PGE to build grid-connected power plant, wind farm

Portland General Electric Co. completed competitive bidding processes and subsequent negotiations to construct a baseload energy project and to acquire and construct a new wind farm.

PGE has also signed a new memorandum of understanding with the Bonneville Power Administration (BPA) to seek mutual transmission capacity solutions, resulting in the company’s decision to suspend permitting and development of the proposed Cascade Crossing transmission project and revise its 2013 earnings guidance.

PGE has entered into the following:

·      An agreement to construct a new 440 MW natural gas-fired power plant near Boardman. Projected cost: $440 million to $455 million, excluding allowance for funds used during construction.

·      Agreements to acquire development rights for and to construct a new wind farm in southeastern Washington with a nameplate capacity of 267 MW. Projected cost: $520 million to $535 million, excluding allowance for funds used during construction.

·      A non-binding agreement to participate in negotiations with BPA to pursue ownership of regional transmission capacity to meet PGE customers’ needs via an innovative exchange of capacity and assets.

The new MOU with BPA stems from continued discussions between PGE and BPA to explore common interests surrounding PGE’s proposed Cascade Crossing transmission project.

New baseload power plant

The 440-MW natural gas-fired power plant will be built for PGE adjacent to its Boardman Generating Station by Abengoa S.A. (MCE: ABG), an international developer and contractor that applies technology solutions for sustainable development in the energy and environment sectors. Abengoa specializes in carrying out complex turnkey projects for thermal generation.

The plant will use a G-class turbine manufactured by Mitsubishi Power Systems Americas Inc. and be capable of producing enough electricity to serve about 300,000 residential customers. Abengoa submitted the best-performing bid to meet customers’ need for a baseload resource, using a new bidding option encouraged by the OPUC to give independent developers access to sites already controlled by PGE.

A total of 18 bids representing eight distinct generating projects were submitted in response to PGE’s request for proposals. PGE will own and operate the new facility, which is scheduled to be online in 2016. The project will create up to 500 jobs during construction and about 20 full-time positions when operating.

New wind farm

PGE has entered into an asset purchase agreement to acquire the development rights to phase two of the Lower Snake River wind farm, currently under development by Puget Sound Energy Inc. near Dayton, Wash., northeast of Walla Walla.

The project will be built for PGE by general contractor and independent renewable power developer RES Americas Construction Inc. using 116 wind turbines manufactured by Siemens Energy Inc., each with a nameplate generating capacity of 2.3 MW, for a total nameplate capacity of 267 MW. The transaction is expected to close in August 2013, subject to customary conditions.

PGE will own and operate the facility, creating up to 300 jobs during construction and about 18 full-time operating positions. The facility is expected to be complete in 2015 and generate enough power to serve about 84,000 residential customers. Timing of construction and project milestones have been structured to enable the project to qualify for federal production tax credits that will reduce the cost of the facility for PGE’s customers by about $253 million during the life of the project.

Phase two of the Lower Snake River project was the best-performing proposal from among 64 bids representing 39 distinct generating projects that were submitted in response to PGE’s request for proposals for renewable resources.

Together with PGE’s existing owned and contracted renewable power generating resources, the new wind facility will allow PGE to comply with state standards requiring the utility to supply 15 percent of the power it delivers to customers from qualifying renewable sources beginning in 2015.

Transmission capacity memorandum of understanding

The new, non-binding MOU provides that PGE and BPA will explore a new option under which PGE could acquire perpetual ownership interest of about 1,500 MW of transmission capacity.

In exchange, PGE could make investments in BPA’s system, transfer assets or transmission capacity, and/or facilitate implementation of operational efficiency solutions for use by BPA. As a result, PGE has decided to suspend permitting and development of the Cascade Crossing project.

Under the MOU, PGE and BPA will work to reach a definitive agreement concerning the options described in the MOU. However, there is no assurance that the MOU will result in a binding agreement.

The MOU reflects progress PGE and BPA officials have made on discussions surrounding Cascade Crossing under a previous MOU signed in January. Changing market conditions have created an opportunity to explore lower-cost alternatives for customers that could provide needed transmission capacity for PGE with reduced environmental impacts.

Plans for new energy projects in the Pacific Northwest have changed and other new transmission lines have been completed or are in development, increasing available capacity. In addition, electricity demand and forecasted growth have slowed. The new MOU identifies an option that could meet PGE’s retail customers’ needs for the next 10 years.

In a subsequent phase, PGE could acquire up to an additional 1,100 megawatts of perpetual transmission capacity ownership, which could include system upgrades and expansions. Timing and costs of these transmission capacity resources may be clarified through future discussions with BPA.

As a result of the decision to suspend permitting and development of the Cascade Crossing project, PGE will record an after-tax loss of about $31 million during the second quarter of 2013 for project-related costs ($52 million pre-tax). The company has filed an application with the OPUC seeking to defer these costs for possible future recovery in customer prices.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at

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