Opinion Could Change Plans for Coal

Aug 29 - The Daily Oklahoman

Despite a generally positive recommendation by an Oklahoma Corporation Commission administrative law judge, a proposed 950-megawatt coal-fired power plant likely would not be built if the recommendation is followed completely, Oklahoma Gas and Electric Co. said Tuesday.

Participants on both sides of the case filed appeals with the commission Tuesday afternoon.

OG&E said it disagreed with language in the recommendation that indicated the utilities should receive a return on most, but not all, of the cost of the proposed power plant.

"Make no mistake, we were pleased by the judge's rulings in many areas of our case," said Steve Moore, OGE Energy Corp. chairman and chief executive officer. "However, even though commissioners may vote to approve the plant, a failure to address the issue of inadequate cost recovery is, in effect, a vote against the plant."

Moore said the company needs the money for ongoing system reliability improvements and environmental upgrades to its coal- and natural gas-fired power plants.

OG&E's partner on the project, Public Service Co. of Oklahoma, filed a motion with the commission on Tuesday seeking clarification on the cost recovery issue. The company did not say whether it thought the issue could derail the power plant.

"We certainly want clarification on that issue," PSO spokesman Stan Whiteford said. "It's certainly an issue we are concerned about."

OG&E, PSO and the Oklahoma Municipal Power Authority proposed the $1.87 billion coal plant near Red Rock last summer, saying relatively inexpensive coal is the best option for the state and for Oklahoma electricity customers.

Administrative Law Judge Judge Maribeth Snapp last week agreed a coal plant likely will save consumers money. Snapp also said a new coal plant would help consumers be less dependent on volatile natural gas prices.

Opponents including the Quality of Service Coalition, Oklahoma City natural gas producer Chesapeake Energy Corp. and a group of Oklahoma industrial electricity users have challenged the plan, saying coal is too dirty and that future environmental costs will offset the fuel cost savings. Chesapeake also has said Oklahoma utilities should use power plants that burn Oklahoma natural gas rather than Wyoming coal.

The Quality of Service Coalition in its appeal Tuesday readdressed its claims that the Corporation Commission does not have constitutional authority to hear the case and that PSO circumvented commission rules in its bidding process for the proposed power plant.

"We think there are enough issues outstanding in this case that they (the commissioners) need to be extremely concerned about the costs of the facility and about the utility's recovery mechanism," said Lee Paden, attorney for the coalition.

Chesapeake also expressed optimism in the commissioners' final decision.

"We are comfortable with the fact that the commissioners understand the importance of this issue to Oklahomans, their health, the health of our environment and the economy," said Tom Price Jr., Chesapeake's senior vice president of corporate development. "We are comfortable that they will make a decision that is consistent with the decisions that have been made around the country, which is to reject coal plants because of the anxiety about emissions and because of the uncertainty of what's going to happen with fuel costs in the future and on the escalating price of building the plants themselves."

Judge Snapp is expected to respond to the appeals by Friday. No deadline has been set for when the three corporation commissioners will issue their decision.

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