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Portland General Electric Co (NYSE:POR)
Q3 2020 Earnings Call
Oct 30, 2020, 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 2020 Earnings Results Conference Call. Today is Friday October 30, 2020. [Operator Instructions] For opening remarks, I will turn the conference call over to Portland General Electric's, Senior Director of Investor Relations, Jardon Jaramillo. Please go ahead, sir.

Jardon Jaramillo -- Senior Director, Investor Relations

Thank you, Jimmy. Good morning, everyone. I'm pleased that you're able to join us today. Before we begin this morning, I'd like to remind you that we have prepared a presentation to supplement our discussion which we'll 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 Lobdell, Senior Vice President of Finance, CFO and Treasurer. 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 Chief Executive Officer

Thanks, Jardon. And thank you all for joining us today. I hope that you and your families are staying safe and healthy during what continues to be a very challenging time. Portland General and all of us here have been put to the test several times this quarter. Our team has tackled difficult issues head-on and took swift actions. I'd like to discuss each of these two events. First, at the end of August, we announced that Energy Trading activity in certain wholesale electricity markets would result in significant losses. Upon learning of the issue, our Board of Directors immediately formed a special committee to review the Energy Trading situation. This review is ongoing. At the time, our team worked quickly and in early September, we announced that we no longer had net market exposure.

I want to make two things clear. This effect of trading losses was isolated to the third quarter and the trading losses had no impact on our operations. Second, we experienced one of the most destructive wildfire seasons on record. In responding to the wildfires, the entire organization demonstrated its resilience and unwavering focus on customer safety. At the onset of the historic wind storm and high risk wildfire conditions, we worked in partnership with local authorities and emergency responders to proactively shut off power in several high-risk areas. During the course of the week, we not only enacted Public Safety Power shut off, but we also restored power to about 250,000 customers.

Over the last several years, our investments in new resources, vegetation management as well as inspection and maintenance of our equipment enabled us to act swiftly, which helps emergency responders safely fight the wildfires. We continue to invest in improving our system including, steel poles, substation upgrades, distribution automation and other equipment. These and other initiatives build on our strong operating strong foundation. With growing demand in the Pacific Northwest, these needs are more important now than ever. Our vision for a clean energy future drives our strategy. There is a clear need for urgency in addressing climate change and to meet our customers' desire to be served with increasingly clean renewable energy.

We are building on our 11 year track record of having the largest renewable energy program in the United States with over 25% of customers buying a 100% green energy. Today, we have a number of projects and initiatives under way. Our agreement with Avangrid to source power from the largest solar facility in Oregon will serve an equivalent of 40,000 homes. We're furthering our investment in battery storage. Testing several projects across our service territory. Between the Wheatridge, wind, solar, and battery storage project and these other investments, we have a lot of important work under way throughout our state.

With year-to-date earnings of $1.15 we're on track to finish at the upper end of our guidance range of $1.40 to $1.60 per share. Our underlying operations remain strong and we continue to find efficiencies and reduce costs throughout our organization. Finally, I want to recognize the hard work of our co-workers and first responders who in the middle of a pandemic went above and beyond to protect our communities.

Before I turn the call over to Jim, I would like to take a moment to thank him. As I'm sure many of you have seen yesterday afternoon, we announced that after a long and successful career at PGE, Jim plans to retire at the end of the year. I can't overstate what Jim has done for PGE throughout his 36 year career at the company. He active lives our company values and his dedication and leadership have been instrumental in driving financial improvements and strategic initiatives. Jim is well recognized as a leader across the West and played an important role alongside other utility leaders in creating the Western Wholesale Financial Power market. On a personal note his come rotary and counsel has meant the world to me and the [Indecipherable]. In connection with Jim's retirement, Jim Ajello, the former, Executive Vice President and CFO of Hawaiian Electric Industries has been appointed Senior Advisor, effective November 30. He will step into the CFO role on January 1. We are excited to have Jim on board.

