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Oklahoma Corporation Commission wraps up testimony on proposed Wind Catcher settlements, but no decision was made  

Credit:  By Jack Money | The Oklahoman | July 4, 2018 | newsok.com ~~

Consumer protection issues dominated discussions Tuesday before elected members of Oklahoma’s Corporation Commission as they continued a hearing on the Wind Catcher Energy Connection project.

Public Service Co. of Oklahoma’s regulatory vice president and expert witnesses for various parties involved in two settlements the utility proposes to move the project forward spent much of the day answering questions on that topic.

So did a witness for the Oklahoma Attorney General’s office, which opposes the settlements along with the commission’s Public Utility Division.

Many questions and responses centered on whether the project would benefit the utility’s typical residential customer, especially during the last 15 years of the project’s expected 25 year life.

A big key to that, witnesses agreed, is where natural gas prices would be during that time.

But they disagreed about whether consumers would be protected if prices were to remain at historic lows.

Scott Norwood, a consultant who works for the Oklahoma Industrial Electricity Consumers (an organization supporting one of the proposed settlements) said production tax credits and the settlement’s proposed net energy generation guarantees would protect the utility’s customers, even if natural gas prices remain cheap.

“What we are talking about here is the addition of roughly 12 percent of the company’s energy supply being served from wind energy that has significant guarantees behind it,” Norwood said, observing its average price of generation will be about $31 a megawatt hour.

“In the long run, gas prices could be lower (making natural gas produced power cheaper,) but they also could be much higher,” Norwood said, adding he believes the power generating market will be dominated by natural gas-fueled plants, which he stated could drive up the commodity’s price.

Todd F. Bohrmann, a regulatory analyst for the attorney general, countered that his office believes PSO customers could have been better served through a competitive bidding process to use other potential power sources.

Bohrmann cited recent data published by an economist at the Oklahoma City branch of the Federal Reserve Bank of Kansas City that shows both technological advances and increased labor productivity in extracting natural gas have boosted its supply and depressed its price.

“We believe the market price natural gas forecast is more reasonable than the price forecast put forth by PSO in this case,” Bohrmann told commissioners.

Testimony Tuesday also debated whether PSO’s request meets the agency’s definition of need set out in state statute, especially in the context that the Oklahoma utility only would own part of the project.

Additionally, testimony was given about whether or not large power users such as those represented by the Oklahoma Industrial Electricity Consumers group represent the same interests that residential customers have when it comes to the case.

And before the meeting’s close, Commission Chairwoman Dana Murphy again discussed concerns she has about complaints the agency has received from various Oklahoman landowners that could be impacted by a proposed 360-mile line to get power from Wind Catcher into the utility’s Tulsa-area grid. Many have said the utility and the land company it has been using to acquire needed line rights of way have used deceitful and bullying tactics.

Project outline

PSO is asking commissioners to determine there is a need for the project and grant it preapproval to recover its costs for the project from ratepayers.

If approved, the utility would be allowed to recover about $1.4 billion in its costs to buy 30 percent of the 2,000 megawatt Wind Catcher farm being built in Oklahoma’s Panhandle.

Along with co-owning the generating facility with its American Electric Power sister company, Southwestern Electric Power, the two also propose building and operating the line that would carry electricity from the farm into the grids they operate that distribute power to their customers. The project’s expected total cost is $4.5 billion.

Arkansas and Louisiana regulators have approved Southwestern’s plans for the project, while Texas regulators are considering it.

But in Oklahoma, a commission administrative law judge who considered PSO’s proposal recommends the commission deny the utility’s request.

The judge recommends denial because the utility did not seek competitive construction bids for the project and because that work had started before PSO filed its request.

While PSO estimates its 545,000 customers would see a rate increase of about $78 million in 2021 if the cost recovery were granted, it also maintains lower energy costs and connected federal wind production tax credits would offset that increase.

The company also has stated it believes its ratepayers would financially benefit from the project during its 25-year life because of affordability forecasts for wind energy, compared to other sources of power such as natural gas.

Plus, it maintains the two joint stipulation and settlement agreements before the commission include additional safeguards it believes would protect its customers.

One agreement, which the industrial consumers, Walmart, Sam’s Inc. and other parties support, proposes capping costs to ratepayers for the project at 103 percent, guarantees the project would qualify for 100 percent of federal renewable energy production tax credits available when the farm’s construction started in 2016, guarantees average net power generation and proposes requiring PSO to review the project’s benefits to ratepayers after 10 years.

The other pending agreement proposes supplementing Wind Catcher power with energy generated by a combined-cycle natural gas power plant owned by Oneta Power LLC, which utility officials said would help it meet its integrated resources plan for future power needs.

Next steps

The attorney general and the commission’s public utility staff continue to urge commissioners to reject PSO’s proposed agreements, or to require a tighter cost cap and stronger consumer protection guarantees (including requiring an annual review of the project’s performance to ensure customers are protected).

Commissioners also heard from about a half-dozen additional citizens Tuesday, many of whom are landowners that could be impacted by the proposed line.

They took the two days’ testimony under advisement, and could either review still-to-be-filed legal arguments or schedule another hearing later this summer.

As for landowners’ complaints, Chairman Murphy reiterated Tuesday she believes the commission does have siting authority for power lines because of how that work impacts a project’s cost.

Source:  By Jack Money | The Oklahoman | July 4, 2018 | newsok.com

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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