COC dadco-10-26-2010.pdf

Please refer to page 9 of this report for detailed disclosure and certification information.
INDUSTRY UPDATE
Institutional Equity Research

October 26, 2010 Utilities Industry Update

Prices: (10/26/10)

Industry:
Utilities

James L. Bellessa, Jr., CFA
406.791.7230
[e-mail]

Michael Bates
Research Associate
406.791.7216
[e-mail]

3Q’10 Earnings Previews

• Earnings for the majority of the fourteen regional utilities under our coverage will
be released this week, ahead of the annual Edison Electric Institute Financial
Conference, which will be held the first half of next week.
• Hot summer should give nice boost to Upper Midwestern utilities. Electric
utilities with operations in the Midwest (including ALE, LNT, MDU, MGEE, and
OTTR) should have received a welcomed boost in electric demand in the third
quarter, as abnormally hot and humid temperatures in that region compared with
record or near-record low temperatures in the same quarter a year ago.
• Cool weather likely held back demand in the West. In contrast to the favorable
weather experienced in the Midwest, utilities with operations in the Pacific
Northwest and Rocky Mountains (AVA, IDA, NWE, and POR) contended with
weather that was cooler than last year.

Table 1: D.A. Davidson & Co. Utilities Ratings, Target Prices, & Estimates
Price
10/26/10
ALLETE Inc.1 ALE N $36.91 $39.00 $0.49 $0.36 $0.38
Alliant Ener Cor .1 LNT B $36.94 $40.00 $0.76 $1.02 $1.06
Avista Cor .1 AVA B $21.69 $24.00 $0.15 $0.11 $0.10
Black Hills Cor .1 BKH N $32.74 $30.00 ($0.10) $0.31 $0.29
Hawaiian Electric Industries, Inc.1 HE U $22.12 $19.00 $0.37 $0.44 $0.36
IDACORP Inc.1 IDA B $36.83 $42.00 $1.16 $1.28 $1.23
ITC Holdin s Cor .1 ITC B $61.21 $75.00 $0.74 $0.71 $0.70
MDU Resources Grou , Inc.1 MDU B $21.07 $23.00 $0.50 $0.46 $0.45
MGE Ener Inc.1 MGEE N $40.87 $38.00 $0.55 $0.76 N/A
Northwest Natural Gas Co.1 NWN N $50.35 $48.00 ($0.25) ($0.32) ($0.31)
NorthWestern Cor .1 NWE N $29.44 $30.00 $0.52 $0.24 $0.29
Otter Tail Cor .1 OTTR U $21.25 $16.00 $0.29 $0.30 $0.38
Portland General Electric Co.1 POR N $20.76 $21.50 $0.43 $0.42 $0.46
Questar Corp.1 STR N $16.75 $18.50 $0.15 $0.13 $0.14
3Q'09 3Q'10E 3Q'10
ConsensusCompany Name Symbol Rating Price
Target

Source: D.A. Davidson & Co. Consensus estimates from Thomson One Analytics.
1D.A. Davidson & Co. makes a market in this security.

