OGE Energy : Direct Testimony of Christopher B. Lelak

Published: 2025-05-19 16:43:06 ET OGE

Published on 05/19/2025 at 16:43

IN THE MATTER OF THE APPLICATION OF )

OKLAHOMA GAS AND ELECTRIC COMPANY ) Case No. PUD2025-000038 FOR COMMISSION PREAPPROVAL OF NEW )

GENERATION CAPACITY PURSUANT TO ) 17 O.S. § 286(C) AND RIDER COST RECOVERY )

Direct Testimony of

Christopher B. Lelak on behalf of

Oklahoma Gas and Electric Company

May 19, 2025

Christopher B. Lelak

Direct Testimony

Q. Please state your name and business address.

A. My name is Christopher B. Lelak. My business address is 321 N. Harvey, Oklahoma City,

Oklahoma, 73102.

4

Q. By whom are you employed and in what capacity?

A. I am employed by Oklahoma Gas and Electric Company ("OG&E" or "Company") as the

Director of Major Projects. 8

Q. Please summarize your educational background and professional qualifications.

A. I earned a Bachelor of Science in Electrical Engineering from Rose-Hulman Institute of

Technology in 2003. I hold Professional Engineering licenses in Oklahoma and Indiana.

I also hold a Project Management Professional certificate from Project Management, Inc.

Prior to my time with OG&E, I worked for Duke Energy and its predecessor company

Cinergy at various locations in Indiana and North Carolina. In those roles, I provided

engineering and project management oversight of projects in the generation space,

including new plant construction and large environmental retrofits. I have worked for

OG&E in various capacities since 2014 as a Project Manager, Director of Capital Projects,

and now as Director of Major Projects. In my current role, I have responsibility for New

Generation, Large Generation Retrofits, Transmission, and Substation projects. 20

Q. Have you testified previously before this Commission?

A. No, I have not. 23

Q. What is the purpose of your testimony?

A. The purpose of my testimony is to discuss the contracts resulting from the bid selected

from OG&E's 2024 All Source Request for Proposals ("RFP") for Horseshoe Lake Units

13 and 14 ("HL 13 & 14"). Specifically, my testimony describes the contracting structure,

certain specific terms, the costs associated with those contracts, and the other costs

associated with the project.

HORSESHOE LAKE UNITS 13 & 14

Q. Please describe Horseshoe Lake Units 13 & 14.

A. One of the selected bids resulting from the All-Source RFP (further discussed in the Direct

Testimonies of Company witnesses Kimber Shoop, Kelly Riley, and Matthew

Schuermann) was OG&E's affiliate bid for HL 13 & 14, which are two 224 MW units with

a combined capacity of 448 MWs, to be built at OG&E's existing Horseshoe Lake site. 7

Q. How was the HL 13 & 14 bid formed for submission into the All-Source Resource

A. The Affiliate Bid Team ("Bid Team"), who supplied the bid into the RFP, submitted a firm

price with a bid validity period and a set of commercial and technical exceptions and

clarifications. The bid was comprised of two components: (i) the purchase of the

Combustion Turbines ("CTs") themselves as proposed by the General Electric Company

("GE"), who is the Original Equipment Manufacturer ("OEM") (the "CT Procurement

Contract"); and (ii) the balance of plant engineering, procurement and construction

("EPC") contract with a joint venture ("JV") between Sargent & Lundy, an engineering

and design firm, and TIC - The Industrial Company, an industrial construction company

(hereinafter the "JV Contract"). 19

Q. Has there been an increase in the cost of the project since the original bid price?

A. No. Typically, in projects of this size and scope, bids are submitted using the best

knowledge available at the time the bid is prepared, and all bidders take some exceptions

and clarifications to the scope and terms of the contract. Between the time the bid is

submitted, evaluation is conducted, and a winning bidder is announced, changes occur with

regard to market conditions, supply chain constraints, etc. All of these changes are very

typical in large construction projects. Fortunately, OG&E mitigated cost increases from

bid time by awarding the OEM contract closer to the time of submitting the OG&E affiliate

bid. That action allowed OG&E to secure manufacturing slots for gas turbines and lock

pricing at the values used in the bid submission to the RFP.

Q. How did the Company ensure OG&E's affiliate bid did not receive any special

A. As discussed by Company Witness Riley, this process was conducted in compliance with

the Oklahoma Corporation Commission ("OCC") Competitive Bidding Rules. Once the

Company decided to submit an affiliate bid option into the RFP, OG&E prepared a Code

of Conduct document, which identified OG&E members representing separate Bid Team

and Evaluation Teams. The Code of Conduct also specified the steps the Company would

take to maintain separation between the two teams for the duration of the RFP and ensure

the Bid Team did not receive any non-public information that could be used to gain an

advantage in the RFP process. The Code of Conduct was also posted on the Company's

website during the RFP process.

The Code of Conduct ensured the Bid Team and Evaluation Teams had no contact

related to the RFP other than during the technical conference and through transparent email

communications through a dedicated email inbox-communications that were shared with

the Independent Evaluator and made available to all bidders. These actions are taken to

ensure the internal Bid Team had the same publicly available information that was posted

for all bidders. 18

Q. Please describe the process that followed the announcement that HL 13 & 14 had been

A. Once the project was selected and announced as a winning bid, the Bid Team and

Evaluation Team worked together to commence formal contract negotiations with the JV. 23

Q. Please describe the formal negotiation process.

A. Formal negotiations began with OG&E asking clarifying questions of GE and the JV with

regard to price and scope adjustments that are typical of a project of this size and scope.

Once the JV and OEM answered questions, scope and pricing adjustments were agreed

upon, and the final set of contracting documents were negotiated and executed.

HL 13 & 14 CONTRACTS AND COSTS

Q. Why was a single EPC contract not utilized for both the procurement of the CTs and

A. OG&E Bid Team's objective was to create savings for customers by having OG&E

contract directly with GE, the OEM for the procurement of the CTs, instead of using the

EPC contactor as a middleman to acquire the CTs. OG&E successfully utilized this

contracting strategy on the Mustang Energy Center and HSL 11 & 12 projects. EPC

contractors usually charge a markup on procurement of large equipment as a fee for

management of the OEM Contract. The Bid Team included this concept in its bid to avoid

this EPC contractor fee and lower costs to customers, which could have added

approximately 10 percent of the CT purchase cost to the total cost. 12

Q. Please describe the general terms and provisions of the CT Procurement Contract

A. The CT Procurement Contract between OG&E and GE specifies the terms under which

OG&E will acquire two (2) 224 MW CTs. Under its terms, GE will manufacture, supply,

deliver, and provide technical support and assistance, as requested, in connection with the

installation, commissioning, and testing of the HL 13 & 14 CTs.

The Contract Price is firm, fixed, and all-inclusive, covering payment of all costs

of materials, equipment, labor, transportation, engineering, manufacture, and other services

relating to GE's performance of its obligations under the CT Procurement Contract. The

contract also provides liquidated damages for delivery and performance of the CTs, which

ensures OG&E customers are financially protected from equipment delivery delays or poor

performance of the units. For the benefit of customers, OG&E specifically negotiated

terms which provide price certainty for the turbines. 26

Q. Is there a deadline for providing a full notice to proceed to GE?

A. Yes. OG&E must provide a full notice to proceed to GE by November 15, 2025, in order

to keep the CTs under current pricing. If OG&E fails to do so, it could either face increased

costs or lose the specific turbines it has contracted for and must re-enter the supply chain

Disclaimer

OGE Energy Corporation published this content on May 19, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 19, 2025 at 20:42 UTC.