OKLAHOMA CITY — The state Corporation Commission approved a special tariff proposed by Public Service Company of Oklahoma to help lower the cost of electric service to participating customers.
Participants in the Voluntary Curtailment Services program have the option of cutting back on usage during periods of high energy market prices.
Service under the VCS program is open to PSO customers who have a minimum 1,000 kW of curtailable demand. The average residential customer uses 1,100 kilowatt-hours of electricity in a month, PSO officials report.
Fairo Mitchell, a regulatory consultant for PSO, told the Oklahoma Corporation Commission last year that VCS would be strictly optional.
“The program is designed so that customer participation in the program will reduce total purchased power costs below what they would have been otherwise … thus providing an avoided purchase power cost savings to all customers,” Mitchell testified.
Capacity-based demand response programs “incentivize customers to reduce demand during periods of peak demand or emergency conditions,” he said. By contrast, energy-based demand response programs “incentivize customers to reduce their energy needs during periods of high energy market prices.”
PSO will call for a Voluntary Curtailment Event when the Southwest Power Pool day-ahead market locational marginal price for an applicable load zone is more than $200 per megawatt hour for two or more consecutive hours, Mitchell testified.
Enabling PSO customers to reduce the energy portion of their bill by voluntarily curtailing usage at their premises during periods of high energy market prices “would benefit all other customers in the form of reduced pass-through fuel costs,” said Wayne Greene, PSO’s region communications manager.
Under terms of the VCS program, PSO can ask a participating customer to cut back on demand “at any time.” Any season
The company will notify the customer by email, text or automated message about a Voluntary Curtailment Event no later than 4 p.m. prior to the event day. The notice will include “the starting and ending time of the event and the quoted price the customer would be compensated for reducing energy usage,” Mitchell said.
A participating customer will determine whether to curtail energy usage during that event, and if so by how much. No penalty will be assessed if the customer does not reduce its usage, Mitchell said.
Customers who curtail their usage during the entire event below their agreed-upon average on-peak demand will be compensated at not less than $100 per megawatt hour, Mitchell said.
A credit will appear on the customer’s bill within 45 days after the end of the month in which the curtailment event occurs.
PSO will not request more than two power curtailment events per day. If two events occur on one day, the events will have to be separated by at least one hour.
The Voluntary Curtailment Service will not increase PSO’s revenue requirement, Mitchell told the Corporation Commission. “The program is designed to reduce the company’s total revenue requirement by reducing the price paid for purchased power during periods of high market pricing.”
Industrial consumers opposed a provision
Oklahoma Industrial Energy Consumers opposed a provision in PSO’s proposal which would have barred customers that participate in the SPP’s Demand Response Market program from also participating in PSO’s Voluntary Curtailment Services program.
“While the OIEC acknowledges that this tariff provides benefits to customers, the VCS tariff proposed by PSO also contains a provision that prevents certain customers from participating in this tariff,” said Thomas Schroedter. “That provision is not in the public interest,” said Schroedter, the OIEC’s executive director and general counsel. “We urge you to reject that provision.”
The Corporation Commission removed that prohibition, which will benefit OIEC members and PSO customers alike, Schroedter told Southwest Ledger. “The tariff as revised will promote energy conservation and will result in cost savings to all PSO customers,” Schroedter told OK Energy Today.
The Corporation Commission’s Public Utility Division and Administrative Law Judge Linda Foreman recommended approval of the VCS program and the three-member commission endorsed the proposal 3-0 earlier this month.
The VCS program was prompted by extraordinary energy bills that public utilities in this state incurred during the February 2021 Winter Storm Uri in which Oklahoma was pummeled by rain, wind, snow, freezing rain, and subfreezing temperatures.
PSO, for example, purchased $675.2 million in natural gas and supplemental power to meet its customers’ electricity demands during the two-week storm, ledgers reflect.
In comparison, PSO’s fuel bills for an entire year typically range from about $500 million to $600 million, Greene said. The company’s fuel expense in 2020 was $520 million, and for 2021 the fuel bill was $701 million, he said.
PSO, OG&E and other utilities are forbidden from reaping a profit on fuel and purchased power costs, Greene noted. “It’s a pass-through expense.”
PSO, a Tulsa-based subsidiary of American Electric Power, is an electric utility company serving more than 568,000 customer accounts in 232 communities in eastern and southwestern Oklahoma. The utility serves more than three dozen communities in southwest Oklahoma, including Lawton, Altus, Duncan, Cache, Elgin, Fletcher, Porter Hill, Sterling, Apache, Cement, Cyril and Frederick.
Jerry Bohnen contributed to this report.