Portland General Electric (NYSE:POR) on Aug. 2 reported a net loss of $22m for the second quarter of 2013, compared with net income of $26m for the second quarter of 2012.
Results for the second quarter of this year were driven by several factors, including the suspension of the Cascade Crossing Transmission Project and increased operating and maintenance expense related to the company’s generation plants and distribution system.
“Although several factors impacted our operating and financial performance this quarter, our outlook for 2014 and beyond is positive,” said Jim Piro, president and CEO. “We are moving forward on our three new generation projects, have reached substantial settlement on our 2014 General Rate Case and have successfully completed debt and equity financings, positioning the company for strong operations and growth over the next few years.”
General Rate Case—PGE filed a 2014 General Rate Case in mid-February and has reached settlement with Oregon Public Utility Commission staff and interveners on all items except pension expense.
Generating Projects—On June 3, PGE announced the completion of the competitive bidding process for baseload and renewable generation plants. PGE has entered into an agreement for the construction of a new 440-MW natural gas-fired baseload plant called Carty, to be built by a third party next to the Boardman coal plant, which is due to be retired in 2020. On Aug. 1, PGE closed on an agreement to acquire development rights for the construction of a new 267 MW wind farm, which the company will now call Tucannon River Wind Farm. Also, PGE has begun construction on Port Westward Unit 2, the 220 MW natural gas-fired capacity resource announced earlier this year. Together, these three projects represent an investment of approximately $1.3bn (excluding AFDC) and are scheduled to come online in 2015 and 2016.
Cascade Crossing—On June 3, PGE announced a new non-binding memorandum of understanding with Bonneville Power Administration. Under this MOU, the parties will explore a transmission capacity option whereby BPA could provide PGE with ownership of approximately 1,500 MW in transmission capacity, in exchange for certain PGE assets, investments and/or PGE transfer capabilities to BPA. Timing and costs of potential options under the MOU will need to be clarified through further discussions and are contingent upon reaching a definitive agreement with BPA. As a result, PGE suspended permitting and development of Cascade Crossing and charged $52m of capitalized costs related to Cascade Crossing to expense in the second quarter of 2013.
Generating Plant Outages—The Boardman and Colstrip Unit 4 coal plants went offline at the beginning of July due to specific equipment failures. Boardman, of which PGE owns 65%, experienced a thermal hammer event in the cold reheat line causing structural damage, and came back online July 31. Colstrip Unit 4, of which PGE owns 20%, experienced vibration and rotor issues. PGE is working with PPL Montana, the plant operator, to assess the damage and necessary repairs. Colstrip is expected to be offline for the remainder of 2013. The company estimates 2013 replacement power costs for the two plants combined to be between $10m and $12m. The estimated repair costs are expected to be approximately $10m for Boardman and $30m to $40m for Colstrip Unit 4. Insurance recovery of repair costs is subject to a $2.5 million deductible at each plant; insurance carriers have been notified of potential claims.
Portland General Electric is a vertically integrated electric utility that serves about 834,000 residential, commercial and industrial customers in the Portland/Salem metropolitan area of Oregon.