Governor Kevin Stitt allowed a controversial utility bill to become law without his signature on Wednesday and opponents of SB998 suggested a constitutional challenge is coming. They also were not happy with the governor’s handling of the measure that opponents contend will lead to immediate costs for consumers.
The measure is controversial because it allows utilities to use a WPIC or work in progress maneuver to charge ratepayers while projects are under construction rather than waiting to recover costs after completion of the project. But Gov. Stitt, in announcing a budget deal claimed the measure will “allow more energy generation” and “create a more reliable and affordable energy grid.”
The Corporation Commission, chaired by Kim David, had voted in late April to oppose the measure and on Wednesday, she indicated displeasure at the governor’s decision.
“I’m very disappointed that the Governor chose not to veto SB998. The question of whether a utility should be allowed to implement an immediate rate increase for new power generation should be evaluated on a case-by-case basis—not granted as a blanket policy.”
The commissioners had raised the issue that the bill removed some of their constitutional duties and responsibilities and could face a legal challenge.
Commissioner David hinted again at it in her statement to OK Energy Today.
“On the topic of whether or not we will challenge this at the Supreme Court still has to be decided and voted on by the Commissioners.”
She had earlier explained the CWIP “goes against 100 years of ratemaking principles and usurps the constitutional duty of the statewide-elected Corporation Commissioners to keep rates fair, just, and reasonable.”
“Utilities have not sought the ability to recover CWIP before a plant is designated as ‘used and useful’ in over a decade,” David continued. “If a utility believes this is in the ratepayer’s best interest, then it should file a case and present its best arguments instead of asking the Legislature to mandate this approach.”
Commissioner Todd Hiett, during an April discussion expressed the same constitutional concerns.
“Consumers take the construction cost risk for the investment without realizing any benefit for many years while the utility profits from the investment,” Hiett said. “This radical approach shifts the burden from shareholders to customers to fund capital investment and allows for a utility to profit from this investment before it produces electricity.”
Commissioner Brian Bingman also questioned the CWIP
“People only have a handful of dollars to spend and if they’re paying for service they won’t receive for years, maybe they’d rather use that money to pay off a high-interest credit card instead.”
The governor’s decision caught him off guard on Wednesday.
“I understand that the Governor did not sign 998, I guess I was a little surprised that he didn’t sign. As for any constitutional challenge , no comment at this time.”
Gov. Stitt had been pressured by the AARP Oklahoma and Americans for Prosperity-Oklahoma. When asked whether the AARP might make a legal challenge, State Director Sean Voskuhl answered, “We’re exploring our options now including a legal challenge. We’ll definitely have more to tell you later.”
During debate for a vote earlier this month in the state House, author Rep. Trey Caldwell refuted claims the bill will lead to higher costs.
““This piece of legislation will lower the overall cost to your mom and pop ratepayer when it comes to the additional costs that are coming,” he promised. “Whether if we do nothing or if we do something, there will be a plethora of generation, transmission and distribution needs across the state of Oklahoma over the next decade.”
During the same House debate, Rep. Nick Archer, R-Elk City disagreed with Caldwell, painting a picture of utilities attempting to change the law to add to their profits.
“While families are tightening their budgets—all across the state, regulated monopolies were reporting record earnings—they’re not struggling, they’re not—they’re thriving.”
In allowing the bill to become law, Gov. Stitt offered no statement. However, in an announcement of a budget deal reached with legislative leaders, he made it clear the energy bill was part of the deal.
An energy bill was part of the agreement as explained in the announcement in which it said included “Expense recovery for utilities which will allow more energy generation and create a more reliable and affordable energy grid.”
The budget deal included an agreement aimed at cutting taxes, investing in key infrastructure and strengthening Oklahoma’s business-friendly climate.
The announcement explained that the agreement includes a quarter-point tax cut to the state income tax, a consolidation of income tax brackets and a true path to zero income tax, ensuring that Oklahoma stays competitive with surrounding states.
“Our agreement shows the kind of leadership that Oklahomans expect— fiscally responsible, conservative governance,” said Governor Stitt. “We’re delivering a tax cut for every Oklahoman, investing in critical infrastructure, public safety and education, and making smart, one-time investments that will strengthen Oklahoma for the long haul.
In the press release from his office, Gov. Stitt did not refer to SB998 by name, but referenced his decision.
“In addition to an income tax cut and budget, the parties also agreed to significant business friendly policy proposals including:
- Behind the Meter which will allow large scale manufacturers and data centers to build their own power generation.
- Business courts which will create courts to handle complicated business matters in an efficient and knowledgeable manner.
- Tort reform which will protect rural doctors and business owners from out-of-control economic damages and frivolous lawsuits.
- Expense recovery for utilities which will allow more energy generation and create a more reliable and affordable energy grid.”