February 13, 2018
Oklahoma

Wind Catcher costs request gets negative recommendation

By Jack Money | The Oklahoman | February 13, 2018 | newsok.com

An Oklahoma Corporation Commission administrative law judge is recommending against preapproval of Public Service Co. of Oklahoma’s request to allow it to charge its ratepayers to help it own part of a wind farm and to use some of that power.

PSO is asking the commission to authorize it to recover an anticipated expenditure of about $1.36 billion to become part-owner of the 2,000 megawatt Wind Catcher project, and to build a 765-kilovolt line capable of carrying 600 megawatts of power from the wind farm to a PSO substation north of Tulsa.

The utility has said the power would supply electricity to both its customers and those in Southwestern Electric Power Co., a sister utility. Both utilities are subsidiaries of American Electric Power.

The judge used existing statutes and commission rules to make the recommendation after conducting a hearing on the issue and reviewing filed testimony from dozens of witnesses.

• The commission’s rules require a utility to request cost recovery preapproval before construction on the proposed project begins. But the judge’s recommendation states that construction on Wind Catcher already had started before the request was made.

• Oklahoma law requires utilities to show a need exists for added electrical capacity either to meet higher demand or to satisfy renewable energy or other regulatory requirements.

The judge’s recommendation states that PSO failed to show a need because its analysis used unreasonable data developed through a flawed planning process that contained assumptions about future natural gas prices, carbon costs and wind additions that overstate the project’s benefits.

The judge’s recommendation also noted there are associated risks with the project that include potential cost overruns, nonperformance by PSO’s partners and possibilities the power line might not get built or that the project might fail to qualify for full federal wind production tax credits.

• The utility didn’t competitively bid the projects. “An excuse of ‘not enough time’ for competitive bidding is not sufficient in light of the significant cost to be borne by PSO customers,” the judge stated as part of the recommendation.

The utility previously had said it expected Wind Catcher would be operational in late 2020, and that its costs would add about $78 million to its customers’ rates in 2021.

However, it also had said it expected lower energy costs and the federal wind production tax credit would offset the increase, and, had made additional promises to regulators it said would protect its customers.

PSO officials said Monday they were disappointed by the recommendation, adding they still hoped elected commissioners might approve the plan. They said they plan to file their response to the recommendation later this month and hope for a hearing before commissioners in March.

In a statement, PSO said a rejection would “deny our customers the extraordinary savings that Wind Catcher would provide and would effectively stop one of the largest private investments in state history, which would deny the state and local communities the tax revenues and economic development benefits of Wind Catcher.”

Oklahoma Attorney General Mike Hunter, meanwhile, said the administrative law judge’s recommendation backs his position on PSO’s request.

“The Wind Catcher project will be a net cost to customers of at least $320 million, based on our analysis,” Hunter said. “We hope the commissioners do the right thing for PSO ratepayers and uphold the judge’s recommendations.”