OGE Energy : OG&E - Rebuttal Testimony Shawn McBroom
OGE
CASE PUD 2023-000087 ENTRY NO. 267 FILED IN OCC COURT CLERK'S OFFICE ON 05/17/2024 - PAGE 1 OF 7
BEFORE THE CORPORATION COMMISSION OF THE STATE OF OKLAHOMA
IN THE MATTER OF THE APPLICATION OF
)
OKLAHOMA GAS AND ELECTRIC COMPANY
)
FOR AN ORDER OF THE COMMISSION
)
AUTHORIZING APPLICANT TO MODIFY ITS
) CASE NO. PUD 2023-000087
RATES, CHARGES, AND TARIFFS FOR RETAIL
)
ELECTRIC SERVICE IN OKLAHOMA
)
Rebuttal Testimony
of
Shawn McBroom
on behalf of
Oklahoma Gas and Electric Company
May 17, 2024
Rebuttal Testimony of Shawn McBroom
Page 1 of 7
Case No. PUD 2023-000087
CASE PUD 2023-000087 ENTRY NO. 267 FILED IN OCC COURT CLERK'S OFFICE ON 05/17/2024 - PAGE 2 OF 7
Shawn McBroom
Rebuttal Testimony
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QUALIFICATIONS, EXPERIENCE, AND PURPOSE
2 Q. Please state your name, position, by whom you are employed, and your business
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address.
4
A.
My name is Shawn McBroom, and I am the Senior Manager, Market Operations for
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Oklahoma Gas and Electric Company ("OG&E"). My business address is 321 N. Harvey,
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P.O. Box 321, Oklahoma City, Oklahoma 73101.
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Business Administration in 2008 from the University of Central Oklahoma. I joined the
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Company in 2001 and have been involved with generation operations and the energy
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markets including the Energy Imbalance Service ("EIS") market operations and Southwest
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Power Pool ("SPP") Integrated Marketplace ("IM") design and operations. In 2020, I was
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promoted to Senior Manager, Commercial Operations where my responsibilities include
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SPP IM activities, fuels procurement, storage and transportation for coal, oil, and natural
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gas for OG&E. I also hold voting representation on the SPP Market Working Group.
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18 Q. Have you previously testified or appeared before the Oklahoma Corporation
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Commission ("Commission")?
20
A.
Yes.
21
24
Industrial Energy Consumers ("OIEC") witness Norwood regarding the declining energy
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production levels at OG&E's coal units over the last several years, and Mr. Norwood's
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assessment of low Locational Marginal Prices, ("LMPs") and high congestion cost at
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Sooner, as well as high energy production cost for OG&E's coal units.
Rebuttal Testimony of Shawn McBroom
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Case No. PUD 2023-000087
CASE PUD 2023-000087 ENTRY NO. 267 FILED IN OCC COURT CLERK'S OFFICE ON 05/17/2024 - PAGE 3 OF 7
1
RESPONSE TO OIEC WITNESS NORWOOD
2 Q. What are Mr. Norwood's concerns about the operation of OG&E's coal units during
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the test year?
4
A.
In his Responsive Testimony, Mr. Norwood states he is concerned about the level of
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OG&E's requested coal inventory because there were declining energy production levels
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and high operating costs at OG&E's Sooner and Muskogee coal units in recent years.1
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8 Q. Do you agree that energy production levels for OG&E coal-fired generation units
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were low during the test year?
10
A.
Yes. Energy production levels for OG&E coal-fired units were lower in the test year, but
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we must look beyond test year production levels to see that coal units are critical for
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reliability. As shown Chart 1 below, while energy production from OG&E's fossil fuel
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generating units has historically fluctuated based on the price of gas, there have been recent
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periods with much higher energy production from the coal units. OG&E must maintain
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higher coal inventory levels so it can sustain higher energy production levels when called
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on by the SPP IM. OG&E witness Robert Doupe discusses OG&E's coal inventory in
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more detail.
1Responsive Testimony of Scott Norwood, page 15 line 17 - page 16, line 2.
Rebuttal Testimony of Shawn McBroom
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Case No. PUD 2023-000087
CASE PUD 2023-000087 ENTRY NO. 267 FILED IN OCC COURT CLERK'S OFFICE ON 05/17/2024 - PAGE 4 OF 7
Chart 1: OG&E Fossil Fuel Unit Production (MWh)
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something the Company can control.
4
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OG&E fossil fuel power plants. This has been caused by the higher congestion around the
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Sooner facility and the large amount of wind generation in that same area.
