Investment and Operation Costs

Recent Investment
Over the past two years PSO has invested more than $444 million in new generation, transmission and distribution assets in order to continue to provide safe, reliable and quality service to our customers.

Here are some examples of recent investments:

  • Generation - $156 million. Includes new peaking generation, replacing cooling towers at existing plants, and various capital maintenance projects.
  • Transmission - $97 million. Includes new transmission lines, such as $52.7 million for a major project in the Tulsa area.
  • Distribution - $180 million. Includes overhead-to-underground conversions, right-of-way tree trimming, ice storm repairs and replacements, electric lines and transformers to add new customers, and capital maintenance on existing assets.

Planned Investment
PSO expects a continued high level of investment in electric assets over the next five years totaling $1.8 billion. As a result, there will be a need for additional base rate relief beyond this rate filing.

Areas of continued additional investment include:

  • Generation - $881 million. Includes construction of flue gas desulfurization (FGD) equipment and addition of low nitrous-oxide burners for environmental compliance at coal-fired Northeastern Station Units 3 and 4. Ongoing capital maintenance to ensure reliable electric production from existing power plants.
  • Transmission - $165 million. Includes continued investment in high-voltage transmission lines to support PSO's electric system.
  • Distribution - $679 million. Includes expanded program to convert overhead to underground; expansion of the electric system to accommodate new customers; serving existing customers.

Rising Cost of Operations
PSO has experienced across-the-board increases in the cost of operations despite ongoing efforts to minimize spending. Since the close of the June 30, 2006 test year on which PSO's current rates are based, overall operations and maintenance expenses have increased in virtually all areas of the company.

Increases have occurred in all segments of PSO's operations, including generation, transmission and distribution. Generation spending is up by $18 million, Transmission is up by $8 million, and Distribution is up by $11 million over levels covered by current rates. The increases stem from a variety of causes, including increases in purchased generating capacity, stepped-up reliability enhancement efforts, higher power plant maintenance costs, the global rise in the cost of steel, copper, aluminum, and many other materials used in manufacturing and constructing utility equipment and facilities, and higher prices for virtually every item PSO purchases to produce and provide electricity.