By Tulsa World Staff
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OKLAHOMA (Tulsa World) – Customers of the Public Service Company of Oklahoma could soon receive what amounts to a 20-year bill for costs associated with a widespread and prolonged cold snap in February of last year.
So, just weeks away from the anniversary of this freeze, many taxpayers are wondering if they could be saddled with similar generational bills in the future.
The short answer is that it is possible.
“Everyone from an industry perspective understands that these extreme weather events may not continue to be extraordinary,” PSO President Peggy Simmons told Tulsa World in a virtual meeting. “They can be a little more recurrent. …
“I just keep repeating that we are all integrated and we are all looking at this and seeing how we work together to ensure the best outcome for our clients. This is going to take work from all of us.
So that no one forgets, the numbing cold that hit Oklahoma and the region in February set off chain reactions that depleted energy reserves and reduced the flow of electricity from utilities.
In addition to heating businesses and homes, natural gas also powers many power plants. Weighed down by more than a week of single-digit and, at times, sub-zero temperatures, Oklahoma has seen the state’s gas utilities and transmission companies suffer drastic spot price increases, frozen wellheads and problems with raw material acquisition, line pressure and supply shortages.
For example, a total of 151.7 billion cubic feet of natural gas was delivered to the United States on February 14 and 149.8 billion cubic feet was delivered the next day, setting a record for the greatest demand for a two-day period, according to the American Gas Association.
To conserve electricity and at the request of the grid operator, Arkansas-based Southwest Power Pool, PSO had to carry out controlled outages that affected tens of thousands of customers.
By the time everything had thawed, Tulsa-based PSO had paid $675.2 million for fuel and power purchased in February, an astronomical increase from the roughly $500 million it normally pays for such expenses over an entire year.
PSO is seeking to recover the $675 million in a securitization case before the Oklahoma Corporation Commission. If approved, the spending would be spread over 20 years and would increase the average residential customer’s bill, according to early estimates, by just over $4 per month.
“We are used to heat waves here. We’re used to planning those,” Simmons said. “We are used to understanding what these impacts are and how we react to them.
“The winter side of it was not planned. … We are learning from this and we will be better prepared if something like this happens again.
Deborah Thompson, an attorney for the OK Energy Firm, appeared on a Facebook forum Wednesday on behalf of AARP Oklahoma, which says rising utility rates are putting particular financial strain on older Oklahomans.
Referring to rate increases related to securitization by Oklahoma utilities, she said “it’s likely $6 billion will be squeezed out of customers in that two-week period in February.” That’s a huge amount of money that can leave the state and customers can’t pump into Oklahoma’s economy.
PSO makes no profit on fuel and purchased electricity expenses. As for the examination of the alleged price increases during the winter of 2021, the Corporation Commission has no authority over the energy markets. But the Federal Energy Regulatory Commission is investigating allegations of market manipulation during that time, and in September it released its findings on the weathering of the grid.
Simmons was asked if PSO felt ripped off by the exorbitant natural gas prices it had to pay. Gas spot values in February in parts of the country were up 900% month-over-month, according to S&P Global, a New York-based data and analytics firm.
“What we were thinking at the time was keeping the lights on for our customers,” she said. “We were going to get the supply we needed to keep our production facilities running, and that’s what we did.
“I would much rather be sitting here having conversations with you and anyone else about the expense and the impact than having conversations about how we couldn’t keep the flow going and why someone one lost his life. I’ll take this conversation all day.
To lessen the chances of a repeat of last winter, PSO said it was doing its part.
The company has increased its coverage — although that also comes with additional costs, Simmons said. PSO, which serves about 400,000 customers in the Tulsa area, is also diversifying its fuel generation mix by introducing more renewable energy.
One example is the company’s North Central Energy Facilities, its three wind farms in western Oklahoma.
These trusses – two are working and the third will go live this year – are designed with a cold weather package that will increase performance in extreme weather. If the facilities had been running in February and operating as planned, PSO said, the weatherization equipment would have saved the facilities about $200 million in fuel costs.
Half of PSO’s power is purchased from the Southwest Power Pool. Wind power and natural gas represent approximately 22% each.
“We obviously didn’t make any profit from this event and would have liked to see a smaller number of attendees,” said Tiffini Jackson, PSO’s vice president of external affairs. “But we had to take what was available at the time.”
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