(TNS) -- Public Service Co. of Oklahoma expects to add up to 200 megawatts of solar capacity and bolster its wind offerings, according to a planning document outlined before regulators Thursday.
The utility, which has 543,000 electricity customers in eastern and southwestern Oklahoma, presented its draft integrated resource plan at the Oklahoma Corporation Commission. Though not binding, utilities have to submit the plans every three years to regulators.
The plan represents PSO's "best guess" at what its capacity and generation mix could look like by 2024. The utility expects to boost its natural gas generation, continue to add wind capacity and make a foray into utility-scale solar. Those changes come along with expected reductions in demand from various energy efficiency and conservation programs.
"The selected plan provides what we believe to be a flexible plan to allow us to make changes to it if we need to, changes in gas market technologies, environmental regulations, and it helps mitigate some of the price of the environmental risks," said Mark Becker, a manager of resource planning for PSO's parent company, American Electric Power Co. Inc.
15 percent increase
PSO expects to finish installing smart meters throughout its system by the end of 2016. It also has a pending case before state regulators to get reimbursed for $172 million in system investments and environmental compliance projects to meet federal Regional Haze rules and Mercury and Air Toxics Standards. If approved, the plan would increase residential customer bills 15 percent in the next year.
The integrated resource plan assumes those projects will be complete and PSO's generation output from coal will go from 55 percent in 2015 to 16 percent by 2024. Natural gas generation would go from 13 percent to 47 percent in that same period. Wind would make up 28 percent of its electricity generation in 2024, almost double from 2015.
Steve Fate, PSO's director of business operations support, said the utility is still studying scenarios under the Obama administration's Clean Power Plan to cut carbon dioxide and other greenhouse gas emissions from power plants. Fate said PSO's generating plants are well-positioned under the final version of the rule, but it's up to the state to formulate a compliance plan or let the federal government come up with one.
PSO last year signed three power-purchase agreements for 600 megawatts of wind from Oklahoma projects that will come online by 2016. The utility said it also expects to add at least another 100 megawatts next year under its planning scenario to take advantage of low wind prices and the federal production tax credit. That would double PSO's current wind capacity, which is 690 megawatts.
Scott Fisher, AEP's manager of resource planning, said PSO's plan includes adding 50 megawatts of utility-scale solar each year from 2021 to 2024.
PSO also expects to add 390 megawatts of natural gas generation in 2022 and another 870 megawatts of natural gas by 2024. Those would be baseload, combined-cycle generating units. Among those options could be a natural gas repowering of a coal unit at PSO's Northeastern Station plant that's expected to retire in 2016.
Chad Burnett, AEP's director of economic forecasting, said PSO is forecasting strong growth in the industrial class in the next couple of years, driven by demand in the oil and gas sector. PSO's electricity sales to the energy industry are up almost 22 percent from a year ago. This growth is coming despite continued low oil prices, he said.
"We are seeing a tremendous amount of industrial load growth in the oil and gas sector in the PSO service territory," Burnett said. "Nationwide, AEP covers five of the seven major shale plays. The oil and gas sector, despite the lower oil prices and rig counts, is still seeing strong growth in electricity sales and in production from last year."
Commissioner Dana Murphy said she's still concerned about a longer term oil slump and wondered if PSO's estimates would hold up.
"That's the big question: How long will oil prices stay down," Burnett said. "We certainly are keeping an eye on that, but at the same time, it's important to remember that in planning for this load growth, we know where this oil is located. We know it's going to be here.
"Even though we're still seeing a lot of growth in oil and gas extraction, a lot of the growth we're seeing here is in the pipeline transportation infrastructure. Later on, when oil prices finally do come back, we've got the infrastructure built to really transmit that."
On the residential side, Burnett said PSO sees sales declining slightly. That's from federal standards, PSO's energy-efficiency programs and more efficient appliances.
"We've really seen over the last 10 years the usage per customer has really flattened out," Burnett said. "Going forward, over the next 10 years, we're projecting usage per customer to start to decline."
PSO expects to reduce peak demand 88 megawatts by 2018 through residential and commercial programs for weatherization, lighting, voltage reductions and changes in consumer behavior. That's up from 64 megawatts of demand reduction expected in 2016.
©2015 The Oklahoman Distributed by Tribune Content Agency, LLC.