Supreme Court rules against OGE in battle with Corporation Commission

In a split decision, the Oklahoma Supreme Court ruled in support of an Oklahoma Corporation Commission ruling against OG&E’s attempt in 2018 to provide electrical services outside its certified territory in southeast Oklahoma.

It was 5-3 decision by the supreme court with one justice “disqualified” from the appeal brought by Oklahoma Gas and Electric Company following the denial by regulators to provide service to the Tall Oak Woodford Cryo Plant in Coal County. People’s Electric Cooperative challenged OGE, contending the plant is located in People’s certified territory which granted it exclusive rights to provide electricity under the Retail Electric Supplier Certified Territory Act (RESCTA).

It was in 2017 when Tall Oak Midstream III, LLC, based in Edmond announced plans to construct a natural gas gathering system covering stacked pay zones including the Woodford, Caney and Mayes formations. The company said its system would span Hughes County and parts of Seminole, Pontotoc, Coal, Pittsburg, Atoka and McIntosh counties.

People’s Electric, a rural cooperative that serves 16,000 members in 11 south central counties contends OGE’s service to the Woodford Cryo plant is in violation of the Retail Electric Supplier Certified Territory Act. Headquartered in Ada, People’s Electric supplies electricity to customers in  Atoka County, Carter County, Coal County, Garvin County, Hughes County, Johnston County, McClain County, Murray County, Pittsburg County, Pontotoc County and Seminole County. This service area, extending 43 miles east, 36 miles west, 36 miles north and 37 miles south of Ada, contains approximately 4,500 miles of distribution and transmission lines.

As the Supreme Court explained, the Oklahoma Corporation Commission enjoined OG&E from serving the Plant, finding that OG&E was not “extending its service” as authorized by RESCTA. The Commission determined that a retail electric supplier may not use third-party transmission lines to extend its service into another supplier’s certified territory under the Large Load exception. OG&E appealed the decision.

The Supreme Court of the State of Oklahoma reviewed the case and upheld the Commission’s determination. The Court held that Article 9, Section 20 of the Oklahoma Constitution requires a limited review of the Commission’s order. The Court affirmed the Commission’s interpretation that the Large Load exception does not permit a supplier to use third-party transmission lines to extend its service into another supplier’s certified territory. The Court’s decision applies prospectively only and does not affect existing retail electric services and facilities established under the Large Load exception.

The justices who sided with state regulators were Dustin Rowe, Dana Kuehn, Richard Darby, John Kane and Robert Bell.

Dissenting opinions were offered by Justices James Winchester, Douglas Combs and Noma Gurich. Justice James Winchester was disqualified from the case, according to the Supreme Court announcement.

In opposing the final decision, Justice Winchester wrote, “Today’s pronouncement endorses the Commission’s subjective policymaking at the expense of the RESCTA’s plain language by imposing restrictions on the Large Load exception which were not expressly carved out by the Legislature.”

Justice Gurich added, “The majority opinion is based entirely on the interpretation of statutory law included in the Retail Electric Supplier Certified Territory Act (RESCTA), which was enacted over 50 years ago, without regard to the technological advancements that have taken place in that time. The majority mistakenly overlooks the fact that since the RESCTA’s enactment in 1971, the Legislature has indicated its intent to keep apprised of the changing technology relating to the electric industry and has endeavored to create competition in that space.”

She concluded, “This Court should not ignore the clear legislative intent, repeated many times since 1971, which recognizes that technological advances provide consumers with a more competitive price and access for retail electric power without requiring duplication.”