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PSO to face foe over EPA settlement
D. Ray Tuttle, The Journal Record

 TULSA – Legal maneuvering will continue on Thursday between Public Service Company of Oklahoma
and opponents over the electric utility’s compliance plans with the Environmental Protection Agency.

The hearing at the Oklahoma Corporation Commission on Thursday will center on an appeal by the
Oklahoma Industrial Energy Consumers to delay an April 23 hearing. At that hearing, PSO will
present its environmental settlement regarding its coal-fired operation in Oologah. In its settlement
with the EPA and the Sierra Club, PSO agreed to retire a coal-fired unit at Oologah in 2016 and a
second unit in 2026. They are the only two coal-fired units operated by PSO, a unit 0f Ohio-based
American Electric Power, in Oklahoma.

The settlement, announced on April 24, 2012, is the cornerstone of what the utility refers to as its
Environmental Compliance Plan. PSO submitted it to the OCC on Sept. 26, 2012. The OCC then
scheduled a hearing on the plan for April 23. Prior to that, a motion to stay the hearing was filed and
an administrative law judge at the OCC heard arguments on that motion on March 13. The judge took
the matter under advisement, and on March 18 announced a decision to deny the motion to stay.
That denial is being appealed and will be heard on Thursday.

“This hearing on April 23 will give the Corporation Commission the best opportunity to hear about
PSO’s environmental compliance plan, and to understand our rationale behind it,” said Stan Whiteford,
PSO spokesman.

The OIEC believes that the initial rate increase due to the EPA settlement in 2016 will be about 15
percent, said Tom Schroedter, the group’s executive director.

“Future rate impacts of the EPA settlement are likely to be much larger as PSO will be entirely
dependent on natural gas to supply its future energy needs after the Northeastern coal units are
retired,” Schroedter said. “These excessive rate increases would be traumatic for ratepayers and
disastrous to the state’s economy.”

PSO wants to cover the settlement with the OCC now before the utility has to ask for any possible rate
hikes down the road, Whiteford said.

“We like the idea to sum up everything and move forward with the hearing on April 23,” Whiteford
said. “So, we are opposed to any attempts to delay it.”

The OIEC believes that the cost of PSO’s settlement could be $4 billion more than the alternative of
retrofitting and continuing to operate its Northeastern coal units, Schroedter said.

“The company’s own analysis indicates that the settlement will be about $1.9 billion higher than
retrofitting and continuing to run PSO’s coal units,” Schroedter said. “However, this estimate includes
approximately $3.7 billion to comply with potential carbon regulations that don’t currently exist and
may never exist.”

Since the settlement is a costlier option than continuing to run PSO’s coal plants, the OIEC wants PSO
to submit another plan, Schroedter said.

It is the same approach taken by PSO’s affiliate Southwestern Electric Power Co., or SWEPCO, at its
Flint Creek coal plant in Arkansas, Schroedter said. Also, AEP affiliates in other parts of the country
are retrofitting existing coal plants.

“Maintaining the Northeastern coal units is also important to preserve fuel diversity on PSO’s system,
so that customers will be protected if natural gas prices rise again in the future,” Schroedter
said. “OIEC encourages PSO to reconsider the alternative of retrofitting and continuing to run the
Northeastern coal units.”

Arguments and rebuttals have been filed for months now, Whiteford said.

“The time to act is now,” Whiteford said “Everyone has the information they need. It is time to move


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