D.A. Davidson & Co.
2
• ALLETE, Inc. is scheduled to report 3Q’10 earnings on Friday, October 29th before the
market opens. A conference call with management will be held the same day at 10:00 AM
ET/7:00 AM PT.
• We are forecasting EPS of $0.36 for the quarter versus $0.49 per share reported in the
same quarter a year ago and the $0.38 consensus of three analysts. Our full-year
estimate for 2010 earnings is currently $2.27 per share, versus guidance of $2.05-$2.35
and a $2.30 consensus estimate. (Note: our 2010 EPS forecast includes a 1Q’10
nonrecurring charge of $0.12 per share relating to the Patient Protection and Affordable
Care Act, whereas this charge is excluded from management’s guidance range.)
• Modeling lower EPS from the Regulated Operations. We are forecasting the
Regulated Operations segment, consisting of the company’s regulated utilities and
investment in American Transmission Company (ATC), will contribute EPS of $0.38,
versus $0.50 in 3Q’09. Although an interim rate increase collected by Minnesota Power
since the beginning of the year will contribute to higher regulated revenues, this benefit
will be eclipsed by higher expenses. This increase in expenses includes costs for a
scheduled maintenance outage of Boswell #4 and increased usage of reagents at Boswell
#3, as well as higher interest expenses and a higher tax rate. Also weighing on EPS is
the dilutive effect of an estimated ~5% increase in outstanding shares due to the
company’s periodic issuance of equity program.
• Investments & Other segment likely to post a loss. We are projecting that ALLETE’s
Investments & Other segment, consisting of its real estate business and nonregulated
energy operations will post a loss of $0.02 per share for the quarter, matching the loss a
year ago due to continued weakness in the Florida real estate market and the transfer of a
small generating facility to the regulated utility in 4Q’09.
• Conference call expectations. We expect management to provide commentary on
industrial demand nominations and the construction progress of its Bison I wind farm. We
also expect some color on recent developments in the CapX 2020 transmission plan.
• Our 12-18 month price target of $39 equates to ~13x our 2011 forecast of non-real
estate EPS of $2.75, plus an estimated $3 per share value of the company’s Florida real
estate, which ALLETE is attempting to divest. We continue to rate the shares NEUTRAL.

• Alliant Energy Corporation is scheduled to report 3Q’10 earnings on Friday, October 29th
before the market opens. A conference call with management will be held on the same
day at 10:00 AM ET/7:00 AM PT.
• We are forecasting EPS of $1.02 for the quarter versus $0.76 per share reported in the
same quarter a year ago (excluding a noncash charge of $1.16 per share in connection
with a tender offer) and the $1.06 per share consensus of six analysts. Our full-year
estimate for 2010 earnings is $2.60 per share, which includes the effect of a one-time
deferred income tax charge of ~$10 million (-$0.09 per share) versus guidance of $2.55-
$2.70 (which excludes the $0.09 per share charge) and a $2.61 consensus estimate.
• Looking for strong utility results. We are forecasting higher utility earnings due to the
positive effect of above normal summer temperatures in the Midwest, which compares to
unusually mild temperatures in the summer of 2009. Earnings for the utility will also
benefit from rate increases in both Wisconsin and Iowa since a year ago, but this benefit
will be partially offset by higher transmission service expenses and lower AFUDC.
• Nonregulated segment likely remained weak. Our model calls for nonregulated
earnings of $0.02 per share for the quarter, compared to break-even results in 3Q’09 and
earnings of $0.06 in 3Q’08. Although we believe the current climate will produce more
favorable results than a year ago, sentiment among potential wind project developers has
probably not improved much from last year’s levels.
• Expected conference call updates. We expect management will update the investment
community on its ongoing rate cases, but do not expect to hear about much progress on
the part of the Wisconsin Public Utilities Commission with regard to the company’s request
for permission to install pollution controls at the Columbia Energy Center.
• Our 12-18 month target price of $40 equates to 13.7x our 2011 EPS estimate of $2.92.
At the current share price, we rate the shares BUY.
ALLETE, Inc.
Alliant Energy Corp.
D.A. Davidson & Co.
3

• Avista is slated to release 3Q’10 earnings on Thursday, October 28th before the market
opens. Management will hold a conference call at 11:30 AM ET / 8:30 AM PT on the
same day.
• We are forecasting overall EPS of $0.11 for 3Q’10 versus $0.15 per share reported in
3Q’09 (including a $0.06 per share nonrecurring tax benefit). The consensus EPS of
three analysts is $0.10. Our full-year estimate for 2010 earnings is currently $1.59 per
share, versus guidance in the lower half of a $1.55-$1.75 range and a $1.58 consensus
estimate of five analysts.
• Higher rates leading to utility earnings growth. Rate relief should support earnings
growth at Avista Utilities in the quarter, as should a reduction in, or absence of, the 3Q’09
absorption of $2 million in costs under the Energy Recovery Mechanism (ERM) in
Washington. Likely offsetting these benefits was the negative effect of summer
temperatures (as measured by cooling degree days) which were 31% below what they
were in the same quarter a year ago.
• Modeling higher nonregulated earnings. We are forecasting $0.04 of EPS from
Advantage IQ and Avista Ventures, versus earnings of $0.02 a year ago. The growth is
largely attributable to a full quarter’s benefit from Ecos Consulting, which was acquired in
3Q’09.
• Our 12-18 month price target of $24 equates to ~13.1x our 2011 EPS estimate of $1.83.
Combining the stock’s appreciation potential with a 4.8% yield, we believe the current
share price provides an ongoing BUY opportunity for total return to investors.

