Oklahoma Corporation Commissioner Bob Anthony, the lone regulator who did not support the use of securitization for ratepayer bonds to help OG&E with extreme winter storm costs came out this week saying it’s clear the true impact on customers “was grossly misrepresented.”
He opposed the bonds and a 28-year amortization in which OGE customers were hit with more monthly charges when the securitization was approved last December on a 2-1 vote by the Oklahoma Corporation Commission. The supporting commissioners approved the bond package on the grounds it would result in long-term savings for OGE customers.
But last week, commissioners were informed the interest rate on the bonds was not 2.58% as anticipated, but 4.9%.
“In short, the results of OG&E’s winter storm bond issuance are simply horrifying. The Oklahoma Corporation Commission’s open-ended financing order failed to protect consumers and left all the risk for rising interest rates on ratepayers,” said Anthony in a statement issued on Monday.
The commissioner said that the higher rate means that over time, OGE customers will actually be charged almost twice what they supposedly “owe” for the power used during the February 2021 winter storm.
“The detrimental financial consequences for ratepayers are all the more heartbreaking as Oklahomans struggle with runaway inflation in so many other areas of their household budgets,” continued the commissioner.
” As I repeatedly argued in December and January, it didn’t have to be this way. The insiders and special interests have had their way, and it’s the ratepayers who will pay – literally for generations!”
In his statement, Commissioner Anthony also pointed out:
- The average monthly impact on customer bills will actually be 57% higher than the $2.12 deceitfully announced by the two commissioners who approved the bond financing.
- The much-touted “low” 2.58% bond interest rate actually topped out at 5.087% near the end of the bonds’ ridiculously-long, multi-decade term.
- The bogus claims of securitization “savings” conspicuously disintegrate in the face of about $600 million in interest expenses – some $300 million more than was so optimistically forecast.
In light of those facts, Commissioner Anthony said it is no wonder 13 of the 15 states impacted by the 2021 winter storm Uri rejected the costly Texas/Oklahoma securitization bond approach for their largest electric utilities.
In his opposition last December to the original order approved by the two other commissioners, Anthony questioned at the time what he called a “purported yet open-ended $1.067 billion debt obligation.”
“Fundamentally, far too many critical questions remain unanswered. First and foremost, the true price tag! Assuming a $760 million OG&E securitization amount, plus an estimated $307 million in interest over the 28-year recovery period, the total financing obligation to be paid by OG&E customers is alleged to be $1.067 billion… probably… at a minimum.”
Still to be determined are the interest rates of similar bond projects for Oklahoma Natural Gas Co., Public Service Company of Oklahoma and Centerpoint Energy.