Judge recommends approval of plans for Oklahoma Gas and Electric Co. to acquire AES Shady Point
An administrative law judge at the Oklahoma Corporation Commission is recommending elected commissioners approve a stipulated agreement between Oklahoma Gas and Electric Co., the commission’s Public Utility Division and the Attorney General’s office on a plan the utility has to buy a coal power plant and another generating asset to meet its capacity needs.
The utility, a subsidiary of Oklahoma City-based OGE Energy, proposes to spend about $27 million to acquire a 360-megawatt coal- and natural gas-fired plant near Poteau owned by AES Shady Point.
It also proposes to spend about $26 million to buy a 146-megawatt natural gas-fired, combined cycle plant in west Oklahoma City owned by Oklahoma Cogeneration.
The stipulated agreement, utility officials said, details that the utility won’t be able to begin recovering costs for acquiring the facilities until a pending rate case it has before regulators is settled. The agreement also limits the length of time OG&E will have to recover those expenses to three years.
Brian Alford, a spokesman for the utility, said the administrative law judge’s recommendation determines the utility demonstrated it needs to acquire the capacity and that its expenses to buy the plants are reasonable and justified.
“We are pleased to have reached a settlement in this proceeding,” he said. “We will have need for that capacity this summer, and these acquisitions will enable us to meet that need while providing our customers significant savings.”
The utility previously contracted with the owners of both facilities to buy power to help meet its capacity needs under requirements of the Public Utility Regulatory Policies Act of 1978, which Congress used to promote development of domestic, non-utility power generating stations to both support the nation's power supply needs and to provide other beneficial products to meet secondary needs.
In AES Shady Point's case, a percent of carbon dioxide it emits has been getting siphoned off for use as a liquid and solid food-grade refrigerant for the poultry industry. In the case of Oklahoma Cogeneration, steam generated by that facility was piped to a nearby tire manufacturing plant to support its operations.
The law had required utilities to execute agreements to take power from such facilities in cases where costs for that power were equal to or less than what the utility would have had to spend to supply that same amount of power through its own facilities.
Officials previously said OG&E believes acquiring the facilities makes financial sense, estimating it will save OG&E's customers at least $40 million annually because it will cost the utility less to operate them than to buy their power. They also said the additions continue to advance the company’s commitment to provide reliable energy to its customers because it keeps its potential sources of energy diversified.
The Oklahoma chapter of the Sierra Club opposes OG&E’s acquisition plan for AES Shady Point.
“Shady Point is 360 megawatts of dirty, harmful power that Oklahoma customers don’t want and don’t need,” stated Johnson Grimm-Bridgwater, director of the chapter, in a March 27 letter he wrote to elected Oklahoma Corporation Commissioners.
Bridgwater stated in the letter that AES Shady Point has built a track record over time of choosing to dispose of coal ash generated by its operation in unlined pits near the town of Bokoshe in a manner that caused the community’s residents health problems and also exposed them to ever-visible pollution.
“The fact that these harms to the families of Bokoshe have gone on for nearly three decades in full view of state regulators has been a clear and inexcusable government failure, but in any event, OG&E should not be allowed to perpetuate the harm,” he wrote.
“The owners of the coal plant should not be rewarded with tens of millions of dollars of ratepayers’ money for selling the coal plant, on top of the millions already made.”
OG&E officials previously said they intend to modify the coal plant’s operations to reduce its coal use by half, initially, and explore other potential ways to reduce the plant’s emissions and waste stream, going forward.
The proposed agreement not only must be approved by corporation commissioners in Oklahoma. It also must be approved by utility regulators in Arkansas, officials have said.