OKLAHOMA CITY – Public Service Co. of Oklahoma seeks permission to offer its customers the option to reduce the cost of their electric service by cutting back on usage when energy market prices soar to abnormal heights.
The proposed program was prompted by the extraordinary energy bills that public utilities in Oklahoma incurred during the two-week February 2021 Winter Storm Uri in which Oklahoma was pummeled by rain, wind, snow, freezing rain, and subfreezing temperatures.
PSO, for example, purchased more than $693 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 range from about $500 million to $600 million, Region Communications Manager Wayne Greene said. The company’s fuel expense in 2020 was $520 million, he said.
Fairo Mitchell, a regulatory consultant for PSO, told the Oklahoma Corporation Commission that the Voluntary Curtailment Service would be strictly optional and available to customers whose minimum electricity demand is 1,000 kilowatts.
“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 could ask a participating customer to cut back on demand “at any time.”
The company would 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 would 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 would determine whether to curtail energy usage during that event, and if so by how much. No penalty would be assessed if the customer did not reduce its usage, Mitchell said.
Customers who curtail their usage during the entire event below their agreed-upon average on-peak demand would be compensated at not less than $100 per megawatt hour, Mitchell said.
A credit would appear on the customer’s bill within 45 days after the end of the month in which the curtailment event occurred.
PSO would call for a VCE 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.
PSO would not request more than two power curtailment events per day. If two events occurred on one day, the events would have to be separated by at least one hour.
The Voluntary Curtailment Service would 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.”
PSO filed the VCS application late last year.
Industrial organization
permitted to intervene
A commission administrative law judge held a hearing and gathered evidence in the case earlier this year. Nevertheless, the commission voted unanimously April 28 to allow Oklahoma Industrial Energy Consumers to belatedly intervene and state their position on the issue.
For example, some Public Service customers “may want to participate in the VCE program but also in the Southwest Power Pool demand response market,” said Thomas Schroedter, an attorney who represents the OIEC, an organization of large energy consumers. A proposed settlement agreement between PSO and the commission’s Public Utility Division decrees, “No payment shall be made under this program for hours that a customer is responsible for curtailing under another program.” That provision would prohibit “double dipping.”
“Why is that important?” Commissioner Bob Anthony asked.
“Our position is that prohibition is not in the public interest, because we want to encourage companies to participate in the demand response market,” Schroedter said. “Our members would like to participate in both markets. It’s basically conservation.”
What PSO proposes has “never been used in Oklahoma before” but is “not unlike what’s being done in other jurisdictions” in the U.S., PSO attorney Jack Fite said.
The commission voted to send the case back to an administrative law judge for further proceedings.