Public Service Co. of Oklahoma recently filed an application seeking preapproval of more than $1.2 billion in energy projects that could mean higher consumer electric rates of more than $10 extra a month if approved by the Oklahoma Corporation Commission.
PSO has had seven rate hikes in the last 10 years.
“New loads, mostly from commercial and industrial customers, are driving the increase in demand for electric service,” Matthew A. Horeled, president of regulatory finance for PSO, wrote in a filing with state regulators.
He called the load growth in residential class of service to be “minor,” and said commercial and industrial growth is being fueled by new customers coming onto the system with electric needs far greater than what PSO has experienced in the past.
PSO signed a letter of agreement (LOA) with one new customer that will “eventually result in a load of more than 1,000 megawatts,” Horeled wrote in prefiled testimony. In comparison, he said, for most of PSO’s history “the largest single customer was 130 MW.”
He said PSO has 11 customers “under letters of agreement or contracts that are 50 MW or larger.” He also said several industrial parks in PSO’s service territory are in “late-stage negotiations with large-load projects that are expected to sign LOAs this year.”
Horeled did not identify the new customer nor any of the 11 other customers, but did say that the dozen projects “represent thousands of new jobs for Oklahoma’s economy.”
“Specifically, PSO is requesting approval of eight generation resources to meet customer needs,” he said. Seven of the projects involve up to 1,500 megawatts of Southwest Power Pool accredited capacity. PSO also is seeking preapproval and cost recovery of two combustion turbines that are “expected to be in service no later than December 28,” Horeled wrote in his prefiled testimony.
The company is resorting to a new state law to allow the implementation of rates while some of the projects are under construction, long before they have become operational.
PSO is seeking “a determination by this commission that there is a need for the projects and that reasonable alternatives have been considered;” and that an “energy security rider” (a surcharge on customer utility bills) be approved to authorize a return on construction work in progress, operation and maintenance expenses, depreciation, amortization, ad valorem taxes, production tax credits, investment tax credits and a return on the assets “until they are incorporated into base rates through a general rate case,” according to the Sept. 12 filing.
This request follows the Corporation Commission’s approval in June of PSO’s $730 million acquisition of the Green Country Power Plant in Jenks, a purchase that resulted in a utility bill increase for residential ratepayers of $7.19 per month this year and $6.47/month next year.
When PSO took control of the Jenks power plant in July, the company said the 795-megawatt power plant “will deliver dependable, cost-effective electricity to homes and businesses across the state…” Commissioner Todd Hiett noted that PSO assumes the 23-year-old power plant, which has three natural gasfired generating units, has a remaining lifespan of 30 years. He also expressed concern about PSO’s projected
Turn to PSO, p6 $138 million in Green Country operation and maintenance expenses over the next three decades.
Exec says PSO needs additional resources Paul Demmy told the commission that even with the purchase of the Jenks power plant and continuation of the Northeastern Unit 3 at Oologah on natural gas, PSO still needs additional “accredited capacity resources.”
The company has “a 10 MW deficit for planning year 2027, growing to 3,124 MW by 2031, Demmy claimed.
Besides the anticipated new customers, the Southwest Power Pool approved increases in the summer base planning reserve margin to 16% starting June 1, 2026, and the winter base PRM to 36% starting Dec. 1, 2026. The PRMs will be effective through 2029, Demmy said.
Largely because of the new SPP requirements, PSO’s summer capacity position “will be deficient” by 10 MW in 2027, 470 MW in 2028, and 1,766 MW in 2029, said Demmy, resource planning lead for American Electric Power Service Corp., which, like PSO, is a subsidiary of American Electric Power Co.
The Southwest Power Pool is a regional transmission organization that manages the electric grid and wholesale power market for much of the central United States. The nonprofit corporation is mandated by the Federal Energy Regulatory Commission to ensure reliable supplies of power, adequate transmission infrastructure, and competitive wholesale electricity prices. The SPP and its member companies coordinate the flow of electricity across approximately 60,000 miles of high-voltage transmission lines spanning 14 states. The company is headquartered in Little Rock, Arkansas.
PSO estimates the cost of its newest selected projects to be $1.255 billion and the total estimated retail rate impact in 2029, once the resources have entered commercial operation, would be $157.1 million.
Rebecca A. Schwarz, director of regulatory pricing and analysis for AEPSC, testified the estimated retail rate impact from 2026 through 2029 reflects a “phased recovery approach” beginning with ‘construction work in progress.’
“In 2029, once all facilities are operational, the projected impact reflects a net increase of $14.33 per month, representing a 9.59% increase in the total monthly bill,” Schwarz said. “This estimate incorporates the combined effects of the selected facilities. When factoring in load growth estimates and economic development forecasts, the total estimated typical residential customer bill is projected to increase to $10.34 per month…” One of the proposed projects carries a price tag of $539.8 million. It is the construction of a large natural gas project, as described by AEP’s Michael J. Dilley, director of projects.
“The NE 5&6 Project is a nameplate 450 MW simple cycle natural gas facility to be located at PSO’s existing Northeastern Generation Station in Oologah, which is close to the Tulsa load center,” Dilley said.
The NE 5&6 Project will consist of two General Electric combustion gas turbine generators and associated “balance of plant” equipment. The project “will be engineered to have a minimum design life of 30 years,” Dilley said.
The plan is to have the generators installed and running, delivering power to the electric grid by the end of 2028, he indicated.
PSO officials want to expedite their $1.2B proposal Dilley stressed that basically time is of the essence for the work in Oologah.
“Although the combustion turbine equipment has been reserved with GE to preserve the manufacturing slots and planned delivery in 2027, the definitive agreement needs to be executed and the supplier, GE, needs to be given full notice to proceed to manufacture the gas turbines by the end of 2025 to allow for delivery of the combustion turbines in 2027 to support the construction and commissioning schedule,” Dilley testified.
PSO’s original f iling and notice was made on Sept. 12, shortly after the controversial Senate Bill 998 took effect in late August. The bill became law without Gov. Kevin Stitt’s signature.
The new law has been criticized by Corporation Commissioners, including Hiett, who, in an interview with OK Energy Today, called it “terrible” and said it is “ very likely unconstitutional.”
One part of the new law requires action to be taken by the Corporation Commission within 180 days, not the 240 under the pr evious law. Part of PSO’s filing falls under the 180-day statute while other portions fall within 240 days of the filing.
In his testimony, Horeled said “developing a generation asset is a time-intensive process, prompt action at what I refer to as ‘the speed of business’ is essential.”
Tulsa-based 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.