Item 7.01 Regulation FD Disclosure.
On April 29, 2016, Portland General Electric Company (PGE or Company) disclosed
in its Quarterly Report on Form 10-Q for the quarterly period ended March 31,
2016 that it was targeting an in service date for the Carty Generation Station
project (Carty or the Project) in July 2016. PGE had previously disclosed that
on December 18, 2015, the Company declared its engineering, procurement and
construction contractor for Carty, Abeinsa EPC LLC, Abener Construction
Services, LLC, Teyma Construction USA, LLC, and Abeinsa Abener Teyma General
Partnership, an affiliate of Abengoa S.A., (collectively, the "Contractor"), in
default under the construction agreement (Construction Agreement), terminated
the Construction Agreement and took control of the Carty site.
The Company also disclosed in its associated April 29, 2016 earnings conference
call that the Project would complete its first fire in early June. The Company
has received numerous inquiries from investors concerning the results of first
fire, and is filing this Current Report on Form 8-K in order to respond to those
inquiries in a manner that complies with Regulation Fair Disclosure issued by
the United States Securities and Exchange Commission (SEC).
On June 21, 2016, the Company completed its first fire of Carty and is
continuing with the startup phase of the Project, which requires that extensive
work be completed prior to placing the plant in service. First fire involves the
initial running of the gas turbine and marks the end of the construction and
commissioning phase. This is one of several steps that need to be completed
prior to declaring the plant in service.
The Company is targeting an in service date by July 31, 2016. However, due to
uncertainty concerning the expected outcomes of the steps remaining before the
plant can be placed in service, as well as continued uncertainty relating to the
quality of the work performed by the Contractor prior to termination of the
Construction Agreement, the in service date for Carty could be delayed beyond
that date. As previously reported, the 2016 General Rate Case order issued by
the Oregon Public Utility Commission (OPUC) allows for the inclusion of $514
million of capital costs related to the Project to be included in customer
prices, provided that the Project is placed in service by July 31, 2016. If PGE
determines that the in service date will be delayed beyond July 31, 2016, the
Company will provide an update to investors.
For additional information related to Carty, including the alternatives PGE may
pursue related to the recovery of Carty costs if the plant is not placed in
service by July 31, 2016 and the recovery of costs in excess of the $514 million
approved by the OPUC, as well as legal matters related to the Construction
Agreement and the performance bond provided in connection with the Construction
Agreement, see Note 9, Carty Generating Station, in the Company's Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 2016.
Information Regarding Forward-Looking Statements
This current report includes forward-looking statements. PGE based these
forward-looking statements on its current expectations about future events in
light of information available to the Company on the date of this current report
and the Company's current assumptions about future circumstances.
Forward-looking statements include statements regarding the targeted in service
date for Carty. Investors are cautioned that any such forward-looking statements
are subject to risks and uncertainties, including the outcome of the remaining
steps in the commissioning process, the discovery of additional defects in the
construction work performed by the prior contractor, and the occurrence of other
unforeseen problems that arise in the course of completing construction of the
Project. As a result, actual results may differ materially from those projected
in the forward-looking statements. All forward-looking statements included in
this report speak only as of the date hereof and the Company assumes no
obligation to update any such forward-looking statement.
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