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Oklahoma Corporation Commission Rejects $1.1 Billion Rate Hike Proposal By OG&E

OG&E's coal-fired power plant in Muskogee.
Logan Layden
StateImpact Oklahoma
OG&E's coal-fired power plant in Muskogee.

This morning the Oklahoma Corporation Commission rejected a plan by the state’s largest utility that could’ve raised monthly utility rates by nearly 20 percent over the next half-decade.

Oklahoma Gas & Electric made the $1.14 billion request in order to pay for upgrades that would put coal-fired power plants in compliance with the federal Clean Air Act.

Customers’ monthly utility bills would’ve gone up incrementally over the next five years, eventually peaking at 19 percent above the current rates, The Journal Record’s Sarah Terry-Cobo reports:

OG&E may request recovery of those costs in its next rate case, which is expected to be filed soon. The company must reduce air pollution from coal-fired power plants to meet the federal Clean Air Act. A 2011 Oklahoma law allows utilities to request pre-approval of money for uncompleted projects related to federal environmental laws. However, OG&E’s request was controversial because it included an unrelated $414 million project to update its Mustang Power Plant in western Oklahoma City.

The decision came on a 2-1 vote, with Commissioners Bob Anthony and Todd Hiett denying the request in part because they felt there wasn’t convincing evidence the Mustang upgrade was necessary.

Commissioner Dana Murphy dissented, saying she thought there was enough evidence to support using a rate hike to pay for the company’s plan, which also included $700 million to install pollution scrubbers at two current coal-fired power plants, and convert two others to natural gas.

OG&E’s spokesman Randy Swanson told The Oklahoman’s energy reporter Paul Monies after the vote the company was “stunned” by the rejection.

“We believe we presented a very strong case with ample information to make a good decision,” Swanson said. “The plan we offered met the mandates that we're facing from the federal government at what we believe to be the lowest-cost plan for the consumer that provides fuel diversity, which we think is very important. It also met the mandates for the reduction in coal.” Swanson said utility officials were meeting to regroup and continue planning for the company's next rate case. The rate case is expected to be filed Thursday. . . . Representatives for the Sierra Club applauded the commission's rejection of OG&E's preapproval plan. “We think they made the right decision,” said Al Armendariz, a former EPA regional director who is now with the club's Beyond Coal campaign. “Oklahoma ratepayers are not going to have to foot the bill for a half-billion-dollar scrubber on a 35-year-old coal plant. Ratepayers are not going to see their bills go up to prop up an old, dirty fuel source. Now Oklahoma can move forward with a much more thoughtful plan on low-carbon and zero-carbon alternatives that are going to be good for the environment and save people money.”

As StateImpact Oklahoma has reported, OG&E has to comply with federal mercury rules by April 2016, and regional haze regulations by January 2019.

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Brian Hardzinski is from Flower Mound, Texas and a graduate of the University of Oklahoma. He began his career at KGOU as a student intern, joining KGOU full time in 2009 as Operations and Public Service Announcement Director. He began regularly hosting Morning Edition in 2014, and became the station's first Digital News Editor in 2015-16. Brian’s work at KGOU has been honored by Public Radio News Directors Incorporated (PRNDI), the Oklahoma Association of Broadcasters, the Oklahoma Associated Press Broadcasters, and local and regional chapters of the Society of Professional Journalists. Brian enjoys competing in triathlons, distance running, playing tennis, and entertaining his rambunctious Boston Terrier, Bucky.
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