AEP-PSO proposed rate increase draws protests
BY ROD WALTON World Staff Writer
Saturday, January 12, 2013
1/12/13 at 7:26 AM
What may be AEP-PSO's biggest rate request ever should inspire action from anyone concerned about the utility's costly environmental compliance plan that was forged with federal regulators, business leaders said Friday.
"It's really important to be at the table," longtime home builder Joe Robson said during a meeting at the Home Builders Association of Greater Tulsa office. "If you're not at the table, you're going to be on the menu."
Those attending listened to opponents of AEP-PSO's rate case, which is set to be heard in April by the Oklahoma Corporation Commission. American Electric Power-Public Service Company of Oklahoma said it needs to raise customers' rates about 11 percent to pay for $350 million in costs related to meeting mandates over regional haze and other air toxins imposed by the Environmental Protection Agency.
The utility plans to shutter both of its coal-fired generation units in Oologah, one in 2016 and the other 10 years later. Opponents such as the Oklahoma Industrial Energy Consumers and Quality Service Coalition warned that actual rates may rise by as much as 44 percent and cost up to $4 billion more than AEP-PSO estimated.
"This is the most important case in the history of Oklahoma industry," said Scott Norwood, an energy consultant and OIEC's expert witness in the Corporation Commission case.
The OIEC represents large industrial customers, some of which spend $1 million per month on utility bills, Executive Director Tom Schroedter said at the meeting. If fully implemented, Schroedter and Norwood warned, AEP-PSO's compliance plan will take away the state's low-cost advantage for manufacturers, eliminate fuel diversity in the generation mix and actually increase emissions of sulfur dioxide - one of those pollutants targeted by federal rules - over the next decade or so.
"That doesn't make any sense," Tulsa Port of Catoosa Director Bob Portiss said.
AEP-PSO spokesman Stan Whiteford, contacted later to rebut the contentions by Norwood, Schroedter and QSC attorney Lee Paden, said his company is not happy about potentially raising electric rates but also believed the EPA settlement is the least costly way of meeting numerous air emissions mandates. He also noted that the Corporation Commission staff and a witness for the Attorney General's Office generally are supportive of the utility's conclusions.
"I don't want to dispute the fact that a rate increase is part of it," Whiteford said. "It's not avoiding it, but how to make sure it's got the least impact as possible.
"Even if regional haze rules went away, we'd still have other regulations to meet."
Whiteford strongly disputed most of the opponents' contentions, such as the fear of potential 44 percent rate increases and that sulfur dioxide emissions will increase despite the coal plant shutdowns.
"That's absolutely false," he said about the SO2 contention. "How can you put emissions controls on one unit, completely shut down the other and end up producing more SO2?
Sulfur dioxide actually will be reduced by 75 percent by the process, Whiteford said.
Once the projects are completed, AEP-PSO will replace the electricity lost from coal-fired generation with more natural gas units and purchased power from Calpine Corp. Whiteford said he found the OIEC's worries about generation diversity ironic considering the group opposed the proposed Red Rock coal plant in 2007.
The OIEC's Norwood and Schroedter, however, noted earlier that AEP-PSO originally planned to fight the EPA's rules in court but opted for a settlement. Oklahoma Gas & Electric, the state's largest utility, has sued the federal regulators over regional haze rules and were joined in that case by state Attorney General Scott Pruitt.
In June, the 10th U.S. Circuit Court of Appeals, based in Denver, granted a stay against the EPA rules.
"The company was premature," Norwood said. "They need to wait and see what happens with the regional haze rules."
Original Print Headline: AEP-PSO rate plan draws foes to meeting
Rod Walton 918-581-8457