We also announced that Brett Sims, our Senior Director of Strategy, Commercial and Regulatory Affairs has been appointed Vice President of Strategy, Planning and Energy Supply effective today. A top priority for Jim and me as well as the entire management team is to ensure a smooth transition. Finally, I want to add that we're pleased to welcome Michael Lewis and Jim Torgerson to our Board of Directors. Both Michael and Jim bring valuable skills and extensive utility experience that will support our efforts to ensure a clean energy future for Oregonians.

And now let me turn it over to Jim. Thank you.

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

Thank you, Maria, and thank you for those comments. And good morning everyone. Before we discuss our financial results, I'd like to recognize the resiliency and focus the company has maintained throughout this quarter's challenges, ensuring that we deliver on our commitments and continue to invest in safe clean reliable and affordable energy for our customers.

Turning to Slide 6, I'll walk through our quarter-over-quarter results. As Maria mentioned earlier, our earnings this quarter were impacted by the losses associated with our Energy Trading activity. Despite this impact our core operational results were strong and there were several items to highlight. For the walk, I'll start with $0.61 for the third quarter of 2019. Excluding the impact of the Energy Trading loss on our purchase power and fuel expense, gross margin decreased by $0.09. This includes a $0.02 increase in total revenues, retail deliveries increased 4% compared to the third quarter of 2019 as deliveries to both residential and industrial customers showed considerable growth over the prior year. The impacts of increased residential usage are largely offset by the decoupling mechanism. Commercial deliveries, which declined exceeded 32% on collections this quarter. In 2021 our decoupling mechanism will reset again. This increase in revenue was offset by an $0.11 decrease attributable to higher power costs, partially driven by an increase in the average price for purchase power.

Second, there is an $0.11 increase for lower plant in transmission and distribution operating expense, which was primarily driven by reductions in outside services, increased capital work relative to O&M and reduced maintenance at our generation facilities.

Third, a $0.12 increase from reduced administrative and general expenses, which includes a $0.06 increase from expenses that did not reoccur primarily associated with the stabilization of our billing system in 2019, a $0.06 increase from lower administrative expenses due to reduced incentives and health insurance premiums, a $0.4 increase due to the efficiencies at Boardman as we finalized operations leading up to the coal-fired plant shutdown in October. Next a $0.04 increase in other income from AFDC equity associated with ongoing construction of our integrated operations center in Wheatridge facilities. And an increase in non-qualified benefit trust from investment returns. There was a $0.05 increase from lower tax expense primarily driven by lower pre-tax book income, following revisions to our forecast after the impact of the Energy Trading losses. Finally, there was a $0.02 increase from lower miscellaneous expense.

Energy Trading losses represented a negative impact of $1.09 per diluted share. This amount represents the $127 million impact from the Energy Trading losses, net of $30 million tax impact in the quarter. This brings our GAAP net income to a loss of $0.19 per diluted share. After adjusting for the impact of the trading losses, non-GAAP earnings per diluted share was $0.90.

On to a regulatory update. Last week, the Oregon Public Utility Commission approved two of our outstanding deferrals. First, the Commission approved our application for deferral of certain incremental costs related to COVID-19. The final stipulation among parties related to the deferral has been filed with the Commission. The stipulation includes dates from -- for restarting disconnects, late fees and extended time payment agreements. Second, the Commission approved the deferral for incremental O&M and capital expenses related to the September wildfire events. We are continuing to assess the damage to our system and expect additional O&M and capital costs related to the wildfires to be assessed or to be addressed by the deferral. Also, we received an order approving a renewable adjustment clause for the Wheatridge Energy facility. The Commission found that we acted prudently in our decision to select the facility in consultation with the independent evaluator. The project is scheduled to go into service by end of this year. Regarding our future resource needs, we plan to issue one or more RFPs for new non-emitting resources in the first half of next year and plan to file an IRP update before the end of 2020.

