Dive Brief:

• Portland General Electric has filed a $180 million lawsuit against Liberty Mutual Surety and Zurich North America, the companies which posted a $145.6 million performance bond to ensure Abeinsa Abener Teyma General Partnership, the company developing PGE's Carty Generating Station. 
• The insurers are refusing to pay the bond, citing claims by Abeinsa that PGE was wrong to terminate its contract and that it is still in negotiations with the utility.
• PGE told the U.S. Securities and Exchange Commission that the cost to develop the Carty plant, including allowance for funds used during construction, will be approximately $635 million to $670 million.
• That would be about 30% more than regulators approved last year, The Oregonian reports. An additional $156 million could wind up being passed on to ratepayers.

Dive Insight:

PGE in December declared Abiensa, a unit of Spanish energy giant Abengoa SA, in default of its engineering contract, saying the company "had ceased construction activities" around the middle of the month. The utility said it took back the construction site by Dec. 18 and was in the process of putting together a new development team for the project.

That's led to the current lawsuit against the companies who insured the project, but because Abiensa says the contract was improperly terminated, denying liability. 

But the project is almost done, and the utility is still expecting the plant online this summer. "However, due to uncertainties relating to the work performed to date by the contractor and the work necessary to correct defects and complete construction, the costs and completion date for Carty could vary from the company’s current projection," PGE warned federal regulators.

Now, customers may be asked to shoulder up to $156 million in extra costs.  "Increased costs and delay of the targeted in service date could also impact the timing and amount of the company’s recovery of Carty costs in customer prices," PGE told the SEC.

State regulators approved $514 for Carty, but the utility said "if the costs incurred by PGE to complete Carty ... exceed this amount, PGE would seek recovery of the excess amount in customer prices. "

PGE also warned there is not assurance the Oregon Public Utilities Commission would approve the cost recovery, and said if construction goes past July it will need to "pursue one or more alternative avenues to obtain OPUC approval for the inclusion of Carty costs in customer prices."

According to PGE, over the next decade its demand is expected to increase more than 45%, and the 440-MW Carty station would generate enough power for roughly 300,000 residential customers.