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NatGas For Power Up in Dry Northwest, PGE CEO Says

Lower output from wind and hydroelectric sources has meant an increased reliance on natural gas-fired generation in the Pacific Northwest as evidenced by the 2Q2015 results of Portland General Electric (PGE) released on Tuesday.

It was the warmest June ever and third-warmest second quarter ever in the PGE service territory, and overall annual customer growth has increased to 1.5% as the Portland and Oregon economies rebound. Natural gas accounted for 20% of PGE's power mix in 2Q2015, according to CEO Jim Piro.

For the first six months of the year, wind power was off by 30% and hydroelectric supplies were below normal, but Piro said "strong system reliability and power supply management" offset those negative impacts.

Gas-fired generation is on track to get a boost next year when PGE's $450 million, 440 MW Carty Generating Station opens as expected in the second quarter. Construction is proceeding on budget, Piro said during a conference call in which he reported that 2Q2015 earnings were flat compared to 2Q2014.

Related to the Carty project, Piro said TransCanada's Gas Transmission Northwest has begun construction on a 24-mile, 20-inch diameter natural gas transmission pipeline to supply the site at Boardman, OR, adjacent to a PGE coal-fired plant that is slated to close by 2020. Construction of a 500 kV substation that will serve the gas-fired site was recently completed.

Construction of the Carty plant is about 60% complete, Piro said.

As part of the uptick in the Oregon and Portland metropolitan area economies, Piro said energy deliveries by PGE increased 5.8% in the second quarter. Growth was concentrated in the industrial and commercial customer segments, with residential load remaining flat, he said.

In 2Q2014, gas (1%) and coal (8%) combined accounted for less than 10% of PGE's power supplies, while wind (9%) and hydro (9%) contributed nearly 20%. In 2Q2015, natural gas (20%) and coal (35%) contributed more than one-third of the power.

There was also a big drop in purchased power (73% to 49%) quarter over quarter, and a lot of those supplies also can come from gas-fired generators.

PGE reported net income or $35 million (44 cents/share) in 2Q2015, compared to $35 million (43 cents) for the same period in 2014.

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