Portland General Electric (NYSE:POR) said Nov. 1 that it has had issues with power plant operations, with some of those problems fixed, but the return of a unit at the Colstrip power plant not expected until early next year.
“While the generating plant outages have been challenging this year, the balance of the company’s operations have been very strong,” said President and CEO Jim Piro in a Nov. 1 earnings statement. “Our performance in distribution reliability and customer satisfaction is top quartile, we reached a reasonable settlement on all issues in our 2014 general rate case, and the construction of our new thermal and renewable resources is proceeding on time and on budget.”
PGE said it is making progress on its three new generation projects. Construction is underway on Port Westward Unit 2, a 220-MW natural gas-fired capacity resource and on Tucannon River, a 267-MW wind farm. Engineering and design is underway for the Carty Generating Station, a 440-MW natural gas-fired energy resource, with construction expected to begin in early 2014.
The Boardman (in Oregon) and Unit 4 of the Colstrip (Montana) coal-fired plants both tripped off-line on July 1 due to equipment failures. Boardman came back online at the end of July and Colstrip Unit 4 is expected to come back online in the first quarter of 2014. Coyote Springs, one of PGE’s natural gas-fired plants, tripped off-line in late August due to cracks in the steam turbine rotor. Repairs to the plant are underway and Coyote Springs is expected to be online later this month.
PGE owns 65% of Boardman, with that share representing 374 MW (net) of capacity. It owns 20% of Colstrip Units 3 and 4, which is a 296 MW (net) share of the total capacity of those units. Coyote Springs has a capacity of 231 MW (net).
PGE’s share of repair costs for the coal plants – approximately $13m – is expected to be covered by insurance, net of about $2m in deductibles. Repair costs for Coyote Springs are estimated to be $2m. All together, replacement power costs in 2013 for the three outages are expected to be $16m to $18m.
In late October, PGE and the Bonneville Power Administration (BPA) agreed to discontinue discussions regarding PGE’s potential ownership of approximately 1,500 MW of BPA’s transmission capacity rights. PGE and BPA concluded that they would not be able to reach an agreement on financial terms that benefited both PGE and BPA customers, the utility explained. At this time, PGE has determined that transmission service offered under BPA’s open access transmission tariff is the best option for meeting its current transmission needs.
Purchased power and fuel expense increased $8m, or 4%, for the third quarter of 2013 compared to the third quarter of 2012. The increase consisted of $15m related to a 9% increase in the average variable power cost, which is largely due to the unplanned plant outages, partially offset by $7m related to a 4% decrease in total system load. During the third quarter of 2013, the company incurred about $11m of incremental replacement power costs related to the unplanned plant outages.
Interest expense decreased $2m, or 7%, in the third quarter of 2013 compared with the third quarter of 2012, due to an increase in the allowance for debt funds used for construction driven by a higher average construction work-in-progress balance resulting from the commencement of the construction of Port Westward Unit 2, Carty Generating Station and Tucannon River Wind Farm in 2013, as well as a decrease in interest expense driven by the timing of the maturities and issuances of long-term debt.
Portland General Electric is a vertically integrated electric utility that serves about 836,000 residential, commercial and industrial customers in the Portland/Salem metropolitan area of Oregon.