Oklahoma Supreme Court: Approval of Coal Plant Retrofit was Untethered from the Public Interest

OKLAHOMA CITY-- The Oklahoma Supreme Court issued a decision today siding with Sierra Club and Oklahoma Energy Results in an appeal of a decision by the Oklahoma Corporation Commission. The Supreme Court agreed with Sierra Club that the Commission lacked authority to approve a half-billion dollars in retrofit costs by OG&E in its aging coal plants without first assessing the impact on customers rates.

The 40-year-old Sooner coal-fired power plant has struggled in recent years to operate in an modern electric grid that is getting more modern and efficient. OG&E imports hundreds of millions of dollars of coal from Wyoming to operate the coal plant, money that ought to stay inside Oklahoma and create jobs within the state. With this decision, OG&E now has the opportunity to step back, not to foist a price tag of hundreds of millions of dollars onto Oklahoma ratepayers, and instead to make investments in more modern sources of electricity—especially wind, solar, and electric battery power.

"We are pleased with today’s order from the state Supreme Court. Customers are exasperated and ready to push back on OG&E's many attempts to get ratepayers to bail out an idle, dirty coal plant built in the 1970s," said Johnson Bridgwater, Director of the Oklahoma Chapter of the Sierra Club. "OG&E should follow the directions from the court, and invest in cleaner and more efficient sources of energy. We need utility investments that benefit the ratepayer and help  advance Oklahoma’s economy.”

OG&E first requested approval in 2014 from the OCC to retrofit the Sooner Power Plant and to recover half a billion dollars of ratepayer money for this retrofit. The OCC denied that request, along with other requests, finding that OG&E failed to demonstrate the financial benefit of installing expensive scrubbers for numerous reasons, including ignoring future ratepayer-funded investments that would be needed to maintain the aging Sooner coal plant. The OCC also concluded that OG&E’s plan put customers at risk because it missed opportunities to lock in record-low prices for wind-based electric power.

Barely two months after the OCC rejected OG&E’s first request, the company filed another request seeking approval that it was reasonable to install scrubbers at the Sooner plant to remove the risk that shareholders would not be able to recover the $500 million for the retrofit. OG&E didn’t provide any new information to alleviate the OCC’s concerns about risks to ratepayers; in fact, OG&E asked the OCC to make its decision based on the same record from the previous case. Sierra Club and other parties asked the OCC to stand by its previous decision to protect ratepayers as the risks for ratepayers had increased since its previous decision. The independent regional electricity transmission organization, the Southwest Power Pool (SPP), had shut down OG&E’s Sooner plant in the intervening period and put it on standby reserve. Unfortunately, in May 2016, the OCC approved OG&E’s latest request. Today’s decision by the Oklahoma Supreme Court overturns the May 2016 decision by the OCC.