megawatts of company-owned wind resources and a power purchase agreement for another 83 average megawatts. The commission is expected to acknowledge the short list by early December and we expect to complete contract negotiations and announce the results shortly thereafter.

We continue to work with the commission and interveners on our Green Tariff, a green energy product designed for municipalities and other large customers who want 100% renewable energy. Additionally, we have a number of smaller projects that we hope to grow in the future. These efforts include three smart grid projects adjacent to substations being upgraded, six electric avenues, and a joint project with our local transit authorities, as well as plans to move forward on our five proposed energy storage projects.

PGE customers and the region continue to push for further growth in renewables and carbon-free technologies. Portland placed 10th on a recent list ranking America's 100 Greenest Cities and was just named a winner in the Bloomberg American Cities Climate Challenge.

And now I'm pleased to turn the call over to Jim. Thank you.

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

Thank you, Maria. As Maria mentioned, and as shown in Slide 7, we are affirming our full-year 2018 earnings guidance of $2.25 to $2.40 per diluted share. We currently expect to be toward the middle of this range.

Turning to Slide 8, which shows earnings drivers for the quarter. First, the Carty cash settlement increased earnings $0.10 per diluted share due to a $0.07 increase related to a $10 million pre-tax cash settlement proceed and a $0.03 increase related to avoided carrying and litigation costs. Second, gross margin increased earnings by $0.04 due to a $0.06 increase as a result of higher wholesale electric prices and lower natural gas prices, allowing for the increased economic dispatch of our plants, offset by a $0.02 decrease due to less favorable weather quarter-over-quarter, followed by a $0.01 decrease in other expenses.

As Maria mentioned, in the third quarter, electricity prices in the West were extremely volatile as a result of wildfires and natural gas constraints in California, due to unplanned pipeline outages and a methane leak that reduced capacity at the state's largest natural gas storage facility. Our power operations team did an excellent job managing our diverse energy portfolio and used the opportunity of lower natural gas prices and higher electric wholesale prices to manage costs and help maintain the reliability of the system. In particular, this helped to mitigate minimal wind output, slightly below normal hydro production, and thermal generation outages largely due to emission testing at the Colstrip Units 3 and 4. The testing has been completed and the units have been operational since September.

Moving to Slide 9, last month we settled all revenue requirement issues related to the 2019 general rate case. The agreement resulted in a 9.5% return on equity, a 7.3% cost of capital, a 50% debt and 50% equity capital structure, and a rate base of $4.75 billion, which includes our customer information system. To the extent the rate base ends up being higher, we will manage our operating costs to provide a return on incremental capital. The average customer price increase is expected to be less than 1% with final power cost updates due in mid-November.

The remaining issues to be resolved include our proposal for full volumetric decoupling, the storm restoration balancing account, and trended weather in the load forecast. Regulatory review will continue until the final order is issued, which is expected in December 2018, with new customers prices going into effect January 1, 2019.

On to Slide 10, we provide a summary of the company's current capital expenditure forecast from 2018 to 2020, related to investments that support our continued customer growth, development of a more efficient, reliable, and secure system. In managing these expenditures, we are moving to a rolling planning process that may result in more frequent updates to our capital forecast. We will continue to deliver our primary capital updates every third quarter. As shared in our previous calls, we have not included any capital expenditures in our forecasts related to potential projects pursuant to our Renewable RFP.

On to Slide 11, we continued to maintain a solid balance sheet, including strong liquidity and investment-grade credit ratings. As of September 30th, we had cash, available short-term credit, and letter of credit capacity totaling $861 million, first mortgage bond issuance capacity of $1.1 billion, and a common equity ratio of 50.1 percent. In 2018, we expect to fund estimated capital requirements with cash from operations, debt issuances of $75 million, and commercial paper as needed.

And now, operator, we're ready for questions.

Questions and Answers:

Operator

Thank you. As a reminder, if you would like to ask a question at this time, please press "*1" on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press "#". Your first question comes from Christopher Turnure with J.P. Morgan. Your line is open.

