The Environmental Protection Agency gave approval Monday to a plan by electric utility Public Service Co. of Oklahoma to retire its last two Oklahoma coal plants by 2026.
The plan is part of an effort to control haze at federal parks and wilderness areas. With the approval of PSO’s plan, EPA also withdrew a federal plan for regional haze that would have applied to coal units at PSO’s Northeastern Station plant near Oologah.
“EPA has worked with Oklahoma and other stakeholders to expedite the process of approving the state clean-air plan to replace the federal plan,” the agency said in a news release.
Stuart Solomon, PSO president and chief operating officer, said the state plan was the best way to comply with federal environmental rules for PSO’s plants.
“Not only have we avoided the cost to our customers of a more onerous federal plan, we have ensured compliance with numerous Clean Air Act provisions in a reasonable and cost-effective way that utilizes more of Oklahoma’s natural gas and renewables,” Solomon said in a statement.
Solomon said the federal plan would have cost PSO and its customers about $650 million more than the state plan. PSO estimates the state plan will cost more than $350 million and raise customer rates by about 11 percent starting in 2016.
Last month, PSO filed for a $45 million rate case with regulators at the Oklahoma Corporation Commission. If granted, that increase would raise bills by almost $4 per month for the typical residential customer. The rate case doesn’t include costs needed to comply with PSO’s regional haze plan beginning in 2016.
PSO’s plan for regional haze calls for it to retire one coal unit at Northeastern by 2016. It would install some emissions-control equipment on another coal unit before retiring it by 2026. To make up for the loss of the coal-fired unit in 2016, PSO will buy natural gas generation from Calpine Corp. under a 15-year power purchase agreement.
The utility also recently signed three 20-year contracts for a total of 600 megawatts of wind power from wind farms to be built in northwestern Oklahoma and the Panhandle by 2016.
Oklahoma Gas and Electric Co., Oklahoma Attorney General Scott Pruitt and Oklahoma Industrial Energy Consumers are fighting the EPA’s plan for regional haze for OG&E. They have appealed to the U.S. Supreme Court to review an appellate court decision that went against them last year.
OG&E has four coal units at its Red Rock and Muskogee generating plants covered by regional haze rules. The utility estimates it may have to spend between $1.2 billion and $1.3 billion to comply with the federal plan.
Whitney Pearson, with the Sierra Club’s Beyond Coal campaign in Oklahoma, said OG&E should follow PSO’s lead and retire its coal plants.
“For PSO, the right choice was clear: Oklahomans could spend hundreds of millions of dollars to prop up obsolete coal-fired power plants and keep paying for out-of-state coal, or we could use our energy dollars to fuel Oklahoma’s economy with cleaner, home-grown resources and build more prosperous communities,” Pearson said.
PSO, a unit of Ohio-based American Electric Power Co. Inc., has about 540,000 electric customers in eastern and southwestern Oklahoma.