Rebuttal Testimony of Shawn McBroom
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Case No. PUD 2023-000087
CASE PUD 2023-000087 ENTRY NO. 267 FILED IN OCC COURT CLERK'S OFFICE ON 05/17/2024 - PAGE 5 OF 7
1 Q. Does Mr. Norwood mischaracterize OG&E's knowledge of congestion causes at the
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Sooner coal plant by stating that the Company does not know why congestion costs
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are high?
4 A. Yes. Mr. Norwood references OG&E's data response OIEC 18-19, which reads that the
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Company cannot "be certain of the specific reasons" related to these congestion costs
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elevations. However, I can state in my professional opinion that the likely cause is not
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simply congestion, but rather a conglomeration of renewable wind assets attempting to
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connect to constrained transmission paths. My opinion is based on the market clearing
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awards during periods when Sooner should otherwise be committed by the SPP, but is not,
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while at the same time wind production output across the region is at or near maximum
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output capabilities.
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13 Q. Is it reasonable to identify wind generating resources as the most likely cause for
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increased congestion costs at the Sooner coal plant?
15 A. Yes. Pointing specifically to Mr. Norwood's generally accurate explanation of what are
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congestion costs and what drives them to increase, I would like to give a simple analogy
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that helps further support the general reason for increased congestion costs. Airline ticket
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prices increase as you approach the departure date of the flight. As a plane fills toward
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capacity, the ticket price of the next seat can move up rapidly, because there is increased
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value with limited supply. It is the same with transmission line congestion - as more
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electricity attempts to flow down a transmission path back toward load centers that will
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consume the electricity, there is an increase in the value of that transmission like capacity
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and thus increased congestion costs. In the airline example, in order to alleviate the
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congestion, they will offer credits for future flights or even cash. This is the same thing
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that occurs with transmission congestion. When paths are overloaded, the LMP will often
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show specific generating units are less desired by the market, and this is realized through
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lower congestion components of the resource's LMP.
Rebuttal Testimony of Shawn McBroom
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Case No. PUD 2023-000087
CASE PUD 2023-000087 ENTRY NO. 267 FILED IN OCC COURT CLERK'S OFFICE ON 05/17/2024 - PAGE 6 OF 7
3
Congestion Hedging products over 10 years ago: protecting our customers from congestion
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cost volatility. OG&E is allocated transmission congestion rights ("TCRs") by the SPP
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and these TCRs serve as a hedge against congestion. TCRs not only provide protection
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from congestion cost exposure but also provide congestion revenue that is returned directly
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to customers to offset fuel and market expenses.
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9 Q: Is OG&E doing anything to alleviate the elevated level of congestion near the Sooner
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coal plant in particular?
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revenues and, while they are not energy production revenues, they are revenues just the
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same that flow directly back to customers and offset customer fuel expense.
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positions, more than offsetting the high congestion costs at Sooner. To this fact, while
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congestion costs may be high at Sooner power plant, the net benefit to Customers is
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bolstered by the congestion revenues received that go directly toward offsetting Customers
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load expense. Sooner power plant congestion revenues have accounted for more than $226
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million in the past five years, which is approximately 45% of all congestion revenues
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received for the Company.
Rebuttal Testimony of Shawn McBroom
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Case No. PUD 2023-000087
CASE PUD 2023-000087 ENTRY NO. 267 FILED IN OCC COURT CLERK'S OFFICE ON 05/17/2024 - PAGE 7 OF 7
1 Q. Mr. Norwood recommended that the Company be required to meet with the SPP and
2
stakeholders regarding the causes and potential solutions to congestion costs and
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factors leading to reduced production and revenue from OG&E coal units.2 Do you
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believe this is necessary?
5
A.
No. In my capacity as a voting member on the SPP Market Working Group, I can state
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firsthand that the topic of congestion hedging and causes for congestion has been a daily,
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monthly, and annual focus of the SPP and its stakeholders since the Integrated Marketplace
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began, with an even more centralized focus over the past three years based on SPP board
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recommendations to review congestion hedging impacts across the SPP system. The SPP
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is continually focused on evaluating ways to mitigate congestion costs. Therefore, Mr.
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Norwood's recommendation to start looking into congestion is unnecessary, as congestion
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is of high interest to not only OG&E, but the entire SPP. While there may not be specific
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documentation related to Sooner coal units, the SPP reports regularly on congestion across
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the entire SPP footprint.
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RECOMMENDATIONS
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inventory, and I recommend the Commission reject Mr. Norwood's recommendation
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require OG&E to initiate meetings with the SPP and stakeholders to address high
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congestion costs at Sooner.
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23 Q. Does this conclude your Rebuttal Testimony?
24 A. Yes.
2
Id. at page 27, line 13 - 22.
Rebuttal Testimony of Shawn McBroom
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Case No. PUD 2023-000087
Disclaimer
OGE Energy Corporation published this content on 29 August 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on August 29, 2024 at 18:21:29 UTC.