The Oklahoma Supreme Court is being told Corporation Commissioners failed state statute last November when they denied a Construction Work in Progress request made by Oklahoma Gas and Electric Company.
“In short, the statute says what it means and means what it says. Once the statutory prerequisites are met, CWIP is a mandate the Commission must honor,” argued OG&E in a recent filing made as part of the utility’s Supreme Court challenge of the denial by regulators.
Commissioners voted 2-1 last November to deny the utility’s request to allow CWIP in the construction of two new gas-powered generators at the Horseshoe Lake Power plant located in eastern Oklahoma County. The CWIP would have allowed OG&E to begin charging ratepayers immediately during construction. Commissioners Todd Hiett and Brian Bingman voted to deny the request while Commissioner Kim David voted to support OG&E.
“Rather than apply the statute as written, the Commission imposed a procedural barrier found nowhere in the governing law or its own rules, effectively engrafting a limitation the Legislature did not include,” argued OG&E in its filing, declaring the new state law made it clear, “The Commission shall permit an electric utility to recover return on and return of Construction-Work-In-Progress expenses prior to commercial operation of a newly constructed electric generating facility subject to the provisions of this subsection, provided the newly constructed electric generation facility utilizes natural gas as its primary fuel source.”
The utility noted the key word is “shall.”
While Corporation Commissioner denied CWIP, it allowed OG&E to recover financing expenses under what is known as the AFUDC method. Allowance for Funds Used During Construction is an accounting mechanism that allows utilities to capitalize the financing costs of capital projects while they are under construction. It treats the costs as part of the asset’s cost, which are later recovered from customers through depreciation after the project is placed in service.
OG&E used Commissioner David’s dissent on the vote in arguing she was correct and the other two commissioners were in error.
“In her dissent, she stated, in part: Now that the statute is in effect, OG&E is entitled to avail itself of these legislatively created substantive rights on a prospective basis.” It also cited her own statement issued at the time.
“This Commission is not vested with the authority to determine the
constitutionality of a statute, nor are we empowered to disregard or alter policy choices made by the Legislature. In this instance, the Legislature has determined that electric utilities are entitled to recover CWIP costs for newly constructed electric generation facilities utilizing natural gas as their primary fuel source. While I may have concerns about the statute and its potential impact on ratepayers, it remains the law.”
The fracas started when OG&E filed a rate hike notice in May 2025 as SB998, the bill that eventually became law, was still being handled in the legislature. The bill became law but without the signature of Gov. Kevin Stitt. It took effect August 28,2025 and while it won approval in the legislature, OG&E withdrew its original request and refiled a new one in an attempt to take advantage of CWIP.
The new law requires that in order for a utility to employ CWIP, the project must use natural gas. OG&E’s Horseshoe Lake project involved natural gas.
In its challenge, OG&E argued, “The statute’s command is straightforward. It imposes a mandatory duty, defines what
must be permitted, specifies when recovery may begin, and sets out the lone conditions for eligibility: The Commission shall permit recovery. The utility must be allowed to recover both a return on and return of CWIP expenses.”
The utility concluded the corporation commission’s order against CWIP rests on a “misapplication” of governing law. It maintains CWIP recovery is not discretionary nor may it be defeated by procedural limitations found nowhere in the state or the Commission’s rules.