PSO wants customers to ante up gas costs

By Jack Money

Published: May 16, 2008

Public Service Co. of Oklahoma filed a fuel adjustment case with the Oklahoma Corporation Commission Thursday, seeking relief from high natural gas prices.

"Prices for natural gas are at levels approaching historic highs,” said Stuart Solomon, the company's president and chief operating officer. "Since the majority of our fuel costs are based on natural gas, these significantly higher prices are substantially increasing our costs for producing electricity.”

Two main sources of fuel are used to generate electricity by the utility — coal, which it uses at its plant in Oologah, and natural gas, which it uses to run electricity-generating turbines at its six other power plants in Oklahoma.

A coal-fired plant in Texas also helps generate power for the utility's 525,000 Oklahoma customers.

The amount the utility is seeking in the fuel cost adjustment case is 1.75 cents a kilowatt hour. If the commission approves, the change would cost a customer using 1,000 kilowatt hours a month $17.50.

Officials said the utility's gas cost has increased about 40 percent since the utility's fuel costs last were set, adding they hadn't seen rates this expensive since 2005 after hurricanes hit the Gulf Coast.

According to information from Clearwater Enterprises Inc., the price of natural gas on the Western Oklahoma Natural Gas Index has been climbing steadily since the first of the year, when its price was $6.38 per thousand cubic feet. By April, that amount had climbed to $8.45.

This month, the price of natural gas has been climbing along with the price of crude oil. Thursday, though, natural gas prices fell to about $11.39 a thousand cubic feet on the New York Mercantile Exchange when the federal government reported that storage levels had grown by 93 million cubic feet in just the past week.

PSO officials said Thursday they know customers already are hurting because of high energy and food prices.

"We understand the challenge that increased electric prices have on our customers who are already struggling with significantly higher prices for gasoline, groceries and other necessities,” Solomon said. "We are doing everything we can to hold costs down, and we urge our customers to conserve their use of electricity to help manage these costs increases.”

The company also is asking the Corporation Commission for an adjustment in the company's base rates. That increase request is being driven by investments the utility has made in generation, transmission, distribution and other power systems to serve its customers, officials said.

Oklahoma's Corporation Commission will be asked to hear the fuel cost adjustment case later this month. The base rates case will be heard later this year, officials said.

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