ONG and Oklahoma Municipal League respond to ratepayer bond tax issue


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Oklahoma Natural Gas came out this week indicating it might have a disagreement with Oklahoma regulators over taxes and those winter storm ratepayer-backed bonds, but it doesn’t oppose an effort to collect them. At the same time, the Oklahoma Municipal League wants things to slow down regarding the issue.

In a filing this week, ONG argued that franchise fees and gross receipts taxes are prudently incurred operating expenses of a utility. Such taxes are passed by ONG to its customers.

The utility, in the filing with the Oklahoma Corporation Commission stated it does not oppose the relief request by the Commission’s Public Utilities Division. But it is asking the commission that any order clearly state its interpretation that securitization charges should not be assessed franchise fees and gross receipts taxes and reflect the utility’s ability to seek recovery of these prudent operating expenses if a court of competent jurisdiction finds or subsequent legislation directs that the franchise fees and gross receipts taxes should be assessed on securitization charges.

Oklahoma Municipal League (@OklaMuniLeague) / Twitter

The Oklahoma Municipal League also took a stand this week on the issue.

“The Oklahoma Municipal League (“OML”) believes the premise behind the application poses many questions and the process should not be conducted hastily. Outstanding questions of law exist which should be carefully considered,” stated the league in a filing with the Corporation Commission.

It also made the following observations:

  • While “Franchise fees” were not specifically addressed in 74 O.S. § 9070 et seq., franchise fees are not taxes pursuant to Oklahoma law and municipal charters, and the basis for determining a franchise fee or distinguishing it from a tax is unclear in this Application. OML is concerned an Order arising from this application could prevent its members from collecting franchise fees.
  • The Oklahoma Constitution, state statutes, and municipal charters all provide municipalities the authority and mechanism(s) for the regulation of certain charges, taxes, and fees, none of which appear to be considered in the Application.
  • The Application seems only to prohibit the “[r]espondents frombilling customers for franchise fees, municipal fees or taxes, and/or 68 O.S. § 2601 taxes based upon securitized revenue”, thus it is unclear whether respondents will be required to remit franchise fees associated with securitization revenue to municipalities even though they are prohibited from billing for such fees.
  • Municipal governments have not received notice of the proceedings or made parties thereto despite that millions of dollars in fees are at stake.
  • The franchises municipal governments have in place were duly voted in elections called pursuant to 11 O.S. 16-112. It is unclear what legal authority permits those duly voted franchises to be usurped by agency proceedings.
  • Does the enabling legislation, 74 O.S. § 9070 et seq., constitute an unlawful impairment of contract?

In a final appeal to the Commission, the Municipal League’s General Counsel, Daniel P. McClure Jr. stated, “On behalf of its members, the Oklahoma Municipal League requests that the timeline of this Application and corresponding proceedings be decelerated; such that adequate time for briefing of the issues and fair notice to affected stakeholders occurs, and a deliberate and measured approach to this wide-reaching challenge is achievable.”









Daniel P. McClure Jr.   OBA #33762

201 NE 23rd Street

Oklahoma City, Oklahoma, 73105

General Counsel

Oklahoma Municipal League