After a series of meetings spanning multiple weeks, Oklahoma Corporation Commissioners voted Thursday to deny Oklahoma Gas and Electric’s request to use a cost-recovery measure called “construction work in progress,” or CWIP.
The state’s largest utility company sought to use the procedure to help finance the construction of two new natural gas turbines at its Horseshoe Lake Power Plant in eastern Oklahoma County. While OG&E received preapproval to build them and eventually charge customers for the cost, regulators specifically denied the use of CWIP.
Commissioners deliberated whether they were obligated to approve the mechanism under a new law requiring the Corporation Commission to allow CWIP for new or expanded natural gas infrastructure. But the law wasn’t applicable in this case, the regulators said, because OG&E filed its application before Senate Bill 998 went into effect.
Why did OG&E want to charge customers during construction?
The utility company wanted to buy more energy generation capacity, driven by rising electricity demand and the retirement of older facilities.
OG&E laid out plans to build the natural gas turbines, purchase power from a gas-fired generation facility in Pittsburg County and enter into a contract with a battery energy storage system facility near Woodward. CWIP collection would have financed the natural gas turbine construction.
Residents would have seen new monthly charges increase incrementally, the company announced, starting with about 60 cents in 2026 and ending with more than $4 in 2031.
Representatives for OG&E maintained during the length of the case that customers would have saved millions of dollars in interest over the life of the $506 million project.
The savings would total about $176 million, a spokesperson for OG&E said in October.
But commissioners argued that residents wouldn’t see the savings for years.
“The math is so absolutely clear that CWIP treatment is a detriment to rate payers, where if they enjoy any savings at all, it's going to be 25 years and beyond before they get that savings,” Commissioner Todd Hiett said during a Nov. 5 meeting.
“ Those customers may not be customers, they may not be alive. Those businesses may not be alive.”
Corporation commissioners disagreed on which final document to vote on
Commissioner Brian Bingman proposed an order that denied CWIP, but still granted preapproval to construct the turbines and buy power from two other facilities. His document also gave OG&E until July 2026 to draft a large-load tariff, which keeps residential customers from paying the same amount as facilities like manufacturing plants or data centers.
Bingman’s document also allowed OG&E to charge customers for 18 months once the new turbines are in service. After that, the company could include remaining costs in a general rate case.
But Hiett condemned the new order in favor of an older version, saying some new language came from OG&E. Hiett brought his own proposed order.
“I was just shocked to see the monopoly utility swoop in after the record is closed, and after a robust hearing, the company swoops in and completely rewrites the order,” Hiett said.
The two primary changes in the document involve extending the window for the large-load tariff filing and increasing the number of months the company can charge customers for the turbines before entering a new rate case, according to Louis Jackson, assistant and advisor to Bingman.
Proposed orders aren’t typically made public unless voted upon. StateImpact has not independently verified the changes.
“Both PSO and OG&E have been working for several years over at the legislature to systematically do two things: Remove themselves from regulation and strengthen their monopoly status,” Hiett said. “They were very successful in removing themselves from regulation last year with Senate Bill 998.”
Hiett said some of the new language was “nothing but propaganda,” urging Bingman and Chairman Kim David not to approve the proposed order.
“They're trying to capture this regulatory body, utilize this regulatory body through an order to promote propaganda, and this order should be rejected on those grounds alone,” Hiett said.
David and Bingman disagreed with Hiett’s comments, saying the changes were not significant.
“I'm highly offended by what you had to say,” David, who joined the meeting virtually, said. “You just basically accused us both of not being genuine, and the changes that were made in this order are not substantial changes.”
David and Bingman voted to approve the order, while Hiett voted against it.
In an email, Ken Miller, vice president of public and regulatory affairs for OG&E, wrote that Hiett’s comments were “baseless.”
“I’ve known Todd for a long time and he has never responded well to not getting his own way,” he wrote. “We take great offense to his characterization of OG&E’s advocacy for critical projects that meet Oklahoma’s growing demand for energy at low costs as highly inappropriate and unacceptable.”
Regulators explored consumer protection options during the case, as energy-hungry facilities like data centers come online
Before the final proposed order, commissioners discussed using three mechanisms meant to keep residential customers from paying the same monthly amount as large facilities: a large-load tariff, a production demand allocation and a true-up adjustment.
A large-load tariff is an agreement between a utility and a high-consumption customer, such as a data center. The tariff ensures bills for big consumers are calculated differently from smaller-load households or businesses.
The protection was included in the commission’s final order, directing OG&E to file a large-load tariff with the regulatory body by July 1. The agreement could be used to set rates as bigger customers come online.
Before the vote to deny OG&E’s request, a stipulation agreement written by the Office of the Attorney General, the commission’s public utility division and the Petroleum Alliance of Oklahoma included the production demand allocation and true-up mechanisms.
The allocator would update the amount of CWIP money charged to customers every year. As more high-consumption facilities come online, the amount owed by customers with smaller energy footprints would be expected to decrease.
The true-up mechanism would happen after the turbines come online. OG&E would have looked at its energy supply compared to when CWIP was first set. Some residential customers could see a refund in the form of lower bills after the company calculates final project costs.
More CWIP requests likely on the horizon
Although the commission denied its first case of CWIP under Senate Bill 998, more will probably be filed by utilities in the future.
During the Nov. 13 meeting, Bingman said consumer protections could be part of future CWIP cases.
“As you can tell, I was more taken with eliminating the CWIP, which I know we're going to see down the road,” he said. “But I think a lot of these protections that you're talking about, that as we go on down the road, some of those we will be able to put in place.”
In an email, a spokesperson for the attorney general’s office wrote OG&E could come back to the commission with another CWIP request.
When asked if OG&E planned to challenge Thursday’s decision, a spokesperson wrote, “The commission and OG&E differed on the relevant effective date of the new law in this specific case. We believe it’s important to save customers a significant amount of money and will work to secure these savings in future cases.”
It’s unclear when the utility plans to file another case. The OG&E spokesperson said timing isn’t finalized for its next general rate review.
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