The last time rates were adjusted for Oklahoma Gas & Electric Co. was in 2009, based on 2008 costs. It's now 2012 and OG&E has accepted a settlement in the latest rate case, which had sought about $73 million based on 2010 costs.
The utility didn't get anywhere near the amount sought, but it also didn't get the rate decrease that its rate case opponents were seeking.
At no time in the course of a year is electricity more appreciated than now. It's hot and getting hotter. We want our power to be reliable as well as affordable. A regulated utility's job is to ensure the former while juggling the latter.
OG&E's power is relatively cheap, about 20 percent below the national average. The company sought a rate increase to recover more than $500 million of investments to improve system reliability. Instead of $73 million, the settlement will give the company a paltry $4 million.
Rate case opponents are claiming victory, but we suspect this will be short-lived. Regulated utilities have a right — and an obligation — to raise rates when conditions warrant. The settlement only defers the day of reckoning.
OG&E faces many challenges, not the least of which is the prospect of installing scrubbers at its coal-fired power plants. The Obama administration's war on coal led to an Environmental Protection Agency determination that the plants were causing haze at national wildlife refuges.
Company officials know that coal has a limited future in power generation unless society changes its thinking. But transitioning from coal to another fuel source isn't a matter of flipping a switch. It requires expensive investments, the cost of which must be recovered from ratepayers.
Even if OG&E wins its challenge to the EPA mandate, rate hikes loom. The company deserved better than it got from the latest case, even if its officials had to settle for less.