Empire District Electric Company, one of three companies to recently notify the Oklahoma Corporation Commission of its intent to use a new controversial state law allowing depreciation expenses, contends the move will not immediately affect its ratepayers.
In a letter to the Corporation Commission’s Public Utilities Division, Empire District Director of Legal Services, Diana C. Carter explained, “The creation of the above-referenced regulatory asset by the Company will have no immediate impact on customers and the Company’s rates.”
Empire as well as Public Service Company of Oklahoma and Oklahoma Gas and Electric became the first utilities to take advantage of a new law that took effect at the end of August. It has two impacts. One allows utilities to seek and win approval of rate hikes for CWIP or “Construction While in Progress” projects, meaning ratepayers could see higher rates while a project is being built. The second section of the law also allows utilities to defer to a regulatory asset 90% of all depreciation expenses and return associated with “qualifying electric plant.”
It is the second section that did not receive the publicity as section one when SB998 was introduced in the legislature. The bill was approved by the House and Senate and allowed to become law without the signature of Gov. Kevin Stitt.
Corporation Commissioner Todd Hiett, in an interview this week with OK Energy Today, said it was a “real detriment to consumers” because it could allow a utility to defer the 90% of all deprecation expenses for 2 years before it applies for a rate hike case.
“Section Two was overlooked and it’s amost as bad as Section One,” remarked the Commissioner who also called the law “bad policy” and said its constitutionality should be challenged with the Oklahoma Supreme Court.
The new law in which Empire District made its request is 17 Oklakhoma Stat. 286A as pointed out by Carter, Empire’s attorney.
“Senate Bill 998 contains a new provision of law, codified at 17 Okla. Stat. 286A. This law allows public utilities to make an election regarding the regulatory accounting treatment commonly referred to as “plant in service accounting”.”
She stated the creation of the regulatory asst by the Company will have no immediate impact on customers and the company’s rates.
“As detailed in 17 Okla. Stat 286A, the qualifying electric plant related to the depreciation expense and return deferred to the regulatory asset will be reviewed for prudence in a later general rate case proceeding” added Carter.
Empire District, headquartered in Joplin, Missouri has a reported customer base of 218,000 across Oklahoma, Kansas, Missouri and Arkansas. In 2016, the utility served 12,000 to 15,000 people in Oklahoma or 5% to 6% of its total customer base.