A settlement agreement appears poised to end Oklahoma Gas and Electric Co.'s long-running rate case, the company announced Monday.
The utility company stands to get about a $4 million rate increase, although residential customers are expected to see their bills drop slightly because the agreement includes new rate designs and a lower rate of return on equity.
The settlement agreement will slash about 9 cents a month off the average residential customer's bill, while increasing the cost for highly subsidized municipal and security lighting customers, according to OG&E.
“This settlement, while challenging in terms of overall cost recovery, removes uncertainty and provides a path forward for the recovery of our investment in transmission assets,” OG&E spokesman Brian Alford said. “The level and timing of cost recovery will increasingly challenge us to meet growing electricity demand and maintain the same level of service our customers have come to expect.”
Consumer and industrial groups objected to OG&E's initial $73 million rate hike request, leading to talks that resulted in Monday's settlement.
“With many Oklahoma families struggling financially, we worked hard for an outcome that would protect Oklahoma consumers from higher utility rates while providing the necessary provisions for OG&E,” said Diane Clay, spokeswoman for Attorney General Scott Pruitt.
Pruitt's office is responsible for representing Oklahoma consumers in utility cases.
Barney Allen, a member of consumer advocate AARP Oklahoma's executive council, said he was pleased with the rate case settlement.
“We believed at the outset of this case a rate increase was unwarranted and would have hurt older Oklahomans who already struggle to pay their utility bills,” Allen said.
“We applaud this settlement that replaces OG&E's rate increase request with a net rate decrease and adds additional consumer protections for residential customers. This is definitely a win for the consumer.”
The agreement must be approved by the Oklahoma Corporation Commission.
OG&E's original rate request, filed July 28, would have added about $6.50 to the average residential customer's monthly electric bill, while allowing the company to recoup the costs of nearly $500 million in new investments over the past couple of years.
Commission staff, Pruitt's office and Oklahoma Industrial Energy Consumers had called for a rate cut of up to $57 million.
The settlement also will extend funding for OG&E's vegetation management and establishes a system for the company to recover the costs of high-voltage transmission projects.
OG&E also agreed to report additional details of its smart grid deployment and hire a third-party expert to evaluate potential rebate programs for customers who reduce their electricity use during peak hours.