Solar power fell short for OGE in its $331 million rate hike project

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Documents and testimony in the $331 million rate hike request made by Oklahoma Gas and Electric with Oklahoma regulators show the utility encountered challenges in attempting to obtain new power through solar energy.

The utility is seeking the rate hike to cover the replacement of aging power generating units at its Horseshoe Lake  Power Plant east of Oklahoma City. OG&E initially drew up a 5-year Integrated Resource Plan in which it proposed a combination of combustion turbines and solar generation sources.

As Kimber Shoop, Director of Regulatory Affairs, testified in OG&E’s application, “This blend of combustion turbines and solar generation was found to mitigate future risks to customers and fulfill the many objectives of the IRP.”

What OG&E didn’t count on was the problem it encountered in seeking a Request for Proposal for solar power which was issued in January of last year and with the requirement of solar generating capacity that would be available no later than the summers of 2023, 2024 and 2025.

When OG&E opened the bids from the initial Solar RFP in March 2022, none of the Solar RFP bids could meet the shorterterm needs beginning in 2023. Also, while some bidders had projects that initially could meet the Company’s 2025 inservice date 
requirements, those bidders later notified OG&E they could no longer meet the 2025 in-service requirements,” explained Shoop during his testimony on file with the Corporation Commission.

In other words, OG&E couldn’t find any firm that could provide the solar powered project until after the summer of 2025. So the utility had to reissue a Solar RFP in October 2022, one that was designed to cast a wider net.

“Also, in August 2022, President Biden signed into law the Inflation Reduction Act (“IRA”), which contained enhanced federal tax incentives for solar generation,” explained Shoop.

“It was hoped the reissued Solar RFP would attract bids from more projects and from lower overall cost projects that were able to take advantage of the new IRA tax credits.”

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OG&E attempted a separate RFP focused on flexible resources for large power generation, but the initial bids also fell short and were not capable of meeting OG&E’s shorter-term needs. They would not be available in 2023.

Because of increased requirements from the Southwest Power Pool, OG&E was forced to purchase short-term capacity and reissue bids which weren’t received until August 2022.

OGE revealed in the testimony that it did not have success in negotiating deals with any bidders in the re-issued Solar RFP. In some cases, bidders withdrew their bids because the projects were sold to other buyers.

What now? OGE said neither of the two Solar RFP’s yielded actionable projects so the company intends to re-issue another Solar RFP and to continue to seek attractive solar projects in the market.