• We expect Black Hills Corporation to report 3Q’10 earnings on Thursday, October 28th
after the market closes. A conference call with management will be held the following day
at 11:00 AM ET/8:00 AM PT.
• We are forecasting EPS of $0.31 for the quarter, including a $0.14 per share gain on
the sale of a 23% ownership interest in Wygen III. Our estimates compare to a loss of
$0.10 per share reported in the same quarter a year ago and the $0.29 per share
consensus of three analysts. Excluding a mark-to-market loss on certain interest rate
swaps, EPS in the year-earlier period would have been $0.05. Our full-year estimate for
2010 earnings is currently $1.52 per share, which includes the effect of a non-cash
unrealized mark-to-market loss relating to interest rate swaps of $16.2 million, or $0.41
per share. This compares with management’s 2011 guidance range of $1.80-$2.05
(which excludes nonrecurring items) and a $1.89 consensus estimate.
• Modeling higher utility earnings. Black Hills’ regulated electric and gas utility
operations will likely be the main earnings contributors for the quarter ($0.25 versus $0.18
in Q3’09), with the largest factor explaining the upward move being the aforementioned
gain. Based on commentary by management at the recent investor day, we do not
believe temperatures provided a material benefit to electric utility results in the quarter.
The gas units typically post losses during the summer months.
• Non-regulated businesses expected to show improvement. We are forecasting EPS
of $0.12 from nonregulated operations in the quarter, versus a loss of $0.04 per share a
year ago. Our model calls for $12.6 million of external operating revenues from the
Energy Marketing segment versus $5.3 million of negative external revenues due to last
year’s aforementioned mark-to-market loss. We are modeling Oil & Gas revenues of
$18.0 million (versus $17.9 million), based on average energy prices of $6.19 per mcfe
(versus $5.73 a year ago) offset by a 6.7% decrease in production.
• Conference call expectations. We expect management will provide commentary on an
upcoming equity offering. Although management has not pinpointed the timing, the capital
raise will be needed to fund near-term capex, including the construction of two power
plants in Colorado (a 180-MW regulated power plant and a 200-MW non-regulated plant).
The new facilities should be completed by January 1, 2012 at a cost of approximately
$500 million.
• Our 12-18 month target price of $30 equates to 15x our 2011 EPS estimate $2.00. We
continue to rate the stock NEUTRAL.
Avista Corp.
Black Hills Corp.
D.A. Davidson & Co.
4

• Hawaiian Electric Industries, Inc. is scheduled to release its 3Q’10 earnings on Saturday,
October 30th. Management’s conference call with the investment community will be held
the following Monday at 10:00 AM ET/7:00 AM PT.
• We are forecasting 3Q’10 EPS of $0.44 versus $0.37 reported a year ago and the $0.36
per share consensus estimate of six analysts. Our full-year 2010 estimate is $1.44 per
share, versus a $1.36 consensus.
• Utility earnings expected to improve. Our electric utility EPS projection of $0.32
compares to $0.29 per share a year ago. We are forecasting utility gross margin
(revenues less fuel and purchased power costs) of $262 million, up ~16% from the same
quarter a year ago. This expected improvement in gross margin should be brought on by
rate relief granted in the last year (including cost recovery of a new generating facility at
the Campbell Industrial Park). Potentially offsetting the benefit of rate relief is the fact that
temperatures (measured by cooling degree days) were ~10% below what they were in the
year-ago quarter.
• Recovery at American Savings Bank forecasted. We are modeling bank EPS of $0.17
versus $0.12 in 3Q’09. Factoring in a lower provision for loan losses ($4.5 million versus
$5.2 million) and a lower net interest margin (4.19% versus 4.23%), we anticipate a 6%
decline in net interest income. However, the absence of a $9.9 million impairment of
private-issue mortgage-related securities that was recorded in the year-ago quarter and
lower operating expenses from the bank’s performance improvement project should drive
ASB’s earnings higher.
• Conference call expectations. We expect management will provide commentary on
various items on the regulatory front, including its current HECO rate case. We also
expect Hawaiian Electric to introduce Richard Wacker, who the company announced
yesterday will take the reigns as President and CEO of American Savings Bank on
November 15th.
• Our 12-18 month target price of $19 equates to 13.4x our 2011 utility estimate of $1.20
per share, plus 1.5x multiple of the tangible book value of the bank of $4.54 per share,
less parent company debt of $3.80 per share. At the current share price we are
maintaining an UNDERPERFORM rating.

