Court rules on agreement between Lawton plant and PSO

Wednesday, June 22nd 2005, 6:56 am

By: News On 6

OKLAHOMA CITY (AP) The Oklahoma Supreme Court decided Tuesday to uphold the bulk of a ruling that paves the way for a cogeneration plant in Lawton, despite some concerns that the agreement between the Lawton plant and Public Service Company of Oklahoma could lead to higher rates for consumers.

The state's highest court voted 6-3 to affirm in part the Oklahoma Corporation Commission's 2003 ruling on a 20-year contract between PSO and Lawton Cogeneration. The plan would require PSO to purchase 300 megawatts of power from the natural gas-fired plant that will be located in Lawton's industrial park.

``This facility is vitally important to southwestern Oklahoma,'' said Deborah Thompson, director of business and legal affairs for Lawton Cogeneration and its parent company, Energetix.

``It's to be constructed in Lawton, which is a part of the state that hasn't had any new local generation facilities constructed, and it's vital to the continued reliability of the system,'' Thompson said.

A PSO spokesman, Stan Whiteford, said the company was withholding comment until officials had reviewed the court's 42-page ruling.

``We've just gotten the decision this afternoon and are still reviewing it and determining its implications,'' Whiteford said.

The utility objected to the commission's ruling, arguing in part the agreement would result in higher rates for its customers. The company serves about 505,000 retail customers in eastern and southwestern Oklahoma.

The attorney general's office, which represents ratepayers, and a coalition of industrial consumers also opposed the commission's ruling.

As part of its ruling, the Supreme Court ordered the Corporation Commission to re-examine how the energy prices in the contract were calculated.

The attorney general's office had argued that the commission-ordered heat rate, which refers to the amount of natural gas used to create electricity, was too high and should be reconsidered.

``From the attorney general's viewpoint, we would like to see a lower heat rate applied in this case,'' said Assistant Attorney General Bill Hume, chief of the public utilities unit. ``With the cost of natural gas being so high, that means higher costs for the ratepayers.

``We're happy with the opportunity to go back to the commission and try to prove our case once more.''

Chief Justice Joseph Watt and Justices Steven Taylor and James Winchester voted against the ruling. In a dissenting opinion, Justice Taylor objected to the 20-year contract term.

``... I would hold that setting this contract term at 20 years is an abuse of discretion,'' Taylor wrote.

In November 2003, the Corporation Commission voted 2-1 in favor of the cogeneration plan. In his dissenting vote, Commissioner Bob Anthony said the contract should be limited to five years, rather than the 20 years established in the commission order.