Legal options exhausted, OG&E seeks approval for environmental compliance plan

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Aug 06, 2014, 04:40 ET

OKLAHOMA CITY, Aug, 6, 2014 /PRNewswire/ -- After unsuccessfully challenging the EPA all the way to the U.S. Supreme Court and exhausting its legal options, Oklahoma Gas & Electric today filed an application with the Oklahoma Corporation Commission seeking approval of a plan to be in compliance with federal environmental mandates and to modernize the company's Mustang Power Plant.

OG&E's filing calls for adding two pollution control devices known as scrubbers to the coal-fired units at the Sooner Power Plant near Red Rock, converting two coal-fired units at the Muskogee Power Plant to natural gas and modernizing the natural gas units at the Mustang Power Plant.

"These efforts accomplish four key objectives," said Paul Renfrow, VP of Public Affairs and Corporate Administration. "First, they put the Company into compliance with the federal regulations. Second, they preserve fuel diversity in our generation portfolio, which is so important for reliability and cost control. Third, they allow us to maintain some flexibility to deal with the uncertainty around future developments, and most importantly, they allow us to meet our objectives at the lowest reasonable cost to our customers."

In regards to the federal mandates, Renfrow said, "OG&E's goal has always been to produce energy in an environmentally responsible way. In this case, we took exception to the methodology EPA was requiring for compliance. OG&E and the State of Oklahoma developed a much more cost-effective way to comply. Our approach would have been easier on customers' pocketbooks, but EPA disagreed and we lost in the courts. We respect the process and now we are taking the necessary steps to be in compliance."

OG&E's plan to modernize Mustang Power Plant calls for replacing existing natural gas steam units that were first installed in the late 1940s with new quick-start, natural gas-fired combustion turbines. The new turbines will better support both reliability and efforts to lower customer energy costs because they can be brought online in 10 minutes rather than the 10 hours it takes for the current units at the plant. This feature makes the natural gas-fired combustion turbines particularly well suited to maximize the benefits of renewable energy and helps ensure the company's required generation reserve margins are met.

"The Mustang plant site has all of the necessary infrastructure, the workforce and the necessary environmental permits," said Renfrow. "It only makes sense to modernize this plant so it can provide several more decades of use rather than spending more money to locate the combustion turbines at a different site."

The deadline for OG&E to achieve environmental compliance is January 2019. The company has until that time to fully implement its plan or face enforcement actions.

"That may sound like a long time, but it's not when you consider all the work that has to be done while still meeting our customers' electricity needs during Oklahoma's hot summers," said Renfrow. "We can meet this deadline but we certainly won't have any time to spare."

OG&E is seeking approval to recover the costs associated with its compliance and Mustang modernization efforts. These capital costs are estimated to be approximately $1.1 billion over a six year period (2014-2019).

OG&E, a subsidiary of Oklahoma City-based OGE Energy Corp. (NYSE: OGE), serves more than 810,000 electric customers in Oklahoma and western Arkansas.

SOURCE OGE Energy Corp.