Oklahoma OKs utility's plant purchase proposal

The Oklahoma Corporation Commission on Wednesday approved a proposal that will allow Oklahoma Gas and Electric to recover the cost of purchasing an electric generation plant near Luther.

Commissioners Jim Roth and Jeff Cloud approved the proposal, while the third member of the regulatory panel, Commissioner Bob Anthony, issued a separate opinion.

OG&E, which expects to complete its acquisition of the plant by Oct. 1, said once the plant is operational, the average residential customer's bill is expected to increase by about $3.34 per month.

"We are pleased to have the commission's approval as well as the support of the commission staff, our customers and the Attorney General's office," Howard Motley, OG&E's vice president of regulatory affairs, said in a statement. "This plant will help us continue delivering a reliable supply of power and also provides long-term cost savings to our customers."

The joint stipulation and settlement agreement was reached between the state Attorney General's office, OG&E, the Corporation Commission's Public Utility Division and other groups.

Under the agreement, OG&E plans to buy the natural gas-fired Redbud power plant, which now is owned by Kelson Holdings LLC of Maryland, then sell undivided interests in the facility to the Grand River Dam Authority and the Oklahoma Municipal Power Authority.

When the deal is complete, OG&E will own a 51 percent interest in the Redbud plant, the GRDA will own a 36 percent interest and the OMPA will own a 13 percent interest.

The unadjusted purchase price for the plant is $852 million, of which OG&E's portion will be $434.52 million. Under the agreement approved by commissioners, the latter amount is deemed as "prudent" and OG&E "shall be authorized to recover the Oklahoma jurisdictional annual revenue requirement associated with the Purchase Price" for the Redbud facility.

Last September, the Corporation Commission denied a request by OG&E to raise customer rates to help pay for a proposed 950-megawatt, $1.8 billion coal-fired power plant near Red Rock in north-central Oklahoma. The company then abandoned plans to build the plant.

After the 2-0 vote to approve the Redbud plan during Wednesday's meeting, Roth challenged Anthony, calling the latter's decision not to vote an abstention.

"Don't put words in my mouth," Anthony responded.

Commission spokesman Matt Skinner later said Anthony believed the issue should not have come before the commission, because Anthony believed the Redbud proposal essentially was a continuation of the Red Rock case.

"I have not supported the package of the Commission orders denying the Red Rock coal plant and approving the Redbud gas-fired generation facility," Anthony said in a statement. "I do support a diversified fuel mix and the lowest overall cost to consumers."

The Redbud plan still must be approved by the Federal Energy Regulatory Commission. The agreement notes that "such approval may include a requirement that OG&E construct or cause the construction of new transmission facilities" and that "OG&E expects the construction of such facilities, if required, could take up to 27 months to complete and cost approximately $17 million."

OG&E has more than 765,000 customers in a service area spanning 30,000 square miles in Oklahoma and western Arkansas.

The Grand River Dam Authority serves rural cooperatives and municipalities in northeastern Oklahoma and communities in bordering states, including Siloam Springs, Ark., and Coffeyville, Kan. GRDA officials have said the authority will be able to increase its total generating capacity by 28 percent by buying an interest in the Redbud plant.

The OMPA provides wholesale electricity to cities and towns that own their electric systems. The OMPA serves 35 such municipalities in Oklahoma.