Oklahoma Corporation Commissioner Bob Anthony came out Wednesday with a claim that the constitutional rights of ratepayers are “repeatedly violated” because the attorney general is “trying to represent competing interests at the same time.”
While critical of the situation for Attorney General Gentner Drummond, Commissioner Anthony also praised Drummond’s for finally carrying out an investigation into the historic natural gas prices that led to billions of dollars in 2021 Winter Storm costs heaped on ratepayers.
Anthony pointed out how Drummond’s office not only has to represent the rights of major utilities, but also ratepayers and so its interest in such cases are at odds with one another. State statutes require the Attorney General to represent “all utility customers” in cases at the Corporation Commission and beyond, as well as to serve as the state’s chief law enforcement officer, which might involve prosecuting wrongdoing at the Corporation Commission.
Anthony pointed out that at the OCC’s November 21 meeting, the same assistant attorney general who argued on behalf of the attorney general’s motion to modify the PSO rate increase order also reported he had been communicating with the commissioners’ offices about the Winter Storm Uri subpoena. Court records show Assistant Attorney General Chase Snodgrass was himself involved with the winter storm bond cases in 2021 and 2022.
“Clearly there is no ‘Chinese wall’ at the Attorney General’s office,” Anthony observed.
In an 11-page opinion filed Wednesday, Anthony said the utility regulation at the Corporation Commission is “broken” and the Commission is “failing to protect the due process rights of all the parties in utility cases—especially residential ratepayers.
The opinion was filed in both the recent PSO rate case and in an ongoing OCC Notice of Inquiry (NOI) “to identify and examine alternative ratemaking methodologies.” Some of the public comments in the NOI have questioned whether the OCC is suffering from “regulatory capture.”
In his opinion, Anthony called attention to the fact that his two fellow commissioners, Todd Hiett and Kim David, changed their decision on a PSO rate order last week…an order approved on a 2-0 vote with Anthony basically abstaining. On November 21, they adopted a new rate order after the attorney general, who had publicly criticized their first vote, issued a subpoena to the entire Corporation Commission for communications about February 2021’s Winter Storm “Uri” and the ratepayer-backed bonds the OCC approved.
“Whether or not my fellow commissioners were influenced to change their votes on the A.G.’s rate cap by the fact that the A.G. simultaneously had them over a subpoena barrel, for a quasi-judicial agency like the Corporation Commission, the entire situation is legalistically bizarre and creates appearances unbefitting a Court of Record,” Anthony wrote.
Anthony has been crying foul about the winter storm costs – and especially the ratepayer-backed bonds the OCC approved to finance them – for more than two years. “I opposed securitization, voted against it, and have repeatedly called the Winter Storm and its unnecessary $2 billion securitization scheme ‘the largest fleecing of the Oklahoma ratepayer in the history of the state,’” wrote Anthony.
He said, timing aside, he was encouraged by the attorney general’s November 7 subpoena because “it appeared someone was finally investigating the whole scope of possible wrongdoing – including public corruption – I had exposed more than a year ago.” In September 2022, Anthony filed a 74-page “Report Card on Securitization: Anatomy of a State Government Screw-Up,” detailing what he called potential evidence of widespread wrongdoing surrounding the multi-billion-dollar bond deals.
In the 14 months since, Anthony has made several additional filings describing ongoing “obstruction” of his investigation into the alleged wrongdoing as well as millions of dollars in newly-uncovered “cost discrepancies.” In his filings, he says it appears Wall Street banks were paid hundreds of thousands more than they bid to underwrite the bond deals, and that millions more dollars of bond expenses were improperly passed through to ratepayers.
In September 2023, Anthony called for independent audits of the winter storm bonds that he claims are required by law but being all-but-ignored by the OCC. On September 15, OCC Chair Todd Hiett had sent a one-page audit of ONG’s $1.3 billion in bonds to the governor, house speaker and senate pro tempore. Anthony blasted it as “ludicrous,” “pitiful,” “farcically inadequate,” and “another attempt at whitewash and cover-up.”
