Power Plant Dealt Final Blow

By Jason Womack, Tulsa World, Okla.

Oct. 12–The Oklahoma Corporation Commission issued a final order Thursday quashing a proposed $1.8 billion coal-fired power plant known as Red Rock.

But customers of two of the state’s largest electricity providers may still be asked to pay for some of the costs associated with the proposed 950-megawatt plant, provided the companies obtain regulatory approval.

Both American Electric Power-Public Service Company of Oklahoma and Oklahoma Gas & Electric Co. could seek to recover about $40 million that the utilities said they spent developing the north-central Oklahoma facility.

Alan Decker, director of regulatory affairs for AEP-PSO, said company incurred its expenses in good faith and under its obligation to customers.

“We think we are entitled,” he said following the commission’s formal vote. However, Decker said the company has made no final determination on whether it will try to recoup as much as $22 million.

OG&E said it spent an estimated $18 million to $21 million on engineering costs and other expenses associated with canceling the project.

In a split vote, the commission denied applications filed by the utilities, who were

seeking pre-approval of the plant and the need for the power it would have provided.

Under state law, a utility can voluntarily seek approval of those costs before a project is completed.

The three-member commission can consider the need for power and reasonable alternatives. But it cannot designate the type of facility or prevent a utility from moving forward with a project.

“Contrary to what many seem to think, the question before the commission was not one of coal versus natural gas or of whether to issue a permit for construction of a power plant,” Commission Chairman Jeff Cloud said in a written statement.

“To be clear, the commission orders do not tell the companies they cannot build this or any project,” he said.

Cloud and Commissioner Jim Roth voted to deny the application for pre-approval. Commissioner Bob Anthony voted against that denial.

In an opinion issued as part of the order, Anthony said the commission is limited in determining alternatives to a proposed facility.

“The question is whether there is a need,” Anthony said following the vote. “We determined there is a need.”

The commission agreed that AEP-PSO and OG&E need additional generation capacity.

According to the order, AEP-PSO requires an additional 450 megawatts and OG&E requires 300 more megawatts of power by 2012. A megawatt will power an estimated 1,000 homes.

Both companies could seek regulatory approval on other projects that would provide that power.

“It could take any number of forms,” said Brian Alford, an OG&E spokesman. “There is nothing to say it wouldn’t be coal again.”

The utilities contend that the “ultra super critical” coal plant was the best solution for its customers.

The plant would provide a cleaner-burning coal technology, and it would use a low-cost fuel that does not suffer from the same volatility as natural gas, the utilities said.

But Roth and Cloud said the utilities did not perform a thorough analysis of other options.

“The majority of the commission, as reflected in today’s order, determined that the utilities did not put on sufficient evidence to meet their burden of demonstrating that all reasonable alternatives were explored,” Cloud said in his statement.

Roth contended that the utilities should have looked at nuclear power, wind power and energy conservation programs as a way of meeting demand for power.

In a statement, Roth also encouraged the utilities to examine 2,300 megawatts of power available at existing facilities in Oklahoma.

“Is it reasonable to ask the public to buy a new car when several pre-owned cars sit in Oklahoma’s driveway?” Roth asked in the statement.

Tom Schroedter, executive director of Oklahoma Industrial Energy Consumers, said any plan that the utilities ultimately submit to the commission should involve input from ratepayers.

“We want to be part of the process,” Schroedter said. “We recognize that there will be a future need, but we want to avoid another Red Rock.”

The proposed plant, which was billed as the largest project of its kind in the nation, was too expensive, faced an uncertain regulatory future and would negatively impact the environment, its opponents said.

Assistant Attorney General Bill Humes, who represented Oklahoma consumers in the Red Rock case, said the utilities might propose another kind of facility.

“This is the final chapter for Red Rock,” Humes said. “But there is nothing unique about utilities meeting a future need.”

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Jason Womack 581-8380 jason.womack@tulsaworld.com

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