OG&E seeks rate hike to recover costs
Oklahoma Gas and Electric Co. is asking the Oklahoma Corporation Commission for a rate increase to reimburse more than $600 million in upgrades it is making to comply with federal emissions requirements, the utility announced Monday afternoon. The two projects involved in the case — a $75 million project to convert two of three coal-fired powertrains at OG&E's Muskogee Plant to natural gas and a $534 million project to install emissions-reducing scrubbers on the two coal-fired trains at the Sooner Power Plant — have been considered by commissioners before. “The first Sooner scrubber is online, and the second is scheduled to go into service in January," OG&E spokesman Brian Alford said. “It’s important to note that this project is on schedule and approximately $80 million under budget. "Similarly, the Muskogee conversion is scheduled to go online in January 2019, also on time and under budget.” Alford noted OG&E has been able to do the work at both plants while keeping its customer rates 31 percent below the national average and within a half percent of what its rates were in 2014. “Due in large part to the actions we’ve taken at these facilities, overall plant emissions are expected to be significantly lower from 2005 levels," Alford also said. He said the utility expects its
sulfur dioxide emissions will be lower by nearly 90 percent, nitrogen oxide emissions will be lower by 75 percent and carbon dioxide emissions will be lower by about 40 percent.
Alford said this request also seeks to boost the company's return on equity to the utility industry's national average and to adjust its depreciation rates to more realistically reflect life spans of the utility's assets.
“OG&E consistently ranks well above the national average in terms of environmental stewardship, safety, customer satisfaction and low customer rates,” Alford said. “Higher performing companies typically have ROEs aligned with, or above, the industry average.”
Back again
The improvements involved in this rate request increase were part of a larger, $1.1 billion package of work the utility announced it would undertake in 2014 to both improve its efficiencies and to comply with federal environmental restrictions.
Besides the work at the Muskogee and Sooner plants, OG&E officials also planned a $400 million project to replace an older natural-gas fired plant in western Oklahoma City's with new natural gas fired generators that were far more responsive and efficient.
In 2015, commissioners considered that entire package of projects when the utility asked for authority to begin recovering those costs before work began. The request was opposed by environmentalists, who argued the project to put scrubbers at Sooner would be too costly for its customers and that the utility instead should have proposed making other changes that would have embraced renewable energy sources.
In that case, Commissioners Todd Hiett and Bob Anthony supported an order rejecting the utility's request, while Commissioner Dana Murphy dissented, saying the commission had the authority to preapprove the environmental plan, with conditions.
Then, in 2016, OG&E brought its request back before the commission again, asking for approval for its scrubber plan with a provision that an actual cost recovery proposal would be considered later.
Anthony and Hiett voted to approve that request, while Murphy supported the utility's position it needed to upgrade its facility so that it would continue to have diverse sources of energy in its portfolio without signing the order.
Oklahoma's Supreme Court invalidated that order in April, though, in an appeal of the decision brought by the Sierra Club and Oklahoma Energy Results LLC. Still, work already was well underway.
Meanwhile, OG&E has recovered the costs for its Mustang Energy Center upgrade as part of another rate case the commission approved in June. In that case, the utility agreed to reduce its rates by $64 million, in large part to compensate customers for the Tax Cuts and Jobs Recovery Act.
In this latest $609 million case, OG&E is seeking a rate increase of $77.6 million per year, or 4.4 percent, to recover its investment, and officials said that equates to an increase of approximately $7.60 per month for the average residential customer.
A representative of the Oklahoma Sierra Club couldn't be reached for comment on Monday.