Portland General Electric (NYSE:POR) (PGE) is eyeing resource options and the timing of possible generation additions as it prepares to file an Integrated Resource Plan (IRP) with Oregon regulators and as legislation moves through the state Legislature that would boost Oregon’s renewable portfolio standard (RPS), PGE executives said Feb. 12 during the company’s 4Q15 earnings call.
PGE plans to participate in the Western energy imbalance market (EIM) starting in the fall of 2017, with the California ISO (Cal-ISO) petition at FERC still pending, and access to the EIM would enhance PGE’s access to renewable resources in the region, a PGE spokesperson told TransmissionHub Feb. 12.
The Oregon legislation (HB 4036) was passed by the House Energy and Environment Committee and is headed to the state House floor for a vote, Jim Piro, president and CEO of PGE, said during the call. The legislation would increase the RPS mostly in later years, reaching 50% in 2040, though it would also increase the current RPS of 25% in 2025 to 27% in 2025, with requirements for 35% by 2030 and 45% by 2035, Piro said.
The utility is considering the timing of issuing a request for proposals (RFP) and utility-build options for new generation resources, since its Boardman coal-fired power plant is slated to be shut around 2020, with an RFP perhaps being filed with regulators in the later part of 2016, Piro said during the call.
Adding a higher RPS as a possibility in the mix and considering transmission access to renewable resources in California has PGE examining portfolio options that balance cost and risk, Piro said. He noted that the high levels of solar resources being added in California have officials in that state dealing with grid implications “but the straw into California is only so large, so we have to think about the reliability of that supply as well as the cost” of moving it to address PGE’s needs.
“Those are things we’re looking at” in preparing the IRP, which is expected to be filed with the Oregon Public Utility Commission in the second half of 2016, Piro said.
PGE executives did not address the EIM during the earnings call, but access to the market is an important tool for efficient dispatch of generation resources and accessing renewable resources from a broader region, the PGE spokesperson said following the call.
PGE is continuing to work with the Cal-ISO about how the EIM can help manage generation resources over a broad area, the spokesperson said.
The plans for joining the EIM, dealing with the possibility of a higher RPS and perhaps issuing an RFP “are all part of the larger puzzle” that will be addressed over time and outlined in the upcoming IRP, the spokesperson said.
PGE is continuing to deal with the fallout of a change in general contractor building the Carty generating station, a 440 MW natural gas-fired power plant near Boardman, Ore., after it declared the first contractor, Abeinsa, in default under multiple provisions of the construction agreement, Piro and Jim Lobdell, treasurer, senior vice president of finance and CFO at PGE, said during the call. Construction was halted for a few days last December, but is on track to be completed in July, they said.
Two sureties, Liberty Mutual and Zurich North America, have provided a performance bond of $145.6m under the construction agreement, and PGE is negotiating with the sureties about their obligations under the performance bond and responsibilities toward completing construction, PGE said in its Feb. 12 earnings statement.
Current cost estimates for completion of the Carty plant are between $620m and $655m, but that does not include any amount that might be received from the sureties under the performance bond, Lobdell said. If the sureties provide what PGE believes they are responsible for, the project would come in on budget, Piro said.
For 4Q15, PGE reported net income of $51m, or 57 cents per diluted share, compared with $43m, or 55 cents per diluted share, for 4Q14.
For all of 2015, the utility reported net income of $172m, or $2.04 per diluted share, compared with $175m, or $2.18 per diluted share, for all of 2014. The dip in annual earnings reflected lower energy sales due to historically warm weather and lower-than-expected hydro and wind generation, PGE said.