A challenge to the Supreme Court of Oklahoma’s new Construction Work in Progress could be the constitutional challenge some had argued was needed when the law was created in 2025 by the state legislature.
Oklahoma Gas and Electric Company contends in its Supreme Court challenge of a Construction Work in Progress denial by state regulators that the regulators not only were wrong in their decision but misinterpreted the new state law allowing CWIP.
The utility filed its challenge last Thursday, hours after the Corporation Commission voted 2-1 to deny OG&E’s CWIP request covering the costs of constructing two new gas-powered generating units for its Horseshoe Lake Power Plant in eastern Oklahoma County.
The filing, Case Number 123848, indicated the case came down to the definition of one word, “shall” and what was meant by the world “shall” in the law enacted last year by the state legislature.
“This appeal presents a significant question of first impression: whether the Legislature meant what it said, when it provided that “[t]he Commission shall permit” CWIP recovery once two conditions are met: (1) construction of the electric generation facility was approved under 17 O.S. § 286(C); and (2) the facility utilizes natural gas as its primary fuel source. 17 O.S.§
286(C)(6) (emphasis added). The Commission determined the Legislature did not.”
OGE further claimed the order signed by the commissioners contained “conflicting analysis” when the “Commission concluded that its own rules allow it to depart from the statute and effectively adds limitations not found in the law.”
“The Legislature did not grant the Commission latitude—much less “the widest possible latitude”—to deny CWIP where the statutory conditions are satisfied.”
OG&E contends it did meet the statutory conditions and that the order should be reversed. In summarizing its appeal, the utility said there are three issues on appeal and the first is whether the Corporation Commission “erred in dismissing” the CWIP request after it had previously approved the construction of the new natural gas-fired electric generating facility.
The second issue on appeal, according to OG&E is whether the Commission “misinterpreted” the state law in concluding it does not entitle OG&E to recovery of CWIP expenses.
The third issue, according to OG&E was whether the Corporation Commission has authority to permit recovery CWIP after approving the construction.
The state CWIP law took effect in August 2025 after Corporation Commissioners came out in opposition to it after it had been filed as SB998 in the legislature.
“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 May 2025. “The Construction Work in Progress 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.”
OG&E initially filed a request prior to the bill becoming law, then refiled the request with the CWIP addition after it took effect at the end of August.
OGE issued a statement last Thursday following the commission’s denial, indicating it planned an immediate challenge before the Oklahoma Supreme Court.
““OG&E is disappointed the Oklahoma Corporation Commission (OCC) ignored state law by dismissing OG&E’s request to apply Construction Work in Progress (CWIP) for Horseshoe Lake units 13 and 14, which would save customers $173 million over the life of the units.”
Under CWIP, the utility could immediately charge consumers with the costs of the construction project while the consumers would not see benefits until the completion of the project.
Even as SB998 was being considered in the legislature, attorney Thomas Schroedter, executive director and attorney for the Oklahoma Industrial Energy Consumers said a constitutional challenge was needed. He later predicted, in an interview for Scott Mitchell talks energy with Jerry Bohnen, that one was likely in 2026.
“If the Oklahoma Corporation Commission issues an order approving C-WIP, which I hope they don’t, I hope the Corporation Commission determines that the statute is unconstitutional—But if they don’t, you will see an appeal before the Oklahoma Supreme Court once a commission order is entered and that will likely be this year—next year 2026. So yes, you’ll see that coming.”
Opponents argue that CWIP laws violate the constitutional duty of utility commissioners to ensure rates are “fair, just, and reasonable” by forcing customers to pay for projects that provide no immediate benefit.
As OK Energy Today reported in December 2025, the Manhattan Institute issued a report critical of CWIP. One of the authors was a Tulsa University professor, Jason Walter. He and the two other authors called CWIP a “hidden tax” on consumers and its use was in essence a “gold plate” for utilities to extend construction timelines and add costs.
“Under CWIP, utilities face little pressure to control costs or timelines because every additional dollar spent and every month of delay expands their rate base and increases their guaranteed returns,” they said. “Cost overruns become profit opportunities rather than financial penalties.”
The Institute’s report gave three choices to policymakers across the nation.
-
End CWIP entirely, forcing utilities to use traditional debt/equity financing.
-
Allow CWIP only under strict budget caps established before construction, with no change orders.
-
Make CWIP’s rate of return performance-based, rewarding projects that finish on time and on budget while penalizing overruns.