Cooperative opts out of bond securitization for winter storm costs

Canadian Valley Electric Cooperative



Oklahoma regulators have signed off on another utility seeking approval of 2021 storm cost recovery but unlike previous firms, the Canadian Valley Electric Cooperative is not making use of the bond securitization Act that is being challenged before the State Supreme Court.

Corporation Commissioners on Tuesday gave unanimous approval to a joint stipulation and settlement agreement to allow the cooperative headquartered in Seminole to recover an estimated $16 million in Winter Storm Uri costs over a 10-year period.

The cooperative purchased its energy during the storm from the Western Farmers Electric Cooperative whose extraordinary fuel costs were in excess of $200 million. WFEC offered CVEC two options for repayment of its nearly $16 million share of the costs and CVEC decided a 5-year plan would create “too great of a rate increase” to its members.

The cooperative chose to recover its share through a surcharge tariff and the use of low-cost financing from CoBank, an existing cooperative lender. Interest on the loan over the decade would be 2.465% per annum.

It will result in an increase of $2.64 to the monthly bills of the cooperative’s estimated 3,124 members. Testimony showed CVEC’s costs totaled $15,869,552 while the loan interest with the bank would be $2,230,024.

Canadian Valley Electric Cooperative , Oklahoma , United States

Commissioner Bob Anthony, who voted against bond securitization requests that eventually were approved for OG&E, ONG, PSO and CenterPoint Energy supported the request of Canadian Valley Electric Cooperative. He also filed a separate opinion pointing out at the CVEC “sets an example” for “no ratepayer-backed bonds!”, “No securitization!” and “no multi-generational 20-year, 25-year or 28-year debt!”

His opinion also said it would not result in millions of dollars in “yet-to-be-determined interest carrying costs, fees, commissions, marketing enhancements, Bond Council payments, servicing expenses, etc.!”

Anthony went on to state in his opinion that “while Oklahoma public officials, state agencies, and the regulated public electric and gas utilities themselves dither, equivocate, prevaricate and pass the buck, Oklahoma ratepayers are still in the dark about exactly what went wrong during the February 2021 Winter Storm.”

The commissioner added that CVEC’s method of cost recovery did not result in “misleading” claims of millions of dollars in ratepayer “savings.”

He then pointed to a recent OK Energy Today article about a recent study by Intelometry that stated Oklahoma’s method of securitization “hits consumers hardest of the states that suffered in the storm.”

Click below to view Anthony’s separate opinion