Dive Brief:
- Portland General Electric (PGE) expects to spend about $3 billion from 2013 through 2018, with almost half of the investment slated for three power projects, company officials said during an earnings conference call.
- PGE is building three generating projects: a 220-MW gas-fired peaker; a 267-MW wind farm; and, a 440-MW baseload gas-plant.
- PGE expects the projects will drive up customer rates by up to 12%. The utility asked regulators last week to approve an $81 million, or 4.6%, rate hike.
- PGE's weather-adjusted electric sales were flat last year. Including 1.5% energy efficiency savings, PGE expects its sales to increase 1% this year, driven by a jump in sales to the industrial and high-tech sector.
Dive Insight:
Two things about PGE's power plant build out. First, it shows how a utility with modest load growth still needs to make major investments. It's possible that at some point the utility's customers get tired of rate hikes and seek alternate power sources.
Second, PGE will need to add more power plants around 2020. Independent power producers believe that PGE's last round of solicitations for new generation coal, which led to all utility-owned projects, was essentially rigged, even though there was an independent monitor and the Oregon Public Utility Commission approved the process. Any future PGE solicitations will be closely watched.
During the conference call, an analysts asked about PGE's thoughts on the coal-fired 2,090-MW Colstrip plant in Montana, which is facing scrutiny because two units appear to be losing money. PGE owns stakes in the plant's two newer units.
“We need to understand that [units] one and two is much older than units three and four, and so they are going to be probably the focus of the initial conversations,” Jim Piro, PGE president and CEO, said. “Units three and four are still pretty cost-effective and still relatively young in their life.”
However, the economics of coal plants could change depending because of pending greenhouse gas regulations, Piro said.
