OKLAHOMA CITY (KFOR) – The Oklahoma Corporation Commission (OCC) has approved the bill increase for Oklahoma Gas and Electric’s (OG&E) customers to help the company recoup the costs from February 2021’s winter weather.
OCC and OG&E officials stress this is not a rate increase – OG&E can make profit from those – this is a cost recovery.
Earlier this year, OG&E reportedly spent as much as 1000-times normal cost for natural gas to turn into electricity.
Now, the OCC has approved a plan that would raise customer rates by about $2 per month over the next 28 years so OG&E can pay back the $760 million owed to suppliers.
OCC Chairman Dana Murphy noted that without the agreement and the state’s new securitization law, the total of the February storm fuel costs OG&E could recover under the law would be devastating.
“It’s estimated that simply passing through $748.9 million in fuel costs would have resulted in the average residential consumer being charged an unmanageable amount of more than $400 dollars in one month just for the storm. Under the agreement, that is lowered to $2.12 a month, with the reimbursement spread out over 28 years using the state’s new securitization law,” Murphy said. “There is no ‘magic bullet’ available to the Commission that could erase the unprecedented increase in natural gas prices that occurred during the February storm.”
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.
“Natural gas pricing falls outside of Commission jurisdiction. Our agency’s auditors have worked to ensure that OG&E is not making any profit on the fuel costs and that the purchase of the fuel met the other requirements of state law,” Murphy said. “But there is no changing the fact that for electricity to be able to be supplied during the storm, those purchases had to be made at prices that were unimaginable before the event.”
Commissioner Todd Hiett said the settlement also commits OG&E to actions normally outside the control of the OCC.
“The Corporation Commission does not have the authority to specifically dictate to a regulated utility how it runs its day-to-day business,” Hiett said. “Under the settlement of this issue, OG&E commits to actions to reduce the impact of this kind of event in the future. Further, OG&E has agreed to apply any savings that result from future federal or legal action associated with the February fuel costs to the credit of customers.”
The agreement requires the company to apply any other proceeds it receives for the storm directly to consumers’ bills to lower customers’ fuel charge, and requires OG&E to take steps to improve its fuel supply plans to protect customers in the future.
“The fact is a debt was incurred for good reason during the winter storm. Natural gas had to be purchased to maintain electric generation and protect life and property. Now the cost must be paid,” Hiett added.
AARP Oklahoma State Director Sean Voskuhl issued the following statement in response to the Oklahoma Corporation Commission ruling today.
“AARP Oklahoma is extremely disappointed with today’s ruling by the majority of Oklahoma’s Corporation Commissioners which forces more than 870,000 Oklahomans to pick up the tab for all the costs from the February 2020 storm while OG&E pocketed $224 million in profit last quarter alone. Residential customers deserved a better deal. OG&E has already filed for yet another rate increase in 2022. Our hope is that our elected Corporation Commissioners will right this wrong and with the next rate case require OG&E to use some of their profits to lower rates. We also hope the Attorney General’s office gets to the bottom of who priced gouged Oklahoma and makes sure they are held accountable. AARP Oklahoma will continue, as we always have, to fight to ensure Oklahoma ratepayers get a fair deal.”