The CWIP or Construction Work in Progress request of Oklahoma Gas and Electric isn’t going anywhere with the Oklahoma Corporation Commission—-at least for the next week.
Regulators considered a vote on the controversial move that would have put construction project costs on the backs of ratepayers for the next several years while the additional electric generation projects were being built. But it was delayed for another week to give them more time to consider a proposal to deny some of the CWIP request.
Commissioner Brian Bingman wasn’t so quick to join the CWIP move, despite a new state law that said regulators “shall” approve such projects if they entail the use of natural gas for the generation projects. OGE sought CWIP approval for generation capacity additions, including the Black Kettle Battery project near Enid, improvements to its Kiamichi plant, and the addition of two natural natural gas combustion turbines at the company’s Horseshoe Lake power plant east of Oklahoma City.
The company, serving 907,000 customers covering 30,000 square miles in Oklahoma and western Arkansas says its 2024 Integrated Resource Plan (IRP) demonstrates a need for additional capacity in 2028 of 1,096 MWs and growing to 1,215 MWs in 2030. It contends that by 2034, there will be a need for 2,592 MWs.
Therefore, long-term forecast curves remain central to justification.
“CWIP is not in the best interest of ratepayers,” said Commissioner Bingman as he explained his proposed 128-page order. “We will follow the law but it has a big impact on ratepayers.”
As noted in the testimony of company executives, OG&E explained that if CWIP is approved, it would result in a monthly cost increase of 60 cents in 2026 for an average residential customer; $1.38 in 2027; $2.21 in 2028; $3.32 in 2029; $4.55 in 2030; and $4.81 in 2031; that the monthly cost increase to the average General Service customer is expected to be $0.79 in 2026; $1.86 in 2027; $2.91 in 2028; $4.34 in 2029; $5.76 in 2030; and $5.97 in 2031; that the monthly cost increase to the average Power & Light customer is expected to be $12.65 in 2026; $30.16 in 2027; $47.58 in 2028; $71.48 in 2029; $95.76 in 2030; and $100.20 in 2031; and that the monthly cost increase to the average Large Power & Light customer is expected to be $863.60 in 2026; $1,802.00 in 2027; $2,618.00 in 2028; $3,678.80 in 2029; $4,569.60 in 2030; and $4,651.20 in 2031.
OGE asked for preapproval to cover a 5-year Capacity Purchase Agreement with Tenaska’s Kiamichi Energy Plant in Kiowa; a 20-year agreement for power from the Black Kettle Energy Storage in Oklahoma City; and the addition of two new gas-fired combustion turbines at a cost of $506.4 million at its Horseshoe Lake power plant in eastern Oklahoma County.
Bingman said it would mean ratepayers would not see the results of added generation projects for perhaps 15-20 years.
“They’ll be paying up front and I didn’t think the advantage would be with CWIP.”
Bingman’s proposal was clear how he suggested where the Corporation Commission should come down on the request.
“The Commission specifically rejects OG&E’s CWIP
request in this Case,” declared his proposed order.
But his plan included preapproval to OG&E for some of its new generation sources, including new gas turbines for its Horseshoe Lake power station near Oklahoma City.
“OG&E conducted a competitive bidding process, evaluated a large number of bids, negotiated for seven highly ranked
projects, and made reasonable choices to move forward with the agreements it could reach. However, the Commission declines to wholly approve the cost recovery plan put forward by OG&E,” stated the order.
The order called for costs related to the Black Kettle battery project at Enid and improvements to the utility’s Kiamichi plant to be recovered through OGE’s Fuel Cost Adjustment Rider “with no additional recovery related to profit or earnings for OGE.”
After OGE filed its request, the Attorney General, the Public Utility Division of the Corporation Commission and the Oklahoma Petroleum Alliance agreed to support the projects through a Stipulated Agreement. It wasn’t supported by Commissioner Bingman’s proposed order.
“While the Commission acknowledges the efforts of OG&E, the Oklahoma Attorney General (“Attorney General”), the Petroleum Alliance of Oklahoma (“PAO”), and the Public Utility Division (“PUD”) to reach a settlement agreement in this Case, their non-unanimous settlement agreement does not reflect a balanced compromise of the interests in this Case and is therefore not approved. The Commission encourages ongoing efforts by parties to negotiate to reach balanced settlement agreements.”
Deputy Attorney General Thomas Grossnicklaus went before commissioners on Wednesday to explain why the Attorney General supported the CWIP request. While the consumer group, Oklahoma Industrial Energy Consumers challenged OGE’s timing and withdrawal of its original request so it would meet the new standards of SB998, the law that created CWIP financing on natural gas energy projects, Grossnicklaus told Commissioners, “The Attorney General said it didn’t matter. His concerns were how 998 was written and the language is clear, the commission shall approve CWIP.”
“The math is so clear. Customers may not be alive in 20 to 25 years,” responded Commissioner Todd Hiett.
Following discussion, Commission chair Kim David said she was not ready to vote on the issue.
“I’m not either,” added Hiett.
The matter was postponed until Thursday, November 13.