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Ore. stakeholders question Portland General's plan for additional resources

Oregon Public Utility Commission staff, a ratepayer advocacy group, generators and others are raising concerns about an integrated resource plan developed by Portland General Electric Co.

PUC staff, for example, said it believed PGE overstated its 819 MW shortfall for 2021 by 40%, according to initial comments filed Jan. 24 on the resource plan. Also, staff said it has "low confidence" in the utility's 1.2% annual load growth forecast, noting that the utility has consistently overforecast its growth rate.

Further, PUC staff said it was unconvinced of PGE's need to acquire renewables in 2018.

In its IRP, proposed in mid-November 2016, PGE said it expects to acquire the equivalent of 515 MW of wind to meet Oregon's renewable portfolio standard, which was expanded to 50% by 2040 under a sweeping energy law that also bars the utility from coal-fired generation starting in 2035. The standard includes staged increases to 20% in 2020 and 27% in 2025.

PGE wants to purchase the renewables in time to take advantage of the federal production tax credit for wind, which is being phased out.

PUC staff, however, said in the past that PGE did not have enough taxable income to use all its production tax credits. Further, with the expectations of more decreases in wind costs, it may be more cost-effective to buy wind in the 2020s, staff said.

The resource plan also calls for acquiring up to 850 MW of natural gas-fired resources, including 375 MW to 550 MW of annual resources. The utility expects to acquire another 400 MW that could be annual or seasonal resources.

PGE is performing "due diligence" on two natural gas-fired options: a 390- to 530-MW combined-cycle plant and a 225- to 330-MW simple-cycle plant next to its existing Carty Generating Station power plant. The utility said it is considering offering the sites for a third party to bid on in a future request for proposals, with PGE ultimately owning the facilities.

PGE needs to better explain how the long-term asset purchases serve ratepayers during a period of uncertainty, commission staff said. "These uncertainties include disruptive distributed technologies, regional market dynamics and public policies that will make fundamental changes to how utilities operate over the next five to ten years," they said.

CUB urges delay in adding assets

The Oregon Citizens' Utility Board, or CUB, representing ratepayers, said PGE is undervaluing medium-term resources, not using enough market purchases and committing ratepayers to investments in natural gas-fired power plant despite uncertainties that will probably reduce the utility's capacity needs.

PGE should be required to explore entering into five- to 10-year contracts instead of adding natural gas-fired generation, according to the CUB.

PGE's market purchases have dropped from 35% of its portfolio in 2013 to zero this year at a time when wholesale power prices are generally low, the advocacy group said. "Based on PGE's own projections, market purchases may be a least-cost option to make up, at least a segment, of the company's power supply," the CUB said.

The group contends that technological developments in demand response, energy efficiency and energy storage will increasingly reduce PGE's projected long-range need for new capacity resources, according to the CUB.

Growing renewables requirements and increased distributed generation are driving down power prices, which reduces the value of selling hydroelectric resources into the market, according to the CUB. PGE should issue a solicitation to see if it can buy cost-effective hydro capacity, the group said.

Generators call for PPAs

Generators also called on PGE to enter into short- and medium-term power purchase agreements. "With so much environmental policy uncertainty, PGE should consider 'renting' resources instead of 'buying' them," the Northwest and Intermountain Power Producers Coalition said.

PGE's analysis overstates the benefits of utility-owned generation compared with PPAs, according to the trade group.

PacifiCorp and Puget Sound Energy Inc. both rely extensively on market purchases for the power supply, NIPPC said.

The Oregon Department of Energy urged the PUC to require PGE to study joining a Western regional transmission organization, which is being developed by the California ISO and PacfiCorp. The utility is already intending to join later this year the energy imbalance market started by the ISO and in which other western utilities are already participating.

If the PUC "acknowledges" the resource plan, PGE will have increased assurances that it can recover plan-related costs in rates. (Oregon PUC Docket No. LC 66)

Ethan Howland is a contributing reporter to S&P Global Platts, which, like S&P Global Market Intelligence, is owned by S&P Global Inc.