For the past several weeks the Oklahoma Corporation Commission has heard from attorneys for Oklahoma Gas & Electric regarding the utility’s request for approval to spend $1.1 billion.
It’s a little complicated, but essentially OG&E has to move away from coal-fired power plants in order to comply with federal regional haze and mercury and air toxics rules.
The state’s largest utility plan to pay for that involves increasing rates about 3.5 percent annually through 2019.
“That doesn't sound like very much each year, but it adds up to bills for residential and commercial customers going up about 15 to 20 percent from now to 2019,” said Journal Record managing editor Adam Brooks. “OG&E officials are getting the pre-approval because later they'll have to go back to the Corporation Commission and formally ask for authority to pass these fees onto consumers.”
Consumer advocates want to know just what they’re getting for their $1.1 billion, and The Journal Record’s Sarah Terry-Cobo says that’s created an issue because the price tag includes two seemingly disparate projects.
It estimates that it needs to spend about $700 million to reduce air pollution from its coal-fired power plants, the result of the federal Clean Air Act. The company also plans to spend about $414 million to replace old natural gas turbines at its Mustang plant with new, quick-starting natural gas combustion turbines. However, the latter project is unrelated to federal air pollution requirements. Assistant Attorney General Jerry Sanger questioned why the utility planned to include about $10.8 million for dismantling old equipment at its Mustang power plant. The company could add new equipment to the site within the next two years, but doesn’t need to dismantle old equipment right away. Sanger asked Sheri Richard, director of revenue requirements for OG&E, why the company included those expenses in the rate hike. The company will have depreciation for that equipment, she said. Those dismantling costs could be included in another case, she said in response to one of Sanger’s questions. “If we don’t dismantle (that equipment) soon, we can put those costs into base rates (and collect that money later),” Richard said.
Tuesday’s hearing became a little heated.
Judah Rose is the senior vice president and managing director of the consulting firm ICF International. He’s an expert witness in this hearing, in the past he’s backed upgrades at a natural gas in Arkansas. But he didn’t seem as supportive of doing the same thing in Oklahoma.
His firm conducted its own analysis of the utility’s Integrated Resource Plan. The utility could save up to $3.3 billion if it added wind power from turbines that receive federal production tax credits, combined with new natural gas power plants. ICF International’s analysis was compared to OG&E’s plan to add pollution scrubbers to a coal power plant and to convert a coal plant to natural gas. The utility doesn’t plan to add more wind in the near future for logistical reasons, company representatives previously testified. There is too much congestion in the electric transmission system, OG&E said, in part because so many wind farms have been added recently. However, Rose said that argument is flawed. The company plans to spend $11 billion on a transmission system to transport electrons from wind power farms in northwestern Oklahoma to central Oklahoma. Yet a single $7 million transmission switch could alleviate that congestion, Rose said.
As StateImpact Oklahoma's Logan Layden has reported, Oklahoma attorney general Scott Pruitt is no fan of federal regulation or the Environmental Protection Agency. But Brooks says it took his office awhile to weigh in on the dispute.
“Some folks thought that was strange because the attorney general is really supposed to represent the people of the state in this sort of case,” Brooks said. “Possibly because of some media pressure, his office did say that they are going to suggest that OG&E remove the $400 million at Mustang power plant, but they haven't formally put that into the hearings yet.”
There’s no real end date in sight, and the hearing could take weeks. There’s a public comment period at 1:30 p.m. on each meeting day.
“After the hearing, the judge who's hearing the case will make a recommendation to the Oklahoma Corporation Commission,” Brooks said. “After that, the three corporation commissioners will vote, and then later on OG&E will have to come back and specifically ask for the rate increases.”
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