Bonneville Power Administration will sell Portland General Electric up to 200 megawatts under two five-year deals, BPA and PGE said on March 7.
The power purchase agreements will help fill a projected shortfall in PGE’s generating capacity after 2020, when the Boardman Generating Station ceases coal-fired operations.
“These contracts are an example of how BPA is working toward greater cost competitiveness and capturing the additional value of the low carbon, flexible federal resources by strengthening partnerships with regional utilities as we collectively adapt to the rapidly changing energy environment,” Suzanne Cooper, BPA’s vice president of bulk marketing, said Wednesday.
Under two five-year agreements beginning in January 2021, BPA will offer to sell PGE up to 200 MW of surplus hydropower generated from the Federal Columbia River Power System.
Negotiations between BPA and PGE began after BPA responded to an inquiry from PGE seeking access to existing regional generating resources.
With the encouragement of the Oregon Public Utility Commission and other stakeholders, PGE reached out to BPA and other regional power generators last year as part of its integrated resource planning process to see if its need for additional on-demand generating capacity could be met without committing in the near-term to construction of new power plants.
In addition to allowing BPA to take advantage of a new opportunity to market its flexible hydropower and generate direct revenue as part of a broadening portfolio of power products, the contracts allow PGE more time for new dispatchable resource technologies to mature to help the company integrate increasing amounts of renewable power onto its system, BPA and PGE noted.
“Dispatchable resources like hydroelectricity can help the region achieve its renewable goals by dovetailing with variable output resources like wind and solar to meet load swings,” they said in a March 7 news release.
BPA sells power from federal dams totaling about 22,000 MW and from a 1,107-MW nuclear plant using 15,000 miles of high-voltage power lines that cross the Northwest.
The federal power marketer provides about 28 percent of the electricity used in the Northwest and its customers include 54 cooperatives, 42 municipalities and 28 public utility districts.
PGE preparing for retirement of coal plant
PGE is preparing for the 2020 retirement of its majority-owned 600-MW coal-fired Boardman power plant. The Portland, Oregon-based investor-owned utility had been preparing to add up to 850 MW of natural gas-fired generation to its fleet to replace the plant but agreed last year to explore buying existing resources that could be less expensive. The utility also lowered its expected capacity shortfall to about 560 MW.
A ratepayer watchdog group is supporting the BPA-PGE deal. “It's a value-added product for the federal power system and a good alternative for PGE,” said Bob Jenks, Oregon Citizens’ Utility Board’s executive director. “It puts off big new investments in [natural gas plants] that would have locked PGE and its customers into fossil fuels for decades.”
PGE has also entered into a five-year contract for 100 MW of seasonal peak capacity during the summer and winter periods, Maria Pope, PGE president and chief executive officer, said during a February 16 earnings conference call with analysts.
“We expect our remaining capacity needs to be filled by acquisition of energy storage, capacity contributions from renewables procured through the [request for proposals,] contracts of qualifying facilities and market purchases,” Pope said.
PGE is preparing to issue an RFP in May for renewable resources that starting around 2020 can provide 876,000 MWh a year, an amount that a roughly 300-MW northwest wind farm can deliver.
Oregon’s RPS was expanded in 2016 to 50 percent by 2040 under a sweeping energy law that also bars the utility from coal-fired generation starting in 2035. The RPS ramps up to 20 percent in 2020 and 27 percent in 2025.
The BPA contracts won’t count towards the RPS, according to PGE.
