The point of contention was over ownership. SWEPCO only sought projects they would own, allowing them to earn a rate of return, or profit, increasing the cost of the energy for ratepayers.
The Commission wanted to see the costs (and benefits) of SWEPCO’s application for owned generation compared to a Power Purchase Agreement (PPA) in which SWEPCO would simply buy power from a renewable power producer to ensure ratepayers were getting the best value.
In Louisiana, when an electric company needs more energy, they release a Request for Proposals (RFP). The company sets the parameters and reviews the submitted proposals. What frequently happens is the company limits proposals to only projects that they would own, making it impossible to compare PPAs, potentially lower cost options. That is exactly what happened with this SWEPCO solar application.
Commissioners made it clear that they want all generating resources to compete fairly. If a RFP is only willing to accept utility-owned generation, the public cannot get a fair sense of how those costs compare to potentially lower cost options. This is a big step in the right direction for Louisiana ratepayers. The decision addressed utility owned solar resources versus a PPA, but it sets precedent for renewable resources to be compared on a level playing field to fossil fuel generation and, even compared, dollar for dollar, to energy efficiency resources!
For too long, our utility companies have limited the scope of RFPs to their own benefit, eliminating transparency over new energy resources additions for the public and the Commissioners. While the Commission approved the project as SWEPCO demonstrated the need for owning additional energy capacity, they made it clear that utility companies requesting new generation must demonstrate that they evaluated ALL options. We’re excited to see how this precedent takes hold in the future.
