State Treasurer won’t seek audit of $250,000 reimbursement in winter storm bond package

  • February 28, 2024

 

 

The Oklahoma Treasurer’s office doesn’t believe the recent return of $250,000 by a bond underwriter who handled bonds covering utility costs in the 2021 Winter Storm Uri will lead to other such “redeposits.” The office also doesn’t intend to ask for an audit of the overpayment.

It’s what Jordan Harvey, Chief of Staff for State Treasurer Todd Russ said in response to inquiries by OK Energy Today following the return of the money by the RBC Bank of New York City. The bank underwrote the bonds used by Public Service Company of Oklahoma.

“We don’t anticipate any other over charges by other banks involved in the bond packages, but as you know this was a unique situation as a whole.”

The bank was originally paid $2,894,367.43 to underwrite PSO’s $700 million ratepayer-backed bond issuance in September 2022. It was nearly a year later when the overpayment totaling $250,000 was returned.

As reported earlier this month, the redeposit led Oklahoma Corporation Commissioner Bob Anthony to suggest it should prompt a thorough and deep audit of the controversial funding mechanism approved by the legislature and used by OG&E, ONG and PSO.

“At this point, the Treasurer trusts that the State Auditor is fully capable of engaging her office in an audit if she deems necessary,” answered Harvey during an email exchange with OK Energy Today.  However, when asked about such an audit, the State Auditor’s office referred questions to the Treasurer.

Harvey explained the redeposit “was the result of a difference between the assumed cost of services and actual cost of services provided by Paul Weiss as underwriters counsel to RBC on the transaction.”

The Chief of Staff said the fee quoted on RBC’s RFP response showed the services of Weiss was to be $375,000 plus out of pocket expenses.

“This was the amount expected to be remitted by RBC at closing. However, upon final reconciliation of all invoices from Paul Weiss, the total billed was only $125,000. As a result, RBC redeposited the remainder,” added Jordan.
Jordan said by contrast, on the OG&E transaction on which RBC served as bookrunner/senior manager, Weiss was already engaged by OG&E as external counsel and therefore RBC had to use another firm not listed in its RFP response, Sidley Austin. the other two firms quoted in the RFP response were also already engaged on the transaction.
“The fees and expenses for the services of Sidley Austin far exceeded what was deemed to be the maximum amount permitted under the Financing Order and bond documents, and as a result RBC had to cover costs that exceed that amount (roughly $350,000).”
Jordan also said the funds held were not remitted back with interest  “to the best of our knowledge.”
The handling costs of the bonds that allowed the utilities to extend consumer repayments for 25 to 28 years have been the main target of Corporation Commissioner Anthony’s criticism. He has maintained the costs added billions more to the long-term payments being made by ratepayers and they should be audited at length. The commissioner has contended consumers should not be paying for the legal costs of the utilities.
He also was critical of the Corporation Commission’s one-page audit of each of the bond issues used by the major utilities.
OK Energy Today sought responses from the remaining two commissioners, Todd Hiett and Kim David who approved the one-page audits on 2-1 votes. They have not responded.

 

Jerry Bohnen