Oklahoma Gas and Electric argues for Crossroads rate rider

Due to the elimination of the expectation of federal Renewable Portfolio Standards (RPS), Oklahoma Gas and Electric no longer reflects 1,200 MW of future wind in its integrated resource planning.

“Without a federal or state requirement to add wind, OG&E adds wind energy based on the potential to offer customer savings,” wrote Gregory Tillman, Manager of Pricing for OG&E. “Therefore, OG&E has no firm plans to add additional wind energy but will analyze opportunities on a case-by-case basis much like the Crossroads analysis.”

The utility filed testimony from Tillman on Nov. 30 at the Arkansas Public Service Commission. He was rebutting testimony from other parties to a rate rider case related to the company’s new Crossroads wind farm.

That 1,200 MW of future wind had been in the utility’s 2010 Integrated Resource Plan (IRP), Tillman noted. “The resource additions were based on then expected federal renewable portfolio standards (‘RPS’) requirements and expected federal legislation limiting carbon dioxide emissions,” he wrote. “After the Company published the 2010 IRP, the likelihood of federal legislation changed significantly and the Company no longer believed the assumption that 1,200 MW of wind generation would be required was valid. From that point forward, OG&E eliminated that assumption from its analyses. Since the decision to pursue Crossroads was made after that point, the Company excluded the 1,200 MW of new wind requirements from the analysis of the Crossroads facility. This was done specifically to isolate and assess the value of the Crossroads facility under the new assumption. In 2012 a new IRP was developed in compliance with the rules in both Oklahoma and Arkansas. The 2012 IRP did not assume a federal RPS requirement but did analyze the economics of wind by adding 150 MW of wind energy by 2014.”

Since the start of Crossroads facility production in September 2011 through September of this year, the facility produced over 748,000 MWh and created a reduction in fuel costs of approximately $15.3m, Tillman noted. Of this total company benefit, Arkansas customers have received the benefit of about $1.6m in reduced fuel costs. “These benefits have been realized by customers without compensation to OG&E shareholders for the investment,” he added.

OG&E believes that approval of the Crossroads facility is in the public interest, Tillman said. “The Company’s market assessment shows that the Crossroads facility was favorable when compared to other available market opportunities at the time. Based upon the testimony and evidence presented in this docket, the Commission should find that Crossroads is in the public interest and authorize the Crossroads Recovery Rider for the collection of the revenue requirement of the Crossroads facility.”

Crossroads is a 98-turbine, 227.5-MW wind plant located in Dewey County, Okla. It began initial operation in September 2011 and commercial operation on Jan. 17, 2012. Crossroads interconnects to OG&E’s 345-kV Woodward-to-Oklahoma City transmission line.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.