Sierra Club argues against Sooner scrubber project at Oklahoma Supreme Court

The Sierra Club said Dec. 22 that it filed its opening brief that day with the Oklahoma Supreme Court asking it to overturn a decision by the Oklahoma Corporation Commission (OCC) approving Oklahoma Gas & Electric (OG&E) to spend $500 million to retrofit the coal-fired Sooner plant with SO2 scrubbing technology.

The Sierra Club contends that the OCC’s decision unlawfully puts protecting company shareholders from financial risk above protecting ratepayers.

“Customers are exasperated and ready to push back on OG&E’s many attempts to get ratepayers to bail out an idle, dirty coal plant built in the 1970s,” said Johnson Bridgwater, Director of the Oklahoma Chapter of the Sierra Club. “OG&E should  use this money, time and effort to implement cleaner sources of energy that benefit the ratepayer, advances Oklahoma’s economy, and provides entrepreneurs with a share in the booming clean energy economy. The OCC is constitutionally empowered to stand up for ratepayers, and right now it is only standing up for OG&E’s shareholders.”

OG&E first requested approval in 2014 from the OCC to retrofit the Sooner olant and to recover half a billion dollars of ratepayer money for this retrofit. The OCC denied that request, along with other requests, finding that OG&E failed to demonstrate the financial benefit of installing SO2 scrubbers for numerous reasons, including ignoring future ratepayer-funded investments that would be needed to maintain the aging Sooner coal plant, the club said. The OCC also concluded that OG&E’s plan put customers at risk because it missed opportunities to lock in record-low prices for wind-based electric power.

The company then filed another request seeking pre-approval of its decision to install scrubbers at Sooner to remove the risk that shareholders would not be able to recover the $500 million for the retrofit. The Sierra Club and other parties asked the OCC to stand by its previous decision. The club said that the Southwest Power Pool (SPP) had in the meantime effectively shut down the Sooner plant and put it on standby reserve.

In May 2016, the OCC approved OG&E’s latest request. The OCC determined that its authority allowed it to preapprove OG&E’s plan without addressing the plan’s impacts upon ratepayers.

Sierra Club’s brief filed Dec. 22 at the state Supreme Court argues that both the Oklahoma Constitution and statutes prohibit the OCC from shirking its obligations to protect ratepayers.

Said utility parent OGE Energy (NYSE: OGE) in its Nov. 3 quarterly Form 10-Q financial report: “On September 10, 2014, OG&E executed a contract for the design, engineering and fabrication of two circulating dry scrubber systems to be installed at Sooner Units 1 and 2. OG&E entered into an agreement on February 9, 2015, to install the dry scrubber systems. The dry scrubbers are scheduled to be completed by 2019.

“On February 12, 2016, OG&E filed an application requesting the OCC to issue an order approving its decision to install dry scrubbers at the Sooner facility on or before May 2, 2016. OG&E’s application did not seek approval of the costs of the dry scrubber project. Instead, the reasonableness of the costs would be considered after the project is completed and OG&E seeks recovery in its rates. On April 28, 2016, the OCC approved the dry scrubber project and OG&E is proceeding with the project. Two parties to the proceeding have appealed the OCC’s decision to the Oklahoma Supreme Court. After the OCC provides a certified record to the Oklahoma Supreme Court, the parties will file briefs by the end of 2016 or the first quarter of 2017.

“OG&E anticipates the total cost of dry scrubbers will be $547.5 million. As of September 30, 2016, OG&E had invested $138.6 million of construction work in progress on the dry scrubbers.”

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.