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Consumers need to educate themselves about Integrated Marketplace

BY DANA MURPHY, Oklahoma Corporation Commissioner Modified: March 5, 2014 at 7:49 am •  Published: March 5, 2014

If someone said to you, “Pay me $100 and you'll save $50,” would you rush to write a check? Obviously not – at least, not without much more information.

But for electric customers in Oklahoma and some other states, that might soon be the case as part of an “Integrated Marketplace” that's extremely complex in structure and operation. Its goal is fairly basic and positive: Simply put, the aim is saving money by giving utilities access to more generation choices.

It would do this by establishing a daily electricity market under the control of the Southwest Power Pool (SPP), a regional transmission organization with 75 electric utilities from eight states, including Oklahoma, as members. Its job is to help ensure reliable, affordable power. But this doesn't come cheap. The estimated cost of setting up the Integrated Marketplace and getting it operative is more than $115 million.

Who pays for this? You and I do.

In the traditional model of utility regulation, a utility had to build and put into operation needed infrastructure before applying for cost recovery. The application had to include evidence that the infrastructure costs were reasonable and it was useful to the ratepayer. Just as importantly, the approval had to come from officials of a particular state.

But under the new system, ratepayers will be paying for massive investments for items that might or might not have any direct bearing on their service. They may have to pay before the systems are actually used. Moreover, approval for those investments isn't made at the state level, but rather at the SPP.

Just as the traditional model of rate regulation is changing, Oklahoma Corporation Commission staff involvement in the SPP process has also evolved, necessitating commission participation in processes occurring prior to SPP board decisions in order to provide input from the state regulatory level. Ultimately, the individual utility must obtain approval for its share of the costs from the commission (or an equivalent body in other states), but under current Oklahoma law the cost must be allowed.

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