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Oklahoma provides model for other states with new fuel rules for electricity generation

A group backed by the natural gas industry has pointed to new Oklahoma rules as a model for other states in long-term fuel contracts for electricity generation.
by Paul Monies Modified: June 28, 2012 at 10:20 pm •  Published: June 29, 2012

New Oklahoma rules allowing long-term natural gas contracts for electricity generation have the potential to lock in millions in benefits for ratepayers while gas prices are low.

That's according to a report this week by the industry-backed American Clean Skies Foundation. The group urged state regulators across the country to follow the lead of those in Oklahoma and Colorado in allowing long-term fuel contracts for natural gas.

In May, Oklahoma Gov. Mary Fallin approved an update to Corporation Commission rules that gives utilities greater flexibility to enter into long-term fuel contracts. The rules were backed by natural gas producers such as Devon Energy Corp. and Chesapeake Energy Corp.

No Oklahoma utility has entered into long-term fuel contracts for natural gas under the new rules. Public Service Co. of Oklahoma is studying its options. The Tulsa-based utility has more than 520,000 customers in eastern and southwestern Oklahoma.

“The rules are helpful,” said Alan Decker, PSO's director of regulatory services. “They're going to allow us to have a little more flexibility in how we put together fuel purchases and our fuel portfolio. We haven't fully sorted it out at this time.”

Decker said pending Environmental Protection Agency rules will affect how the utility operates its plants, which would then in turn affect future fuel choices and fuel contracts.

Natural gas, coal even

For the first time, natural gas and coal had the same share of electricity generation in April, the federal Energy Information Agency said Wednesday. Both fuels were at 32 percent as coal use declined and natural gas use rose for the month. It was the first time natural gas matched coal since the agency began collecting data on fuel use for electricity generation in 1973.

Environmental concerns and new federal emissions rules for power plants are expected to make it harder — and more expensive — for utilities to justify increased coal use for electricity generation. In April, PSO said it would phase out its last two coal-fired units at the Northeastern plant near Oologah.

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by Paul Monies
Energy Reporter
Paul Monies is an energy reporter for The Oklahoman. He has worked at newspapers in Texas and Missouri and most recently was a data journalist for USA Today in the Washington D.C. area. Monies also spent nine years as a business reporter and...
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