Documents filed this week with the Oklahoma Corporation Commission show the Jenks gas plant purchased by Public Service Company of Oklahoma was sold in a $730 million deal that will result in higher bills for customers. It will also mean another PSO rate hike request is coming in 2025.
First, the acquisition will need approval from the Corporation Commission and from the Federal Energy Regulatory Commission along with meeting anti-trust requirements.
“The purchase price for Green Country, a combined cycle gas-fired electric generation merchant plant located in Jenks, Oklahoma, with an output capacity of 79,518 MW, is $730 million,” stated Matthew A. Horeled, Vice President, Regulatory and Finance for PSO in testimony filed with the state agency.
He supported a statement by another witness in noting that “the price is very favorable in today’s market” and explained the acquisition is contingent upon PSO receiving regulatory approvals that are satisfactory to PSO by no later than June 30, 2025.
The impact on PSO customers? According to Horeled’s testimony, it will mean a 3.84% total bill increase. Residential customers will see a monthly increase of $7.24 or 5.44%.
Horeled’s testimony contended the purchase of the Green Country plant “is a reasonable alternative to meet PSO’s identified need for additional capacity and energy and energy and the generating facility will be considered used and useful for customers”
PSO is asking the Corporation Commission to approve a rider to recover the annual revenue requirement of Green Country until new rates are implemented in PSO’s next base rate case.
“ PSO is also requesting the Commission find the entire purchase price, including the return on the amortization of the transaction costs, recovery of the operation and maintenance expenses (“O&M”), 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.”
He also explained that the closing on the acquisition is contingent on certain approvals received from the Federal Energy Regulatory Commission and under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
PSO said it needs the power plant because between 2027 and 2029, it anticipates a shortfall of between 972 and 995 megawatts before the capacity deficit increases even more in future years. The company also became aware in September of 2023 that the Green Country plant was available for possible acquisition. 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.
Horeled defended the acquisition, saying PSO was reducing the risk of purchasing capacity in what he labeled 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. It may be difficult for another fossil fuel generation facility to be built in the Tulsa metroplex considering environmental requirements.”