OGE Energy : PUD 2023-000055 Direct Testimony Shawn McBroom

CASE PUD 2023-000055 ENTRY NO. 28 FILED IN OCC COURT CLERK'S OFFICE ON 08/29/2023 - PAGE 1 OF 30

BEFORE THE CORPORATION COMMISSION OF THE STATE OF OKLAHOMA

APPLICATION OF MARK ARGENBRIGHT,	)
DIRECTOR OF THE PUBLIC UTILITY DIVISION,	)
OKLAHOMA CORPORATION COMMISSION,	)
FOR PUBLIC HEARING TO REVIEW AND	)
MONITOR APPLICATION OF THE FUEL	)
ADJUSTMENT CLAUSE OF OKLAHOMA GAS	) CAUSE NO. PUD 2023-000055
AND ELECTRIC COMPANY FOR THE	)
CALENDAR YEAR 2022	)
AND,	)
FOR A PRUDENCE REVIEW OF THE ELECTRIC	)
GENERATION, PURCHASED POWER AND FUEL	)
PROCUREMENT PROCESSES AND COSTS OF	)
OKLAHOMA GAS AND ELECTRIC COMPANY	)
FOR THE CALENDAR YEAR 2022	)

Direct Testimony

of

Shawn McBroom

on behalf of

Oklahoma Gas and Electric Company

August 29, 2023

Direct Testimony of Shawn McBroom	Page 1 of 23
Cause No. PUD 2023-000055

CASE PUD 2023-000055 ENTRY NO. 28 FILED IN OCC COURT CLERK'S OFFICE ON 08/29/2023 - PAGE 2 OF 30

Shawn McBroom

Direct Testimony

1. Q. Please state your name and business address.
2. A. My name is Shawn McBroom. My business address is 321 North Harvey, Oklahoma City,

3	Oklahoma 73102.
4

1. Q. By whom are you employed and in what capacity?
2. A. I am employed by Oklahoma Gas and Electric Company ("OG&E" or "Company") as

7	Senior Manager, Commercial Operations.
8

1. Q. Please summarize your educational background and professional qualifications.
2. A. I received a Bachelor of Business Administration in Management in 2005 and a Master of

11	Business Administration in 2008 from the University of Central Oklahoma. I joined the
12	Company in 2001 and have been involved with generation operations and the energy
13	markets including the Energy Imbalance Service ("EIS") market operations and Southwest
14	Power Pool ("SPP") Integrated Marketplace ("IM") design and operations. In 2020, I was
15	promoted to Senior Manager, Commercial Operations where my responsibilities include
16	SPP IM activities, fuels procurement, storage and transportation for coal, oil, and natural
17	gas, and energy settlements for OG&E. I also hold voting representation on the SPP
18	Market Working Group.

19

1. Q. Have you previously testified before the Oklahoma Corporation Commission?
2. A. Yes. I have filed testimony in Case Nos. PUD 2021-00072 and PUD 2022-000057.

1. Q. How is your testimony organized?
2. A. My testimony is arranged into three parts: Part I describes OG&E's participation in the

25	SPP IM and Part II describes OG&E's fuel procurement processes and operational
26	impacts on the fuel purchases. Part III describes OG&E's fuel hedging strategies.

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CASE PUD 2023-000055 ENTRY NO. 28 FILED IN OCC COURT CLERK'S OFFICE ON 08/29/2023 - PAGE 3 OF 30

1	Part I - OG&E's Participation in the SPP IM

1. Q. Please describe OG&E's generating resources employed during 2022.
2. A. OG&E owned and operated four coal-fired generating resources in 2022. This includes

4	Sooner (Units 1 & 2), Muskogee Unit 6, and River Valley. OG&E also owns and operates
5	gas-fired generation facilities at Seminole, Horseshoe Lake, Muskogee, Mustang, and
6	Frontier. In addition, OG&E operates and is the majority owner of two combined cycle
7	gas-fired generation facilities: McClain, and Redbud. During 2022, OG&E owned and
8	operated approximately 449 MW of wind generation and had long term purchase power
9	agreements (PPAs) for approximately 342 MW of wind generation. For additional
10	information on OG&E's generating resources please see the Direct Testimony of witness
11	Robert Doupe.
12

1. Q. How were OG&E's generating resources utilized in 2022 in the SPP IM?
2. A. OG&E offered all available generating resources into the SPP IM, as prescribed by the SPP

15	market protocols.
16

1. Q. Please briefly describe the SPP IM.
2. A. SPP operates an energy market where market participants offer generating resources and

19	bid load into the marketplace. SPP commits and dispatches the lowest cost resources
20	necessary to reliably meet the corresponding SPP load, which includes OG&E's customer
21	load.
22

1. Q. How does OG&E utilize the SPP IM?
2. A. The SPP IM allows OG&E to reduce its fuel expense in serving customer loads. This is

25	accomplished through offering OG&E's generating resources into the SPP IM at their
26	calculated variable fuel and variable O&M costs, bidding load in the day-ahead market,
27	and participating in the congestion hedging process.

