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SWEPCO's wind plan faces challenges in Texas but may not need PUCT approval to proceed

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SWEPCO's wind plan faces challenges in Texas but may not need PUCT approval to proceed

Highlights

Wind project would deliver to customers in four states

SWEPCO says proposed project is scalable

Invenergy to build and sell three wind farms

Houston — Southwestern Electric Power, an AEP utility subsidiary based in Shreveport, Louisiana, is waiting for a Public Utility Commission of Texas approval of a 1,485-MW regulated wind project that it says it doesn't absolutely need for the long-anticipated project to proceed.

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SWEPCO is working with sister and neighboring AEP subsidiary utility, Public Service Company of Oklahoma, on a three wind farm project from which they would sell wind power to customers. SWEPCO's share of the wind power—810 MW—would be sold to 536,300 customers in three states, including 231,000 in northwest and central Louisiana, 185,500 in East Texas and the Panhandle, and 119,800 in Western Arkansas.

"We have a settlement agreement in Arkansas that requires approval by the Arkansas Public Service Commission. It is currently under APSC review. We have a settlement agreement in Louisiana that was announced March 16 and filed April 9. It will be on the agenda for the Louisiana Public Service Commission's May 20th meeting," Peter Main, a SWEPCO spokesman said in an email.

A March 25 joint filing with the PUCT, the Commission Staff and Texas Industrial Energy Consumers mainly challenged SWEPCO's use of AEP natural gas price forecasts and argued that the acquisition of wind facilities would "not result in the probable lowering of costs to customers."

While some parties in Texas continued to raise cost and price issues with the project, SWEPCO, nonetheless has said it is working through the regulatory process in the hope that its customers in East Texas and the Panhandle will "benefit from the low-cost renewable energy from this project. "

"In Texas, we are expecting the Administrative Law Judge to issue a Proposal for Decision in mid-May."

But, Main said, "The project does not require all states' approval."

"As noted in the news release about the Louisiana settlement agreement, SWEPCO's proposal is scalable to align with regulatory approvals by state, subject to commercial limitations. Two states that approve the project would have the ability to increase the number of megawatts allocated to them if one state does not approve the proposal," Main said.

Following the ALJ's Proposal for Decision in Texas, parties then can file responses to the ALJ's recommendation, and the full PUC will review that information before making a decision.

"I don't have an expected date for final PUCT consideration," Main said. "Arkansas has not set a date for decision. The item is on the May 20 agenda for the LPSC," Main said.

THREE WIND FACILITIES

PSO in Oklahoma, which will be supplying 675 MW of regulated wind power in eastern and southwestern Oklahoma where it has 554,000 customer accounts, has won approval from the Oklahoma Corporation Commission that allows it to move forward with the project.

The project consists of three wind farms with combined capacity of 1,485 MW that SWEPCO and PSO will own. All three facilities are to be built in Oklahoma by Invenergy at a price of roughly $2 billion.

The facilities include the 999-MW Travers Wind project in southeast of Woodward, Oklahoma, the 287-MW Maverick Wind facility near Enid, and the 199 MW Sundance Wind facility northeast of Woodward. Woodward, in the western half of Oklahoma, is near the Texas border.

The smallest of the three facilities was due to come online by the end of 2020, Invenergy has said, which would make it eligible for the full production tax credit.

Travers, at 999-MW, will be the largest wind farm in the US when completed. The expectation is that Travers and Maverick will not be completed until 2021 or 2022, at which time they would be eligible for 80% of the PTC.

HOPING TO CHANGE SOURCE MIX

SWEPCO purchases 469 MW of wind power under long-term power purchase agreements with wind facilities in the Texas Panhandle, western Oklahoma and south central Kansas.

These facilities are not in SWEPCO's service territory but are interconnected to SWEPCO through the Southwest Power Pool transmission system.

SWEPCO says it has a long-term plan for more clean energy, which includes getting more than one-third of the energy required by customers generated from wind and solar sources over the next 20 years.

The company has said it expects its energy source mix will change, with wind energy increasing from today's 9% to 26%, "and solar is introduced and grows to 10%." SWEPCO has said natural gas-fired generation will grow from the current 7% to 19%, while coal drops from 83% to 44%.