Oklahoma’s Corporation Commission asks Public Service Co. of Oklahoma to seek settlement on its Wind Catcher plan
Oklahoma’s Corporation Commission on Wednesday asked for additional settlement talks on Public Service Co. of Oklahoma’s request to collect construction costs from its ratepayers for what could be the largest wind project in the nation.
If built and brought online at the end of 2020, the 2,000-megawatt Wind Catcher Connection in Oklahoma’s Panhandle would supply the customers of PSO and Southwestern Electric Power with electricity the utilities maintain would be among the most affordable in the nation.
If the plan ultimately is approved in Arkansas, Louisiana, Texas and Oklahoma, PSO would own 30 percent of the project, while its sister utility, Southwestern Electric Power, would own the remainder.
The utilities, both of which are subsidiaries of American Electric Power, also propose building a 360-mile line capable of carrying 600 megawatts of power from the wind farm to the Tulsa metropolitan area, where it would be input into the part of the Southwest Power Pool grid that PSO and Southwestern Electric operate and maintain.
In total, the project’s expected cost is $4.5 billion, and PSO seeks authorization to recover $1.36 billion from its customers.
While PSO estimates its 545,000 customers would see a rate increase of about $78 million in 2021 if cost recovery were approved, it also maintains that lower energy costs and the federal wind production tax credit would offset that increase. The company believes its ratepayers would benefit during the 25-year life of the project because of the more-affordable electricity they would get once it comes online.
The utility reinforced that commitment by guaranteeing it would reimburse customers after 10 years for any expenses they might incur during that time.
“This is a very ambitious project … based upon the desire to save the customers of PSO literally hundreds of millions of dollars over a 25 year period,” said Jack Fite, an attorney representing the utility before the commission.
“It is a project that is designed to, in essence, give PSO customers a hedge against future energy prices.”
What the critics say
Critics of the plan, however, have argued repeatedly they worry methodology the utility used to forecast potential savings is flawed.
They dispute PSO’s assertion the project will qualify for all of the federal energy production tax credits that were available when work on Wind Catcher began at the end of 2016. Congress approved legislation that began phasing out that credit in 2017.
They also take particular issue with natural gas pricing forecasts the utility initially submitted as part of its case testimony, saying the forecasts are overly optimistic about where natural gas prices are headed (PSO since has provided pricing forecasts indicating the project would break even, even if natural gas prices remain below $3 per thousand cubic feet throughout Wind Catcher’s life).
Opponents also told commissioners Wednesday they believed the utility could get power as affordably from other wind energy projects that are being independently developed, and said they were worried Wind Catcher and its associated line could stifle the development of other transmission capacity.
Opponents include the Oklahoma Industrial Energy Consumers organization, South Central MCN, which owns part of the transmission grid in Oklahoma’s Panhandle, Novus Windpower, which is developing projects in the same area, Oneta Power, which operates a large natural gas power generating facility and the Windfall Coalition, a political organization seeking to have power produced by wind taxed the same way as other energy resources are in Oklahoma.
Both the commission’s Public Utilities Division and Oklahoma’s Attorney General have argued PSO’s request should be denied.
They said the utility hasn’t demonstrated it needs Wind Catcher’s power, that it didn’t seek preapproval to recover those costs before construction began and that it didn’t competitively bid the work before it started.
“This project relies on unreasonable economic forecasts. It was planned and designed behind closed doors without competitive bidding or input from stakeholders, and it undermines Oklahoma processes and policies set up through statutes and rules, and it is unnecessary,” said Jared B. Haines, an assistant attorney general.
PSO has reached a proposed settlement with Arkansas regulators. But in Oklahoma, PSO has managed to reach an agreement only with Walmart Stores East and Sam’s East, a major retailer in all four states.
Rich Chamberlain, an attorney representing Walmart Stores East LP, said the retailer seeks to move its energy footprint to being entirely renewable in the future.
“Quite frankly, this project is attractive to Walmart because it will help it meet some of its energy goals,” Chamberlain said.
Early on Wednesday, PSO said the commission’s public utilities division has offered a conference room to it and the other parties to try to reach a settlement on Friday.
“We would like to have some kind of a time frame to pursue an attempt to settle,” Fite said.
Ultimately, commissioners asked for the utility to try to reach those agreements.
“I think this could be worked out (if everyone) would just dig in a little harder,” said Commission Chairman Dana Murphy.
|Wind Watch relies entirely
on User Funding