Correction: In the original version, an incorrect amount was reported as to how much consumers were being asked to pay. That has been corrected.
OKLAHOMA CITY (KFOR) – Who will be picking up the tab on the February freeze? Earlier this year, OG&E reportedly spent as much as 1000-times normal cost for natural gas to turn into electricity. Now, they are asking the consumers to pay the three-quarters of a billion bill over the next three decades.
Corporation Commission and OG&E officials stress this is not a rate increase – OG&E can make profit from those – this is a cost recovery.
OG&E is asking Oklahomans to pay millions, but some think the power company should also pay their fair share.
“OG&E was signing contracts at a rate of $2 million an hour or putting Oklahomans in debt at a rate of $2 million an hour and they did not tell people, this was going on,” said Steven Goldman in front of a Corporation Commission Court.
OG&E has submitted a plan to pay the reported $760 million owed to suppliers for natural gas bought during the February freeze.
If paid all at once, consumers would see bills in the tens of thousands of dollars. But using low cost loans arranged by the Oklahoma legislature last session, OG&E says their plan would be for the average customer to pay a little over $2 dollars more a month, for the next 28 years.
“I’m going to still be paying it when I’m retired,” said Eric Jergensen of VOICE Coalition.
Members of Voices Organized In Civic Engagement (VOICE) say it’s up to OG&E to pick up part of the bill because they say the power company knew that petroleum products are not covered under state price gouging laws.
“Our fear is that if OG&E doesn’t bare more of the cost and just passes it to the rate payers, they won’t be incentivized to put together better contracts and better arrangements,” said Jergensen.
“There is nothing that is preventing them from taking some of their profits and applying them towards this balance and lowering that rate,” said Chad Mullen of AARP Oklahoma.
The AARP of Oklahoma says especially seniors on fixed incomes will be hit hard as these increases are likely to happen on other utility bills too.
“This is all coming on top of a time when the actual price for actual natural gas has risen exponentially over the past couple of months. So this is going to be a very expensive winter in Oklahoma,” said Mullen.
OG&E says they don’t want to talk on camera until the hearings are over but they issued this statement.
The Oklahoma Corporation Commission meeting allowed the Commission to hear directly from customers and commenters regarding February’s severe winter weather event. The meeting is part of the process for OG&E to recover fuel costs incurred during the February event. This process is important, and we believe it’s important for the public to be heard. Our goal, as it is every day, is to provide uninterrupted service to all customers because they depend on it particularly in sub-freezing conditions. Because the OG&E generation fleet was online and running during the February winter weather event, our customers did not experience widespread, uncontrolled blackouts.
Since February, OG&E has been exploring ways to minimize the impact on customer bills and we are now seeking to take advantage of the “securitization” law recently enacted by Oklahoma legislators. Oklahoma law provides for fuel costs to be passed directly to customers with no profit to the utility. Passing along the high costs for natural gas and wholesale energy during February’s unprecedented winter weather event through our normal process would have created a significant burden to our customers. To date, customers have not been billed for any fuel costs related to that storm.
Securitization provides utilities a way to spread fuel costs out over a much longer time period. As a regulated utility, hearings like the ones this week must be held with the Oklahoma Corporation Commission (OCC) to review and approve securitization requests.
While $875 million is the original fuel cost and included in OG&E’s original securitization filing, the amount OG&E seeks to recover today is $760 million. This reduction is largely due to resettlements from the Southwest Power Pool for power utilized by SPP participants that was generated by OG&E. OG&E does not profit from fuel costs.
If our request is approved, the average residential customer would see an increase to their bill of either $3.29 over 15 years, $2.65 over 20 years, or $2.12 over 28 years, as determined by the hearings.
We appreciated the opportunity for Commissioners to hear from our customers about their concerns and will continue to invest in the grid and our systems to ensure reliable and affordable service for our customers.”
But some members of the public aren’t happy with their plan.
“If we just pay these fuel charges and declare them prudent and reasonable there is zero incentive to not do this again in the future,” said Nick Singer.
There is another opportunity for the public to speak in that court at a hearing at 1:30 p.m. on Wednesday.
Ultimately it will be up to the judges to come up with a recommendation that will then be voted upon by the Corporation Commissioners.
As for fixing this issue permanently, it would be up to the Oklahoma legislature to pass price gouging laws to cover oil and natural gas. There have been studies this summer.