ROFR, PBR, cash and the Oklahoma Legislature


It is a big day at the Oklahoma State Capitol. The Oklahoma Legislature returns to session and depending on your viewpoint of legislators, can be a circus or a scary time for voters.

We’ll be paying attention to how much focus on energy the Governor gives in his annual State of the State Address and certainly to energy-related bills drawn up the Senators and Representatives.

We know that two measures of importance will be ROFR and PBR bills. ROFR or Right of First Refusal came in the form of SB 498 introduced last year by Sen. Lonnie Paxton, then the measure was withdrawn. Whether it ran into head-strong opposition or whether the Senator decided more study should have been conducted, we don’t know.

We do know, Sen.Paxton chaired a Senate  Energy and Telecommunications Committee study last October, at which time he promised, “We’ll keep the best interests of Oklahoma ratepayers at the forefront of our decision-making as we continue studying this important issue.”

The ROFR topic, along with Performance Based Ratemaking in the form of the Ratepayer Protection Act of 2023 by Sen. Pro Tempore Greg Treat and House Speaker Charles McCall, received studies by Paxton’s Committee and also by the Oklahoma Corporation Commission.

Both measures, introduced in the 2023 session, were withdrawn last year and because this is the second session of the 59th Legislature, they are eligible to be brought up again.

Treat’s SB1103 did not get a Senate floor hearing before a March deadline last year. In committee, he amended his bill by removing the ROFR language.

ROFR has its major supporters in most of the state’s utilities, who want the right to build their own major electrical transmission lines without competition bidding. Utilities are mum about what they expect from the legislature this year, but certain observers believe they have amassed a large warchest to finance lobbying of legislators to gain support for their ROFR bill. In other words, those observers expect to see a lot of money infused into the political coffers of legislators.

ROFR also has its opponents, who contend competitive bidding, required for transmission lines over 300 kV, results in lower construction costs. The issue of the transmission line development resulted in a Federal Energy Regulatory Commisssion ruling in the form of Order 1000 in 2011. It allows regional transmission groups, such as the Southwest Power Pool that regulates Oklahoma, to use competitive bidding for line develpment. Two years later in 2013, the Oklahoma legislature approved a law allowing utilities to have ROFR to build electric transmission lines at 300,000 volts and under. But now those utilities want the ROFR power for lines greater than 300 kV.

Utilities argue the ROFR would allow them to build such transmission lines on a faster basis and result in increased cost stability to the state’s electric rates. OG&E took quick note of the ROFR bill filed last year by Senate leader Great Treat.

“We appreciate Senate Pro Temp Greg Treat for authoring this electric power industry legislation and starting the conversation around rate stability and predictability, which our customers continue to tell us are important to them,” said Ken Miller, OG&E vice president of public and regulatory affairs.

Miller, the former State Treasurer who went to work for OG&E, contended ROFR would provide for gradual infrastructure investments and greater transparency by adding rate reviews annual rather than the current system of every three to five years.

One group steadfastly opposed to ROFR is the Oklahoma Industrial Energy Consumemrs, lead by executive director Tom Schroedter. He also opposes SB 1103, the Performance-based Rate plan bill, which he contends would strip the Oklahoma Corporation Commission of the right to determine if such a rate plan is in the best interest of consumers and the publicc.

“So, if Senate Bill 1103 is enacted, the Corporation Commission would have to grant a utility’s application for a performance-based rate plan. So that is taking away the sole authority of the Corporation Commission to regulate public utilities and their rates as they should.”

Corporation Commission chairman Todd Hiett also expressed his opposition to PBR, telling senators at one point last sessiion that performance-based ratemaking is already allowed under the Commission’s authority.

“There have been numerous requests in litigated cases to have a form of PBR for electric utilities and these have yet to be supported  by the Corporation Commission’s Public Utillity Division,the attorney general or consumer groups.”

However, former Corporation Commissioner Jeff Cloud  who is the executive director of Alliance for Secure Energy, took a difference stance last session. He noted that in its current form, SB1103 would extend the same protections that natural gas customers already enjoy to electricity customers.

“As former chair of the Oklahoma Corporation Commission, I believe this process will improve cost predictability and increase regulator efficiency and ability to ensure that customer rates are fair, just and reasonable.”

Those three words, “fair, just, reasonable” are at the heart of the debate by proponents and opponents. Look for them to be thrown about in any debate, whether it be in a legislative committee or on the floor of the Senate and House.