AFCEC utility rates team saves hydropower, money for Vance AFB

  • Published
  • By Kevin Elliott
  • AFCEC Public Affairs
TYNDALL AIR FORCE BASE, Fla. --  An innovative electricity contract between Vance Air Force Base, Oklahoma, and Oklahoma Gas and Electric Company, has already saved the base almost $200,000 in projected energy costs in its first six months by preserving a crucial hydropower allocation.

What makes this agreement unique, however, are the circumstances that necessitated the deliberations in the beginning.

Vance had previously been part of a three-party wholesale power sales agreement with the Southwest Power Administration and OG&E for delivery of hydropower to the base. However, changes to regional electricity markets and corporate policies at both SWPA and OG&E made it impossible to renew the existing contractual arrangements, which were set to expire in May 2014.

The hydropower provided by SWPA was used to offset the base's peak energy requirements. Without that renewable supply, Vance's peak energy would need to be provided by OG&E under a separate thermal power sales agreement, costing the base roughly twice as much.

SWPA was unable to serve the full requirements of Vance's electric load, and OG&E was unable to enter into a follow-on power sales agreement, putting the installation's entire hydropower allocation in jeopardy, said Nancy Coleal, utility rate management team chief at the Air Force Civil Engineer Center.

After being informed of the possible contract termination by SWPA, Vance reached out to AFCEC's URMT for help with utility contract negotiation. The team partnered with private consulting firm Exeter Associates to find a solution and craft a new agreement before the existing contract ended.

"If the SWPA hydropower allocation was not delivered, Vance would have to buy peak demand energy from OG&E at full retail customer rates," Coleal said. "The base would have incurred a significant cost increase, so we had to negotiate an agreement rather quickly."

Relying on examples from other successful contract negotiations, AFCEC coordinated with Vance and OG&E to establish a special agreement under which the base would continue to receive its hydropower allocation.

"OG&E was supportive of Vance's continued receipt of the SWPA hydropower because they value the base as a customer and recognize its contribution to the local economy," said Christina Mudd of Exeter Associates. "Because SWPA provides an energy resource that is delivered during peak demand periods - a resource that, without Vance's allocation, may not otherwise be available to Oklahoma - OG&E recognized the agreement presented a win-win situation for Vance and OG&E's retail customers."

As with any special contract in Oklahoma, the Vance-OG&E agreement required approval from the Oklahoma Corporation Commission. Members of the Air Force Utilities Law Field Support Center and OG&E met with commissioners and staff from the Oklahoma Corporation, and the final approved contract was put into effect in June with a 10-year term.

"The Air Force appreciates the cooperation and participation of everyone involved in this negotiation," Coleal said. "Without the teamwork of people at Exeter Associates, Vance Air Force Base, OG&E, SWPA and the ULFSC, the Air Force would have lost a significant and affordable renewable energy source forever."

(Nancy Coleal and Christina Mudd contributed to this article)