Oklahoma’s Corporation Commissioners are bracing for an anticipated flood of new rate requests thanks to a new law that utilities lobbied to get, but is one that Commissioners opposed and now believe it could be unconstitutional.
The bill that one attorney charged stripped Oklahoma Corporation Commissioners of their authority in how quickly they handled utility requests for natural gas expansion is now law. It’s also the law that will allow utilities to force ratepayers to start footing the bill for new projects while they are under construction.
SB998, the measure that Gov. Kevin Stitt allowed to become law without his signature, took effect August 29 and forces state regulators to handle utility requests within 180 days of filing, not the 240 days that they previously were allowed.
It is a law that not only received criticism of some Corporation Commissioners during a mid-August meeting, but of attorney Thomas Schroedter with the Oklahoma Industrial Energy Consumers group. The Tulsa attorney raised questions at the meeting about the constitutionality of the law and explained it defies Article 9, Section 18 of the state constitution.
He called the “180 day thing” a real problem, adding, “It does strip you of your authority and we believe the legislation, 998 is unconstitutional because it usurps your authority.” He further contended the law is “deficient and cconflicts and violates” other articles of the constitution.
Authored by Sen. Grant Green, R-Wellston and Rep. Trey Caldwell, R-Faxon, the measure provoked Commissioners to be skeptical about its legality. Commission Chair Kim David questioned it during the August 12 meeting. So did Commissioner Brian Bingman who suggested the Commission “could raise the issue” with the state supreme court.
But new applications by utilities seeking approval for their projects under the new 180-time frame have not been filed so far. However a pre-approval was projected last week to be filed by Public Service Company.
But they are expected soon because, as the OIEC’s Schrodter noted, some utilities lobbied the legislature for the measure to become law.
It was in May when the Corporation Commission voted to come out unanimously against the bill, which also allows utilities to charge customers or ratepayers while new utility plant construction is underway, a term known as Construction Work in Progress or CWIP.
“SB998 only benefits the utility company at the expense of the ratepayer, who will be forced to fund these projects prior to receiving the benefits,” Commission Chairman Kim David said in a press statement following the vote.
“The Construction Work in Progress (CWIP) issue as imagined in SB998 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.”
The passage of SB998 also prompted Oklahoma Gas and Electric to withdraw a request it had filed prior to the legislature’s approval. The original request for a “modification of rates” was made May 16 by the utility but a week later, it was withdrawn as Kimber Shoop, Director of Regulatory at OG&E cited the recent passage of SB998 as the reason.
“This new law impacts the timing of when OG&E files rate reviews and allows OG&E to avoid a rate review this summer,” he stated. “OG&E remains committed to providing reliable energy at the lowest cost possible. We will continue to keep customers informed of any changes.”
As OK Energy Today reported last week, OG&E advised its customers in the past few weeks of its intention to seek higher rates. It explained the rate hikes were necessary to meeting growing electrical power demands. The utility said one of the projects was the construction of two additional natural gas combustion power generation units at its Horseshoe Lake Power Plant in eastern Oklahoma County.
“These projects were selected after demonstrating a significant need for new electric generation and conducting a competitive bidding process to identify the lowest cost options,” stated the notification. “This new electric generation is critical to provide you with even more reliable and resilient electric service as we plan for the future.”
With “laddered increases” beginning in 2026, the average residential customer of OG&E could be paying nearly $5 more a month by the time the funding of the power expansion projects are completed.
It would mean another $1.38 a month in 2027; $3.32 in 2029; $4.55 in 2030 and $4.81 in 2031 for t he residential customer.The increases would be greater for other customers such as the General Service customer whose bill by 2031 would be increased by $5.97 a month. The average Power & Light customer would see a jump of $100.21 a month by 2031. But the Large Power and Light customer would see monthly increases of $863.60 in 2026; $1,802.00 in 2027; $2,618.00 in 2038; $3,678.80 in 2029; $4,569.60 in 2030 and $4,651.20 in 2031.