December 11, 2019

Agreement sets stage for Public Service Co. of Oklahoma to add wind energy to its portfolio if regulators agree

By Jack Money | The Oklahoman | Wed, December 11, 2019 |

TULSA – Regulators and other interested parties have agreed to Public Service Co. of Oklahoma’s proposal to buy ownership into three under-construction wind farms in north-central Oklahoma, the utility announced Tuesday.

Utility spokespeople said the agreement between the utility, the Public Utility Division of the Oklahoma Corporation Commission, the Oklahoma Attorney General’s Office and consumer groups propels it forward on its plan to add 675 megawatts of energy to its energy resources.

“This settlement agreement puts PSO a step closer to adding more low-cost Oklahoma wind energy to its portfolio,” Peggy Simmons, PSO’s president and chief operating officer, stated as part of the announcement. “We appreciate the collaboration among the parties to reach this settlement.”

If elected members of the Oklahoma Corporation Commission approve, PSO would be cleared to execute its plan to buy partial ownership of three wind-powered energy generating facilities in Alfalfa, Blaine, Custer, Garfield, Kingfisher, Major and Woods counties. The combined projects are expected to cost about $2 billion.

A sister utility, Southwestern Electric Power, is working with regulators in Arkansas, Louisiana and Texas and the Federal Energy Regulatory Commission to gain approval to buy the remaining ownership of the projects and the energy they generate.

PSO, meanwhile, expects its 45.5% ownership share of the 1,485 MW total project would save PSO customers more than $1 billion after its $908 million cost during the time the wind farms are in service.

PSO spokesman Stan Whiteford previously had said the proposal represents an effort both utilities are making to hedge against projected future fuel costs, which would keep costs for customers affordable and boost the region’s economic development opportunities.

The projects, he said, also should benefit the counties where they are located by adding to their tax bases, plus creating an estimated 50 permanent jobs.

This proposed plan seeks to achieve the same benefits for customers as one the utilities proposed a couple of years ago called Wind Catcher. In that case, they asked regulators for preapproval to recover costs for a 2,000-megawatt farm in Oklahoma’s Panhandle and a transmission line hundreds of miles in length to get the energy from there to the utilities’ grids.

But the utilities pulled the plug on that project about a year ago after Texas regulators rejected the plan.

Whiteford previously said the current plan does not include a proposed transmission line.

“The energy from the farms will get onto the grid just as all existing wind power we have, through existing transmission facilities,” he said.

As with all generation projects, the utilities could chose to acquire the facilities without preapproval from regulators to recover costs. However, utilities typically don’t make those types of large investments without securing that authorization from regulators first.

The proposed settlement agreement would require PSO to leave its rates for its customers unchanged between now and the next time the utility undergoes a regular review of its rates.

Officials expect the energy would come online in 2020 and 2021, supplementing other power resources PSO owns or can access that includes PSO facilities powered by coal and natural gas and power supplies available through the Southwest Power Pool.

PSO serves more than 554,000 Oklahoma customers across 30,000 square miles of eastern and southwestern Oklahoma.

Attorney General Mike Hunter on Tuesday said the agreement is good for Oklahomans.

“We are pleased with the tangible benefits of the project to customers and the protections that PSO has guaranteed,” Hunter said.

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