The growing issue of Right of First Refusal for utilities in Oklahoma comes down to one big question….is it a financial benefit for their customers or will it harm them?
Those for ROFR, as it is typically called and those who contend consumers will be hurt by such a law, made their case this recent week during a technical hearing presented to Oklahoma Corporation Commission Chairman Todd Hiett. He was the only of the three commissioners to personally attend the hearing where utility representatives and consumer groups squared off in a gentleman-like presentation.
The same presenters went before an Oklahoma State Senate interim study in October and their Corporation Commission arguments were echoes of what was said to legislators.
The technical hearing was the result of a Notice of Inquiry made earlier in the year by the commission and several questions were posed about the possibility of a ROFR law being reinstalled in the state.
The utilities clearly want the ability to build larger transmission lines without being forced to take competitive bidding for the costly projects. And the consumer groups clearly oppose it, contending a ROFR law would only mean higher rates for customers.
“I can tell you with certainty, that a reinstatement of ROFR would mean you retain oversight,” Emily Shuart, Director of Regulatory Services at OG&E said during the presentation, explaining that the Corporation Commission would have a direct say about such large projects.
“There would be more cost oversight,” she added,” and it would be a benefit to ratepayers.
That’s where others disagree.
“We don’t believe it would benefit Oklahoma ratepayers,” claimed Thomas P. Schroedter, Executive Director and General Counsel of Oklahoma Industrial Energy Consumers. “Expanding ROFR would increase costs for ratepayers.”
He argued by giving ROFR to utilities such as OG&E and PSO would be “bad public policy” and “they’ll have a monopoly on the market.”
Schroedter went so far as to call for an elimination of the existing ROFR law down to 100 Kv, rather than the 300,000 volts set in the 2013 law created by the legislature. It was in 2011 when the Federal Energy Regulatory Commission issued an order that allows regional transmission groups, such as the Southwest Power Pool which includes Oklahoma, to use competitive bidding for transmission project development.
NextEra Energy, the Florida-based company with wind farms located throughout Oklahoma, is also opposed to expansion of ROFR. Executive Director Matt Pawlowsky spoke at the technical presentation, pointing out what he called as “misconceptions” thrown out in the discussion. He advocated for competitive bidding on major transmission line projects.
“Competition is like sharpening your pencil,” he said.
Still, the utilities pressed their case.
“The opponents fail to recognize you commissoners have a say,” responded Matt Horeled, Vice President of Regulatory & Finance with Public Service Company of Oklahoma. “They’re saying they don’t want your oversight.”
OGE’s Shuart said without a ROFR law, the corporation commisson will not have an opportunity to review the cost of a project.
“The only way you’ll have oversight is reinstatement of ROFR,” she added. “There is too much superficial shallow information floating around here.”
She made the argument that competitive bidding could result in out-of-state companies in charge of transmission lines and their response to emergencies would be delayed or different than that of in-state firms.
“When the bad times come—who you gonna call?”
NextEra Pawlusky had a different opinion, pointing out his company has in-state workers.
“What you want to focus on is the consumers in Oklahoma—what are we doing for the reliability and the cost savings for those consumers.”
Schroedter with the OIEC charged the utilities are fighting for ROFR because competitive bidding would be “an active threat to their corporate profits.”
“I did not hear anything the utilities said that introducing ROFR would increase their reliability–it was just rhetoric. I didn’t hear any facts or figures or empirical data. There is empirical data that shows competition can reduce costs.”
He said studies have shown that competitive bidding can bring savings as much as 40% below what the incumbent utility would have built.
“Competition is going to bring benefits.”
While Empire District Electric Company did not make arguments during the presentation, a spokesman said it supports the comments of ROFR advocates.
Another group, AARP spoke briefly against ROFR saying competition is good and drives down prices.
What is most likely to occur now is in the hands of legislators. Bills for ROFR are expected to be introduced in the 2024 legislative session.