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Oregon Coal Plant Closure Problematic For Planners, PGE CEO Says

More natural gas-fired power generation could be part of the future energy mix in Oregon, but it is not being swallowed easily by some stakeholders as they wrestle with what to do to replace a major coal-fired plant that is set to close in 2020, Portland General Electric (PGE) CEO Jim Piro said Friday.

"The big driver on [future power generation] capacity is the closure of the Boardman [OR, coal-fired] facility, which is nearly 600 MW," Piro said during an earnings call. "In the integrated resource plan [IRP] discussions we're trying to divide the talk between identifying the needs and then how we're going to fill them. The major need is really the Boardman closure."

The IRP process is aimed at identifying with state regulatory commission staff the lowest cost ways to fulfill the agreed-upon need, Piro said.

CFO Jim Lobdell added that there are also other generation plant closures taking place in the broader Pacific Northwest region that influence PGE's future options and therefore must also be accounted for.

PGE eventually must hold requests for proposals (RFP) to acquire renewables, capacity, and/or build new projects to satisfy the IRP. "We'll be receiving the best combination of resources consistent with the acknowledged IRP action plan to meet our customers' future energy and capacity needs," said Piro, who reiterated that the utility has "no predetermined outcome in the RFP process."

Piro emphasized that PGE ultimately wants the "best overall portfolio," balancing costs and risks. All the renewables, along with combined-cycle gas-fired generation, biomass, energy storage and engineering capacity are all part of the potential mix, he said. PGE hasadded gas-fired generation to its portfolio in the past 12 to 18 months.

"People may feel there are other capacity options in the market, and they may indeed exist, but we need to get to an RFP to determine what the options look like and if they are realistic," Piro said.

In response to other questions, Piro acknowledged that there is lot of pushback in the IRP discussions from stakeholders who may see the utility as having a hidden agenda. "The purpose of the IRP is how we address the need, and we need to get to that point because Boardman is 600 MW and it is going to close soon."

Piro said he hopes to get the IRP acknowledged by the Oregon Public Utility Commission by mid-year and then move into the procurement phase, including the RFPs.

For 4Q2016, PGE reported net income of $61 million (68 cents/share), compared to $51 million (57 cents) for the same period a year earlier. For all of 2016, net income was $193 million ($2.16), compared with $172 million ($2.04) for full-year 2015.

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