Oklahoma Gas and Electric Co. estimates it will have to spend up to $1.5 billion to comply with several environmental rules, including compliance costs for a recent court ruling that went against the electric utility.
OG&E said its coal-fired generating plants have 52 to 55 months to comply with federal rules on regional haze, which are designed to curtail emissions that affect visibility in federal parks and wilderness areas. Last week, the utility and Oklahoma lost their bid for a full rehearing of an appeal over the state's regional haze compliance plan by the 10th U.S. Circuit Court of Appeals in Denver.
The compliance plans for regional haze and other rules could cost between $1 billion and $1.5 billion, CEO Pete Delaney said Wednesday during a conference call with analysts to discuss third-quarter results. Much of those costs, which could include installing scrubbers on coal units or retrofitting them to use natural gas, could be passed on to customers, he said.
“Fuel diversity remains very important, an important element of protecting our customers over the long run, and we have been taking these necessary steps to move forward with our plans to be able to scrub some or all of our coal units,” Delaney said.
Delaney said OG&E likely will have details on environmental compliance plans ready by the first quarter of 2014. The utility will recover the costs for the plans from customers through an application at the Oklahoma Corporation Commission, he said. Oklahoma law allows utilities to pass the costs of environmental mandates on to customers, subject to commission review.
“We continue to focus on managing costs in an effort to protect customers' bills in anticipation of future environmental compliance expenditures,” Delaney said.
As well as regional haze rules, OG&E has to comply with other rules for mercury and air toxics standards and nitrogen oxides. The utility has already begun installing equipment on its generating units for those projects.
Meanwhile, the Environmental Protection Agency has begun gathering public comments ahead of a proposed rule by mid-2014 to deal with limits on carbon dioxide emissions at existing power plants. A public “listening session” is Thursday in Dallas for those upcoming rules in the EPA region that includes Oklahoma.
OGE Energy Corp., OG&E's parent company, said its third-quarter profit rose to $215.2 million, or $1.08 per share. That compared to net income of $185.5 million, or 94 cents per share, in the third quarter of 2012.
OGE said its utility division was helped by margins on transmission projects and customer growth. Milder weather in July and August cut into sales, although September weather was back to normal. Delaney said 10 percent of OG&E's customers, about 80,000, have signed up for the SmartHours program, which offers flexible prices to discourage peak-time usage.
Enable Midstream Partners LP, the master limited partnership formed from OGE's Enogex division and the interstate pipeline assets of Houston-based CenterPoint Energy Inc., is on track for an initial public offering in early 2014. Delaney said the search for a CEO for Enable is ongoing.
“I am pleased with the progress the team is making and how both companies are coming together to become a strong competitor in the natural gas midstream sector,” Delaney said.