Wind power settlement could cost OG&E customers 

Oklahoma Gas and Electric Co. wants customers to pay $4.3 million in additional fuel charges on their bills as part of a legal settlement over wind curtailment charges at a project in Woodward County.

CPV Keenan has a 20-year power purchase agreement with OG&E at its 152-megawatt wind farm that expires in 2030.

The company filed a lawsuit against OG&E in August 2013, claiming the utility didn’t pay it for curtailment charges when the wind farm was in operation but transmission issues caused it not to be able to push electricity out to the grid.

“Beginning shortly after the wind farm began operations in late 2010, OG&E repeatedly curtailed the delivery of energy from the Keenan Wind Farm,” the company said in a legal filing. “When CPV invoiced OG&E for the curtailed energy, OG&E refused to pay.”

Curtailment payments

OG&E said in legal filings it wasn’t responsible for curtailment payments during system emergencies, acts of nature or those directed by the operator of the regional grid.

CPV Keenan and OG&E settled the lawsuit in December 2013. Details of the settlement were not part of the case filings in federal court in Oklahoma City.

However, OG&E said in filings with the Federal Energy Regulatory Commission and the Securities and Exchange Commission it expected to recover $4.3 million related to the settlement through its fuel adjustment clause.

The CPV Keenan settlement has not come up during testimony at OG&E’s $1 billion case for environmental compliance and replacement generation at the Oklahoma Corporation Commission. The hearings are on a break until April 7.

If approved by regulators, OG&E’s environmental and replacement generation plan could increase the typical residential customer’s monthly bill 15 percent by 2019.

OG&E has been criticized by several parties in the case for not including additional wind generation as part of the plan. The utility’s representatives testified OG&E wants to wait until some transmission problems have been resolved before it adds wind.

OG&E witnesses also said wind developers weren’t willing to take on more of the risk of curtailment and congestion charges when it last issued a request for information in 2013.
OG&E spokeswoman Kathleen O’Shea said the Keenan curtailment charges came before the start of a regional electricity market at the Southwest Power Pool in 2014.

New transmission lines and a different treatment of curtailment under the Southwest Power Pool’s integrated marketplace likely means such charges won’t be an issue in the future.

Fuel adjustment reviews

O’Shea said the utility plans to include the $4.3 million legal settlement as part of its 2014 fuel-adjustment review that is expected later this year.

“In general, any costs associated with power-purchase agreements get recovered through the fuel clause,” O’Shea said.

The Corporation Commission’s public utility division conducts fuel-adjustment reviews of large utilities at least once every two years. The process gives staff a chance to audit fuel costs to see if the utility collected the correct amount from customers.

Under Oklahoma law, utilities directly pass along the cost of fuel, although they can add storage and transportation charges as part of the fuel costs they include on customer bills.

If the commission’s public utility division staff find the Keenan-OG&E settlement is in the public interest, customers would pay for it as part of their fuel-adjustment charges.

Brandy Wreath, director of the public utility division, said legal settlements have been disallowed in the past. But he said the commission hasn’t yet dealt with a case involving wind curtailment charges in the fuel-adjustment review.