Public Service Company of Oklahoma’s plans to build a $117.9 million energy project at Fort Sill have been put on hold following a decision this week by the Oklahoma Corporation Commission, a spokesman with the Tulsa-based utility said.
The OCC on Monday approved a cost recovery measure for the proposed construction of four, 9-megawatt natural gas-fired reciprocating internal combustion engine (RICE) generators and 10.9 megawatts of photovoltaic (PV) solar energy.
But the reimbursement mechanism came with conditions on PSO’s RICE proposal that has given the utility pause. Work on the project initially was scheduled to begin this fall, with the solar portion scheduled for completion in March 2022 and the RICE portion in October 2023, PSO spokesman Stan Whiteford said.
PSO last summer signed a 30-year lease with Fort Sill in hopes of building an energy center to power it in times of regional failure. OCC’s charge wasn’t to grant approval for construction, only to consider such factors as need, consideration of reasonable alternatives and appropriate cost recovery as it relates to consumers.
“This project meets the capacity needs of all PSO customers, while helping to meet resiliency and reliability mandates for Ft. Sill,” Whiteford said Tuesday in a statement. “While the solar portion of the plan was approved, we are reviewing the Commission’s order and the conditions on cost recovery, particularly conditions placed on the natural gas generation proposal, to evaluate the financial viability of the project.”
A timetable on PSO’s decision is uncertain, Whiteford said.
The proposed project is a collaboration between the U.S. Army and PSO. Benefits of the its design include more clean energy to the power grid and enhanced power quality and energy supply in PSO’s southwest Oklahoma service territory.
The utility said when completed, the project would provide additional energy to serve PSO customers and allow Fort Sill to sustain critical missions for at least 14 days in the event of a disruption.
In a letter to the commission in March, Mark Scott, board chairman of the Lawton-Fort Sill Chamber of Commerce, said Fort Sill provides an estimated $2 billion economic impact to the state.
In a May 24 letter to Commissioner Bob Anthony, Capt. James Taylor, director of the FIRES Innovation Science and Technology Accelerator at Fort Sill, praised the energy proposal.
“… The project is a sustainable winner for Fort Sill and PSO because it would allow Fort Sill to operate, in case of an emergency, for 14 days without being connected to the standard electric grid,” Taylor wrote. “PSO customers will win by having more clean energy generated and put back on the electric grid, providing reliable, low-cost energy. The concept, already in practice, takes the best of joining renewable energy with the clean-burning advantages of natural gas …”
Under PSO’s proposal, the average utility residential customer who uses 1,100 kilowatt hours monthly would have a bill increase of $0.25 per month beginning in April 2022 (once the solar facility was online) and a hike of $1.64 beginning November 2023 (when the RICE facility was online).
The OCC, however, that if the energy center was approved as requested by PSO, the overall body of its customers would pay for the project, even though major aspects of the project were intended to provide PSO’s new service to Fort Sill.
Commissioners also determined that when compared with alternatives available to PSO without regard to location, generation technology or the service requirements of Fort Sill, the utility’s selection of the RICE facility imposes incremental costs on its customers … that “are not necessary” to meet PSO’s capacity reserve margin in service to customers and that those costs are “unreasonable and unjust.”
Further, the OCC said that while examining alternatives for the 36-MW capacity for the RICE facility, PSO failed to compare contemporary market data collected from the PSO 2020 request for proposal (RFP) with the winning bids.
Commissioners recommended that PSO file a rate case at the earliest possible date at which costs associated with the Fort Still project be included in an historic test year, or no later than Jan. 1, 2025.
The panel OK’d the order on a 2-0 vote with Anthony declining to vote and attaching a separate, attached opinion.
“Time will tell if (Monday’s) “limited” approval meets the need,” he wrote.
Anthony also wrote that the OCC “should have issued a timely order” acceptable to both the U.S. Department of Defense and PSO, referring to a law that obligated the OCC to make a “pre-approval” decision within 240 days, which it didn’t.