OG&E gains approvals to upgrade utility fleet, completes Shady Point power plant deal

Oklahoma Gas & Electric said Wednesday (May 22) it has received all state and federal regulatory approvals to move forward with the acquisition of two cleaner-burning power plants to reduce the company’s coal-fired electric use for customers in Oklahoma and Arkansas.

The company, which has more than 800,000 customers in Oklahoma and western Arkansas, first announced in late December 2018 it expected to pay approximately $53 million to acquire the Shady Point plant near Poteau, Okla., – within the Fort Smith, Ark., metro area – and the Oklahoma Cogeneration plant in Oklahoma City.

OG&E officials said the company completed the acquisition of the Shady Point plant Wednesday following regulatory approval from the Federal Regulatory Commission (FERC). Both facilities have served OG&E customers for several decades under federally mandated power purchase agreements.

“We are pleased to have achieved regulatory approval on all fronts and to have closed on the Shady Point acquisition. These transactions will save our customers tens of millions of dollars each year and keeping good paying jobs in Oklahoma,” said OG&E spokesman Brian Alford.

OG&E had previously received the “conditional” approval to proceed with the acquisitions from the Arkansas Public Service Commission on May 8, and the Oklahoma Corporation Commission on May 13. A PSC docket (19-014-U) was established on April 24 when the subsidiary of Oklahoma City-based OGE Energy Corp., filed its expedited application to acquire the Shady Point and the Oklahoma Cogeneration.

In its application, OG&E made the case that speedy approval by Arkansas and Oklahoma regulators would open the door for final FERC approval. According to the PSC docket, Arkansas customers will see a reduction to their overall cost in the amount of $1.11 million annually, or 65 cents per month based on 1,000 kilowatts of use. Two days later, Arkansas Attorney General Leslie Rutledge protested OG&E’s requested for an expedited order, calling it “not reasonable and cannot be undertaken within 13 days” of the Oklahoma utility’s timetable.

“The Attorney General hasn’t yet had an opportunity to begin its investigation and analysis regarding whether the proposed acquisition, depreciation rates, and the requested rate treatment are in the public interest or proper,” Rutledge’s office said a in six-page filing.

On May 8, the PSC conditionally approved a modified OG&E plan to acquire the two Oklahoma power plants, based on guarantees made by the utility operator to protect Arkansas ratepayers. The Commission, however, took exception to OG&E’s request for an expedited approval on an “unworkable schedule” by May 13. The Arkansas Commission, headed by PSC Chief Ted Thomas and Commissioners Kimberly O’Guinn and Justin Tate, has given OG&E until noon on May 31 to file additional testimony concerning its application, while the deadline to submit a petition for intervention is June 7. PSC staff and intervenors must file direct testimony on or before Aug. 2.

The Shady Point facility, owned by AES Corp., is a 360MW coal- and natural gas-fired plant that produces lower emissions due to its design features and emissions controls. The Oklahoma City power plant, owned by Oklahoma Cogeneration LLC, is a 146MW natural gas-fired combined-cycle plant. Alford said that OG&E power plant air emissions are significantly lower than 2005 levels, with sulfur dioxide emissions lower by nearly 90%, nitrogen oxide lower by nearly 75% and carbon dioxide lower by approximately 40%. In addition, the company is expecting to continue reducing CO2 emissions to 50% below 2005 levels by 2030.

OG&E’s lower emissions are largely attributed to the company’s actions to meet federal regional haze mandates, which require states to meet Clean Air Act requirements to cut smog-like nitrogen dioxide emissions and the harmful effects of pollution across national parks and other environmentally sensitive wilderness areas. Under OG&E’s regional haze plan filed with the Environmental Protection Agency (EPA), the utility will convert two units at the company’s Muskogee Power Plant in eastern Oklahoma, about an hour from Fort Smith, from coal to natural gas.

“With our demonstrated emissions reductions and rates that are 31% below the national average, our performance is industry-leading. As we integrate Shady Point into our fleet, we will use our expertise to enhance the operation of this facility to further reduce emissions,” said Alford.