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

Morning, Chris.

Christopher Turnure -- J.P. Morgan -- Analyst

Good morning, guys. Could you give us an update on your dividend strategy and perhaps more broadly, your cash return strategy to shareholders in the event that you do not end up owning any wind in the RFP process here?

Maria Pope -- President and Chief Executive Officer

Sure. Thank you, Chris, and good morning. As you know, we target our dividend payout ratio between where we expect our earnings to go over time. And we are committed to having a healthy dividend and continuing to grow our dividend into the future. As we look at our capital expenditures, you probably saw that we took up our forecast not only for 2019 but also in the outer years. And we expect to have really robust opportunities to invest in our system to be able to enhance the reliability as well as the security, prepare for environmental issues that we see, and then also set the foundation for a smarter, more integrated grid.

Christopher Turnure -- J.P. Morgan -- Analyst

Got you. So, it sounds like plenty of opportunities to invest. Clearly, you guys have erred on the conservative side, historically, in providing us with CapEx updates and wanting to make sure there was visibility in your plan there. So, is it fair to say that there would be no change to the dividend payout or kind of historical growth trend coming up when you typically review that in the middle part of next year?

Maria Pope -- President and Chief Executive Officer

You're absolutely right. We do review our dividend payout strategy generally in the spring time and our Board makes the announcement thereafter. And we continue to target the range of between 50% and about 70% of our earnings paid out each year.

Christopher Turnure -- J.P. Morgan -- Analyst

Okay. And then also a little bit of a longer term question. Looking beyond just this year, how do you think about load growth potential and, in particular, when you're thinking about that, is it something that you have maybe more confidence in now that could help you stay out of rate cases beyond this year?

Maria Pope -- President and Chief Executive Officer

So, that's a terrific question. We have talked in the last couple of quarters about our load growth and as we've noted, we're in a really admirable position to be in with regard to actually having load growth as a utility and we expect to actually have more going forward. Right now, we're looking at roughly about flat load and expect to return to a more normal rate of about 1%, largely due to the very robust in-migration we have in our region and in the state. The state's growing at about 1.3% and we're seeing in-migration in our service territory of about 1.6%. We continue to see also growth in businesses coming into this area and are very pleased with the types of companies coming here.

Christopher Turnure -- J.P. Morgan -- Analyst

Okay. And is the nature of that growth that you're referring to something that would allow you to benefit with the current partial decoupling mechanism or is it something that would kind of accrue to customers?

Maria Pope -- President and Chief Executive Officer

No, it would generally accrue to customers. What our growth does is it really does offset some of the energy efficiency that we see on a regular basis. The current decoupling mechanism that we have really relates more to weather.

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

The other thing to keep in mind, Chris, a lot of this growth that we're looking at on a future basis has to do with industrial loads.

Maria Pope -- President and Chief Executive Officer

Yes, very good point.

Christopher Turnure -- J.P. Morgan -- Analyst

Got it. All right. Thanks, Jim and Maria.

Operator

Thank you. Your next question comes from Julien Dumoulin-Smith with Bank of America. Your line is open.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

Hey, good morning. Can you hear me?

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

Yeah.

Maria Pope -- President and Chief Executive Officer

Yes.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

Excellent. Well, congratulations. I wanted to follow up on a handful of items here. Quickly if you can, just in the context of the new CapEx, what exactly is reflected? And I suppose I'm asking that first with an eye toward the typical third quarter updates that you all provide around substations and distribution upgrades. And then, secondly, you include a comment on the side of Slide 10 with respect to upgrades and replacement of aging generation. Does that reflect anything with respect to the wind RFP? I suspect not but want to reconcile that. And also with respect to the storage docket as well, I just want to make sure we're clear about the $500 million in '18, '19 too.

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

So, how many questions was that, Chris? Or Julien? Sorry.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

Sorry.

