OGE reaches storm cost agreement

Winter storm kills 3 in South as dangerous cold blast moves east - ABC News

 

OGE Energy and some consumer groups filed a joint stipulation  with Oklahoma regulators on Friday agreeing the utility’s estimated winter storm costs will be lowered to $760 million and be recovered over a nearly 30-year period.

The amount is in contrast to the $875 million figure cited by OG&E in a September notice to its customers in which the firm said if its rate hike request were approved by the Corporation Commission, it would result in an increased monthly charge of approximately $3.93 for the average residential customer.

The stipulation, signed by the Corporation Commission’s Public Utility Division, the Oklahoma Industrial Energy Consumers, the OG&E Shareholders Association and Wal-Mart Inc. stated the total amount of OG&E’s extreme purchase cost recovery, including financing costs and upfront securitization costs is estimated to be $760 million.

It also requested regulators issue a Financing Order “for the securitization of that approximately $760 million and authorize a 28-year amortization for cost recovery.”

The State Attorney General’s office did not sign the agreement, nor did the AARP.

“We have been fighting throughout the securitization process to ensure only prudent and reasonable costs be passed on to consumers. We are also fighting to ensure that OG&E takes some financial responsibility for it actions leading up to and through the weather event,” said AARP Oklahoma state director Sean Voskuhl in a released statement to OK Energy Today.

Q&A with Sean Voskuhl

He said it was revealed in hearings before the legislature and in filings with the Corporation Commission that OG&E knew the weather event was likely, didn’t use all of its gas in storage, and kept a high number of generation units offline for maintenance, all contributing to the spending frenzy we saw.

“We are particularly disturbed to see contained within the stipulation agreement that, much like PSO, they are attempting to move more of the cost allocation of the weather event recovery to residential customers and away from large industrials users.”

Voskuhl called it ” unfortunate that when OG&E’s customers need them to play fair the most, they are using the securitization process to provide sweetheart deals to a few of their large customers at the expense of hundreds of thousands of residential customers.”

The AARP leader said many of those customers are also older Oklahomans on a fixed income and cannot afford another rate increase from OG&E.

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The stipulation lowered the company’s total extreme purchase costs for natural gas and wholesale energy purchases estimated to $748.9 million. Those who signed it also agreed that $739 million of OG&E’s extreme purchase costs incurred during the February 2021 Winter Weather Event “should be deemed prudent and reasonable by the Commission.”

A month after the February storm, OG&E took out a $1 billion, one-year loan from Wells Fargo Bank. The utility stated in a filing with the SEC that the loan was to cover “extensive costs” during the storm.

Administrative Law Judge Linda S. Foreman held a prehearing conference on Friday and later indicated a majority of the parties had signed on to the Joint Stipulation. In a memo to commissioners, the ALJ said the Attorney General “while not signing the agreement, has no objections to it.”

AARP reportedly objects to the cost allocation proposed in the stipulation.

Public comments will be heard on Monday, Oct. 11 at 8:30 a.m. with representatives of OG&E, the Attorney General’s Office and the Commission’s Public Utilities Division. A Hearing on the Merits will be heard Tuesday, Oct. 12.

As part of the Stipulation Agreement, OG&E agreed to engage interested stakeholders in a meeting to discuss methods to mitigate costs to customers of natural gas price volatility and future cold weather events.

The utility also said it would evaluate its use of natural gas storage services and physical and financial hedging related to natural gas procurement and also revise its next fuel supply portfolio.