Utility Providers Seek to Buy Generation Plant
By Jack Money, The Oklahoman
Jan. 22–Electrical utilities in Oklahoma are taking another step toward meeting future power needs, their officials announced Monday.
Oklahoma Gas and Electric Co., the Grand River Dam Authority and the Oklahoma Municipal Power Authority want to buy the Redbud electrical generation plant near Luther for $852 million.
OG&E, according to the announcement, would own a 51 percent majority interest in the plant, which has a capacity of about 1,200 megawatts. OG&E, which serves more than 762,000 retail customers across 30,000 square miles in Oklahoma and western Arkansas, also would operate the plant.
The Grand River Dam Authority would own 36 percent interest in the plant, while the municipal power authority would own the remaining 13 percent.
The deal, made with Kelson Holdings in Maryland is subject to approval from both state and federal regulators.
The Oklahoma Corporation Commission will be asked by OG&E to authorize having ratepayers pick up the tab for its share of the cost, or about $435 million.
Oklahoma Corporation Commissioner Jeff Cloud said Monday the announcement was an interesting one.
“At first blush, I would think that natural gas proponents in this state would be supportive,” Cloud said.
A news release issued by OG&E on Monday quoted Pete Delaney, chairman, president and chief executive of OGE Energy Corp., as saying Redbud would help meet a need the utility outlined when it unsuccessfully proposed building a new coal-fired power plant near Red Rock.
Cloud and the other two members of the state Corporation Commission voted against authorizing prior approval to build the coal-fired plant in September, but he and Commissioner Bob Anthony agreed the utility would need at least 300 megawatts of new power by 2012.
Since then, OG&E officials have announced a significant expansion of its electrical capacity using power that will be generated by wind farms.
“The purchase of the Redbud plant fills the need for electric generation that was to have been met by the construction of the coal-fired Red Rock plant,” Delaney said in the release.
“Redbud is a new, efficient … gas-fired plant connected to the OG&E transmission system near the Oklahoma City area,” he added.
Delaney also said the Redbud plant is similar to one it acquired in 2004 near Newcastle, and added the price it will pay for the plant is less than it would cost to build a new one.
The purchase agreement was reached through a competitive bidding process, and required quick action on OG&E’s part. Delaney said the utility was pleased to have put together a partnership involving both the dam and municipal power authorities, he added.
Cindy L. Holman, general manger of the Oklahoma Municipal Power Authority, stated in a news release issued Monday by her organization that its 156 megawatt interest in the Redbud plant gives its system a source of intermediate power for its 35 municipal electric system customers.
“The Redbud ownership will provide member cities additional access to a low-cost resource to provide needed … capacity,” added Charles Lamb, chair of the municipal power authority’s board, in the news release.
Brian Alford, a spokesman for OG&E, said Monday the utility will file with the Corporation Commission to get pre-approval of the project so its cost can be built into its rate base.
The filing likely will happen within the next 60 days, he also said.
The amount of any increase in rates for utility customers of has not been determined.
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Copyright (c) 2008, The Oklahoman
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