On to Slide 7. Our balance sheet remains strong and has the capacity necessary to continue to invest to serve our customers. As of September 30, 2020, we had $918 million in available short-term credit, letter of credit capacity in cash. And $688 million of first mortgage-bond issuance capacity. We plan to further strengthen our liquidity position by issuing up to $230 million of long-term debt securities later this quarter with net proceeds being used for general corporate purposes and repayment of short-term debt borrowings. We expect to fund the remainder of the 2020 capital requirements with cash from operations and the issuance of commercial paper as needed.

Moving on to Slide 8, which shows our updated capital forecast. We added $100 million to our capital forecast for investments that prioritize the reliability and resiliency of our system, while minimizing customer prices. Recent weeks have demonstrated the importance of maintaining a safe and reliable grid as our system continued to perform despite facing the challenges of high wind and wildfire events. As Maria had mentioned, we are reaffirming our full year 2020 guidance of $1.40 to $1.60 per share. For 2020, we're expecting to finish in the top half of our earnings guidance. We are also reaffirming our long-term EPS growth of 4% to 6% and establishing 2019 as the base year for this guidance. This growth is supported by our continued focus on long-term benefits for our customers of decarbonizing our power supply, electrifying the economy and delivering strong operational results to ensure safe, clean and affordable energy.

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

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from Insoo Kim with Goldman Sachs. Your line is now open.

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

Good morning.

Insoo Kim -- Goldman Sachs -- Analyst

Thank you. Good morning. Jim, congrats and best of luck in the next phase.

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

Thank you.

Insoo Kim -- Goldman Sachs -- Analyst

First question is on timing of rate case, given the COVID and the wildfire deferral helps you stabilize the earnings trajectory somewhat. What are your latest thoughts on potential timing of the next general rate case and in a scenario where you file or do not file the next year or so, do you anticipate any need for equity?

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

Insoo, we always evaluate on an annual basis whether there is a need for a general rate case on a forward basis. And we're continuing to do that evaluation. As you know, we are making significant investments in our system on behalf of customers and we will have those deferrals out there. But we will most likely, if there is any news to be shared regarding a general rate case, you'll probably hear that in our fourth quarter call.

Maria Pope -- President and Chief Executive Officer

Yes, and Insoo we have no need for any equity financing.

Insoo Kim -- Goldman Sachs -- Analyst

Understood. Just a little more specific, Jim, but on the -- just for the balance of the year based on the guidance to be at the upper half that implies 4Q to be meaningfully lower, just on a year-over-year basis or based on what you've been earning in the previous few years in the fourth quarter. Besides potentially demand from COVID or net variable power costs differences, what else is driving some of that?

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

Well, you got to keep in mind that while revenues are doing well when you get to the fourth quarter as we've kind of pointed out in our comments, you've got several drivers that are going on. One is the decoupling mechanism is really kicked in, in full force. We've have a 2% cap on the amount of collections that we can do from customers and you look at the residential side, it's basically being decoupled away and on the commercial side, we've hit that cap, and now we're absorbing the continued decrease in commercial loads. But the other thing is, is that on the power cost side, we've always pointed out, we were way down below the baseline in prior quarters. And now we're moving up into the dead bands and that really is being driven by flows of energy in the market, given the fact that there has been some transmission that's been taken out of the marketplace and caused some constraints along with hydro. And then we moved the outage associated with the Colstrip facility from earlier in the year into the fourth quarter. So you've got that.

And then the other items are a bunch of miscellaneous lines associated with things like the COVID deferral. Because of the fact that we cannot do disconnects until we get, let's say for commercial till the 1st of December and then in April of next year when we get to residential. We can't charge late fees and late fees have always been part of our revenue on all the prior quarters that we have out there. And then as I mentioned, there is a bunch of miscellaneous stuff. Obviously we're incurring some additional costs associated with the review by the Special Committee and in defending ourselves in the upcoming losses that we're anticipating regarding the trading that was going on.

Insoo Kim -- Goldman Sachs -- Analyst

Got it, thank you for that detail. And just one more if I could. Maria, it seems like based on the third quarter year-over-year commercial low declines there was definitely more muted than what we saw in the second quarter. Can you describe a little bit, what you're seeing on the ground on the small commercial side and in you neighborhood?

