OKLAHOMA CITY – The electric “resiliency” project that the Public Service Co. of Oklahoma proposes to build at Fort Sill in collaboration with the U.S. Army encountered some resistance at the state Corporation Commission recently.
The proposal calls for PSO to construct a 36-megawatt reciprocating internal combustion engine (RICE) gas-fired generator, plus photovoltaic solar panels providing up to 10.9 megawatts of power, on 81 acres of Fort Sill property. The facility would be situated “behind Fort Sill’s defense perimeter” as a national security precaution, PSO executive Matt Horeled said.
“Protection of these facilities is one of the benefits of this proposal,” Corporation Commissioner Bob Anthony said during a previous commission discussion about the PSO application.
“Under normal circumstances, the energy produced by the RICE generator and solar panels would be fed onto the grid to serve PSO customers,” said Stan Whiteford, region communications manager.
In the event of a grid outage, though, the four 9-MW RICE engines and the photovoltaic solar panels could be disconnected from the grid to provide Fort Sill with 100% of the 33 MW of energy the post would need to sustain its critical missions. “That’s why it’s called an energy resilience project,” Whiteford said.
Mark A. Becker, managing director of resource planning for PSO’s parent company American Electric Power, testified the PSO project would provide Fort Sill with “backup power … over a 14-day period in the event electricity is unavailable from the grid.”
SOLAR, GAS ENERGY LOGICAL
Combining solar and gas-fired generation for the Fort Sill project is logical, Becker said.
The solar panels “will serve their renewable energy objectives and resiliency,” he said. “And when the sun doesn’t shine or the wind doesn’t blow, these RICE facilities at Fort Sill are well-suited … because of their flexible operating characteristics,” Becker said. They’re designed to have “black start” capability of “ramping up and down very quickly.”
In a previous, short hearing about the Fort Sill energy project, Corporation Commissioner Dana Murphy asked Jack Fite, an Oklahoma City attorney who represents PSO at the utility-regulating commission, “If the power needs to be switched off the grid, what comes behind that for [PSO’s] customers?”
“The Southwest Power Pool [SPP] would ensure that the needs of PSO customers would not be jeopardized in such an event,” Fite said.
SPP is the regional entity that manages the electric grid across several central and western U.S. states, including all of Oklahoma and Kansas and portions of Arkansas, New Mexico, Texas, Louisiana, Missouri, South Dakota, North Dakota, Montana, Minnesota, Iowa, Wyoming, and Nebraska.)
Construction is projected to begin in fall 2021 if the Oklahoma Corporation Commission approves the project for inclusion in PSO’s rate base, Whiteford said.
The location for the proposed facility is west of the Dinges Sports Field Complex and south of the 31st ADA Brigade motor pools, said Jessica Tackaberry of the post’s media relations office. PSO would lease the site for 30 years with an option for 10 additional years.
PSO serves more than 562,000 customer accounts in eastern and southwestern Oklahoma. It provides electricity to more than three dozen cities and towns in southwest Oklahoma, including Lawton, Altus, Duncan, Apache, Cache, Carnegie, Cement, Cyril, Davidson, Elgin, Fletcher, Fort Cobb, Grandfield, Hobart, Hollis, Manitou, Martha, Roosevelt, Rush Springs, Snyder, Sterling, Temple, Tipton, and Waurika.
FORT SILL PROJECT WOULD COST $118M
The Fort Sill resiliency project would cost an estimated $117.9 million to construct, according to Horeled, PSO’s Regulatory and Finance Vice President. He received an MBA degree, with a concentration in finance, from Loyola University.
The Army has pledged more than $10 million for investment in equipment that would help make it possible for the solar and gas-fired facilities proposed for Fort Sill to be isolated from the PSO/SPP grid – a capability termed “islandable” – in the event of a terrorist attack such as 9/11/2001 or a catastrophic weather event such as a tornado, Fite said. The $10+ million would be used to tie together two substations that provide electricity to Fort Sill.
During the frigid winter weather in February, the Southwest Power Pool directed electric providers throughout the region to impose temporary “rolling blackouts” that lasted from one hour to several hours, as an energy conservation measure.
Walmart attorney Rick Chamberlain asked whether PSO would expect to earn a profit from the Fort Sill energy project. “We anticipate recovering our investment cost,” Horeled said. However, the $10+ million provided by the Department of Defense would not be incorporated into PSO’s rate base for payment by the utility’s customers.
What PSO proposes to provide to Fort Sill is “normal retail service,” Horeled said during a hearing conducted March 25-26 by commission Administrative Law Judge Dustin Murer. The service has not been offered to another PSO customer in the past, Horeled said. “This is a unique and novel concept we’re proposing.”
“What obligates PSO to provide this type of reliable back-up service?” Chamberlain asked.
“We have a capacity need” and PSO is collaborating with the U.S. Army Office of Energy Initiatives, the U.S. Army Corps of Engineers, and Fort Sill, to accommodate the military, Horeled said.
Does PSO have any other facilities “dedicated to the service of a single customer?” asked Tom Schroedter, executive director of Oklahoma Industrial Energy Consumers, an association of companies with facilities in Oklahoma that consume significant quantities of energy.
“No,” said Horeled, “but Fort Sill is unlike any other customer we have.” The Army post is “important to national defense.”
Doesn’t PSO have other large customers, some of which have larger energy demands than Fort Sill does? Schroedter continued.
