While the economy in the Portland, OR, area continues to thrive, energy demand among residential and small business customers is likely to shrink over the next decade, according to Portland General Electric (PGE) CEO Maria Pope.
The utility’s outlook is based on a 10-year forecast by the Oregon Office of Economic Analysis.
PGE is projecting flat load growth in 2018 and declining per customer-growth in its residential sector, despite the average 3.3% annual gross domestic product (GDP) growth for Greater Portland’s economy over the past 20 years, Pope said during a 4Q2017 earnings call last Friday.
"Energy efficiency contributed to declining use per residential customer” last year, she said. It resulted in a decline of deliveries-per-customer of 0.6% on a weather-adjusted basis. "This is partially offset by the continued industrial strength from the high-tech sector.
"In 2018, we expect weather-adjusted energy deliveries to decrease just under 1% as a result of energy efficiency, closure of a large paper mill customer in 2017 and continued slow commercial growth in brick-and-mortar retail. We are forecasting flat load growth for the next few years, followed by a long-term return to annual load growth of about 1%."
The outlook and PGE's latest integrated resources plan (IRP) dampen the prospects for natural gas-fired generation, which had been boosted in the past two years by an expansion of gas storage tied to more gas-fired units at the Port Windward plant. The expanded no-notice storage is scheduled to be available next winter, 2018-19.
Proposals for added gas-fired generation have been cut back, and the replacement for the coal-fired Boardman plant to be closed in 2020 is left mostly to energy efficiency and renewables, along with added purchased power, as the state emphasizes further de-carbonization of its energy mix.
Last year, PGE dropped plans to add two new gas-fired units at Carty Generating Station, near the Boardman facilities.
Pope said PGE is in the midst of a changing customer base that is "transforming largely from an industrial economy based on natural resources” such as fossil fuels, to a system “that is much more high-tech focused."
She sees this translating into customers wanting more smart grid and green energy solutions. "In Oregon, the customers are rapidly changing their expectations” for energy resources, she said.
PGE's service territory is experiencing higher rates of energy efficiency across the board than in the past, Pope said. She noted that in 2018 the utility is expecting energy efficiency to offset any load growth by 1.6%.
The region’s population growth of 1.3-1.4% “is driving a lot of construction growth in our distribution system, but that isn't translating into higher loads," she said.
Longer term, however, a "substantial expansion" is expected for the utility from industrial customers, including Nike and Amazon.com, along with the technology manufacturing space.
"What we are going through short-term is really a transformation," involving some traditional industrial plant closures and capacity reductions in metal manufacturing, including the solar sector that was hit by the newly enacted solar import tax, Pope said.
"We're going through this in a relatively short period of time, but longer-term we feel very confident in our growth numbers."
In 4Q2017, net income was $42 million (48 cents/share), compared with $61 million (68 cents) for the same period in 2016. For 2017, net income was $187 million ($2.10/share), compared with $193 million ($2.16) in 2016.