Maria Pope -- President and Chief Executive Officer

Great, thank you. So with regards to commercial it did decline much more rapidly in the beginning of the pandemic and we have seen less decline of late. I think it's too early to call. Clearly there is a rise in cases across the country and Oregon is no different. What we are really please with is to see the continued increase in industrial customers. Last quarter as we talked about, industrial growth can be lumpy. We had good growth in the second quarter and that industrial growth continued to be very strong in the third quarter, up about 9% on a weather adjusted basis. So overall, we continue to be very optimistic about the growth in our service territory, both as a result of in-migration, which drives residential and somewhat commercial, but more importantly around industrial hi-tech data centers and many of the additional customers that we're seeing come into the area.

Insoo Kim -- Goldman Sachs -- Analyst

Got it. Thank you, both.

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. Our next question comes from Julien Dumoulin-Smith of Bank of America. Your line is now open.

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

Hey, good morning, team. Thanks for the time and Jim, best of luck here.

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

Thank you, Julien.

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

For the -- absolutely, it has been a pleasure. I wanted to come back to this Board review process. If we can talk, just a little bit more on the timeframe on that and perhaps even more importantly, can you talk about your sense to the any potential process at the Oregon PUC and where that may stand now, specifically as it relates to the trading loss, but frankly more broadly, if there's anything on the wildfire front, we should be watching to.

Maria Pope -- President and Chief Executive Officer

Sure. So, thank you, Julien, and as I noted the special committee's review is ongoing, I will make sure that it's thorough and that we get to the bottom of all that took place and we will make sure that we're transparent as we learn more. So I don't have anything more with regards to timing on that, I would imagine that the PUC and Chair Decker [Phonetic], we'll take the appropriate actions to ensure confidence in customer pricing and our risk management philosophies.

I would say with regards to wildfire recovery, with regards to COVID recovery, with regards to overall proceedings of the PUC there is a number of docket it's very active and we continue to work constructively with all parties.

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

And we're very pleased that the Commission acted so swiftly when it came to wildfires that was greatly appreciated.

Maria Pope -- President and Chief Executive Officer

There is no question about it. There was an unprecedented event and we are fortunate to have taken swift action to have prevented any, we know none of our equipment that contributed to any of the wildfires.

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

Got it. In the queue. Just a quick clarification here if I can just a couple of details important one. The baseline 2019, that's actual or is it something else? And then separately, what's the thought process on the balance of the previous reduction in the capex, is there a prospect to bring that back or just curious, the $100 million [Phonetic] versus $180 million [Phonetic].

Maria Pope -- President and Chief Executive Officer

So let me let Jim address to you the details around exactly our base for our forecast, but please note that we heard you and another investors wanting more granular detail with regards to our 46% long-term growth rates, and when we look at our capital, we are very attuned to the impacting customer prices, but we also recognize that we are lucky to have significant customer growth in our area and new capital needs to support that customer growth.

And then in addition, investments in infrastructure that's aging wildfire resiliency and others. So as projects come up as we continue to plan there may be additional amounts, but at this point in time, it's too early to call. We are very focused on ensuring customer prices remain low and affordable across our area. So Jim, you want to talk a little bit more about the baseline.

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

Yeah. Julien, in 2019 we chose that because that was the last general rate case that we have been through, and so that provides a cleaner look when you're trying to forecast on a forward basis, and as Maria pointed out at the Capital we've got a lot of growth going on in the service territory with additional minimum load agreements being signed by customers increases and the digital space and just overall in migration. We have a shortage of housing in the State of Oregon and that is keeping a lot of people busy as homes are being bid out very, very quickly. So great amount of demand here and that's really showing up in our numbers.

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

Got it. Excellent. All right, I'll leave it there. Thank you all very much.

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

Thanks, Julien.

Operator

Thank you. Our next question comes from Sophie Karp with KeyBanc. Your line is now open.

Sangita Jain -- KeyBanc Capital Markets -- Analyst

Hi, good morning. Thanks for taking my question. This is Sangita on for Sophie.