“Yes, some of those customers are essential industries,” Horeled replied, “but not in national defense.” Schroedter disagreed. “Some of those industries are critical to national defense, such as pipelines and refineries,” he said.
FT. SILL HAS $2B IMPACT
It was noted during the Corporation Commission hearing last month that while PSO customers would pay for the Fort Sill energy project, all Americans potentially could benefit from the project in the event of a crisis because the Army post would remain in operation. Therefore, Horeled was asked, shouldn’t “the entire country” be responsible for “supporting the needs of the military?”
“I think we all do,” Horeled replied, “with our taxes.”
Kyle Vazquez, a Corporation Commission attorney in the Public Utility Division, asked Horeled whether it’s “equitable to have a small subset of Oklahoma citizens – PSO customers – subsidize the cost of a project at the request of a national entity?”
Fort Sill is the third-largest single-site employer in this state and has a $2 billion economic impact on Lawton and Oklahoma, Horeled said. “Those aren’t benefits for the whole federal government. Therefore, I think there’s a strong public policy argument for supporting this project in Oklahoma.”
SIMILAR PROJECT IN HAWAII
Schroedter asked whether PSO’s arrangement with the DOD is unique.
“It is for us,” Horeled said, but he pointed to a similar project in Hawaii.
Hawaiian Electric Co. in Honolulu, on the island of O’ahu, collaborates with the U.S. Army on a resiliency project at Schofield Barracks and Wheeler Army Air Field.
The 50 megawatt (MW) biofuel power generation plant is owned by the utility but situated on land leased from the U.S. military. In the event of a power grid disruption, the plant is capable of providing 100% of the electrical power needs for Schofield Barracks and Wheeler Field.
If a PSO electric generating unit becomes uneconomical, “You have the right to retire that unit?” Schroedter asked Horeled.
A coal-fired electricity generating plant in north Texas, 70% of which was owned by PSO and AEP Texas, was retired last fall; the 650-megawatt Oklaunion power plant near Vernon, Texas, about half an hour’s drive southwest of Frederick, was decommissioned and permanently shut down on Oct. 1, 2020.
Assistant Oklahoma Attorney General Chase Snodgrass, in the AG’s Utility Regulation Unit, asked whether the Fort Sill RICE units would provide peaking power.
“Yes,” Horeled said. And because of the Army’s “islandable” requirement the energy generation equipment must be located at Fort Sill “behind the fence,” he said.
Snodgrass asked whether PSO has backup power generation facilities for institutions such as fire and/or police departments, hospitals and/or municipal water systems.
No, Horeled replied. “We just prioritize and keep them from going offline as much as we can in time of an emergency.” Many, of not most, hospitals have a backup generator “that is owned by the hospital and serves only the hospital,” he noted.
PSO’s LOOMING CAPACITY NEEDS
Schroedter asked Becker about PSO’s previous forecast of a 500 MW capacity shortage in 2022.
Not anymore, Becker responded. Last year PSO purchased enough electricity to cover the shortfall in 2022 through 2024, leaving an excess capacity of 50 MW in the short term.
In 2025 and 2026, though, “We’ll need roughly 600 MW, and in 2027 PSO will need roughly 1,100 MW after Northeastern 3 is retired.” The 40-year-old Northeast 3 coal-fired unit at PSO’s Oologah generating plant is scheduled to be shuttered in 2026.
Joseph DeRuntz, an AEP project director, said the firm that will construct the Fort Sill system, if the project is approved by the Corporation Commission, is Burns & McDonald. The Kansas City, Mo., company has been in business for a century and has “a lot” of experience in energy projects, said DeRuntz, an AEP employee of 36 years who received a bachelor’s degree in civil engineering and has an MBA degree.
DeRuntz told Jared Haines, chief Assistant Oklahoma Attorney General, Utility Regulation, that B&M was “the highest-scoring bidder” for both the solar and RICE facilities proposed for the Fort Sill energy project.
PSO calculated a 30-year “useful life” of the RICE facilities and estimated operation and maintenance costs of the Fort Sill project at approximately $8.20 per megawatt-hour based on 7,500 hours of run time.
Lisa Perry, Walmart’s senior manager in the corporation’s Energy Department, said the company did not take a position on whether to endorse the PSO Fort Sill energy project.
Michael Ghee, a civilian employee with the U.S. Army who is executive director of the Army Office of Energy Initiatives, said the military “believes this project is a win for the Army, for PSO and its customers.”
The next step in the case is for ALJ Murer to submit his “findings of fact and conclusions of law” to the Corporation Commission.
ENERGY, WATER RESILIENCE ‘IMPERATIVE’
The importance of energy resiliency is discussed in Army Directive 2020-03 (Installation Energy and Water Resilience Policy), Horeled noted. The directive states that it is “imperative” for Army installations to have “a high level of energy resilience” and to be able to “withstand, respond to, and recover rapidly from power disruptions.”
In a related matter, the City of Lawton plans to drill some wells that would provide an alternate source of drinking water to supplement raw water Lawton siphons from three lakes. The wells are an element of the Lawton-Fort Sill resiliency project, city officials have confirmed.
Competitive bids on the development of the wells were solicited and five were received, but the City Council rejected all of them last month for various reasons. The city’s Public Utilities Department “reports that we are going to re-advertise for bids toward the end of the month,” Community Relations Director Tiffany Vrska said on April 1.