• IDACORP, Inc. is scheduled to report 3Q’10 earnings on Thursday, October 28th before
the market opens. A conference call with management will be held on the same day at
4:30 PM ET/1:30 PM PT.
• We are looking for EPS of $1.28, up from $1.16 a year ago. The consensus estimate of
three analysts is $1.23 per share. Our full-year 2010 earnings estimate of $2.78 per share
matches the current consensus.
• Utility results likely hurt by weather. We expect 3Q’10 utility segment EPS of $1.26, up
from $1.08 a year ago, with the increase driven by higher margins due to regulatory
changes put in place at the beginning of the year such as the fixed cost adjustment
mechanism, lower power supply costs, and the benefits of improved coal pricing and
deliveries at Bridger Coal Co. However, we anticipate these positive impacts will be
partially offset by the fact that the service territory of Idaho Power has seen a cool
summer, with cooling degree days being recorded as 21% below what was recorded in
the year-ago quarter.
• Conference call expectations. We anticipate there will be a discussion about the status
of talks with the IRS to adopt uniform capitalization rules for tax purposes. We will also be
looking for additional details about the company’s recent rule change request with the
IPUC to accommodate what appears to be a healthy pipeline of new industrial customers’
requests for power.
• Our 12-18 month price target of $42 equates to 14.5x our 2011 EPS estimate of $2.90.
We rate the shares BUY.
Hawaiian Electric Industries, Inc.
IDACORP, Inc.
D.A. Davidson & Co.
5

• ITC Holdings Corp. is scheduled to report 3Q’10 earnings on Wednesday, October 27th
after the market closes. A conference call with management will be held the following day
at 11:00 AM ET/8:00 AM PT.
• We are forecasting EPS from continuing operations of $0.71 for the quarter, versus
$0.74 in the same quarter a year ago, which included an $0.11 per share nonrecurring
gain for the recognition of regulatory assets. Excluding this one-time item, our estimate
calls for EPS growth of 12% between the quarters. Our full-year estimate for 2010
earnings is $2.80 per share versus the current consensus estimate of $2.77 and
management’s 2010 EPS guidance range of $2.70-$2.75.
• Strong report attributable to rate base growth. ITC’s growth in operating earnings
between the quarters was primarily boosted by a higher rate base across each of its
operating companies. Although hot summer temperatures likely led to higher demand for
electricity within ITC’s service territory, we do not anticipate higher demand had an effect
on ITC’s earnings, as the company’s revenues are decoupled from demand.
• We are maintaining our 12-18 month target price of $75, which equates to ~17.7x our
2012 EPS estimate of $4.23. We continue to rate the shares BUY.

