Oklahoma Gas and Electric Co. laid out a plan to reduce demand for its electricity so it doesn't have to build a new power plant until at least 2020, the utility told regulators on Tuesday.
OG&E may add more renewable energy, most likely wind generation, by 2014. It also plans to install emissions-control equipment to deal with several federal environmental regulations. But OG&E wants to hold off on the most expensive emissions controls for its coal plants until legal reviews are complete.
The utility presented its integrated resource plan at a public meeting before the Oklahoma Corporation Commission in Oklahoma City. The plan, which is not binding, has to be submitted every three years to regulators.
Leon Howell, OG&E's director of resource planning, said the plan is a snapshot of how the utility will deal with future customer needs in several areas, including generation, transmission and environmental regulations.
“Demand response is very important to our 2020 goal going forward,” Howell said.
Smart meters used
OG&E said the installation of smart meters and Smart Hours, a variable-pricing program for peak-demand times, will help lower daily customer demand. The utility forecasts daily system demand of 5,864 megawatts in 2020, a reduction of more than 500 megawatts. Most of the reduction would come from expiring wholesale power contracts OG&E has with other utilities.
The utility said it will issue a request for information next year to see if additional wind capacity would be affordable for its customers. OG&E added wind power last year with its 227 megawatt Crossroads project in Dewey County. It will add another 60 megawatts later this year when it begins buying power from a NextEra Energy Resources wind farm near Blackwell.
Shifting to natural gas
Coal generated 59 percent of OG&E's electricity in 2011, with another 35 percent coming from natural gas. Wind provided the remaining 6 percent. The utility expects to shift most of its generation to natural gas by 2042, when it will make up almost two-thirds of OG&E's energy mix.
Jim Roth, an attorney representing Chesapeake Energy Corp., commended the utility for moving toward natural gas for more of its future generation. But he urged OG&E to explore recent commission rules that make it easier for utilities to buy natural gas on long-term contracts.
“We think Oklahoma's ratepayers could benefit by Oklahoma utilities locking in a long-term gas supply,” Roth, a former corporation commissioner, said after the meeting. “They obviously don't need to lock in their entire supply, but when we're at historic lows, why not lock in at least 10 years or more?”
In the meantime, OG&E has to deal with several environmental regulations to control emissions from its coal plants. Scrubbers are the most expensive option, OG&E said, but it may also look at retiring coals units or converting them to natural gas. Much of those costs would be passed on to customers.
“We're continuing to look out for customers' costs and that's the big reason why we are delaying the decision on scrubbers and we haven't gone forward with putting scrubbers on our units,” Howell said.
OG&E is working toward installing emissions-control equipment for regulations dealing with mercury and air toxic gases, as well as nitrogen oxide emissions. But it is waiting for a court review to deal with sulfur dioxide emissions, which federal regulators said interfere with visibility at national parks.
Coal plants criticized
The Sierra Club said OG&E should be doing more to emphasize energy efficiency and criticized the utility for relying on aging coal plants that are due for expensive upgrades.
“It is also disappointing that OG&E views cleanup requirements on its coal plants as hassles to be battled in court rather than an opportunity to better protect the health of Oklahomans,” said Whitney Pearson, associate organizing representative with the Sierra Club's Beyond Coal campaign.
OG&E said its customers will be responsible for more than $1.36 billion in transmission upgrades in the next decade to make the regional grid more reliable. The utility is a member of the Arkansas-based Southwest Power Pool, which organizes and plans electricity transmission in a nine-state area. Major transmission upgrade costs for the region are pooled among members.
Several meeting participants questioned OG&E on the cost estimates for those transmission upgrades. The estimates went from $61 million in 2011 to $147 million by 2021.
Howell said the pool has ramped up its transmission expansion plans and the revenue requirements should come down over time as the investments depreciate over the next 40 years.