PSO’s $155 million rate hike settlement faced pointed challenges before Judge

Invite disagreement | Chatsworth Consulting Group


The manner in which Attorney General Gentner Drummond’s office handled a recent settlement agreement on the $155 million rate hike request by Public Service Company was criticized by at least two organizations that oppose the request.

The Oklahoma Industrial Energy Consumer’s attorney Thomas P. Schroedter objected at the start of an Administrative Law Judge’s hearing that started on Monday and continued through Wednesday. The hearing did not focus on the details of the rate hike request but only on the settlement agreement.

“We did not see the final rate design settlement and terms,” he argued before Administrative Law Judge Linda Foreman on Monday. “That’s an issue for us.”

PSO attorney Jack Fite countered the OIEC chosen not to take part in the negotiations.

“When you decline to negotiate, it’s obvious you would not be in the room,” he argued.

The second group that criticized the manner the stipulated settlement announced last week by PSO, the Attorney General and the AARP was negotiated was the Alliance for Electrical Restructuring in Oklahoma.

“While parties knew of AERO’s interest, AERO believes that it was excluded from discussion of such vital issues,” stated the organization in a May 22 filing with the Oklahoma Corporation Commission. It argued that the allocation of costs among classes of customers was “never addressed” in any meeting while AERO was in attendance.

AERO argued in its filing the rates from the PSO Stipulation are too high. The organization was one of four that opposed the settlement. The others were the OIEC, the Petroleum Alliance of Oklahoma and the Department of Defense.

AERO contends there has been a “chorus” of public statements that “perhaps no rate increase can be justified in the present economic circumstances for the citizens of Oklahoma.” The organization asked the ALJ to reject the PSO Stipulation.

Further arguments and questions during the three days of hearing focused on PSO’s inclusion of its acquisition of the Rock Hill wind farm in northern Oklahoma. PSO’s rate hike request includes the acquisition but the OIEC pressed whether it should be part of the request since the finalized acquisition was not made until after the rate request filing.

Rock Hill is located in Kay and Grant Counties and became operational in December 2017. PSO announced its acquisition of the wind farm in April of 2023, months after the utility filed its rate hike request. The utility is attempting to include the cost of the acquisition as part of the request.

Matthew A. Horeled, Vice President, Regulatory and Finance for PSO explained under questioning that if the Rock Hill wind farm is not allowed, “customers would be held harmless and they would not be charged any expense.

PSO is awaiting a private letter ruling it sought from the Internal Revenue Service regarding a tax deferment issue in the case and it too was a sticking point this week by critics of the settlement agreement. The utility asked the IRS months ago to determine whether some of its expenses could be part of a regulatory asset effort and has not heard a determination.

Corporation Commissioner Kim David, one of two commissioners who sat in on the hearing’s three days of testimony even though no official vote would be taken, expressed her curiosity about the move by PSO regarding the IRS.

“Based on everything I’ve heard this morning, the question about the IRS letter, are you not asking the commission to approve something that we don’t really know the final answer is?”

Horeled admitted, “That is true….but we really think this is the way to hold customers harmless of both outcomes.”

Administrative law judge Linda Foreman said she would take the matter under advisement. Minutes later, Corporation Commission Chairman Todd Hiett, who sat in on the hearing, said he could not support the stipulation as it has been drawn up.