• MDU Resources Group, Inc. is scheduled to report 3Q’10 earnings on Thursday, October
28th before the market opens. A conference call with management will be held the same
day at 11:00 AM ET/8:00 AM PT.
• We are forecasting EPS from continuing operations of $0.46 for the quarter, versus
$0.50 in the same quarter a year ago and the $0.45 consensus estimate of seven
analysts. Our full-year estimate for 2010 earnings is $1.30 per share versus the current
consensus estimate of $1.29 and management’s 2010 EPS guidance range of $1.10-
$1.35. We also note that our estimates currently exclude the negative effects of last
week’s announcement of a $16.5 million ($0.09 per share) charge for an arbitration award
granted to a subsidiary.
• Construction segments continue to fight a weak economy. We are calling for EPS of
$0.22 and $0.02 from the Construction Materials and Construction Services segments,
respectively, down from EPS of $0.26 and $0.04 in the year-ago quarter.
• Expecting flat-to-up E&P results. We are forecasting a ~$0.14 per share earnings
contribution from the Natural Gas & Oil Production segment, up from $0.13 per share a
year ago. The forecasted earnings improvement is based on the assumption of an
average realized energy price of $6.51/mcfe in 3Q’10 versus $5.91/mcfe a year ago,
partially offset by a 2.5% reduction in overall production.
• Anticipating improved utility results. We are modeling $0.02 of EPS from utility
operations, versus break-even results in the year-ago quarter. Our forecast includes
higher revenues associated with the rate basing of MDU’s ownership interest in Wygen III
(partially offset by higher operating expenses), but there could be some upward headroom
in this estimate as temperatures (measured by cooling degree days) within MDU’s electric
utility service territory were 44% higher than last year’s unusually mild levels.
• Other segments expected to be a mixed bag. 3Q’10 earnings from the Pipeline &
Energy Services segment are expected to be $0.05 per share (versus $0.06 in 3Q’09),
while the Other division is expected to post a flat contribution of $0.01 per share.
• Our 12-18 month target price of $23 equates to ~14.8x our 2011 EPS forecast of $1.55.
We rate the shares BUY.
ITC Holdings Corp.
MDU Resources Group, Inc.
D.A. Davidson & Co.
6

• MGEE is scheduled to report 3Q’10 earnings on Thursday, November 4th during
market hours. The company is not expected to conduct a conference call.
• We are forecasting EPS of $0.76, versus $0.55 per share reported for the same quarter
a year ago. We are the only sell-side research analysts currently following MGEE. Our
full-year 2010 EPS estimate is $2.55.
• Modeling strong utility EPS. We are forecasting utility EPS of $0.51, up from $0.36 a
year ago, with the bulk of the earnings increase attributable to the positive effect of above-
normal summer temperatures in the Midwest (compared to unusually mild temperatures in
the summer of 2009) and higher electric rates as a result of a revenue increase that went
into effect on January 1, 2010.
• Nonutility EPS likely to show growth. We are modeling EPS of $0.25 from nonutility
activities, versus $0.19 a year ago, with growth being driven by the commercial operation
of Elm Road Unit 1 (the start-up of Elm Road Unit 2 was originally set for this August, but
was pushed to late November). We are also expecting MGEE’s investment in American
Transmission Company (ATC) to yield $0.06 per share of earnings, up from $0.05 in
3Q’09.
• Our 12-18 month price target of $38 equates to 13.7x our 2011 EPS forecast $2.77. At
the current share price, we are maintaining a NEUTRAL rating.

• NW Natural is scheduled to report 3Q’10 earnings on Friday, November 5th before the
market opens. A conference call with management will be held the same day at 11:00 AM
ET/8:00 AM PT to discuss the quarter’s results.
• We are forecasting a seasonal loss of $0.32 for the quarter versus a loss of $0.25
reported in the same quarter a year ago and the $(0.31) consensus of four analysts. Our
full-year estimate for 2010 earnings is $2.75 per share versus the current consensus
estimate of $2.73 and management’s 2010 EPS guidance range of $2.60-$2.75.
• Commodity cost sharing could swing the numbers. Although our forecast points
toward a deeper seasonal loss in 3Q’10, it is important to note that our model does not
include potential gains from commodity cost sharing, which contributed $0.07 per share to
results in the year-ago quarter. Aside from the potential impact of these non-operating
gains, our forecast calls for slightly higher operating & maintenance costs and interest
expenses.
• Conference call expectations. We will be listening for updates on the subscription
processes for the Gill Ranch and Palomar projects, as well as color on the timing of NW
Natural’s updated project plan for the eastern segment of the Palomar Pipeline(adjusted
for the absence of the western segment), which is expected to be filed with FERC by year-
end.
• Our 12-18 month price target of $48 equates to 17.8x our 2011 EPS estimate of $2.70.
At the current stock price, we are maintaining a NEUTRAL rating.
MGE Energy, Inc.
Northwest Natural Gas Company
D.A. Davidson & Co.
7

