ROFR and PBR opposed by Corporation Commission’s Public Utilities Division



For the record, Oklahoma’s ROFR or Right of First Refusal Bill, died in the just-concluded legislative session. At the same time, Oklahoma Corporation Commissioners were urged by their Public Utilities Division not to adopt ROFR or another controversial rate-making proposal called PBR or Performance Based Ratemaking.

Commissioners were recently given a 37-page recommendation to remain with their current ratemaking system. The recommendation from the Public Utilities Division came after the commission opened a Notice of Inquiry in August of last year and held public sessions where it heard from ROFR and PBR supporters—i.e. Oklahoma Gas and Electric and Public Service Company of Oklahoma.

“We believe the existing mechanism provides quite a bit of flexibility for this process of regulating utilities,” explained PUD Director Mark Argenbright in a presentation to the three regulators. He said the PUD staff concluded the proposed alternative ratemaking methods “fell a bit short and caused us concern in terms of impact on consumers.”

Argenbright added there was concern about the impact PBR, the method where utilities would present annual requests for rate hikes, would have on the oversight by commissioners.

“Probably better to stay where we are,” he stated.

Regarding Right of First Refusal, which would have allowed utilities to conduct transmission line construction projects without competitive bidding, Argenbright said, “a competitive bidding model is gonna get you closer to an environment where you’re gonna control costs—so we do not recommend the Right of First Refusal.”

OG&E and PSO supported ROFR and PBR considerations in the legislature and before the commission.

“We disagree with staff recommendations,” stated Kimber Shoop, director of regulatory affairs at OG&E.  “We think it’s a good plan. It certainly works for gas utilities and what’s good for them should be good for us.”

He disagreed with the PUD’s conclusion that Performance Based Ratemaking would not be good for customers.

“The PBR we have been proposing both here and at the legislature would require us to return or refund any excess earnings that we receive in a given year and an annual process allows us to do that.”

But Thomas Schroedter, director of the Oklahoma Industrial Energy Consumers supported the PUD recommendations.

“They concluded PBRs are not good for customers—the bottom line is those methods of ratemaking are not good for customers. They simply don’t protect customers like the traditional process does.”

He felt the same regarding PUD’s stance against adoption of ROFRs.

“Competition–competition is going to bring the lowest reaonable costs and I think competition has been around and it’s here to stay,” added Schroedter.

Commissioner Kim David disagreed with the PUD report, noting she had been the only commissioner to publicly support the Right of First Refusal measure in the legislature.

The ROFR bill died in the legislature despite winning approval in one of the houses. A similar attempt made in the 2023 regular session did not advance as well, despite have strong support from the two major utilities in the state.

Commissioners could not technically close the Notice of Inquiry and gave respondents two weeks to file any written response before taking a vote on a formal order.