Maria Pope -- President and Chief Executive Officer

Good morning.

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

Good morning.

Sangita Jain -- KeyBanc Capital Markets -- Analyst

So if you could give us a little bit more color on the magnitude of the wildfire costs that you will be deferring, what the recovery mechanisms are in the state of Oregon? If you're plan to fold into your GRC or if it's going to be a separate proceeding, any color on that would be greatly helpful.

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

Yeah. And when it comes to the wildfires we're about $10 million in cost right now. The mechanism is a 12-month period that the deferral runs. We are currently trying to assess the additional damage to some of our transmission lines that they are out in rural areas, and so we don't have cost estimates associated with those at this particular point in time. So there is more to be figured out. So there is more capital that we're anticipating that we're going to have to spend to recover some of this infrastructure and we'll know those numbers when we get done with those assessments.

Sangita Jain -- KeyBanc Capital Markets -- Analyst

And a little bit more on that, do you think you going to folded into a GRC or is it more likely to be a separate proceeding.

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

This would be separate, the fact that it is a deferral at this particular point in time, the period of recovery hasn't been determined as of yet.

Sangita Jain -- KeyBanc Capital Markets -- Analyst

Okay, that's great, thanks so much.

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

Thank you.

Operator

Thank you. Our next question comes from Anthony Crowdell with Mizuho. Your line is now open.

Anthony Crowdell -- Mizuho Securities -- Analyst

Hey, good morning. James, congratulations. Best of luck in the next phase, great career with 36 years at Portland.

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

Thank you. It's been a long haul.

Anthony Crowdell -- Mizuho Securities -- Analyst

Apologies for just looking to get more in the weeds on the guidance, but just to follow up on Julien's question earlier, the base is 2019. I have earnings from 2019 at 239 [Phonetic] and the thought is that every year post 2019 is going to be between that 4% to 6% growth. It's not something that some will be out some will be above, it's each year will fall within that range.

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

Correct.

Anthony Crowdell -- Mizuho Securities -- Analyst

Great. And then if I could transition to O&M this quarter. I think I lost looks slide it was on the waterfall chart there. There was $0.20 you guys took for not only distribution and transmission O&M savings but also some G&A savings. Is that something we could take in more sustainable going forward?

Maria Pope -- President and Chief Executive Officer

Sure. As Jim mentioned, there were a number of issues that took place in the quarter that were favorable and some issues that were just reflective of significant moves like our coal-strip outage. So while we have made significant productivity and performance improvements across our operations we had a particularly good quarter this year and you're going to need to sort of look a little bit more long-term. As the improvements relate to investments in capital they relate to advancements in technology and those don't necessarily just all happened all at once, but they take a while to really become embedded in our operations. So I would -- we're grateful for the great third quarter O&M experience, but muted as we move forward and really focus on continuing to improve our operating performance and productivity.

Anthony Crowdell -- Mizuho Securities -- Analyst

Great. And then just lastly on the trading loss, just thinking about what anything that you could talk about i.e. maybe change like who do you trading report to, now or any type of safeguards that are in place now versus what was there before and I know there is a report coming out or is an independent review, but I'm just curious what you could tell us now?

Maria Pope -- President and Chief Executive Officer

Sure. So first of all, as I noted, and we've been very clear on we moved very swiftly to consolidate and isolate the events associated with the trading losses and their impact is just to the third quarter. We have made a number of reporting changes and taken other actions. First and foremost, as I mentioned in my remarks with regards to Jim's career he has extensive knowledge across the Western Power Markets and our power operations currently reports to him.

Risk management in the company reports to myself, and we have brought in an outside expert to help us. We've also beefed up other staffing and are taking this very seriously to ensure that it never happens again. We look forward to the report being finalized, I promise you, Jim and I as much of our Board of Directors and we will be transparent with our findings, Jim. Anything else you want to add?

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

No. Just to clarify that these management changes were power operations reports to me is something that happened post the event.

Maria Pope -- President and Chief Executive Officer

Yes.