• NorthWestern Corporation is scheduled to report 3Q’10 earnings on Thursday, October
28th before the market opens. A conference call with management will be held that day at
4:00 PM ET/1:00 PM PT.
• Our 3Q’10 EPS estimate of $0.24 compares to $0.52 a year ago and the $0.29
consensus estimate of five analysts. Our full-year estimate for 2010 earnings is $2.00 per
share, which matches the current consensus estimate and compares with management’s
2010 EPS guidance range of $1.95-$2.10. The primary reason for the downward
comparison between the quarters is the absence of a $12.4 million ($0.34 per share) tax
benefit recorded in 3Q’09 associated with an IRS approval to deduct utility equipment
repair costs that would have been capitalized previously.
• We are forecasting gross margin of $132.9 million, up slightly from $127.7 million a
year earlier due some improvement in the economy. It remains unclear what role weather
played in the utility’s results, as temperatures were above 3Q’09 levels in NWE’s South
Dakota service territory but below last year’s levels in Montana.
• Conference call expectations. We expect to be updated on the status of the rate
settlement agreement filed last month in the utility’s Montana rate case. We also expect
management to comment on the progress of its various transmission growth initiatives.
• Our 12-18 month target price of $30 equates to 13.3x our 2011 EPS estimate of $2.10,
plus ~$2 per share for the present value of the net operating loss carryforward. We rate
the shares NEUTRAL.

• Otter Tail Corporation is scheduled to report 3Q’10 earnings on Thursday, October 28th
after the market closes. The company does not conduct a conference call.
• We are forecasting 3Q’10 EPS of $0.30, compared to $0.29 a year ago and the $0.38
consensus of two analysts. Our full-year estimate for 2010 earnings is $0.78 per share,
versus guidance of $0.70-$1.00 and the $0.80 consensus.
• Expecting flat electric utility earnings. We expect the utility to contribute $0.27 per
share, flat with results in the year-ago quarter. The utility should benefit due to rate
increases in its North and South Dakota territories. We see some upward headroom to
our utility estimate for the quarter, as cooling degree days in Otter Tail Power’s service
territory were 69% higher than the year-ago quarter’s unusually mild temperatures.
• Nonregulated segments expected show modest improvement. We are estimating
nonregulated EPS of $0.03 versus $0.02 a year ago. We are modeling improved results
in the Manufacturing (EPS of $0.02 versus break-even results a year ago) and Health
Services (EPS of $0.02 versus a $0.02 loss last year). Our forecast of $0.05 per share
from the Food Ingredient Processing segment is flat with a year ago.
• Our 12-18 month target price of $16 equates to 15.6x our 2011 EPS estimate of $1.02.
At the current share price, we are maintaining an UNDERPERFORM rating.
NorthWestern Corp.
Otter Tail Corporation
D.A. Davidson & Co.
8

• Earnings release is pending. Portland General Electric is slated to report 3Q’10
earnings on October 28, 2010 before the market opens. Management has scheduled a
conference call the same day at 11:00 AM ET/ 8:00 AM PT.
• Our model calls for 3Q’10 EPS of $0.42, down slightly from $0.43 a year earlier, which
included a $0.04 benefit from an increase in the fair value of the company’s non-qualified
benefit plan trust assets. We are assuming that such benefits will not be repeated in the
soon-to-be-reported quarter. Our estimate remains the low quarterly forecast, with the
average estimate of $0.46 for four other analysts.
• A cool versus warm summer. We expect the quarter’s thermal operations improved
over last year when the plant outages at Colstrip #4 and Boardman increased
replacement power costs by $8 million and $4 million, respectively, and retarded EPS by
~$0.10. Also, because of above average precipitation in June, we believe the quarter’s
hydro conditions were better than 3Q’09, when below normal conditions held back EPS by
~$0.05. The effects of Senate Bill 408, a complex tax law, should also lift the quarterly
comparison as the protection of tax normalization rules comes into play in the tax
calculation due to this year’s higher accelerated tax depreciation. Partially offsetting these
benefits should be the earnings drags from a subdued load due to a continuing weak
economy and cool summer temperatures, and higher O&M costs. We note that the
quarter’s cooling degree days were down 45% from 3Q’09’s record highs.
• Our 12-18 month price target of $21.50 equates to 13.0x our unchanged 2011 EPS
estimate. We continue to rate the shares NEUTRAL.

