Lower Natural Gas Costs Would Offset $92.5 Million Rate Hike Request, OG&E Says
Oklahoma Gas and Electric filed a $92.5 million rate case Friday that could bump residential customers' monthly bills by $7.
But the utility says lower natural gas prices would offset the rate hike that would go into effect in June, according to The Oklahoman's Paul Monies:
OG&E said monthly bills for residential customers would fall by $6.75 beginning in January from lower fuel prices. Utilities pass along fuel costs directly to customers. If the three-person Corporation Commission approves OG&E's rate increase, the monthly bill for a typical residential customer would increase by $7.22. With the lower fuel costs, the net increase would be 47 cents per month, the utility said.
OG&E last increased rates three years ago, and since then, the state's largest electricity utility has added thousands of miles of transmission and distribution lines, a dozen substations, and more than 11,000 transformers. That infrastructure cost about $1.6 billion, and none of it is reflected in the current rate structure.
The utility also terminated a wholesale generation contract for retail consumers, Monies reports:
OG&E ended its last wholesale contract earlier this year, part of its plan to not add new fossil-fueled generating capacity before 2020. The costs of the wholesale contract weren't previously being paid by retail customers in rates because the power wasn't available to them. Swanson said terminating that contract will help customers. . . . In testimony filed in the case, OG&E's Don Rowlett said building a new natural gas combined-cycle plant would cost retail ratepayers about $1,250 per kilowatt. OG&E's reallocation of the power from its last wholesale contract allows it to get 300 megawatts of capacity for $283 per kilowatt.
OG&E says the rate increase would also help it recover some of what they've already spent to comply with federal Regional Haze and Mercury and Air Toxics Standards. The utility's Shareholders Association attorney Ron Stakem wouldn't comment on the specifics of the rate case, but told The Journal Record's Sarah Terry-Cobo that in general, they're important to a regulated utility.
“A company can’t survive unless it recovers prudently incurred costs,” Stakem said. When a utility spends money on equipment and customers receive benefits, shareholders should be able to earn a return on those projects, he said. Shareholders can earn returns only if regulators approve rate cases. The Oklahoma Corporation Commission can approve requested rates after a hearing process. A hearing has not yet been scheduled for OG&E’s rate request.
KGOU is a community-supported news organization and relies on contributions from readers and listeners to fulfill its mission of public service to Oklahoma and beyond. Donate online, or by contacting our Membership department.