Oklahoma Supreme Court seeks more information on utility electricity deal

TULSA, OKLAHOMA - The Oklahoma Corporation Commission needs to provide more information before requiring a utility to buy electricity for 20 years from a soon-to-be-built cogeneration facility, ruled the Oklahoma Supreme Court recently.

American Electric Power-Public Service Co. of Oklahoma, the major electricity utility serving the Tulsa area, had asked the courts to rule on an order of the commission issued in November 2003 requiring the utility to purchase power from Lawton Cogeneration.

The commission had ordered PSO to contract with the cogeneration facility - a power plant capable of producing both electricity and steam using waste heat - under the provisions of a 1978 federal energy law, the Public Utility Regulatory Policies Act, or PURPA. Both PSO and Oklahoma City-based OG&E have in the past been ordered to enter - and have fought against - similar contracts with other power generation facilities that qualify under the provisions of PURPA.

Oklahoma City-based Energetix has plans to begin construction on a 300-megawatt, $310 million cogeneration plant in Lawton as soon as the regulatory disputes have been settled, said Deborah Thompson, director of legal affairs for Energetix.

The Oklahoma Supreme Court found that most of the commission's order stands on firm legal support, according to the majority opinion. But the commission did not provide enough information for the court to determine if the order conformed to PURPA and Federal Energy Regulatory Commission regulations, ruled the court. The commission also needs to show how it arrived at some of its calculations regarding how much PSO would have to pay for the contract.

The matter has been remanded to the commission for further inquiry and findings on the two stated issues.

Three of the nine Supreme Court justices issued a concurrent opinion that criticized the length of the contract ordered by the commission. However, the opinion does not pose a legal challenge to the length of the contract, which was upheld by the majority of the court.

I understand that the Corporation Commission has discretion on this issue, wrote Justice Steven Taylor, joined by justices Joseph Watt and James Winchester. In view of all the law, evidence and circumstances of this case, I would hold that setting this contract term at twenty years is an abuse of discretion. A proper exercise of discretion would result in a contract being set at a much shorter term, subject to later review of the Commission.

The commissioners would need to review the court ruling before commenting on the matter, said Matthew Skinner, public information officer for the Corporation Commission.

Stan Whiteford, spokesman for PSO, said company officials would also have to carefully review the ruling before making comment.

Thompson said Energetix was somewhat disappointed that the court did not approve the commission's order as it was, but noted that the court did not reject the order - merely asked for more information.

It's not saying what they did was wrong or right, they just said we don't have enough information, said Thompson. The other issues are settled with regard to law- It could be a very quick process. It doesn't put people back to square one at all. It gives us a lot of firm, settled issues and very narrow specific items for which additional evidence needs to be gathered.

The Lawton facility could be constructed within 26 months of securing regulatory approval of the project, said Thompson.