OKLAHOMA CITY – Public Service Co. of Oklahoma faced a setback for its Wind Catcher Energy Connection project after an Oklahoma Corporation Commission administrative law judge recommended earlier this month against preapproval of PSO’s request to allow the company to charge ratepayers to help fund the project.
PSO is seeking approval “of the cost recovery of the project; a determination there is a need for the project; approval for future inclusion in base rates cost recovery of prudent costs incurred by PSO for the project; approval of a temporary cost recovery rider; (and) approval of certain accounting procedures regarding federal production tax credits,” according to the report and recommendation of the administrative law judge filed Feb. 12.
The company is looking to recover an anticipated expenditure of about $1.36 billion for the project. The joint effort between Public Service Co. of Oklahoma and Southwestern Electric Power Co., is a $4.5 billion project that involves building a wind farm in Oklahoma, a 350-mile power line and two substations.
The wind farm, to be built on 300,000 acres in Cimarron and Texas counties in the Panhandle, will include about 800 2.5 MW wind turbines. A power line will stretch from there to Tulsa, bringing 2,000 megawatts of energy to customers in Eastern and Southwestern Oklahoma, in addition to parts of Texas, Arkansas and Louisiana.
PSO has said Wind Catcher is anticipated to be the largest wind energy facility in the United States and second largest in the world.
Law requires a “need” for capacity or a need as it relates to renewable energy requirements or other regulatory requirements. PSO has not proven such a need exists, according to the recommendation.
The judge’s recommendation reads that PSO “failed to prove that this project meets an economic need sufficient for preapproval of this project,” and the PSO’s economic analysis used “unreasonable data and utilized a flawed planning process.”
In addition, the recommendation states PSO’s analysis “contained assumptions regarding future gas prices, carbon costs, and wind additions that overstate the benefits of the project,” and that the project shows potential risky elements such as the risk of cost overruns on, or complete failure of, the Gen-Tie line; failure of Wind Catcher to qualify for full production tax credits and a risk of non-performance by other AEP companies.
The recommendation also states the PSO failed to exercise competitive bidding, and that an excuse of “not enough time” is not satisfactory with the significant cost to be undertaken by PSO customers if approved.
“A project at this price must be done right. Given the facts of this Cause, the ALJ cannot recommend preapproval of the project in light of PSO’s failure to competitively bid both the Wind Facility and the Gen-Tie line and PSO’s failure to adequately explain the lack of competitive bidding for such significant purchases,” the recommendation states.
Development of the line route began in the summer of 2017, and the project is expected to deliver wind energy to customers by the end of 2020. A number of leaders in Northwest Oklahoma have expressed support for the project while numerous landowners set to have their properties impacted by the power line have voiced concern and opposition.
PSO officials didn’t respond for comment by press time Monday, but PSO officials told the Tulsa World earlier this month “they were disappointed by the recommendation, adding they still hoped elected commissioners might approve the plan,” and that the company planned to file its response to the recommendation in late February.
PSO President and COO Stuart Solomon told the Enid Regional Development Alliance in January that PSO expects a decision from the commission by the end of March.
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