Anthony Crowdell -- Mizuho Securities -- Analyst

Okay, great. And lastly just will that report be issued to investors or is that just something that was being channel to the Board.

Maria Pope -- President and Chief Executive Officer

I don't know how the Board will handle that it's up to them and their decision making, but please note that they will -- are proceeding through a thorough process.

Anthony Crowdell -- Mizuho Securities -- Analyst

Great, Maria and James. Thanks for taking my questions.

Maria Pope -- President and Chief Executive Officer

Thank you.

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

Thank you.

Operator

Thank you. Our next question comes from Brian Russo with Sidoti. Your line is now open.

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

Morning, Brian.

Brian Russo -- Sidoti -- Analyst

Hi, good morning. Just onto follow up on the capex question, The $100 million of incremental capex that you're laying in for 2021, are you essentially just adding back what was reduced in April and how does that kind of play into maybe an improving economic outlook in your service territory from April?

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

Well Brian, you've got it spot on, those our hand in hand. We are continuing to see growth in the service territory. As I mentioned earlier, we've got strong residential growth that's going on strong housing market, in migration, and then a lot of growth in the digital space and then we continue to invest in the resiliency and aging infrastructure that we have in the system, and then what isn't there is there is no amount associated with any renewable resources that we plan on adding to the system if they were to come out of the RFP process, and then we've still got it investments in the restoration of the system associated to wildfires.

We will, as we've always done, we will evaluate it on a quarterly basis. We have a gating process that I've mentioned previously that we're making sure that every project goes through diligence phase before it gets move forward to be included in our SEC capital expenditure updates.

Brian Russo -- Sidoti -- Analyst

Okay, got it, thanks. And then just on the fourth quarter year-over-year looks like headwind in power supply costs. I think according to the queue as of September you were $27 million [Phonetic] below the baseline and the comments is that you'll be within the dead band range. So the $27 million below will go to at least $15 million [Phonetic] below, but still below zero, Is that the way to look at it?

Maria Pope -- President and Chief Executive Officer

Yeah. And one thing I want to note is that we closed Oregon's only coal-fired generation facility, a number of days ago. So the Boardman plant has ceased its operation. We've also seen higher gas prices throughout the Pacific Northwest as a result of pipeline issues in Canada and elsewhere, and we're watching the hydro and precipitation issue pretty closely. Jim anything else you want to add.

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

No, Brian, I think you've got the math right. We on a year-to-date basis $27 million below and then we will be up here somewhere in the call are by year-end.

Brian Russo -- Sidoti -- Analyst

Right, got it. So your guidance for 2020 includes anywhere between zero and $15 million of power supply cost benefits for the year.

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

Yes, that's correct.

Brian Russo -- Sidoti -- Analyst

Okay and then just one more clarification. Did you guys defer $6 million of bad debt expense in the third quarter. So that $6 million did not hit the expense line. Is that the way to look at it or is that still pending to be deferred?

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

Well, in our general rate case that we generally assume about $6 million worth of bad debt. We had talked previously about bad debt expense that we could be incurring, and we are now deferring, and the amount associated with our deferral right now is probably around the $8 million range.

Brian Russo -- Sidoti -- Analyst

Okay. But in the third quarter, reported results you were still expensing the bad debt expense. Correct.

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

Yes.

Brian Russo -- Sidoti -- Analyst

Yes. Got it. Okay, thank you very much and good luck Jim.

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

Okay. Thank you, Brian.

Operator

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

Travis Miller -- Morningstar -- Analyst

Good morning, thanks you for taking my questions. And again I'll echo Jim congratulations and best of luck.

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

Thank you. Travis.

Travis Miller -- Morningstar -- Analyst

Wanted to a little bit more on the trading losses, one I'm thinking how should we think about putting that number in perspective relative to your purchase power costs and other fuel costs, is there something that would be put in perspective over a quarter or over a year, over a couple of years, how should we think about that $127 million in terms and that will be after tax rate relative to the $292 million purchase power costs in the quarter $554 million over the nine months. Can you give me a sense of that?

