Utilities hunt energy for the future

OKLAHOMA - Oklahoma's two largest electrical utilities are taking steps toward meeting future power needs, but in different ways.

Oklahoma Gas and Electric Co. already announced it plans to join the Grand River Dam Authority and the Oklahoma Municipal Power Authority in buying a natural gas-fired, electricity generation plant near Luther for $852 million.

Public Service Co. of Oklahoma, meanwhile, is working with the Oklahoma Corporation Commission and a consultant selected by the agency - Boston Pacific, in Washington, D.C. - to help map out its future plans, PSO officials say. Different plans, same goal Jeff Cloud, chairman of Oklahoma's Corporation Commission, said he is an interested onlooker at the plans both utilities are following.

Cloud said both directions have merit.

"This is not a case where one utility is doing something right and another one isn't," Cloud said. "Their plans are just different, and I look forward to their processes playing out as both companies move toward meeting their future energy needs." Alan Decker, director of regulatory services for the utility, says PSO is looking for a way to come up with an additional 450 megawatts of power to add to its 4,100 of megawatts of base power available on its system.

It asked Oklahoma's Corporation Commission to help it evaluate how to meet those needs and to solicit proposals from power generators or contractors who build power generation plants because it wants a transparent process, Decker said.

As for what type of power generation the utility is interested in, "it could be anything," Decker said. "But the likelihood is there are just two types of resources... coal or gas."

Decker said this is the first time PSO, based in Tulsa and serving about 500,000 Oklahoman customers, has worked with the Corporation Commission on this type of process. He said the utility chose that path to steer clear of potential criticisms of the company's power needs and ways to meet them. Critics of the plan to build new coal-fired power generation plant at Red Rock questioned the utilities' power needs and estimates for building the plant, officials noted.

"By having the commission hire our consultant, that assures impartiality," Decker said. "Obviously, we want to make sure we have some regulatory certainty about how we meet our customers' needs in the future. If this process contributes to that certainty, then we are all for it."

As part of the process, the consultant and company are considering potential sources of power from existing generation plants and possibly building a new plant for the utility. Decker said the company hopes it can complete its process by the end of 2008. By then, PSO "will know what we are going to build and who is going to build it," Decker said.

The right place at the right time Oklahoma City-based OG&E, meanwhile, is pursuing necessary federal approval to buy the natural gas-fired plant called Redbud. It also has filed an application with the Corporation Commission asking to add $2.82 a month to an average residential customer's bill to pay its $435 million share of the plant's sale price.

Company officials say the charge would be added to customers' bills once OG&E is using power generated from the plant, which it would operate. They have not said how long the fee would remain on customers' bills. OG&E, which serves more than 762,000 retail customers across 30,000 square miles in Oklahoma and western Arkansas, supplies a baseload of 6,200 megawatts of power to its customers today.

It would own a 51 percent majority interest in the plant, and be a le to use about half the power it produces. Redbud has a generation capacity of about 1,200 megawatts. The Grand River Dam Authority would own 36 percent interest in the plant, while the Oklahoma Municipal Power Authority would own the remaining 13 percent. Kelson Holdings in Maryland is selling the plant.

"We are fortunate in that Redbud is in the neighborhood, and that shortly after the Corporation Commission's decision on Red Rock, it was put up for sale," OG&E spokesman Brian Alford said. "So, it was a matter of the right asset and the right place at he right time."

Company officials said they like the plant because it is similar to another OG&E already owns and operates near Newcastle.

Harnessing wind power It also already is connected into the utility's power grid and is used to supply power to the utility when its needed during periods of high electricity use by its customers. Also, using a gas plant like Redbud to help meet OG&E's base load power needs makes sense, officials said, because power produced by gas plants can be increased and reduced quickly, for example, to adjust for power produced by wind.

Pete Delaney, chairman, president and chief executive of OGE Energy Corp., said Redbud will help the utility meet the power needs it demonstrated during the Red Rock pre-approval process.

OG&E officials also have announced a significant expansion of the system's electrical capacity since the Red Rock decision. The utility plans to use power generated by wind to add the capacity to the system, they said.


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