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

No. No worries. Just teasing you. So, as Maria has pointed out earlier, we take the CapEx budget to the Board every third quarter and we've updated that and updated our disclosures associated with it. What we're trying to do is provide you more visibility into what we think things look like on a long-term basis. And in doing that, it is into the items that we have continued to talk about. It is we've got a tremendous amount of customer growth that is going on in our system so we are investing in those line extensions, those new substations that are required to support that industrial load that's been coming into our area. It's adding more capacity into the system to be able to deliver to those particular points where all of the growth is continuing.

We're continuing to invest in the environmental side of our infrastructure. As we've talked about before, we've got a lot of transformers and some switch gears out there with PCBs in it that we're trying to reduce their existence in our service territory. We are continuing to focus on the rest of the aging infrastructure that exists out there. we've got thousands of miles worth of underground cable that we need to remove that are causing faults that are increasing our own expenditures for the company. So, the time our crews are out there chasing these types of faults. So, we're spending a lot of time and effort on those.

We're also spending a lot of focus on resiliency of the system from a cyber perspective. So, on the IT side, from being the systems that are in our offices to the systems that are out into the field. And then it's from a seismic perspective, the fact that we are in the Cascadia Subduction Zone and just recently there were additional faults that were identified under Mount Hood that will impact our service area as well.

So, a lot of continual capital focus on the items that we had talked about before, along with trying to move forward with what we call an interoperable grid. So, it's the ability to not only move energy in one particular direction out to our customers, but to be able to integrate with technology that will be out in the field, whether it's on our side in the operations or resiliency of the system or over on the customer's side, as far as energy management and distributed resources.

Maria Pope -- President and Chief Executive Officer

So, Julien, with regards to your specific question on generation, that relates to our West Side hydro project. Jim mentioned seismic and related upgrades and that is included in the generation area. Many of those facilities are about 100 years old or more and we have been on a program to reinvest there and are looking at repowering one of those facilities. The wind RFP is not included in the capital forecast. However, the storage projects that we have been talking about for the last couple of quarters are included.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

And just to reconcile or clarify, rather, the typical distribution CapEx update cycle that you've done historically in the third quarter, is that also reflected? Or should we be expecting something more robust with fourth quarter here as well?

Maria Pope -- President and Chief Executive Officer

No, that's included now.

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

Yeah.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

Okay.

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

What we'll see is more visibility inside the company than we have in the past.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

Got it. Thank you all very much.

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

Thanks, Julien.

Maria Pope -- President and Chief Executive Officer

Thank you.

Operator

Thank you. Your next question is from Insoo Kim with Goldman Sachs. Your line is open.

Insoo Kim -- Goldman Sachs -- Analyst

Good morning, everyone.

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

Good morning.

Insoo Kim -- Goldman Sachs -- Analyst

Good morning, Jim. Turning to the CapEx plan that you guys have, I know the RFP is not currently in there but if it were to be, if one of the Portland plans were to be selected, would the associated CapEx be purely incremental to what's shown in '19 and '20 or would there be some shuffling, potentially, to get to a level that's not purely additive?

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

Insoo, that would be incremental to that plan.

Insoo Kim -- Goldman Sachs -- Analyst

Got it. And then could you just provide a little bit more color on the mix of the PPN-owned renewable capacity that you guys had in your proposals and what kind of factors went into that mix?

Maria Pope -- President and Chief Executive Officer

Sure. So, we have a partner that we have been working with for some time on wind project development that also includes solar and battery storage. And we have a mix roughly where we are doing about 36 average megawatts and they're doing the balance, about 80-some-odd megawatts. It's been a terrific partnership and has resulted in a competitive bid. I would say that we have received several competitive bids and the process remains ongoing.

Insoo Kim -- Goldman Sachs -- Analyst

Understood. Thank you very much.

Maria Pope -- President and Chief Executive Officer

Thank you.

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

Thanks, Insoo.

Operator

Thank you. Your next question comes from Paul Ridzon with KeyBanc. Your line is open.

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

Good morning, Paul.

Paul Ridzon -- KeyBanc Capital Markets -- Analyst

Good morning. Quick question. Thank you for the CapEx update and we appreciate the more frequent dialogue. Do you envision maybe giving more granularity as to kind of the buckets that this capital is going into?

