The Oklahoma Corporation Commission’s recent decision, on a split vote, to approve Public Service Company of Oklahoma’s $730 million purchase of a 23-year old power plant in Jenks shows a distinct difference of opinion between at least two of the commissioners.
It was a 2-1 vote to approve PSO’s request to purchase the Green Country Generation Facility and to begin cost recovery through a rider. It will also mean a monthly increase of $7.24 for ratepayers beginning in July.
Commission Chair Kim David was a strong supporter of the purchase and in a release from her office said the 795-megawatt natural gas power plant “will help meet PSO’s growing need for reliable, dispatchable energy.” She said the Commission determined that PSO had “demonstrated both a need for new generation and that it had reasonably evaluated alternative options.”
“Purchasing this facility is a strategic decision that benefits both PSO and its customers,” said David. “It’s located in the heart of PSO’s service territory and will provide reliable, affordable power. As Oklahoma attracts new businesses and industries, the demand for electricity continues to grow—this plant helps meet that demand now, not years down the road.”
Residential customers will see an estimated 5.44% increase in their total monthly bill—approximately $7.24 more per month.
“I take seriously our duty to ensure reliable service for all Oklahomans,” Chairman David added. “At the same time, I understand that any rate increase has an impact. That’s why we worked to ensure this purchase is fair, justified, and delivers long-term value for customers.”
She further defended her vote by asserting that the acquisition avoids the delays, costs and regulatory complexities of building a new plant. Her office’s announcement said new construction could take years and cost significantly more but the purchase provides immediate generation capacity at a competitive price.
Commissioner Todd Hiett would obviously disagree. He voted against the preapproval for PSO and in a separate filing of dissent repeated his claim of some weeks ago that the case was “messy.”
Just as he claimed during the meeting where the purchase was approved, he said the record did not fully demonstrate it was a good acquisition. Commissioner Hiett repeated his contention that customer protections were important in the approval and in the fililng noted that the Attorney General, AARP, the Petroleum Allilance of Oklahoma, Oklahoma Industrial Energy Consumers and the Public Utility Division took a position that the request should be denied and only approved under certain conditions.
Hiett said the Attorney General took the position that the Commission should not approve PSO’s request for preapproval of Green Country without customer protections due to the increased risks associated with the purchase.
What were the protections? A Purchase Price Recovery Cost
Cap; a Capital Spending Cost Cap; an Operations and Maintenance (“O&M”) Cost Cap; a Value Guarantee; and an Energy Cost Savings Guarantee. Hiett included those protections in the order he proposed. But they were not adopted.
“As stated today, I believe it is a major disservice to the Oklahoma ratepayers to allow this level of extraordinary investment risk without protections. The consumer protections merely hold
PSO to its own projections and its assurances that Green Country is a good deal for its ratepayers.”
Hiett went on to state that the role of the commission “cannot be to make decisions on wants or desires or even what may instinctively feel right.” Just as he made clear in the public discussion, Hiett repeated his belief that his job is to evaluate the law, including rules of the Commission, and apply it to the particular facts.
The approved cost recovery is capped at approximately $730 million. PSO originally sought approval to recover $753 million. The Commission limited the amount to $730 million to ensure cost control and accountability.