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CASE PUD 2023-000055 ENTRY NO. 28 FILED IN OCC COURT CLERK'S OFFICE ON 08/29/2023 - PAGE 4 OF 30

1. Q. Does OG&E offer its energy and ancillary services into the SPP IM?
2. A. Yes. OG&E is required to offer all available generating resources into the SPP IM for the

3	purpose of supporting reliability. SPP has a defined "must-offer" requirement for the day-
4	ahead and real-time markets, as well as certification processes to qualify to offer the
5	regulation up and regulation down ancillary service types.
6

1. Q. Please explain what constitutes a market offer.
2. A. Market offers represent both the physical and financial characteristics of the generating

9	resource and are submitted for each generating unit in the day-ahead and real-time markets.
10	The SPP IM currently has over fifty offer parameters covering each resource's physical
11	and financial characteristics, including start-up time, start-up costs, and minimum runtime.
12	The physical parameters of a market offer represent the operating characteristics of the
13	generating resource. The financial parameters of a market offer represent the calculated
14	variable costs (i.e., fuel and variable O&M) associated with each generating resource.
15	OG&E's resources include both company-owned resources and third party owned
16	resources where OG&E purchases the resource's output pursuant to a PPA.
17

1. Q. Please describe the market offer process.
2. A. There are two energy markets at the SPP in which offers are submitted: day-ahead and real-

20	time. Day-ahead market offers are submitted by 9:30am the day before the operating day.
21	The real-time market offers are submitted at least every four hours for the current operating
22	day and as needed to ensure the SPP IM has the most current operational data. The general
23	process is as follows:
24	1.	Plant personnel communicate any operational changes to the OG&E Market
25		Operators via OG&E market systems.
26	2.	OG&E Market Operators review any changes and either accept or deny the
27		changes. Plant personnel have the ultimate responsibility for	the operational
28		characteristics of the generating resources. This operational change process serves
29		as a quality checkpoint before the data is used for market offers.
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CASE PUD 2023-000055 ENTRY NO. 28 FILED IN OCC COURT CLERK'S OFFICE ON 08/29/2023 - PAGE 5 OF 30

1	3.	Once the Market Operators have reviewed and verified the data, the OG&E market
2		systems are utilized to calculate the market offers.
3	4.	Once calculations are complete, the Market Operators review the calculations and,
4		if satisfied with the results, submit them to the SPP IM systems.
5	5.	Verification that the SPP IM systems received the submissions are made by the
6		OG&E market systems and are viewed in the SPP market user interface by the
7		Market Operators.
8

9 Q. Please explain OG&E's philosophy when offering its fossil generation resources into

10		the SPP IM.
11	A.	OG&E offers the output of each of its available fossil generation resources into the SPP
12		IM at each resource's calculated variable costs and in compliance with the SPP's must-
13		offer requirements. By offering each generation resource at its calculated variable costs,
14		OG&E's generation resources protect OG&E's load from purchasing energy at a cost
15		greater than OG&E could self-serve. With only a few limited exceptions, OG&E submits
16		offers with a unit commit status of the market for all its available resources. This allows
17		the SPP to commit and dispatch all of OG&E's generating fleet.

1. Q. Are there other exceptions to OG&E's offer philosophy?
2. A. Yes. In some circumstances, OG&E will not offer an OG&E unit into the market for

20	economic dispatch if that unit must either remain online or be started to conduct testing
21	(e.g., environmental testing and post-outage testing). The term used by SPP to describe
22	this scenario is "self-committed." OG&E self-committed less than 0.40 % of the total
23	available hours in 2022. The other exception involves instances when OG&E is faced with
24	an environmental or fuel constraint that causes OG&E to offer a unit above the calculated
25	variable cost. This is done in coordination and consultation with the SPP Market
26	Monitoring Unit ("MMU").

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Cause No. PUD 2023-000055