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

Not at this particular point in time, Paul.

Paul Ridzon -- KeyBanc Capital Markets -- Analyst

Okay. And then, Jim, I think you said you kind of felt comfortable with the middle of guidance.

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

Yes.

Paul Ridzon -- KeyBanc Capital Markets -- Analyst

That implies kind of a weak fourth quarter. What are some of the things that are going to hit the fourth quarter?

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

Well, it kind of goes back to the comments that Maria had made and I had made regarding power costs going into the fourth quarter. You've got the Enbridge gas issue up in Canada that is derating the amount of gas coming down the I-5 corridor. So that's causing power prices to be a bit higher and it's causing the gas prices in the I-5 corridor to be significantly higher. I mean, gas, I think, for tomorrow is like $10.00 for the Sumas. And so that's going to be an issue. That and we are going into the winter season. So, storm restoration. We're expecting that to be a little bit of a challenge. And we've just got a few things to get done before we get to the end of the year.

Maria Pope -- President and Chief Executive Officer

One of the things I wouldn't underappreciate is, given the volatility that we saw in energy markets in late July and early August, we took early action to drive to an earnings result and worked hard on our O&M under Jim's direction. That was possible largely because of the hard work that everyone put into it, but also the pretty good weather that we had. And as we head into much more challenging November and December from a weather situation, we'll have a lot higher storm restoration and other costs, which are more typical of a fourth quarter.

Paul Ridzon -- KeyBanc Capital Markets -- Analyst

O&M was down markedly this quarter. Was that plant outage time or what drove that?

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

It was driven by -- not just in the quarter -- but it was driven by the plant outages there. You have to keep in mind that we had recorded the change in -- or not the change but the settlement associated with Carty at the same time.

Paul Ridzon -- KeyBanc Capital Markets -- Analyst

And, lastly, staff commented on your process in the RFP and had some questions. Kind of what's the next step there?

Maria Pope -- President and Chief Executive Officer

So, the next step is for us to work through the process of the short list. We are also beginning negotiations with all of the parties because we need to be able to conclude by the end of the year to be able to fully incorporate all of the PTCs into these projects.

Paul Ridzon -- KeyBanc Capital Markets -- Analyst

Okay. Thank you.

Maria Pope -- President and Chief Executive Officer

Thank you.

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

Thanks, Paul.

Operator

Thank you. Your next question comes from Travis Miller with Morningstar. Your line is open.

Travis Miller -- Morningstar Inc. -- Analyst

Good morning. Thank you.

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

Morning, Travis.

Travis Miller -- Morningstar Inc. -- Analyst

Just a real quick clarification on the RFP. Would you guys have any kind of involvement in that battery or storage part, either CapEx or some kind of supporting infrastructure? Or is it just that 36 megawatts of wind?

Maria Pope -- President and Chief Executive Officer

So, the battery storage part is inclusive of the PCA section. But we're working collaboratively with our partner and we have other battery storage projects that are ongoing at the company. Total, about a $44 million investment going forward.

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

And, in that case, we're looking at putting battery storage in residential as a testing edge. We're looking at battery storage in our substations, micro grids, and then out at one of our generating plants.

Travis Miller -- Morningstar Inc. -- Analyst

Okay. And that would be separate from this Renewable RFP?

Maria Pope -- President and Chief Executive Officer

Yes, it is separate.

Travis Miller -- Morningstar Inc. -- Analyst

Okay. And then following up on a previous question, I was going to ask about the split in that $500 million, either 2021 or 2022, in terms of distribution, generation, transmission. Is that something that you're not going to break out? Is that how I understood you answered the other previous question?

Maria Pope -- President and Chief Executive Officer

Yeah, we're not breaking it out at this point in time. The vast majority of our incremental capital expenditures are in our transmission and distribution area as we go forward. We're seeing a few -- as mentioned, we're seeing substantial customer growth. We also have catch-up to do in terms of our resiliency, environmental expenditures. And really beginning to do the incremental steps for a smart, I-directional grid is really where we're focused our spending.

