People were trying to wrestle with how we could afford that. That was a big problem we were trying to deal with. Delaying restructuring gave us time to deal with that. The regional transmission authority helped with that because it helped control the costs, helped us do better planning, so we could figure out what to do next and not have as many errors. We were expecting serious reliability problems in the late 1990s and early 2000s.
Q: What other positive changes came out of the regulation discussions?
A: We were able to ask good questions, focusing on meeting concerns. That allowed for building of transmission lines. We managed to get those on the table and find some solution. They are not totally solved, and probably never will be. But at least we are going to the table and doing something about those issues. Over the years, even though Oklahoma did not go the way of Texas, we did join the Southwest Power Pool, which became a regional transmission organization. Some utilities buy power from providers in that market, but the state of Oklahoma is not regulated so that those producers can sell directly to Oklahoma. But we did buy into the fact that having a regional transmission organization is beneficial in other ways than providing energy.
For example, one of the biggest problems any state faces is how to maintain reliability in a system. You build enough plants to have extra capacity so in case of an emergency, you have enough power to cover an emergency if a plant goes down. It is very expensive to build backup generation. One benefit of the regional transmission authority is that the utilities can share that cost. Some capacity in Arkansas not being used can be used to support Oklahoma in an emergency and vice versa.
We also got centralized planning. One of the problems you face in building these very complex systems is that you need to know what decisions to make in terms of what to build and when to build it. Regional planning provides utilities with a lot more opportunity not only to build the right thing, but also to save money in building the right thing.
Q: Is deregulation law in Oklahoma?
A: SB500, that has been on the books, but is under hold, which is the case in a lot of states.
Restructuring was a really big deal until California imploded in the early 2000s. That pretty much put a hold on almost every state. Three-quarters of states going down that road were put on hold.
California customers literally had to pay billions of extra dollars for energy. Not all of that was the result of the restructuring law. Some of it was bad management and bad timing. But when that happened, most states put their plans on hold. It was a response to a very bad situation.
Adam Wilmoth, Energy Editor