Three power contracts for wind energy for Public Service Co. of Oklahoma should be approved by the Oklahoma Corporation Commission, an administrative law judge recommended Thursday.
The Tulsa-based utility announced in October it will purchase almost 600 megawatts of electricity from three wind farms to be built near Seiling in northwest Oklahoma and Balko and Goodwell in the Panhandle.
PSO wants permission from the commission to recover costs associated with the wind contracts starting in 2016 from the fuel-cost adjustment portion of customer bills. The utility typically adjusts its fuel costs in the fall of each year.
Administrative Law Judge James Myles' recommendation to approve PSO's wind contracts will go before the three-person Corporation Commission for its final decision.
PSO issued a request for proposal in June to replace an expiring, 151-megawatt contract with Blue Canyon II wind farm near Lawton. The utility received 18 bids totaling almost 3,000 megawatts.
Because of the number of bids and the low prices for wind power, PSO decided to sign contracts for 600 megawatts. The utility also wanted to secure the contracts before the Dec. 31 expiration of the federal wind production tax credit.
Independent evaluators for the attorney general's office and the commission's public utility division testified Thursday they thought the bid process and contract negotiations were fair and in the best interest of PSO's customers.
Several groups sometimes at odds with PSO said they were happy with the wind contracts, including Oklahoma Industrial Energy Consumers (OIEC) and the Quality of Service Coalition.
PSO estimated the agreements would reduce its costs by $53 million in the first year, with annual savings growing over the 20-year length of the contracts. The utility has about 540,000 customers in southwestern and eastern Oklahoma.
“These forecast savings reflect the fact that prices under these contracts are at historically low levels and are expected to remain far lower than the forecast price of natural gas and the wind energy it is expected to replace,” said Scott Norwood, an energy consultant for OIEC.
Norwood said approval of the wind contracts would be independent of PSO’s environmental compliance plan that would phase out the last of its Oklahoma coal units by 2026.
“The company’s economic analysis indicates that the wind energy purchases will displace very little of the energy produced from the company’s coal-fired units,” he said.
With the new wind contracts, PSO will have 1,137 megawatts of wind capacity. One megawatt can power about 200 homes at peak demand times.
“The proposed contracts are expected to benefit PSO's customers by enhancing fuel diversity and by providing a guaranteed low-cost source of energy for 20 years, which will serve to significantly reduce PSO's system energy costs,” Norwood said.
The new wind farms will be developed by three companies. Apex Clean Energy Inc. will build the Balko project in Beaver County. NextEra Energy Resources LLC will develop the Seiling wind farm in Dewey County, and TradeWind Energy Inc. will build the Goodwell project in Texas County.