OKLAHOMA CITY – State regulators have signed off on another utility seeking approval of 2021 winter storm cost recovery, but unlike previous firms, Canadian Valley Electric Cooperative is not making use of the bond securitization act that is being challenged before the state Supreme Court.
The utility-regulating Corporation Commission gave unanimous approval March 15 to a joint stipulation and settlement agreement to allow the cooperative to recover almost $18.5 million over a 10-year period.
The “average” CVEC residential customer will pay an extra $2.64 per month for the next decade, the commission was informed. Canadian Valley Electric provides power to more than 25,000 accounts, including residential, commercial, and industrial members.
Canadian Valley Electric’s headquarters are located just south of Interstate 40 at its intersection with US-377 (SH-99). The office is south of Prague and north of Seminole.
The territory served by Canadian Valley Electric is bounded on the north by the Deep Fork of the North Canadian River and on the south by the Canadian River. The service area includes approximately 3,500 square miles covering all or parts of Oklahoma, Cleveland, Pottawatomie, Seminole, Lincoln, Creek, Hughes, Okfuskee, Okmulgee and McIntosh counties.
CVEC’s total bill from February 2021 included $15,869,552 in extraordinary purchase power costs incurred during Winter Storm Uri, plus $2.6 million in interest on a loan, gross receipts tax and some legal expenses.
The loan from CoBank will command a fixed interest rate of 2.465% annually for the duration of the loan, records reflect.
Canadian Valley purchased its power during the storm from Anadarko-based Western Farmers Electric Cooperative, whose extraordinary fuel costs were in excess of $200 million.
WFEC offered CVEC two options for repayment of its nearly $16 million share of the costs: monthly payments over a 5-year period or one upfront payment. CVEC decided a 5-year plan would create “too great of a rate increase” to its members, so it opted to secure a loan and make a lump-sum payment.
Corporation Commissioner Bob Anthony, who voted against bond securitization requests that Commission Chair Dana Murphy and Commissioner Todd Hiett approved for OG&E, ONG, PSO and CenterPoint/Summit, supported the CVEC request.
Anthony also filed a separate opinion declaring that CVEC “sets an example” for “no ratepayer-backed bonds!”, “No securitization!” and “no multi-generational 20-year, 25-year or 28-year debt!”
His opinion also said it would not result in millions of dollars in “yet-to-be-determined interest carrying costs, fees, commissions, marketing enhancements, bond counsel payments, servicing expenses, etc.!”
Anthony went on to declare in his opinion that “while Oklahoma public officials, state agencies, and the regulated public electric and gas utilities themselves dither, equivocate, prevaricate and pass the buck, Oklahoma ratepayers are still in the dark about exactly what went wrong during the February 2021 winter storm.”
He added that CVEC’s method of cost recovery did not result in “misleading” claims of millions of dollars in ratepayer “savings.”
Anthony also pointed to a recent OK Energy Today article about a recent study by Intelometry that stated Oklahoma’s method of securitization “hits consumers hardest” of all the states that “suffered in the storm.” Intelometry is a technology, data providers and consulting services company that specializes in retail electricity and natural gas market operations.
The study was presented at the winter meeting of the National Association of Regulatory Utility Commissioners, held in Washington, D.C.
The study found that very few residential customers served by competitive suppliers experienced increased energy bills due to the storm, and that in the vast majority of cases competitive suppliers absorbed the prices, “thereby losing hundreds of millions of dollars.”
In contrast, customers served under a regulated utility construct – as in Oklahoma – “are not protected from the storm’s financial impacts and will in fact be paying the costs associated with the storm for many years to come.”
The authors of the study also determined that “with few or no exceptions, utility monopolies will experience essentially no financial consequences due to the winter storm’s fuel price shocks.”
In comparing the 15 states where 67 utilities sought cost recovery, Oklahoma had the highest in one category and second-highest in another. The estimated cost recovery for a natural gas customer in Oklahoma was $1,270; the next highest was Missouri at $594, less than half as much. Missouri had the highest electrical cost recovery per customer at $1,104, while Oklahoma ranked second at $849.
The highest natural gas prices during the storm were found in Oklahoma. The study noted that the most extreme spot gas prices were at the OneOK trading point in Oklahoma, where peak prices rose to 628 times normal and average prices were 244 times normal.
The study found that 12 of the 15 states that experienced the most significant power and natural gas wholesale price spikes from the February ’21 storm “do not allow power and natural gas competition at all.”