Arkansas regulators approve $4.5 billion Wind Catcher project

by Wesley Brown ([email protected]) 742 views 

The Arkansas Public Service Commission on Tuesday (May 8) gave Southwestern Electric Power Co. (SWEPCO) the go ahead for the controversial Wind Catcher Energy Connection project, a $4.5 billion project that will deliver wind energy from the Oklahoma Panhandle to the utility’s customers in Arkansas, Louisiana and Texas.

The utility has more than 117,000 customers in Arkansas.

Since SWEPCO first announced the project in July 2017, supporters and opponents have debated the merits of the multistate wind energy project that will be partly owned by SWEPCO and its sister company, Public Service Company of Oklahoma (PSO). Both are subsidiaries of Columbus, Ohio-based utility giant American Electric Power (AEP).

The project will originate with the so-called Wind Catcher facility in the Oklahoma Panhandle, which will be the largest wind farm in America and the second-largest in the world once operational. That 2,000-megawatt facility, developed by global wind energy operator Invenergy LLC, will generate power from 800 GE 2.5 megawatt turbines.

The Wind Catcher power line, an approximately 350-mile, dedicated, extra-high voltage line, will then connect a substation at the wind farm with a substation near Tulsa to deliver power across the region. After the switch is turned on, the wind energy development will deliver electric by high voltage power lines to PSO and Southwestern Electric Power Co. customers in Arkansas, Louisiana, Oklahoma and Texas.

Construction on the project began in the Oklahoma Panhandle in 2016, and operations are expected to begin in mid-2020, pending other state and federal regulatory approvals.

In Arkansas, the project has been under review by the Arkansas regulators since SWEPCO filed its application for the project in July 2017 under Docket No. 17-038-U. That review includes detail economic analysis of a variety of stakeholders’ concerns, including overall fuel and purchased power costs and impact on SWEPCO’s 520 customers in Arkansas.

The PSC’s order approved provisions of a settlement agreement submitted in a Feb. 20 joint motion by the commission’s general staff, Attorney General Leslie Rutledge, SWEPCO, Walmart Inc. and Sam’s West Inc (Sam’s Club).

In the 92-page order signed by PSC Chairman Ted Thomas and Commissioners Elana Wills and Kimberly O’Guinn, the Arkansas utility regulators stated that based on all of the pre-filed evidence, exhibits and testimony of the witnesses appearing at the March 1 hearing, the project is “reasonable and in the public interest and therefore is approved consistent with the terms” of the agreement.

“The Settling Parties presented substantial evidence that the Project, with the settlement guarantees and ratepayer protections, will lower SWEPCO’s overall cost to serve customers, continue SWEPCO’s strategy of diversifying its generation mix as outlined in its 2015 integrated resource plan. and serve the renewable goals of SWEPCO’s customers,” the commissioners wrote.

The PSC order also noted the project will provide net savings of nearly $1.5 billion, with Arkansas’ share at 19%, or $290 million. That would reduce the monthly bill of a typical residential customer using 1000 kilowatt hours (Kwh) by $2.46 in 2021, $2.97 in 2022, and $2.75 in 2023, SWEPCO officials testified.

“The evidence additionally shows that the risks to ratepayers are diminished by the guarantees and significant ratepayer protections made by SWEPCO in the settlement,” the order stated.

The settling parties have until noon Friday (May 11) to accept the terms of the modified PSC order or request a full hearing on any contest issues. The three-person regulatory panel did not decide on an “asset rider” request for the multi-billion dollar project, saying it “is premature at this time” to make a ruling on the recovery of costs associated with certain assets that AEP can defer on its balance sheet.

Following the PSC’s decision, AEP officials applauded approval of the settlement agreement. Changes made by Arkansas regulators, and agreed to by SWEPCO, include a cap on construction costs, qualification for 100% of the federal Production Tax Credits, and minimum annual production from the project.

“Wind Catcher is part of our strategy to invest in the energy resources of the future. The Arkansas Commission’s decision recognizes the long-term savings and clean energy that Wind Catcher will deliver to our customers,” AEP Chairman and CEO Nicholas Akins said in a statement. “The Commission thoroughly evaluated our application, including the substantial performance guarantees that were developed during the review process, and they agree that Wind Catcher will provide significant savings and long-term benefits for customers.”

SWEPCO, based in Shreveport, La., has aggressively lobbied Arkansas lawmakers to support the project, pushing talking points that it will save its customers more than $4 billion over the 25-year life of the wind farm, compared to the projected costs of buying power on the open market.

Company officials also released economic impact analysis for the Arkansas portion of the development, highlighting the fact that 800 of its 2.5-megawatt wind turbines for the Wind Catcher wind farm will be manufactured by GE Renewable Energy, which is based in Little Rock. GE and Invenergy officials have said all machine heads and hubs for the Wind Catcher project will be manufactured in the U.S., and additional components will be made in Louisiana, Arkansas, Texas and Oklahoma.

Wind Catcher opponents in Arkansas have made the argument state regulators should support investment into renewable energy development in-state rather than shipping renewable energy into Arkansas from other states. Renewable Arkansas, a nonprofit project of Americans for Affordable Energy, submitted editorial comment to Talk Business & Politics asking the state to reject the four-state project.

“This is not an Arkansas vs. Oklahoma or a wind vs. solar debate. It is all about what is best for Arkansas, and Wind Catcher is not the best option for us. Why import wind from Oklahoma when we should be building our own solar generation that will provide jobs and revenue for communities here in Arkansas?” said Grant Tennille, a former director of the Arkansas Economic Development Commission, who represented the group.

Protect Our Pocketbooks, another nonprofit group with unknown backers, also opposed the project with TV ads and other marketing pieces. In one ad, headlined “Northing for Arkansas and Louisiana,” the tax-exempt group said Wind Catcher would create jobs and make infrastructure investments in Oklahoma with no value-added benefits locally.

The Wind Catcher project is still subject to the approval of SWEPCO’s applications in Louisiana and Texas, and PSO’s application in Oklahoma, as well as the Federal Energy Regulatory Commission.

In August, Oklahoma Attorney General Mike Hunter argued PSO did not follow competitive bidding rules and didn’t show a need for new power generation. The Oklahoma commission chose not to act on Hunter’s request. Hearings before Oklahoma regulators were held in January. No decision has yet been made.