If Edmond State Rep. Ryan Martinez thought his bill designed to give choice and competition in Oklahoma’s electricity market would be quickly approved in the legislature, he’s run into some opposition from one of the more powerful utilities in the state, not to mention from an electricity promoting group.
In other words, the deregulation battle is underway.
Oklahoma Gas and Electric, one of the two utilities identified in HB 1602, the other being PSO, responded to the Martinez bill this week and defended the existing regulatory method in the state. So did former Corporation Commissioner Jeff Cloud, who now heads the Alliance for Secure Energy.
“Any proposal to deregulate the electrical market in Oklahoma is a solution in search of a problem,” declared Aaron Cooper, Manager of Corporate Communications at OGE in a statement to OK Energy Today.
“It has been nearly 20 years since any state has decided to deregulate its electricity system because of the negative financial and operational impacts it brings on consumers, which were displayed last summer and again in recent weeks with grid instability in a number of deregulated markets.”
The Martinez bill would give commercial and industrial customers of the two utilities the option of buying electricity from other vendors. It would have an effective date of January 2027.
While Cooper said the bill is being “weighed by OG&E,” he also defended the state’s existing regulatory method, one he added has served Oklahoma electric customers for more than a century.
“In a deregulated model, there is no regulatory oversight to ensure costs are prudent or benefit customers, leaving open the opportunity for businesses to take advantage of hard-working Oklahomans through deceptive marketing and predatory market practices,” remarked Cooper.
He said the existing regulatory method protects Oklahomans by ensuring every investment in electric power generation and grid reliability paid by company customers is reviewed and approved through the process.
“Today’s OG&E rates are among the lowest average electricity prices in the country — 21% lower than the national average according to the most recent US Energy Information Agency (EIA) report from November 2022,” added Cooper who pointed out that through the utility’s membership in the Southwest Power Pool, OG&E customers enjoy the benefit of competition through a wholesale energy market.
Oklahoma Gas and Electric is regulated by the Oklahoma Corporation Commission and Cooper said as a result, the utility’s rates are 13% lower than the regional average and also 17% lower than Texas which is deregulated.
Cloud also responded to the Martinez bill, calling it an attempt at deregulation.
“We know from polling conducted as recently as this week that Oklahomans remain overwhelmingly opposed to deregulation,” he said in a statement provided OK Energy Today.
Cloud said in essence HB 1602 would break apart generation, transmission and retail distribution into separately operated businesses.
Cloud was also critical of AERO, the Alliance for Electrical Restructuring which came out in support of the Martinez bill. The former Corporation Commissioner said AERO is promoting the financial interests of third-party gas marketers who are funding the effort because they stand to profit from decreasing Oklahoma’s regulation of the electric market and uncoupling transmission and distribution.
“In seeking to dismantle our state’s cost and reliability protections for electricity consumers, these niche interests make plain they want all of the rewards without any of the operating responsibilities and related risks,” asserted Cloud.
“As legislators consider this most recent proposal, we should learn from the failed experiments by other states, including Texas, California and New York. Residents in these deregulated states have lived through a volatility reflected not only in unpredictable costs but in life-threatening protracted outages.”
Cloud contended that the deregulated markets, or at least those that might result from implementation of HB1602 would receive less oversight on the investments made by utilities to the grid and also less oversight on rates.
Earlier in the week, AERO came out with praise for Martinez, saying his work sought solutions for “skyrocketing electricity prices.”
AERO Executive Director Mike Boyd said in a statement that Oklahoma no longer has some of the most affordable electricity in the nation.
“—it’s unfair to deny Oklahoma families and businesses the chance to shop for better deals and lower prices. Kudos to Rep. Martinez for recognizing that a free-market system is going to deliver better outcomes then one controlled by monopoly utilities.”