OKLAHOMA CITY — A $2.47 billion “fuel-free” renewable-energy proposal by Public Service Company of Oklahoma received approval from the regulatory Corporation Commission last week.
The plan features PSO’s acquisition of three solar farms and three wind farms located in southern Kansas and the Texas Panhandle. The plan calls for a 30-year depreciation rate for wind facilities and a 35-year depreciation rate for the solar facilities.
Under the stipulated settlement, 995.5 megawatts of new renewable energy will be added to PSO’s generation mix in 2025.
The project is projected to add an average $1.95 per month for PSO customers for a few months in 2025. By 2026, because of production tax credits and reductions in fuel usage, the project is expected to lower the average customer’s bill by $2.58 per month. This will result in a net rate decrease of 64 cents per month in 2026 for the average utility customer who uses 1,100 kilowatt hours of electricity per month.
Corporation Commission Chairman Todd Hiett and Commissioner Kim David voted 2-0 to approve the final order authorizing PSO to increase its renewable energy portfolio. Commissioner Bob Anthony was absent.
PSO and sister company SWEPCO co-own three wind farms in north-central Oklahoma. “Our share of that is 675 megawatts of nameplate capacity,” said Wayne Greene, PSO’s region communications manager in Tulsa.
The fuel-free plan is “one of the most well-structured settlements that I have seen, and it has, I believe, adequate protections for the ratepayers,” Hiett said. Also, the plan allows the company to make investments to meet capacity needs, he said.
Commissioner David added a caveat about her support.
“I really appreciate the fact that AEP [American Electric Power, parent company of PSO and SWEPCO] wants to be all green and there are all the tax credits out there right now for green generation, but this is Oklahoma,” where oil and natural gas are major contributors to the economy.
“I appreciate the fact that future RFPs [requests for proposals] will be all source,” meaning those solicitations will include other sources of energy in addition to solar and wind.
The stipulated settlement was endorsed by Mark Argenbright, director of the Corporation Commission’s Public Utility Division; PSO attorneys Jack Fite and Joann Worthington; Tom Schroedter, representing Oklahoma Industrial Energy Consumers; Deputy Attorney General Chase Snodgrass; Walmart representative Rick Chamberlain; and Deborah R. Thompson, representing the Oklahoma Sustainability Network.
The Petroleum Alliance of Oklahoma did not sign the settlement agreement but did not oppose the commission’s approval of it.
Attorney General Gentner Drummond praised the settlement and the project, saying it offers “extensive protections” for PSO ratepayers. “I am pleased that this settlement will result in more capacity in times of need, at cheaper rates for PSO customers,” he said.
Protective measures incorporated into the settlement include:
• Requests for proposals: Future RFPs must include all types of energy sources to keep costs competitive and ensure customers receive the benefit of lowest-cost resources regardless of their fuel source. The next RFPs will allow for new gas generation at existing PSO sites, capacity related to conversion of PSO coal units to gas units, and combined-cycle capacity.
• Cost cap: PSO will limit the cost of the fuel-free project at $2.47 billion, ensuring any cost overruns are not passed on to ratepayers. It also guarantees that any reduction in project costs are recognized to the benefit of customers.
• Production tax credits: PSO agreed to guarantee that the renewable resources in this project will qualify for tax credits, which offsets a large portion of the project cost.
• Net capacity factor: PSO will guarantee that the project will produce a certain level of power, which offsets the costs of other resources that use fuel commodities. This guarantees a large part of the underlying economics for the projects.
• Gas procurement and gas storage: PSO will conduct a collaborative process for its fuel supply plan and evaluate gas procurement and gas storage options to ensure reliability and lower customer costs. This measure is designed to prevent surging energy prices, such as those utilities encountered during Winter Storm Uri in February 2021.
• Accountability provisions: The settlement includes language to ensure PSO upholds its obligations. Should the company fail to meet any of its guarantees, PSO will be required to make its customers whole.
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. They include Lawton, Altus, Duncan, Cache, Elgin, Fletcher, Porter Hill, Sterling, Apache, Cement, Cyril and Frederick.
Jerry Bohnen from OK Energy Today contributed to this report.