Travis Miller -- Morningstar Inc. -- Analyst

Okay. And then one higher level. As you looked out to 2022, you were putting together that CapEx budget and even more operational spending. I imagine you're looking out there. Was there a specific allocation and your thoughts around electric vehicles playing a role there? I know they play a role throughout all the CapEx but just wondering if it was large enough in your view, looking out that far, to actually be a specific allocation or some material amount directly related.

Maria Pope -- President and Chief Executive Officer

That's a really good question and we're doing a lot with regards to electric vehicles. We have the electric avenues that we are working collectively with our municipal partners on and creating additional charging opportunities for customers. We're doing a lot around education and working with car manufacturers and distributors as partners. And really excited about the partnerships that we have with several of our local transit authorities. But none of that capital amounts to a significant amount to completely separate it out at this point in time. We might get there in the future. But I think this will be where we will see all sorts of parties come together to make electric transportation really happen within our service area.

Travis Miller -- Morningstar Inc. -- Analyst

Okay. Great. Thanks so much. I appreciate it.

Maria Pope -- President and Chief Executive Officer

Thank you.

Operator

Thank you. Your next question comes from Ashar Khan with Verition. Your line is open.

Ashar Khan -- Verition Fund Management -- Analyst

Hi, good morning. How are you doing?

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

Hi, Ashar.

Ashar Khan -- Verition Fund Management -- Analyst

Can I just ask, as we take the midpoint of the guidance, can we assume that this is a pretty normalized year in terms of takes and ask? I mean, would this assume that weather was not -- I mean, you had weak weather in the beginning and strong weather in the third. But it's not like weather is zero. I was just trying to get a better sense of what a good normalized number would be for this year if you can help on that.

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

Well, the big difference, Ashar, is Carty cash settlement that we had. That brought in $130 million and a $10 million reduction in our A&G costs as it partially offset some of the costs of chasing those settlements. Outside of that, loads weren't off that much. Power costs were not normal for this particular year given what we have seen. We had an outage in the Boardman plant, an outage associated with Colstrip Units 3 and 4, and then as we were mentioning earlier, we have the Enbridge gas situation in the Pacific Northwest.

Ashar Khan -- Verition Fund Management -- Analyst

Could you quantify how much off-normal would that end up in the year as we look at right now in your forecast for the year?

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

No, I couldn't do that off the top of my head.

Maria Pope -- President and Chief Executive Officer

I wonder, given the volatility that we've seen in gas prices and in energy prices this year, but also energy prices last year, whether there ever is going to be something that's truly normal, in terms of weather in our region. It's one of the reasons in the rate case that we're looking for additional decoupling mechanisms that are more typical of what you see in other states across the country.

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

And trend in weather as well. Trying to shorten that up given climate change.

Ashar Khan -- Verition Fund Management -- Analyst

Okay. And so then can I just follow-up. If I read the Q correctly, you booked $8 million and $1 million related to Carty before you stocked. At least it said "year-to-date." So, can I take then that $9 million or so, after tax at your 20% rate or something like that, which kind of gives you $0.06 or $0.07 that we booked negative $0.06 or $0.07 this year related to Carty that was in it but then we got a positive -- what is it? $0.10 or $0.12, right? Am I correct? So, in the net, Carty really helped the year by about $0.03 or $0.04 overall. Is that the right way to look at it or am I doing my math wrong?

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

Well, what we had was the $130 million settlement. And after we looked at what was still on the books at above the $514 million that we had an agreement with the Commission on, that left us with eventually $10 million. And we applied that $10 million to the A&G. Now, what that did from an EPS perspective is that we had a one-time change of $0.07 and we avoided about $0.03 of additional costs going forward as we would have had to have continued to chase that litigation absent the settlement.

Ashar Khan -- Verition Fund Management -- Analyst

Okay. I kind of get it. And then can I just ask a better sense on depreciation? I mean, depreciation increased by $30 million or so from '17 to '18. Is that the kind of run rate one should expect going forward? That's a quite a bit higher number that I would expect. And if you couldn't anything on that regard?