Maria Pope -- President and Chief Executive Officer

So thank you Travis. The event is isolated does not relate to our ongoing power operations. The number of 127 million is a pre-tax number and the EPS impact to the third quarter is $1.09.

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

Just know that those positions were all closed and added in that quarter. So there being no carry over to the fourth quarter from a market exposure.

Travis Miller -- Morningstar -- Analyst

Okay. Were these when you say can confined to the quarter, were these costs and trading losses that happened during the quarter, or they were just booked in the quarter from past over a series of quarters, right, and trying to think about this on terms of overall or just power costs.

Maria Pope -- President and Chief Executive Officer

Yes, they were realized 100% in the third quarter.

Travis Miller -- Morningstar -- Analyst

Okay. So thinking about the number would be relative to that in a $292 million of book purchase power costs. Is that fair?

Maria Pope -- President and Chief Executive Officer

Yeah, that's how I would look at it.

Travis Miller -- Morningstar -- Analyst

Okay. Okay. And then you had mentioned potential legal action. Do you have legal recourse to anything related to those trading losses, any chance of recovering up from the customers but recovering through legal means and if that...

Maria Pope -- President and Chief Executive Officer

We were very clear that we are not recovering these costs from customers. In our 10-Q, we note that we have received a couple of lawsuits and have disclosed those.

Travis Miller -- Morningstar -- Analyst

Okay and budget. Those are lawsuits against you guys or you're filing lawsuits against the people.

Maria Pope -- President and Chief Executive Officer

No those are lawsuits against us.

Travis Miller -- Morningstar -- Analyst

Okay. Do you have any legal recourse against the people who were doing the trading losses, who made the trading loses.

Maria Pope -- President and Chief Executive Officer

So the investigation is ongoing.

Travis Miller -- Morningstar -- Analyst

Okay. Okay, very good. And then any chance in discussions with the PUC about putting in some kind of wildfire mitigation plan link obviously neighbors to the south of stuff like that. Any thoughts on doing capital through designated program going forward?

Maria Pope -- President and Chief Executive Officer

Sure, so the Oregon Public Utility Commission has been leaning into the risks around wildfire for some time. One of the commissioners was a leader across the West in convening forums with regards to not equipment, insurance, power safety shut off really bringing together the best minds across the West and even there is collaboration with Australia and others, as we figure out what the right thing to do is. We have taken a number of actions over the last couple of years to ensure that we're well prepared that we've invested adequately in equipment and that work will continue and will continue to work collaboratively with all stakeholders, including the Commission.

Travis Miller -- Morningstar -- Analyst

Okay. Would you be interested in putting together some kind of multi-year plan, capital investment part.

Maria Pope -- President and Chief Executive Officer

Yes. I mean we do, as you can imagine in running a utility, most of the things that we do are multi-year in nature and pretty extensive as we have infrastructure throughout our service territory.

Travis Miller -- Morningstar -- Analyst

Okay, great, thank you very much.

Maria Pope -- President and Chief Executive Officer

Thanks, Travis

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

Thanks, Travis.

Operator

Thank you. And I'm showing no further questions in the queue at this time, I'd like to turn the call back to Maria Pope for any closing remarks.

Maria Pope -- President and Chief Executive Officer

Thank you very much for joining us today. We look forward to continuing the conversation with those of you who will participate in EEI's virtual meetings and then we also look forward to talking with you in February as we close out the fourth quarter. Well, thank you very much and thank you, Jim.

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

Thanks, Maria.

Maria Pope -- President and Chief Executive Officer

Congratulations.

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

Thank you.

Operator

[Operator Closing Remarks]

Duration: 40 minutes

Call participants:

Jardon Jaramillo -- Senior Director, Investor Relations

Maria Pope -- President and Chief Executive Officer

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

Insoo Kim -- Goldman Sachs -- Analyst

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

Sangita Jain -- KeyBanc Capital Markets -- Analyst

Anthony Crowdell -- Mizuho Securities -- Analyst

Brian Russo -- Sidoti -- Analyst

Travis Miller -- Morningstar -- Analyst

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