Southwestern Electric Power Co., a unit of American Electric Power, has negotiated a proposed settlement with Arkansas’ attorney general and significant power users there that would give it part of the approval it needs to become the majority owner of the Wind Catcher Energy Connection project.
Once built, Wind Catcher would be the nation’s largest single-site wind project. It is being built by Invenergy in Cimarron and Texas counties in Oklahoma’s Panhandle.
The utility, along with Public Service Co. of Oklahoma, seeks regulatory approvals in various states to authorize their plans to buy the 2,000-megawatt wind farm and to build a 360-mile-long line to carry power from the project into their grids.
The proposed settlement Southwestern Electric announced this week, which involves a $607 million investment on the part of its Arkansas customers, still must be approved by the Arkansas Public Service Commission.
But signatories include Southwestern Electric Power, the commission’s staff, the state’s attorney general, Walmart Stores and Sam’s West Inc.
Officials said the proposed settlement was reached with the help of a number of guarantees Southwestern Electric offered, including a cap on construction costs, that the project would qualify for 100 percent of federal production tax credits, and that it would produce enough power annually to benefit those customers.
“We are extremely pleased with this settlement agreement because it recognizes the tremendous opportunity the Wind Catcher project provides for clean, low-cost energy and long-term savings for SWEPCO customers,” Venita McCellon-Allen, the utility’s president and chief operating officer, stated in a news release announcing the proposed deal.
“Walmart has a goal to be supplied by 100 percent renewable energy, and sourcing from wind energy projects – like the Wind Catcher project – is a core component in the mix,” Mark Vanderhelm, vice president of energy for Walmart, stated in the release.
Southwestern Electric said it estimates the project will save the 532,000 customers it has in Arkansas, Louisiana and Texas more than $4 billion during the expected 25-year life span of the project, noting that renewable energy would make up 26 percent of its energy resource mix once Wind Catcher is operational.
Utility officials also said they expect the company’s Arkansas customers would begin to see savings in their bills in 2021, primarily through a reduction in fuel costs.
The economic impact of the project will include manufacturing of key components of the wind turbines in states served by Southwestern Electric, its officials said.
GE Renewable Energy, which will provide 800 of its 2.5-megawatt wind turbines for the Wind Catcher facility, anticipates that a significant number of turbine blades, towers and generator frames will be built in Arkansas, Louisiana and Texas.
Southwestern Electric didn’t say when it expects the Arkansas Public Service Commission to consider the proposed settlement.
Public Service Co. is seeking preapproval from the Oklahoma Corporation Commission to recover an anticipated expenditure of about $1.36 billion it would spend to acquire 30 percent ownership in Wind Catcher 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.
Utility representatives, officials from the Oklahoma Attorney General’s office and other interested parties have testified about the request before an administrative law judge.
The judge recommends against authorizing PSO’s request, based on state statutes and commission rules for several reasons, including the requirement for utilities to submit such requests before construction starts (that didn’t happen in this case), to show a need exists for added electrical capacity (the judge agreed with opponents who don’t think that threshold had been met), and, because the utility didn’t competitively bid the project.
While PSO estimates its 545,000 customers would see a rate increase of about $78 million in 2021 if preapproval to recover costs for the project were approved, it also maintains that lower energy costs and the federal wind production tax credit would offset that increase.
And, although PSO officials said they don’t foresee any type of settlement here, they also announced they plan to incorporate the same guarantees Southwestern Electric made in Arkansas into the Oklahoma proposal this week.
PSO anticipates the case will be heard by Oklahoma’s elected commissioners in mid-March.
If all approvals are met, Southwestern Electric and Public Service Co. would take ownership of the $4.5 billion project when it is completed at the end of 2020.