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Out of options, OG&E must comply with federal environmental rules

by Paul Monies Modified: August 11, 2014 at 11:24 am •  Published: August 11, 2014
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After fighting federal rules on regional haze all the way to the U.S. Supreme Court, Oklahoma Gas and Electric Co. said it’s out of options and must comply with the law.

The utility faces a 2019 deadline for the regional haze rules, which were designed to restore visibility at federal parks and wilderness areas by 2064. OG&E also must meet emissions rules on mercury and air toxics standards, or MATS, by 2016.

OG&E wants to begin recovering $1.1 billion from ratepayers starting next year for its environmental compliance plan, an effort that could increase the typical residential customer’s monthly bill 15 percent by 2019. The utility wants the Oklahoma Corporation Commission to approve its plan by February.

Utility representatives said the higher charges would be phased in over the next five years as a separate rider on monthly bills. Other costs would come from higher fuel charges, because OG&E’s plan calls for more natural gas and less coal generation. Natural gas is about twice as expensive as coal at current prices.

The utility also plans to file a rate case in 2015, which could further affect customer bills.

Higher bills

Sean Voskuhl, Oklahoma director for the AARP, said the increases would be hard to take for ratepayers.

“AARP is deeply concerned about OG&E’s request for cost recovery and the burden to residential customers and small businesses,” Voskuhl said. “A projected 15 percent rate increase will be extremely hard on Oklahoma ratepayers.

“Since OG&E also plans to file a rate case, AARP believes it would be more efficient and cost effective to examine both issues at the same time.”

Businesses also will be closely watching OG&E’s case as it makes its way through the Corporation Commission. For most commercial customers, the compliance plan could increase their monthly bills 15 percent by 2019, while large industrial customers could see monthly bills rise 19 percent.

In testimony filed in the case, Sheri Richard, OG&E’s director of revenue requirement, said bill increases would be limited to no more than 3.5 percent each of the first five years.

“The (environmental and generation plan) rider benefits both customers and the company by providing a smooth transition to full cost recovery over a period of years, mitigating rate shock, while still fairly compensating shareholders,” Richard said.

Compliance options

In a conference call with analysts last week, executives at OGE Energy Corp. said the company would be able to fund OG&E’s compliance plan without having to issue more shares. The utility filed its plan under a 2005 Oklahoma law that allows it to recover from ratepayers the expenditures related to environmental mandates.

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by Paul Monies
Energy Reporter
Paul Monies is an energy reporter for The Oklahoman. He has worked at newspapers in Texas and Missouri and most recently was a data journalist for USA Today in the Washington D.C. area. Monies also spent nine years as a business reporter and...
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Residential customer costs

Oklahoma Gas and Electric Co. said the average monthly bill for residential customers is $108.51. The utility’s plan for environmental compliance and replacement of its Mustang plant would increase residential customer bills by the following amounts each month from 2015 to 2019. The additional charges are based on monthly electricity consumption of 1,100 kilowatt hours and include higher fuel costs.

2015: 80 cents per month

2016: $2.74 per month

2017: $1.63 per month

2018: $3.88 per month

2019: $7.26 per month

SOURCE: OG&E regulatory filings

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