The sale of nearly $1 billion in ratepayer-backed bonds to cover 2021 winter storm costs for Oklahoma Gas and Electric is complete.
The utility stated in a filing made Wednesday with the U.S. Securities and Exchange Commission that the sale of $762 million in bonds was completed July 20 by the Oklahoma Development Finance Authority. It was carried out “for the purpose of allowing OG&E to recover the significant fuel costs it incurred as a result of Winter Storm Uri in February 2021—.”
The filing made no reference to the surprise increase in the interest rate, going from an expected 2.58% as laid out by the utility last year, to 4.9% as revealed last week by the ODFA. The increase will add to the overall cost of the bonds and result in additional monthly costs of $3.34 to consumers instead of $2.12 as expressed last year. It is an increase of 57% of the predicted rate to OGE customers.
OGE blamed the interest rate increase on inflation and on opponents who filed legal challenges before the Oklahoma Supreme Court which delayed the sale of the bonds. The utility issued a statement to News 9 as it reported on the increased interest rate.
The total cost of the bond project will increase by nearly $400 million because of the higher interest rate.
The unexpected interest rate increase led Corporation Commissioner Bob Anthony to express anger about the results.
“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 bond sale was authorized under the February 2021 Regulated Utility Consumer Protection Act which was rushed into law by the Oklahoma legislature. It was also approved by the Oklahoma Corporation Commission (on a 2-1 vote) on Dec. 16, 2021 which adopted a Financing Order.
OGE’s filing also pointed out that the Supreme Court of Oklahoma held the bonds were properly authorized and constitutional under Oklahoma law, an opinion issued May 3, 2022. The bonds are not an obligation of OGE or its affiliates.