Electricity Policy

Wed09202017

Last updateThu, 16 Mar 2017 7pm

ISSN 2331-1223  Twitter

Portland General Electric’s double down on gas-fired plant raises a few questions

Carty

September 7, 2016—Portland General Electric has initiated a permitting process to expand its Carty Generating Station with two new natural gas-fired power plants and a utility-scale solar project. The utility aims to develop up to 860 MW of added natural gas generation at Carty and a 50-MW solar project, but its plans are far from set in stone. The proposed gas-fired units will need state siting approval, must be green-lighted by the Oregon Public Utility Commission and, as the Portland Business Journal reported on Thursday, will be scrutinized by its customers and the Citizens Utility Board. Oregon’s environmental community may look askance at the gas-heavy proposal too, given PGE’s support for legislation enacted earlier this year mandating that at least half its generation come from renewable energy by 2040. “It’s a bit of a horse and rabbit stew,” commented an environmentalist, who did not wish to be named.

PGE’s 440-MW Carty station has been operating at full capacity since the end of July. The troubled project was delayed after work stopped in December, when PGE declared its former contractor on the site, Abeinsa, in default and took over the Carty construction site. Abeinsa is a subsidiary of Abengoa, which itself is in bankruptcy. Construction issues at Carty pushed its original $514 million cost to around $660 million. PGE believed it was protected from the added cost by a $145.6 million performance bond, but insurers Liberty Mutual and Zurich North America denied liability because PGE had fired the contractor. That led PGE to sue the insurers, and raised the prospect of PGE looking to its customers to cover for the added costs if it can’t recoup from the insurers.

Non-utility generators are among those who question the utility’s latest plan. “PGE continues to test Oregon regulators’ authority and patience,” said Robert Kahn, executive director of the Northwest and Intermountain Power Producers. “It bet its customers’ money on the original Carty power plant, which barely met schedule and ran 30% over budget. Now PGE is in international litigation with its sureties over who is ultimately responsible for the inability of Abeinsa, an Abengoa subsidiary, to complete Carty. It made a grievous error choosing inexperienced Abeinsa over a field of seasoned IPPs that competed to deliver equivalent capacity,” Kahn told Electricity Daily. “The explanation is simple,” he added. “It willingly risks its ratepayers’ dollars for the sake of expanding its rate base. The Oregon commission will eventually decide whether or not to dispense more ratepayer dollars for the original Carty. But PGE’s self-evident failure should disqualify it from spending a dime on ‘Carty 2.’” 

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