TULSA – Public Service Co. of Oklahoma inked an agreement to buy a natural gas combined-cycle power generation plant in Jenks for $730 million.
PSO agreed in June to buy the facility from J-Power, a 50/50 joint venture between a Tokyo-based entity and John Hancock Infrastructure Fund.
The Tulsa-based retail electricity provider has applied to the regulatory Oklahoma Corporation Commission for permission to pass the purchase cost on to their ratepayers. In addition, the acquisition will require approval from the Federal Energy Regulatory Commission and must comport with anti-trust requirements.
Matthew A. Horeled, PSO vice president of regulatory and finance, wrote in testimony filed with the Corporation Commission that the acquisition would result in a $7.24 per month increase by June 2025 in the utility bill of a residential customer who typically consumes 1,100 kilowatt hours of electricity each month.
Meanwhile, PSO filed a notice May 31 seeking approval from the Corporation Commission to bill its customers to recover $33.5 million for what is known as a Net Operating Loss Carryforward. If approved, that expense will be amortized over 12 months, and during that year it will add $5 per month to the bill of a typical residential customer who uses 1,100 kilowatt hours of power each month. The Corporation Commission is scheduled to conduct a hearing on the merits of that case on Nov. 5.
The “Green Country” electric generation plant in Jenks, which has an output capacity of 795 megawatts and occupies a 41-acre site, was purchased in a competitive bidding process, Horeled testified. The power plant began operations in 2002.
“The price is very favorable in today’s market,” he said. The acquisition is contingent upon PSO receiving regulatory approvals that are satisfactory to the utility company by no later than June 30, 2025.
Horeled contended the purchase of the Green Country plant “is a reasonable alternative to meet PSO’s identified need for additional capacity and energy, and the generating facility will be considered used and useful for customers.”
“Adding this natural gas facility to our fleet allows us to serve our customers efficiently and reliably without the need to construct a new plant,” PSO President and Chief Operating Officer Leigh Anne Strahler said.
PSO asked the Commission to “find the entire purchase price, including the return on the amortization of the transaction costs, recovery of the operation and maintenance expenses, and depreciation and ad valorem taxes for Green Country, shall be included in PSO’s cost of service in PSO’s next base rate case.”
PSO needs the Jenks generation plant because the utility company is forecasted to have a shortfall of between 186 and 209 megawatts of power between 2027 and 2029, and expects the capacity deficit to increase even more in future years, said Paul Demmy, resource planning manager for American Electric Power, parent company of PSO.
Horeled defended the acquisition, saying PSO is “reducing the risk of purchasing capacity in a capacity-restrained market.”
In addition, “the physical location of Green Country, within PSO’s largest load center, gives the plant a transmission advantage over other alternatives,” he said. “It may be difficult for another fossil fuel generation facility to be built in the Tulsa metroplex, considering environmental requirements.”
PSO serves 575,800 customers (residential, commercial, industrial, and “other”) in 232 cities and towns in eastern and southwestern Oklahoma, including Lawton, Altus, Duncan, Cache, Elgin, Fletcher, Porter Hill, Sterling, Apache, Cement, Cyril and Frederick.
PSO said it became aware in September 2023 that the Green Country plant was for sale. Notification came through CIBC Capital Markets, an investment banking institution representing J-Power, the owner willing to sell a portfolio of generating assets located in North America. The Green Country plant was the only asset located in the Southwest Power Pool.
The SPP is a regional transmission organization, which is a nonprofit corporation mandated by the Federal Energy Regulatory Commission to ensure reliable supplies of power, adequate transmission infrastructure and competitive wholesale electricity prices on behalf of its members.
The SPP has members in Oklahoma, Arkansas, Colorado, Iowa, Kansas, Louisiana, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, South Dakota, Texas and Wyoming.