Portland General Electric (NYSE: POR) said in a Feb. 12 earnings report that construction is continuing on the Carty Generating Station, a 440-MW natural gas-fired baseload power plant near Boardman, Ore.
On Dec. 18, 2015, PGE declared the general contractor responsible for engineering, procurement and construction in default under multiple provisions of the Carty construction agreement and terminated the agreement. Two sureties, Liberty Mutual and Zurich North America, have provided a performance bond of $145.6 million under the construction agreement. PGE required the original contractor to enter into the performance bond to guarantee satisfactory completion of the project in the event the contractor failed to fulfill its obligations. Following termination of the construction agreement, PGE, in consultation with the sureties, brought on new contractors, and construction resumed during the week of Dec. 21, 2015.
As of Dec. 31, 2015, PGE had invested $424 million in Carty, including $41 million of AFDC, which was included in Construction Work in Progress (CWIP) for the project. PGE currently estimates that the total capital expenditures for Carty will range from $620 million to $655 million, including AFDC, and is targeting an in-service date in July 2016.
PGE said it is currently in discussions with the sureties regarding their obligations under the performance bond. The company believes that the sureties will have an obligation under the performance bond to contribute funds toward the completion of Carty. However, the sureties have not yet made a determination with respect to their obligations.