Power Study Panel Debates Competition, Consumer Price Impact in Oklahoma
Sep 23 - The Daily Oklahoman
Sep. 23--Oklahoma electric utility customers could save nearly $90 million a year if state regulators required utilities to buy power from the least expensive sources, former Louisiana Sen. Bennett Johnston told an Oklahoma legislative task force Wednesday.
Oklahoma Gas and Electric Co. spokesman Paul Renfrow, however, dismissed much
of Johnston's argument as "funny math."
The former U.S. senator said Oklahoma had one of the lowest average electric
rates in the country just three years ago, but that the state has now slipped to
No. 24.
"I think the record is clear: whenever you have competition, things are
cheaper," Johnston said. "They're cheaper in the airline business.
They're cheaper in telecom. They're cheaper in electricity."
While not necessarily advocating full deregulation, Johnston suggested a
"transition to competition" by requiring utilities to accept
competitive bids for all the power they use.
He said OG&E customers alone could have saved at least $51 million this
year if the utility had bought more electricity from Redbud and other
independent power producers rather than using its own older, less efficient
generators.
The utilities, however, said the problem is not as simple as Johnston
described.
OG&E uses coal-fired generation for most of its baseload supply, the
minimum amount of power used at a given time, Renfrow said. Coal power recently
has been averaging about 25 percent of the price for natural-gas generation.
It is mainly on hot summer days and other peak energy usage times that the
utility uses large amounts of power from natural-gas generators and other
sources, said Jesse Langston, OG&E's director of corporate planning.
Langston said the company already often buys power from InterGen and numerous
other sources to meet its peak demand.
"We buy whatever is cheapest," he said. "If a utility in
Kansas is running a coal plant and doesn't need all of its power, we might want
to buy their power. The (Corporation) Commission would not like it if we said we
would buy only from independent power producers, because they complain if we
don't."
He said the utility also buys the contracts hours ahead of time, not weeks or
months ahead as InterGen proposed.
"If we had contracted with an IPP this summer expecting the load to be
high, we would have to take our inexpensive coal plants offline to fulfill our
contracts with the IPP," he said. "It's hard to predict the weather a
week or more ahead of time."
The Oklahoma Industrial Energy Consumers recommended further study into the
forced competitive bidding process. The group said industrial customers could
suffer most from increased energy prices and be among the largest beneficiaries
of less expensive power costs.
"If someone has a study that says the economic dispatch model and
competitive bidding can provide savings, I think we need to look at that,"
said Thomas P. Schroedter, attorney for the Oklahoma Industrial Energy
Consumers. "We believe Oklahoma needs to do whatever it can to promote
industries locating here, economic development, expansion and job
creation."
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