OGE Energy : 2021 OG&E Integrated Resource Plan (IRP) Report

INTEGRATED RESOURCE PLAN

OKLAHOMA GAS & ELECTRIC

PREPARED 2021

OGE ENERGY CORP.

OG&E submits this Integrated Resource Plan (IRP) in compliance with requirements established pursuant to the Oklahoma Corporation Commission's (OCC) Electric Utility Rules OAC 165:35-37 and the Arkansas Public Service Commission's (APSC) Resource Planning Guidelines for Electric Utilities. This IRP is submitted according to the triennial schedule established by the OCC and APSC.

2021 Integrated Resource Plan

EXECUTIVE SUMMARY

OG&E plans to meet future capacity needs through a balanced portfolio

of solar resources and hydrogen-capable combustion turbines that

provides affordable costs for customers while satisfying IRP objectives.

Over the next five years, load growth and unit retirements result in the need for new generation capacity to meet OG&E's planning reserve requirements. These capacity needs are shown in the table below:

OG&E Planning Reserve Margin and Needed Capacity (MW unless noted)

	2022		2023		2024		2025		2026
Total Capacity	6,749		6,581		6,581		6,370		6,306
Net Demand	6,025	6,004	6,039	6,059	6,088
Reserve Margin	12%		10%		9%		5%		4%
Needed Capacity*	0	145	183	417	514

*Indicates the capacity needed to restore the reserve margin to 12%.

OG&E evaluated more than one million portfolios that meet the capacity needs utilizing a combination of potential future resources of various technology types, sizes and availability. The IRP analysis shows the lowest reasonable cost plan is a balanced portfolio of solar resources and combustion turbines. This plan helps maintain system resiliency, advances fuel and technology diversity of the generation fleet, improves operational flexibility and expands OG&E's renewable generation portfolio. Adding zero- emitting technologies along with high-efficiency combustion turbines that enable and support renewable generation growth are important building blocks to meet future expectations for cleaner energy. Additionally, the combustion turbines are capable of using hydrogen as a fuel in the future, providing further emission reduction potential.

OG&E will issue a Request(s) for Proposals (RFP) for resources to meet the capacity requirements and other IRP objectives of the company for future generation designed to increase efficiency, advance cleaner generation and maintain affordability.

OG&E Action Plan

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2021 Integrated Resource Plan

Table of Contents

I.	Introduction .............................................................................................................	1
II.	IRP Objectives and Process....................................................................................	2
III.	Assumptions............................................................................................................	3
A.	Load Forecast .......................................................................................................	3
B.	Generation Resources...........................................................................................	4
1.	Existing Resources .........................................................................................	4
2.	Resource Changes in the Ten-Year Planning Horizon ...................................	6
3.	Future Resource Options................................................................................	8
4.	Resource Location Considerations ...............................................................	10
C.	Fuel Price Projections..........................................................................................	11
D. Risk Assessment.................................................................................................	11
1.	Sensitivities...................................................................................................	11
2.	Scenarios......................................................................................................	13
3.	Sensitivity and Scenario Summary ...............................................................	15
E.	Integrated Marketplace Locational Marginal Prices.............................................	15
IV.	Resource Planning Modeling and Analysis ...........................................................	17
A.	Planning Reserve Margin ....................................................................................	17
B.	Modeling Methodology ........................................................................................	17
C.	Portfolio Development .........................................................................................	18
D.	Portfolio Risk Assessment...................................................................................	20
E.	Qualitative Considerations...................................................................................	26
1.	Operational Flexibility and Resiliency Benefits .............................................	26
2.	Fuel & Technology Diversity and Reduced Environmental Footprint ............	26
F.	Conclusion...........................................................................................................	27
V.	Action Plan ............................................................................................................	28
VI.	Schedules .............................................................................................................	29
A.	Electric Demand and Energy Forecast................................................................	29
B.	Existing Generation Resources ...........................................................................	30
C.	Transmission Capability and Needs ....................................................................	31
D.	Needs Assessment .............................................................................................	32
E.	Resource Options................................................................................................	32
F.	Fuel Procurement and Risk Management Plan ...................................................	33
G.	Action Plan ..........................................................................................................	34
H.	Requests for Proposals .......................................................................................	34
I.	Modeling Methodology and Assumptions............................................................	34
J.	Transmission System Adequacy .........................................................................	35
K.	Resource Plan Assessment ................................................................................	36
L.	Proposed Resource Plan Analysis ......................................................................	36
M.	Physical and Financial Hedging ..........................................................................	36
VII.	Appendices ...........................................................................................................	37

