Oklahoma Gas and Electric Co. customers will be paying higher rates for electricity beginning Saturday while an administrative law judge weighs arguments in an interim rate case.
But the $24 million in increased rates will be offset by a separate, $50 million reduction in fuel costs for the utility's customers, a result of lower natural gas prices. Combined, most residential customers can expect to pay about $1 less each month.
Under a 1993 state law, a utility can choose to implement interim rates if a pending rate case takes longer than 180 days. OG&E filed its rate case in July and asked for a $73.25 million increase.
The interim rates are subject to refund, with interest, if the Oklahoma Corporation Commission finds they were too high.
Opponents speak out
OG&E will implement the interim rate hike over the objections of several groups, including the state attorney general's office, a group of industrial consumers and the AARP. They argued in a hearing Thursday the utility's attorneys waived its right to implement interim rates at a Corporation Commission hearing in January.
“A waiver was made, it's enforceable against the party making it, and it's not appropriate in this process to ignore that,” said Deborah Thompson, an attorney for AARP.
OG&E attorney Bill Bullard said the decision to implement interim rates was based on a change in circumstances.
“On that date in January, we simply had no real reason to believe we would be sitting in the middle of May and an order not issued by this commission,” Bullard said. “This commission routinely and regularly recognizes changes of condition as a reason for reconsidering a matter. The idea that a waiver in one context cannot be revisited in another context is just bad policy.”
Bullard said the utility doesn't need the formal approval of the three-member commission to implement interim rates. The increase will go into effect Saturday, the first day of OG&E's next billing cycle. However, it will be offset by a fuel-cost reduction, he said.
“Our motives were to keep costs down for our customers,” Bullard said.
In public comments, Douglas Holsted, a certified public accountant from Oklahoma City, asked the commission not to implement an interim rate increase. He said the utility remains profitable and has yet to detail possible costs for upgrades or retrofits that might result from pending Environmental Protection Agency emissions rules. He said OG&E should live up to its earlier promise not to implement interim rates.
“You made a statement during the hearing, and we ask you to live up to your word,” Holsted said. “You didn't have to make that statement. You chose to make that statement. And you chose to make a statement that you will not implement a rate increase. And now you say today the only reason you're doing it is because the shareholders are entitled to the money.”
Rate cases typically take several months to resolve, but the last time a utility implemented an interim rate increase was in 2007. In that case, Public Service Co. of Oklahoma implemented interim rates almost two weeks after the 180-day deadline. But commission staff attorney Elizabeth Cates said in Thursday's hearing PSO had not previously indicated it would waive its right to implement interim rates.
Judge issues report
Meanwhile, Administrative Law Judge Jacqueline T. Miller on Wednesday issued her recommendation in the full rate case. The 305-page report directed OG&E to come up with a revised cost of service by Monday based on Miller's recommendation for a return on equity of 10.75 percent.
OG&E had requested a return on equity of 11 percent and a rate increase of $73.25 million to recover upgrade costs.
In testimony in the rate case in December and January, several groups asked for rate reductions ranging from $4 million to $57
Parties in the rate case have 10 days to file their comments on the judge's recommendation. The judge's report is advisory, and any decision on the rate case will come from the three elected corporation commissioners.
“We are reviewing the lengthy report and carefully considering what our course of action will be,” said Diane Clay, a spokeswoman for the attorney general's office.
Our motives were to keep costs down for our customers.”Bill Bullard