OG&E, Pete Delaney have the right vision – It’s 20/20

[ APRIL 27, 2009 - OKLAHOMA CITY, OK ] - The choices available for future new electrical generation by electric utilities are many, but making the proper choice is more unclear than it has ever been. With proposed federal mandates on coal and its pollutants, uncertain natural gas prices and the high cost and long lead time to build a nuclear plant, it is difficult for most utilities to plan for their future generating fleet.

Changes in technology, carbon tax considerations, fuel availability, and regulatory and political activity make the choice much more difficult because the utility must weigh the impact to its customers, environment, company earnings and future generations. If utilities aren’t careful, those difficulties lead to bad decisions that lead to unnecessary, higher costs for you and me.

In that spirit OG&E CEO Pete Delaney has made the right commitment that the company will not build any new base load generation until the year 2020. This pledge brings with it new opportunities for OG&E with Oklahoma wind, other renewable technology, Smart Grid and Demand Side Management. Plus, OG&E wisely purchased a portion of the Red Bud power plant in Luther that allows it to weather these uncertainties with a highly efficient, clean-burning natural gas plant powered by Oklahoma fuel. These steps help make OG&E’s vision one of clear focus.

There are two initiatives that OG&E must embrace and implement in the near term to make the 2020 vision workable. The first task is to engage Smart Grid Technology, which has been named “Smart Power” by OG&E as one component of the Positive Energy Together campaign. Smart Power involves installation of new technology including a new electric meter on each household, business and industry in its service area. These meters allow two-way communications between customers and the utility. Presently, the typical meter used today only allows the utility to collect information, but has no capability to reach customers with real-time information. Imagine a world where your house’s new meter reported an outage, even before you got home from work.

There are three distinct benefits to Smart Power. OG&E will be able to remotely initiate and terminate service for customers. Second, during times of outages customer power can be restored quicker. And finally, with in-home technology, commonly called “home area network,” customers can have the choice of controlling times of appliance usage and potentially take advantage of multiple pricing options. This price awareness can lead to real savings on our monthly utility bills. All of these three options lead to better customer communication, control of costs and better reliability of service.

To prepare for the use of the new technology and pricing, customers first need education and understanding of how they use energy, how they can manage energy use and what in-home changes need to be made. Items such as insulation, air infiltration, window replacement, door replacement, etc., need to be evaluated by customers and action taken as necessary.

Demand Side Management is a program designed to help with these issues both by increasing consumer awareness and offering incentives to customers to make improvements.

OG&E initiated a Quick Start Demand Side Management program in July 2008. There are seven measures available to residential and commercial customers: to provide low-income weatherization, promote installation of compact fluorescent lamps, incentives for commercial customers to change inefficient lighting sources, rebates for installation of high-efficiency motors, an energy education program targeted to fifth-grade students, a custom energy report and energy education awareness programs.

As an example of the relationship between Smart Power and DSM, let’s look at a home that is improperly insulated or has no insulation. Because of lack of insulation, the central air conditioner typically will run constantly to maintain a temperature at a comfortable level and will be unable to cycle during the hottest times of the summer.

With proper insulation, better air infiltration and other improvements, such as weather stripping, the same central air conditioner can generally maintain the same comfortable temperature while cycling on and off during the hottest times. This cycling allows customers to utilize Smart Power options such as programmable thermostats and time of use rates. Customers also have flexibility and pricing signals available to help them make decisions about other electric energy usages during peak times.

OG&E’s commitment to no new construction of power plants through 2020 and to Smart Power are innovative approaches that will better position the state of Oklahoma to be a leader in energy. OG&E is on a path that respects its customers’ ability to have the power to make decisions in their own lives, homes and businesses. It’s the right path and it’s the right vision.

Jim Roth, a former Oklahoma corporation commissioner, is an attorney with Phillips Murrah P.C. in Oklahoma City, where his practice focuses on clean, green energy for Oklahoma.