Portland General Electric (PGE) opened a new 440 MW natural gas-fired generation plant in eastern Oregon last Friday, the highlight topic of PGE's 2Q2016 earnings conference call on Wednesday.
Located near Boardman, OR, site of a coal-fired plant scheduled to close in 2020, the baseload Carty Generating Station was selected for construction in 2013, following a long competitive planning process dating back to 2009, according to PGE CEO Jim Piro.
In late December last year, PGE fired Carty's contractor, a unit of Abengoa SA, and stopped construction of the project (see Daily GPI, Dec. 22, 2015). At the time, the plant was 70% complete and on track to open during the second quarter this year, which it did despite the upheaval.
PGE subsequently assumed control of the construction site and moved forward.
"Thanks to the hard work and dedicated effort of the PGE project team and some key contractors our new highly efficient plant is a source of reliable, cost-effective power for our customers," Piro said.
As of Monday, the new plant's costs in retail utility rates resulted in an increase of about 2.5%, but that was earlier offset by a 2.5% rate decrease that was effective Jan. 1 this year, Piro said. "This leaves overall customer prices effectively flat for the year," he said.
The ultimate final capital costs of Carty are currently estimated to be between $640 million and $660 million, said Piro, who noted that PGE has filed with state regulators to recover the capital costs above the $514 million working capital level that were included in a recent rate decision. PGE is in the process of seeking insurance coverage first to cover the added funds.
During his review of capital expenditure plans for the future, Piro said that PGE has identified an investment opportunity of about $70 million in a natural gas reserves project that is included in its updated gas supply tariff with state regulators and he will provide details on future quarterly calls.
Noting a "fairly significant" capacity shortfall over the longer term of 800 to 900 MW, Piro said PGE is trying to determine the right type of capacity to add to its system, which increasingly will include more renewables.
"As technology continues to evolve on the gas turbine side, we think that flexible combined-cycle units can provide the kind of ramp rates we would need while offering the economics of combined-cycle operations," Piro said. "Those are starting to emerge as viable resources to meet our capacity needs."
For 2Q2016, PGE reported net income of $37 million (42 cents/share), compared to $35 million (44 cents) for the same period last year.