PGE may opt against natural gas plants to replace coal plant in Eastern Oregon
Pressure is mounting on Portland General Electric to abandon or delay building two new natural gas-fired power plants to replace its Boardman coal plant in Eastern Oregon.
As state regulators prepare final comments on PGE's plan and a hearing in Portland — where opposition to the plan runs deep — there are new signs PGE is being more open to alternatives.
Last November, PGE proposed two new natural gas plants next to its new Carty gas plant to replace the nearby Boardman coal plant when it closes in 2020, and to meet customers' other long-term energy needs. The proposal, buried in a more than 800-page Integrated Resources Plan the electric utility submitted to the Oregon Public Utility Commission, scored the Carty natural gas option slightly higher than an alternative largely relying on wind power.
Environmental groups immediately criticized PGE's plans, saying it shouldn't build fossil-fuel-based power plants that customers would need to pay for over 40 years at a time when society needs to shift to renewable energy to avert massive climate change.
"PGE is asking to double-down on Carty, adding these two additional units," says Dan Serres, conservation director of Columbia Riverkeeper. "We see significant questions and risks about this frack-based power path that PGE is moving down."
"There's been a lot of opposition to a second (and third) Carty generating plant," said Michael Dougherty, chief operating officer of the Oregon Public Utility Commission, which is taking comments on PGE's Integrated Resources Plan.
More than 7,000 other public comments, most of them opposed, were submitted to the state Energy Facilities Siting Council that is reviewing the gas plant projects, Serres says.
Portland Mayor Ted Wheeler and Multnomah County Chair Deborah Kafoury recently joined the fray when they proposed shifting the entire energy supply used in the county to renewables, which meant trying to convince PGE to abandon building more gas plants.
On Friday, Columbia Riverkeeper and four allied environmental groups filed comments with the Public Utility Commission raising questions about how PGE has managed the first Carty gas plant that opened last year.
It's well-known that it came in more than $100 million over budget. But Friday's filing revealed that a piping subcontractor on that project, Indiana-based NewJac Inc., filed a complaint to the state Building Codes Division alleging PGE failed to conduct adequate inspections of piping at the plant.
Before that complaint was filed, NewJac sent PGE a "demand letter" that asked for $2 million or they'd go public with the allegations, says Laurel Schmidt, PGE spokeswoman. "We reviewed it and we determined they were baseless and refused to meet their demands," she says. "Carty's construction was in compliance with all safety and code requirements."
The environmental groups' filing also notes PGE went to the Oregon Department of Environmental Quality soon after the Carty plant opened, asking for permission to emit significantly more volatile organic compounds into the air than its DEQ permit allows.
VOCs are a component in smog, one of the issues that caused PGE to propose closing the Boardman coal plant, Serres says. "The more efficiently they run, the fewer the VOCs," he says.
Schmidt says PGE received new information from Mitsubishi, manufacturer of the gas plant's turbines, that VOC emissions would be higher than it was initially told. PGE is working closely with DEQ to change its permit, she says.
PGE also has been taking steps to seek alternatives that may make the gas plants unnecessary, at least in the short term.
The utility recently secured access to hydro power from a dam in Douglas County for the next decade. PGE also has been checking the "spot market" to negotiate purchases of other available power from third-party suppliers.
Some of PGE's biggest industrial customers have argued that buying power on the spot market would be less risky than committing to new power plants now.
Angus Duncan, chairman of the Oregon Global Warming Commission, has urged PGE to do the same."My judgement is that's exactly what they're doing now," he says.
Initially, "senior management was pretty locked in on the gas plant," Duncan says. But they've backed off and are more open to alternatives now, he says.
"I honestly think PGE is trying to be responsive to what they've heard" from the public, says Wendy Gerlitz, policy director of the Northwest Energy Coalition.
In a recent conference call with utility analysts, PGE CEO Jim Piro said he hopes to negotiate short-term purchases of power from other suppliers on the market, and the Carty gas plants would remain on the table as a potential backup.
PUC commissioners, staff and others have encouraged PGE to explore alternate sources of energy in the market, Schmidt says. "We are listening to their input, and have confirmed that there is available capacity in the region which could meet our remaining need."
Piro told analysts such negotiations should be "well under way" in the next two to four months, Schmidt says.
By delaying construction of gas plants, PGE could take advantage of lower prices for wind and solar, whose prices keep falling, Duncan says.
Falling wind and solar development costs over the past eight to 10 years have been "as flabbergasting" as the falling prices of natural gas due to fracking drilling methods, he says. "It's really unclear when those cost reductions will stop."
While natural gas prices are at historic low levels because of fracking, that may not last. Fracking causes earthquakes, leaks of methane — a highly potent greenhouse gas — and water and land pollution. Covering the costs of those impacts could eventually raise the price of natural gas.
"Why would you lock in a 40-year gas plant?" Duncan says. "The trends all favor holding off if you can hold off."
• Friday, May 12: Analysts from the Oregon Public Utility Commission submit their comments on PGE's Integrated Resources Plan.
• Monday, May 15, 6 p.m. to 8:30 p.m.: The PUC holds a public hearing on the plan downtown at the Portland Building, 1120 S.W. Fifth Ave., in the auditorium.
• Aug. 8: PUC will hold a final hearing on the proposal in Salem.
• Aug. 31: PUC issues final order.