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2021 Integrated Resource Plan
List of Figures
Figure 1 - OG&E Service Area .......................................................................................	1
Figure 2 - Integrated Resource Planning Seven Step Process ......................................	2
Figure 3 - Renewables Nameplate Overnight Cost Projections in 2021$ ($/kWAC) ......	10
Figure 4 - EIA 2021 Annual Energy Outlook Fuel Projections (Nominal $)...................	11
Figure 5 - Natural Gas Sensitivities ..............................................................................	12
Figure 6 - Solar Capital Cost Sensitivities ....................................................................	12
Figure 7 - Scenario Fuel Projections ............................................................................	13
Figure 8 - Energy Evolution Impact to Load .................................................................	14
Figure 9 - SPP Coal Capacity Comparison ..................................................................	14
Figure 10 - Base Case and Sensitivity Average Annual OG&E Load LMP Comparison
......................................................................................................................................	16
Figure 11 - Base Case and Scenario Average Annual OG&E Load LMP Comparison 16
Figure 12 - Customer Cost Components ......................................................................	18
Figure 13 - New Resource Option Earliest Availability .................................................	18
Figure 14 - Portfolios Comparing 2023 Resource - Base Case NPVCC in Million $....	19
Figure 15 - Natural Gas Price Sensitivity Assessment, NPVCC in Million $ .................	21
Figure 16 - Low Load Sensitivity Assessment, NPVCC in Million $..............................	22
Figure 17 - CO2 Tax Sensitivity Assessment, NPVCC in Million $................................	22
Figure 18 - Solar Capital Cost Sensitivity Assessment, NPVCC in Million $ ................	23
Figure 19 - Fuel Supply Scenario Assessment, NPVCC in Million $ ............................	24
Figure 20 - Energy Evolution Scenario Assessment, NPVCC in Million $ ....................	24
Figure 21 - Portfolio Cost including Load and Existing Generation Units .....................	25
List of Tables
Table 1 - Energy Forecast (GWh) ..................................................................................	3
Table 2 - Peak Demand Forecast (MW) .........................................................................	3
Table 3 - OG&E Existing Thermal Resources ................................................................	5
Table 4 - OG&E Existing Renewable Resources ...........................................................	5
Table 5 - Existing Power Purchase Agreements ............................................................	6
Table 6 - Resource Options in 2021$ .............................................................................	9
Table 7 - Sensitivity and Scenario Summary................................................................	15
Table 8 - Planning Reserve Margin (MW unless noted) ...............................................	17
Table 9 - Portfolios with Base Case NPVCC in Million $ ..............................................	19
Table 10 - Representative Portfolios ............................................................................	20
Table 11 - Sensitivity 30-year NPVCC in Million $........................................................	21
Table 12 - Scenario 30-year NPVCC in Million $..........................................................	23
Table 13 - OG&E Preferred Plan..................................................................................	24

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2021 Integrated Resource Plan

List of Acronyms

Acronym	Phrase Represented	Reference
APSC	Arkansas Public Service Commission	Agency
CO2	Carbon Dioxide	Chemical
CC	Combined Cycle electricity generating unit	Technology
CT	Combustion Turbine electricity generating unit	Technology
DSM	Demand Side Management	Industry
EIA	Energy Information Administration	Agency
FERC	Federal Energy Regulatory Commission	Agency
IM	Integrated Marketplace	SPP
HH	Henry Hub	Industry
ITP	Integrated Transmission Plan	SPP
IVVC	Integrated Volt Var Control	OG&E
IRP	Integrated Resource Plan	Industry
LMP	Locational Marginal Price	SPP
LRR	Load Reduction Rider	OG&E
NERC	North American Electric Reliability	Agency
NPVCC	Net Present Value of Customer Cost	OG&E
NTC	Notice to Construct	SPP
NREL	National Renewable Energy Laboratory	Agency
O&M	Operations & Maintenance	General
OCC	Oklahoma Corporation Commission	Agency
OG&E	Oklahoma Gas & Electric	Agency
PCI	Power Costs Inc.	Agency
PPA	Power Purchase Agreement	Industry
RFP	Request for Proposal	General
SPP	Southwest Power Pool	SPP
STEP	SPP Transmission Expansion Plan	SPP

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