OG&E hopes a higher electric bill now could save consumers money in the future
Are you willing to pay a higher electrical bill to improve the reliability of your service?
If that answer is no, Oklahoma Gas and Electric officials hope to change minds once customers see how system upgrades improved reliability in Arkansas.
On Monday, the utility filed a request before the Oklahoma Corporation Commission asking regulators to approve a cost recovery mechanism it seeks to use to fund a five-year-long project to improve its aging electric transmission and distribution system.
OG&E’s system covers 30,000 square miles in Oklahoma and serves 790,000 bill-paying customers.
Despite recent programs undertaken by the utility to modernize its systems in Oklahoma (smart meter deployment started in 2009, system hardening in 2010 and technology upgrades in 2013), officials say a significant portion of the system remains weakened by age, making it more vulnerable to failures caused by weather and to failures caused by both cyber and physical attacks.
Data kept by the utility shows that 27% of its overall outages (not caused by storms) in 2019 were caused by equipment failures — a percentage that has been growing over time.
Without proposed upgrades, that trend only will accelerate, officials said.
“As we move into the 21st Century, the grid is facing new stresses and demands such as aging infrastructure, increasing customer expectations, more severe and frequent weather events, a heightened level of cyber and physical threats and a growing level of resources requiring two-way power flow,” Zachary Gladhill, OG&E’s director of grid innovation and integration, stated as part of prepared testimony filed Monday with the commission.
The system is comprised of more than 5,600 circuit miles of transmission line that includes 52 substations with a total capacity of 13.65 million kilovolt amps.
On the distribution side, the utility operates 55,000 circuit miles of distribution line that has 350 substations with a total capacity of 10.43 million kilovolt amps, about 29,400 miles of overhead lines, about 3,000 miles of underground conduit and 11,000 miles of underground conductors.
In his prepared testimony, Gladhill noted today’s average OG&E customer has far more electronic devices in his or her home than customers did just a decade or so ago, in effect creating an ‘always on’ society.
“But … OG&E’s grid is still based largely on 20th Century design and is comprised of assets that are at or nearing the end of life, in many cases.
“The grid requires significant investment to ensure it is capable of transforming to a more modern grid that is capable of meeting the needs of its customers.”
The plan OG&E wants to do includes six objectives it intends to use as guideposts to improve reliability, resilience, flexibility, efficiencies, affordability and to enhance customer benefits.
Grid upgrades include replacing towers and arms to improve resilience, adding automation features (such as automatic surge reset and circuit rerouting systems) to reduce outage times, plus improved communications systems and technology platforms and applications.
It proposes spending $89 million on projects the first year, $172.2 million in 2021 and $183 million each of the next three years to put about $810 million into the projects, overall.
If commissioners authorize OG&E’s cost recovery plan, those costs will be regularly reviewed by regulators and returned to customers in situations where they are found to be imprudent.
Eventually, the cost recovery plan for the intended work will be incorporated into an upcoming rate case.
Officials said an average OG&E residential customer would see a 36-cent increase on a monthly bill during the first year, then an increase of another $1.18 in 2021. Supplemental annual increases of about $1.20 a month would be seen by customers each of the following three years.
“We are talking an average of (less than a) 1.7% increase, year-over-year, over that five years,” said Donald Rowlett, OG&E’s managing director of regulatory affairs.
OG&E began the same type of grid modernization program in Arkansas in 2018, completing initial work on an area serving the Fort Smith community in the first quarter of 2019.
The program there continues, but 2019 results showed upgraded circuits performed 62% better in terms of average reliability than they had during the previous three years and also performed better than what the utility estimated they would after the upgrades were completed.
That helped customers two ways. First, it saved them from paying the utility for extra operational and maintenance costs incurred when restoring outages.
Second, customers avoid other economic harms outages cause, such as lost productive time because no power is available to manufacture goods or serve customers or other harms caused by lost property (groceries and other goods that require refrigeration to prevent spoilage, for example).
Rowlett said customers today expect additional value for the money they spend to get their electrical service.
The utility identified as much as $1.9 billion in quantifiable benefits from the upgrades its plans during the next several decades.
“When we have to do less (to keep the power on), those savings flow back to the customer,” Rowlett said.