• Questar Corp. is scheduled to report 3Q’10 earnings on Tuesday, October 26th after the
market closes. A conference call with management will be held the following day at 9:30
AM ET/6:30 AM PT.
• We are forecasting EPS from continuing operations of $0.13 for the quarter, versus
pro-forma EPS of $0.15 in the same quarter a year ago and the $0.14 consensus estimate
of nine analysts. Our full-year estimate for 2010 earnings is $1.04 per share versus the
current consensus estimate of $1.10 and management’s 2010 EPS guidance range of
$1.00-$1.05.
• Expecting flat-to-up operating results. We are forecasting quarterly earnings of $0.12
and $0.08 from Wexpro and Questar Pipeline, respectively. We expect results at the
utility to tick up to a seasonal loss of $0.04 per share, versus a loss of $0.05 in the year-
ago quarter. The primary driver for the reduction in quarterly EPS is higher interest
expense due to the parent company’s assumption of new debt in connection with the QEP
Resources spinoff on July 1, 2010.
• Our 12-18 month target price of $18.50 equates to 16.5x our 2011 EPS estimate of
$1.12. At the current price, we are maintaining our NEUTRAL rating.

Portland General Electric Co.
Questar Corp.
D.A. Davidson & Co.
Two Centerpointe Drive, Suite 400 • Lake Oswego, Oregon 97035 • [phone] • [phone] • www.dadavidson.com
Copyright D.A. Davidson & Co., 2010. All rights reserved.
9
Required Disclosures
D.A. Davidson & Co. expects to receive, or intends to seek, compensation for investment banking services from the companies
mentioned in this report in the next three months.
D.A. Davidson & Co. is a full service investment firm that provides both brokerage and investment banking services. James L.
Bellessa, Jr., CFA and Michael Bates the research analysts principally responsible for the preparation of this report, will receive
compensation that is based upon (among other factors) D.A. Davidson & Co.’s investment banking revenue. However, D.A. Davidson
& Co.’s analysts are not directly compensated for involvement in specific investment banking transactions.
We, James L. Bellessa, Jr., CFA and Michael Bates, attest that (i) all the views expressed in this research report accurately reflect our
personal views about the common stock of the subject company, and (ii) no part of our compensation was, is, or will be, directly or
indirectly, related to the specific recommendations or views expressed in this report.

Ratings Information
D.A. Davidson & Co.’s Institutional Research Rating Scale (maintained since 7/9/02): Buy, Neutral, Underperform

D.A. Davidson & Co. Institutional Research Ratings Buy Neutral Underperform
Risk adjusted return potential azbycx Over 15% total return
expected on a risk adjusted
basis over next 12-18 months
>0-15% return potential
on a risk adjusted basis
over next 12-18 months
Likely to remain flat or lose
value on a risk adjusted basis
over next 12-18 months
Distribution of Ratings (as of 9/30/10) Buy Hold Sell
Corresponding Institutional Research Ratings Buy Neutral Underperform
and Distribution 56% 39% 5%
Corresponding Individual Investor Group Ratings Outperform Market Perform Underperform
and Distribution 88% 12% 0%
Distribution of Combined Ratings 60% 36% 4%
Distribution of companies from whom D.A. Davidson & Co. has received compensation for investment banking services in last 12 mos.
Institutional Coverage 7% 3% 18%
Individual Investor Group Coverage 0% 33% 0%
Distribution of Combined Investment Banking 6% 4% 18%

Target prices are our Institutional Research Department’s evaluation of price potential over the next 12-18 months and 5 years, based
upon our assessment of future earnings and cash flow, comparable company valuations, growth prospects and other financial criteria.
Certain risks may impede achievement of these price targets including, but not limited to, broader market and macroeconomic
fluctuations and unforeseen changes in the subject company’s fundamentals or business trends.

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