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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

Shoop said appealing a federal plan for regional haze bought the utility time to study other options and benefited customers, who didn’t immediately have to pay for compliance costs mandated by the EPA. The regional haze rules are meant to restore visibility at national parks and wilderness areas by 2064.

The utility’s regulatory analysts came up with 25 different options for compliance with regional haze rules, including scrubbing four coal units, converting coal units to use natural gas or replacing coal units with new natural gas units.

Hybrid option

OG&E said the best scenario was a hybrid option that involves putting dry scrubbers on its two Sooner coal units and converting two Muskogee coal units to use natural gas. Another Muskogee coal unit would still operate, but it began operations in 1984 and isn’t covered by the regional haze rules.

Installing dry scrubbers at the Sooner plant could cost about $500 million, or $250 million each, said Don Rowlett, managing director of regulatory affairs for OGE Energy Corp., the utility’s parent company. Those estimates don’t include additional costs needed for ongoing operations.

To comply with the mercury and air toxics rules, OG&E plans to use activated carbon injection technology to remove mercury at all five of its coal units. That project will be complete by April 2016.

Meanwhile, OG&E plans to replace its four natural gas units at the Mustang power plant with 10, 40-megawatt combustion turbine units powered by natural gas. The current Mustang natural gas units were installed in the 1950s. OG&E said it is getting harder to find replacement parts.

“We’ve got some older, legacy gas units that are at the end of their useful lives,” Shoop said. “We’re going to propose that we retire them at the end of 2017 and replace them with modern combustion turbines that are designed to be quick-start and quick-ramping units.”

Shoop said the new gas units at Mustang will allow OG&E to be more responsive to market signals from the Southwest Power Pool, which runs the regional grid that covers Oklahoma and parts of eight other states. The new units also will enhance wind generation integration by allowing grid operators to bring them up and down quickly in concert with wind conditions.

Rowlett said Mustang is a good location for the replacement natural gas units because it is close to customer demand in Oklahoma City, has existing of transmission infrastructure and plenty of water for cooling.

Rowlett said OG&E has been pleased with the response to its SmartHours program, which offers residential customer free programmable thermostats to better manage use during peak summer times. More than 80,000 customers signed up in the second year of the program, and OG&E wants to have 120,000 customers in the program by the end of this year.

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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