He had similarly harsh criticism for the fact that the November PSO rate increase orders approved by Commissioners Hiett and David made no mention of PSO’s winter storm bond expenses. “Despite a billion-dollar cost overrun versus the estimates, $200 million of which is specifically attributable to PSO’s bond issuance, in the year since the 2021 Winter Storm bonds were issued, no audit of the actual costs–original or ongoing–has ever been conducted. The silence of today’s order on this subject is deafening,” Anthony wrote in a six-page dissenting opinion on November 3.
On Wednesday, Anthony complimented Attorney General Gentner Drummond for his willingness to publicly acknowledge the possibility of unlawful activity, saying, “As the third Oklahoma A.G. to examine the storm costs, Gentner Drummond should be commended for being the first to publicly denounce the profiteers for their “billions of dollars in ill-gotten gains.’” But he went on to point out multiple times in recent years when he says utility “ratepayers’ due process rights were violated,” especially after the 2021 Winter Storm.
Anthony quoted a lengthy Concurring Opinion filed in May 2022 in the OG&E bonds case at the Oklahoma Supreme Court in which Justice Doug Combs chastised then-Attorney General John O’Connor for refusing to intervene in the 2021 Winter Storm bond cases. The Court had explicitly asked the attorney general to intervene after about two dozen protests against the bonds were filed by individual ratepayers at the Supreme Court.
“The utility consumers that the Attorney General should be representing have effectively been left without representation. Their access to counsel lies with the Attorney General. Yet he has failed them,” Justice Combs wrote, with Justice Noma Gurich joining.
Anthony implied it happened again this spring in the OCC’s fuel cost and prudence review cases for OG&E, ONG and PSO’s $6+ billion of 2021 fuel procurement processes and costs, including from the February winter storm. In those cases, Anthony asserted, utility customers were never directly notified that they had a right to file complaints – a violation of their due process rights guaranteed under the U.S. and Oklahoma constitutions.
In addition, Anthony said residential ratepayers’ only legal representative, the attorney general, “declined to cross-examine” OCC witnesses in detail about what was or was not examined in the agency’s “prudence review” (like the utilities’ contracts to purchase gas at highest-in-the-history-of-the-nation prices). He added the A.G. also “declined to cross-examine utility company witnesses” about natural gas market manipulation, the bonds’ billion-dollar cost overruns, or the millions in bond “cost discrepancies” Anthony had already pointed out in public filings.
Anthony wrote that given mounting evidence of “natural gas market manipulation by companies who also did business in Oklahoma during the 2021 Winter Storm,” the attorney general should have appealed those April OCC orders declaring everything about OG&E, ONG and PSO’s $6+ billion of 2021 fuel costs to be “prudent, fair, just, and reasonable.” Anthony allowed the attorney general may have had other reasons for not doing the things he did not do when representing ratepayers in the 2021 fuel cost cases, but allowing those witnesses and orders to go unchallenged “was certainlly not in the ratepayers’ interest.” In early November, Anthony suggested those “overly-broad”prudency orders could hurt a future case against market manipulators and other wrongdoers.
“It is increasingly inappropriate for the Attorney General to be put in a position of representing disparate interests at the Corporation Commission at the same time,” Anthony wrote on Wednesday. “The Attorney General is being statutorily required to wear too many hats. When his different interests are competing or even opposing, and the Corporation Commission fails to protect the due process rights of all parties, not only does someone lose out, their constitutional rights are violated in the process. Recently, ratepayers’ constitutional rights have been trampled to the tune of almost $5 billion. It is disgraceful and unacceptable.”
Anthony pointed out that many other states have addressed this issue by appointing an independent, separately-funded, ratepayer advocate to represent the interests of residential ratepayers before their state utility commissions. He named about twenty states, large and small, red and blue, that do so and said, “Whether by initiative petition or direct legislation, Oklahoma should consider appointing an independent ratepayer advocate.”
Read Anthony’s full opinion here:
https://public.occ.ok.gov/WebLink/DocView.aspx?id=14213148