OKLAHOMA CITY – A former state legislator contends the Corporation Commission vote to authorize Oklahoma Natural Gas Co. to securitize $1.3 billion in expenses incurred during a winter storm 14 months ago – via the issuance of bonds that ONG customers would be required to pay off over a 25-year period – was invalid.
“Validating an invalid Corporation Commission order could cost ratepayers dearly,” Dr. James M. “Mike” Ritze, a Broken Arrow Republican, wrote in his protest of the ONG bonds.
The Oklahoma Development Finance Authority has submitted an application to the Oklahoma Supreme Court for permission to issue up to $1.45 billion in ratepayer-backed bonds to cover the abnormal expenses ONG incurred during the winter storm of February 2021.
Supreme Court referee Kyle Rogers held a hearing on the ODFA’s application April 13 at the Oklahoma Judicial Center.
Commission Chair Dana Murphy and Commissioner Todd Hiett cast “a problematic vote” to approve the ratepayer-backed ONG debt at “an unposted January 25, 2022,” Corporation Commission meeting, Ritze wrote in his protest. “Worse, the minutes of an earlier January 20, 2022, OCC meeting were finagled in an effort to concoct a nonexistent ‘recess’ and thereby suggest that the unposted January 25 meeting was really a continuation of the meeting five days earlier…”
An adequate “notice of public meeting” was posted for the January 20 OCC regular meeting. All three commissioners were present and “the entire meeting lasted less than six minutes,” Ritze related. After 33 commission orders “received consideration and votes of approval,” next came agenda item IV, “Discussion of and possible vote(s) on a proposed Order” in the ONG securitization case.
After announcing that the proposed order was not ready for commission consideration, Murphy “explicitly said, ‘I’m suggesting that we continue it in case we have to find an odd time, so we can avoid a 48-hour posting.’” After declaring the January 20 meeting “will be adjourned,” at the meeting five days later Murphy mentioned “the meeting we had recessed and continued over from January 20,” Ritze pointed out.
“Unfortunately for her, nowhere in the video or audio transcript for the January 20 meeting was the word ‘recess’ ever used.”
The “irregular and unposted” January 25 OCC meeting was held and the proposed “Final Financing Order” in the ONG securitization case was approved 2-1; Commissioner Bob Anthony filed a dissenting opinion.
It is “debatable” whether the January 20 meeting was properly continued, Ritze asserted.
Robert’s Rules of Order specify that, “An adjournment (that is, the act of the assembly’s adjourning) terminates a meeting.” The same section of Robert’s states, “A recess, strictly speaking, is a short intermission within a meeting which does not end the meeting or destroy its continuity as a single gathering, and after which proceedings are immediately resumed at the point where they were interrupted.”
The Corporation Commission website has myriad hyperlinks to various areas. Among them is “Public Meetings,” and below that is “Commission Calendar” and “Search Events” with a pair of calendars where events can be searched by dates. Clicking on January 25, 2022, brings up nothing: no announcement of the commission meeting that day and no recorded video of that meeting.
Ritze contends the January 25 meeting violated the state’s Open Meeting Act, which decrees that, “Any action taken in willful violation of this act shall be invalid.”
OCC authorized ONG
to recover $1.338B
in 2021 storm costs
After a “thorough review of the entire record” the Corporation Commission ruled on January 25, in a 2-1 vote, that ONG should be allowed to recover $1,338,906,447 through securitization. That amount includes:
“extreme” purchase costs of $1,284,101,405.
“extraordinary” costs of $33,429,793; and
carrying costs estimated at $21,375,249.
The “typical” ONG residential customer will pay an extra $7.82 per month for the next 25 years to retire that debt, Commissioner Murphy said.
The company’s financial analysis indicates its customers “will realize savings in the aggregate amount of $700 million (net present value) when comparing a 25-year securitized AAA bond at the expected weighted average interest rate of 2.35% to traditional utility financing at the Utility’s most recent approved 8.88% rate of return for the same time period,” the Corporation Commission majority wrote.
Bond proposals
‘ill-conceived’ and
unconstitutional
In his dissent against the ONG securitization agreement, Commissioner Anthony wrote:
“Once again Commissioners are being asked to vote on a Winter Storm 2021 debt package worth well over $1 BILLION to Oklahoma ratepayers. Artificial 180-day deadlines imposed by the Legislature are no excuse for rushing through bad policy, and the more I study and consider the details of these deals, the more devils I find. AARP has expressed legitimate concerns about so-called ‘securitization’ and has called for more transparency. Especially if utility company management is found to have acted imprudently, utility shareholders should share in a portion of the extraordinary costs, instead of automatically being ‘made whole.’
“In my opinion, these stipulated Ratepayer-Backed Bond proposals are ill-conceived, unconstitutional, and bad for residential ratepayers. Worse, they also appear to be an attempt to prevent thorough and open examination of questionable, possibly negligent utility management decisions and imprudent fuel/service purchases made during the storm, as well as an excuse to line the pockets of special interests on Wall Street and their local counterparts.”
ONG serves approximately 905,000 residential, commercial and industrial customers. The utility provides natural gas to more than four dozen cities and towns in 10 southwest Oklahoma counties.
Those include Fort Sill, Elgin, Fletcher, Apache, Walters, Carnegie, Cement, Cyril, Fort Cobb, Marlow, Rush Springs, Duke, Eldorado, Davidson, Frederick, Grandfield, Manitou, Tipton, Comanche, Duncan, County Line, Loco, Velma, Gotebo, Hobart, Lone Wolf, Mountain Park, Snyder, Mountain View, and Waurika.
Referee Kyle Rogers
reviewing 4 cases
The first ratepayer-backed bonds case is that of Oklahoma Gas & Electric Co.; it was submitted to the Supreme Court earlier this year. Besides ONG’s case, the ODFA also made presentations April 13 on $725 million in ratepayer-backed bonds for Public Service Co. and $95 million in bonds for Summit Utilities.
“The Court is trying to handle the cases as expeditiously as possible,” referee Rogers told OK Energy Today. Because of the importance of the utility cases, they take precedence over other issues before the Court, he said.
“There could be a ruling by the end of spring or early summer,” he added. “I have no idea when.”
Rogers is reviewing arguments presented in all four cases and will submit his recommendations to the Justices.