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Oklahoma Gas and Electric Co. upgrades may bring substantial rate increase

by Paul Monies Modified: June 9, 2014 at 8:00 pm •  Published: June 8, 2014

Oklahoma Gas and Electric Co. has big plans for its aging Mustang natural gas plant and wants to install scrubbers at its Sooner coal plant in Red Rock to comply with environmental regulations, the utility said in a planning update submitted to Oklahoma regulators.

While it’s too early to determine exact costs, OG&E representatives said the changes could increase customer bills by 15 to 20 percent when it’s fully implemented by 2019.

OG&E said its plan meets federal mandates in a way that preserves reliability and minimizes the effect on customers.

“Unfortunately, all alternatives available to the company increase customer costs,” the utility said in a draft Integrated Resource Plan submitted to the Oklahoma Corporation Commission.

In the update, OG&E said it wants to convert two of the three coal units at its Muskogee plant to use natural gas. The utility also wants to replace natural gas-powered steam units from the 1950s at its Mustang plant with modern, quick-fired combustion turbine natural gas units.

“With this plan, we’re moving a lot further into the (natural) gas area, but we are preserving some coal for fuel diversity, which is a very important part of our planning,” said OG&E attorney Kimber Shoop. “We really feel strongly that fuel diversity is important for our customers because of the insurance against the increase in costs of one particular fuel.”

The utility’s planning document forecasts that natural gas will be twice as expensive as coal.

Whitney Pearson, with the Sierra Club’s Beyond Coal campaign in Oklahoma, said the utility has taken a “half step in the right direction through its decision to reduce coal use at its largest and dirtiest power plant.”

Pearson said the Sierra Club was disappointed OG&E isn’t taking more advantage of low-cost wind resources available in Oklahoma and will continue to buy coal from Wyoming. The Sierra Club wants OG&E to phase out all its coal plants, a decision already taken by the state’s other large electric utility, Public Service Co. of Oklahoma.

“Throughout the planning process, the Sierra Club will advocate for the Oklahoma-first solutions that will strengthen our economy and protect public health,” Pearson said.

OG&E, which has added 670 megawatts of wind capacity in the last decade, said it wasn’t interested in adding more wind until planned transmission lines are finished. The utility also said it looked at large-scale solar generation but the options weren’t yet cost-effective for customers.

The company plans to file an environmental compliance plan in August for its response to regional haze, mercury and air toxics and other federal emissions mandates. That filing will detail some of the costs the utility needs to recover from customers.

OG&E representatives said they are still studying a 645-page proposed rule on carbon dioxide emissions from existing power plants released Monday by the Environmental Protection Agency. EPA set a goal of reducing greenhouse gas emissions from power plants 30 percent by 2030. For Oklahoma, the plan would mean a reduction of 35 percent in carbon dioxide emissions by 2030.

Apart from the proposed carbon rules, OG&E faces deadlines in April 2016 for mercury and air toxics rules and in January 2019 for compliance with regional haze rules. OG&E, the Oklahoma attorney general’s office and a group of industrial consumers unsuccessfully fought a federal plan in court for part of the regional haze implementation.

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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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