Oklahoma's attorney general wants state regulators to dismiss a preapproval case for Public Service Co. of Oklahoma's Wind Catcher project, saying the utility didn't follow competitive bidding rules and hasn't shown a need for new generation.
The motion, filed late Friday by Attorney General Mike Hunter's public utility division, said if the commission doesn't dismiss the case, it should make PSO pay for the attorney general's costs to represent Oklahoma consumers in the case.
"The Attorney General's full participation is essential, as PSO's customers are at risk to bear the $1.36 billion cost of the Wind Catcher project if the commission grants PSO's requested relief," the motion said.
PSO and a sister utility, Southwestern Electric Power Co., last month announced the $4.5 billion Wind Catcher project. It involves an 800-turbine wind farm in the Oklahoma Panhandle and a 350-mile transmission tie to take the electricity directly to 1.1 million PSO and SWEPCO customers in four states. Both utilities are units of American Electric Power Co. Inc.
PSO would get 600 megawatts of the 2,000-megawatt Wind Catcher wind farm already under construction by Chicago-based Invenergy. SWEPCO would get the other 1,400 megawatts of capacity. The project is expected to be in operation by late 2020.
PSO's request for preapproval said its customers would save money on the fuel portion of their bills in the first year of service. The project would mean an additional $80 million increase in annual rates to pay for PSO's share of the Wind Catcher infrastructure. Those higher costs would be more than offset by federal wind production tax credits and fuel savings, PSO said.
Meanwhile, PSO filed for a $156 million rate case increase in June, which if approved would boost average residential bills by $14 per month.
In its motion to dismiss, the attorney general's office said the pending PSO rate case and the Wind Catcher case together could result in a $250 million annual rate case increase by 2021. The utility's estimated cost savings for fuel include assumptions about the price of natural gas, which its experts said could be $6 per thousand cubic feet by 2020. That's double the current price.
"This proceeding should therefore be dismissed and commission review deferred until the Wind Catcher Project is in service and can be evaluated holistically with the rest of PSO's operations," the motion said.
PSO says customers benefit
In a statement, PSO said the Wind Catcher project will save its customers money, promote investment in Oklahoma and provide additional diversity to its generation fleet.
"We believe the commission will allow the case to move forward and ultimately support the project moving forward so these benefits can be realized," the utility said Monday.
PSO said it supports the attorney general's request to hire an independent evaluator and for the utility to be assessed costs to pay for the attorney general's expert witnesses and consultant fees.
The commission's public utility division also has made a request for PSO to pay for its experts and other fees in the Wind Catcher case. State law allows the commission to approve outside witness costs for the attorney general and the commission's public utility division in preapproval cases brought by electric utilities.
As part of its preapproval application, PSO wants a waiver from the commission's competitive bidding rules.
In its motion, the attorney general's office said PSO should have followed the commission's competitive bidding rules if it wanted preapproval for costs on a generation project. Any waiver must come before construction has started, the motion said.
"In simple terms, a regulatory bargain was struck by the commission's rules," the filing said. "In exchange for preapproval with cost recovery for new generation facilities, a utility must pursue competitive bidding or allow the commission to review the plan in a proceeding before construction begins."
PSO countered that it has "a strong track record of following the commission's competitive bidding rules."
"Wind Catcher will produce extraordinary savings for customers, and must be completed in a time frame that wouldn't be feasible with the process required by the competitive bidding rules," PSO said in its statement. "Additionally, adherence to the competitive bidding process wouldn't be feasible due to the unique nature of the project and lack of comparable options in the market."