POWER TO CHOOSE
Should commercial power customers get to pick whom they buy their electricity from? One group thinks so
Should commercial power customers get to choose who they buy their electricity from?
A nonprofit led by a man who helped work on Oklahoma's plan to deregulate electricity markets two decades ago is aiming once again to get Oklahoma's approval to implement the concept on a narrower scale.
The Alliance for Electrical Restructuring in Oklahoma ( AERO), l ed by Mike Boyd, seeks approval of a plan that would provide comm erci al customers served by Oklahoma Gas and Electric Co. and Public Service Co. of Oklahoma a choice of where to buy their power.
Potential providers not only would include the regulated utilities, but also various other companies that buy and sell power and would work with customers to get them the cheapest energy available over a set period of time.
It's not the first time electrical deregulation has been discussed in Oklahoma, but it's gaining new momentum.
Deregulation, the prequel
Like many other states in the nation, Oklahoma began evaluating the concept of deregulating its electric industry in the late 1990s, based on promises an open market
would boost competition among power suppliers, lower overall rates and give consumers choices about where to obtain their energy based on price and origin.
Oklahoma' s leg isl ature and governor got the ball rolling in 1997, when they approved a law that envisioned the state' s electrical systems would be deregulated by 2002.
A follow-up measure approved in 1998 required the state to conduct studies on how deregulation would impact power providers, consumers and state tax coffers before the market change occurred.
But by 2000, concerns were raised the state might not have enough transmission cap acity to handle the market and utilities might not be motivated to invest in needed transmission upgrades to support the plan.
Legislators were t old in 2001 de regulation would create more issues than it could solve, given the state' s consumers already enjoyed some of the cheapest electricity in the nation.
By t hen, California's deregulation efforts had fallen apart, prompting additional concerns.
Oklahoma passed another law in 2007 creating yet another task force to study the issue, with expectations it would complete its work in 2009. However, nothing of substance was generated by that task force's work.
Today
Some potential problems with deregulation already have been addressed through market forces.
Transmission capacity is no longer a concern. A significant amount was added during the past decade to support the development of wind farms and other renewable energy sources across the Great Plains.
Also, Oklahomans continue to pay among the lowest costs for electricity in the nation for a couple of key reasons.
Generators are t urning to natural gas-fired stations because they are more operationally responsive than coal-fired plants and the fuel is cheaper than coal. Also, wholesale energy costs were essentially deregulated by the Southwest Power Pool (SPP), the regional transmission operator for the grid that serves the Great Plains from Oklahoma to the U.S.-Canadian border.
Under the SPP, electricity needs for utilities, cooperatives and other customers are estimated using a dayahead market it operates.
The market forecasts expected short-term energy needs and t hen pairs those with the most reliable, affordable energy available from power generators on its system.
Additionally, wholesale pricing has been held down because so much renewable energy has been added to the SPP's grid.
Currently, developers are seeking interconnect studies that would support a proposed additional 40 gig a watts of wind, 37 gigawatts of solar and 8 gigawatts of storage.
Barbara Sugg, the SPP's CEO, stresses that not all of
that will be built. Still, she describes the interconnect queue as a good indicator of trends on where future energy development is headed.
She also noted it takes a robust grid system and a diverse field of available generating sources to allow the SPP to adequately manage daily demands with available sources of energy.
Sugg also said this week she expects that wind energy will end 2020 as the grid's top energy source, bumping coal-generated energy from that top spot.
“Coal only nudged out wind by less than 2% through September. We have seen a lot more wind energy in the fall season, so I won't be surprised to see wind overtake coal as the No. 1 fuel source for the year. We predicted it would happen, but didn't expect it until 2021.”
AERO's plan
AERO en visions the process for purchasing electricity could work similarly to what is already in place for large consumers of natural gas. These consumers regularly work with independent providers to keep their fuel costs affordable.
“It is really important to point out that AERO is an organization seeking to bring the stakeholders together, of course including the investor-owned utilities, to determine if now is a good time to restructure the way power is purchased in Oklahoma, ” Boyd said. “AERO is not and will not be a power marketing company, and won't market or sell power.”
Boyd said AERO identified up to 183,000 commercial customers in Oklahomathat could benefit from an open
retail marketplace. He said AERO then asked national power marketers if they might be interested in serving them.
“As you can imagine, without a doubt, they are interested and looking at the possibilities that Oklahoma could bring.”
AERO identified potential savings those customers could enjoy in various scenarios, Boyd said, with more potential savings for customers served by OG&E.
Later, Boyd stated in an email his organization attracted supportive interest from statewide organizations representing hotel and lodging, restaurant and grocery companies.
Further action
The Public Utility Division at the Oklahoma Corporation Commission already asked for the public's help as it looks at ways the state's electricity and natural gas markets are
evolving.
In August, the di vision opened a “notice of inquiry ,” a process the agency routinely uses to work with interested people, organizations and companies to discuss maximizing or further developing available energy resources in the state.
This year, topics on the agenda include battery storage and renewable natural gas and related infrastructure.
Others topics open for comment include discussing ways regulated utilities could increase the information they provide customers through bills, transparency and reporting onutility rates, related eminent domain best practices, the increased use of electric and compressed natural gas vehicles, and the findings and key recommendations that came from the Oklahoma Academy 2019 Town Hall, “Oklahoma Energy: Optimizing Our
Resources for the Future.”
Recently, it amended the notice to include electrical restructuring as a topic of discussion.
It did so after learning about AERO's efforts to put its proposal before legislators and elected corporation commissioners.
Regulators want the public's help to explore whether restructuring would be viable based on customer classes involved, what its impact might be to all electrical producers (including regulated utilities) and consumers, and how would be the best way to monitor those.
The period the agency division is taking public comments on all of the topics continues. A filing is expected soon to extend the public comment period through the end of this year.
A virtual technical conference on the inquiry is planned for 10:30 a.m. on Oct. 29, officials have announced.