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

Yeah. It is a little bit of an anomaly in there in that you're seeing two things. One thing is you're seeing that capital additions are a little higher than what the retirements would be. The other thing is that, in there, we were collecting, over a three-year period, about $50 million associated with the Trojan Spent Fuel Decommissioning Trust. So, we were crediting back about $17 million annually or $52 million total. So, it showed up as a reduction in depreciation in the past and it was also reflected in the revenue line as well. Well, that's now run its course and so that's why you're seeing a bit of a jump up in depreciation year-over-year.

Ashar Khan -- Verition Fund Management -- Analyst

So, the depreciation is more at its normal level, is what you're saying.

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

Yes.

Ashar Khan -- Verition Fund Management -- Analyst

Okay. Okay. Because it was bent down because of that. Okay. I really appreciate your time. Thank you.

Maria Pope -- President and Chief Executive Officer

Thank you.

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

Okay. Thanks, Ashar.

Operator

Thank you. As a reminder, to ask a question at this time, please press "*1". Your next question comes from Vedula Murti with Avon Capital. Your line is open.

Vedula Murti -- Avon Capital -- Analyst

Good morning.

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

Morning.

Vedula Murti -- Avon Capital -- Analyst

A couple of things. One, can you remind, me since the capital program slide does not include the potential wind RFP spending, that if that were to come to pass, how that would be allocated? How much and how is such spread out?

Maria Pope -- President and Chief Executive Officer

Sure. You could be looking at anywhere between $150 and $200 million over 2019 and 2020.

Vedula Murti -- Avon Capital -- Analyst

Would I do that pro rata or would that be backend-loaded or how would I want to spread that?

Maria Pope -- President and Chief Executive Officer

At this point in time, it's too premature to speculate. I would just follow your own judgment.

Vedula Murti -- Avon Capital -- Analyst

Okay. And also I'm wondering, if we just take a look at the capital program as it is, relative to depreciation and other gives and takes, what has that been translated into net rate base growth on an annual basis if depreciation is running $380 million or something like that, at least as of now, and CapEx is as its shown here right now? What does that translate to, in terms of rate base growth?

Maria Pope -- President and Chief Executive Officer

So, we don't disclose exactly our long-term rate base growth or our long-term earnings growth forecasts. We leave that up to you to do the math as we go forward.

Vedula Murti -- Avon Capital -- Analyst

Well, I mean, would it be incorrect then to take, say, $500 million of capital in 2020 and I see depreciation of $380 million, that that would translate to $120 million of net rate base growth.

Maria Pope -- President and Chief Executive Officer

That's roughly how you would do the math.

Vedula Murti -- Avon Capital -- Analyst

Okay. All right. Thank you very much.

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

Thank you.

Maria Pope -- President and Chief Executive Officer

Thank you. We very much appreciate -- go ahead.

Operator

I'm sorry. I'm showing no further questions at this time. I'd like to turn the call back over to Maria Pope for closing remarks.

Maria Pope -- President and Chief Executive Officer

Thank you. We very much appreciate your interest in Portland General and we invite you to join us when we next report our earnings and the fourth quarter results in February of 2019. So, thank you very much and have a great weekend, everyone.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you all may disconnect. Everyone have a wonderful day.

Duration: 36 minutes

Call participants:

Christopher Liddle -- Director, Investor Relations and Treasury

Maria Pope -- President and Chief Executive Officer

James Lobdell -- Senior Vice President of Finance, Chief Financial Officer, and Treasurer

Christopher Turnure -- J.P. Morgan -- Analyst

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

Insoo Kim -- Goldman Sachs -- Analyst

Paul Ridzon -- KeyBanc Capital Markets -- Analyst

Travis Miller -- Morningstar Inc. -- Analyst

Ashar Khan -- Verition Fund Management -- Analyst

Vedula Merti -- Avon Capital -- Analyst

More POR analysis

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