OKLAHOMA CITY – Oklahoma Gas & Electric Co. is seeking a rate hike of approximately $332.5 million in base rates, which would raise the “average” residential customer’s bill by 13.85%.
The “largest driver” of the request is “additional capital investment since the last rate case,” said Kimber Shoop, director of regulatory affairs for the Oklahoma City-based utility. He said the capital investment was directed to the company’s power delivery system and its generating facilities.
In view of Oklahoma’s increasingly extreme weather conditions, OG&E is “focusing on investments in transmission, distribution and grid enhancement/hardening to improve reliability and resiliency during events that are outside the control of the company,” he said. Oklahoma has “multiple types of severe weather,” Shoop noted, and is ranked second by the Federal Energy Management Agency for the frequency of severe weather.
OG&E has invested $987 million in the past two years on its power delivery system, he said.
The company “seeks to better meet the needs of our customers and to mitigate the impact of increasing extreme weather by investing in a more resilient electric grid while balancing affordability,” Shoop said.
“OG&E is reducing outages and improving restoration times by replacing aging infrastructure, upgrading to better technology and equipment, and hardening the distribution system so that it is more resilient in various weather conditions.”
The investor-owned utility company has performed 525 grid enhancement projects across 193 circuits and 35 substations, replaced more than 3,000 distribution line poles and fortified another 11,270 distribution poles, added connecting infrastructure to 5,000 new load projects, and spent $132 million to replace equipment damaged in 25 storms over the past two years, Shoop said.
The company also invested more than $300 million in its transmission and distribution system “to support new business projects” since the Corporation Commission’s last rate review in 2021-22, he said.
Robert Doupe, director of OG&E’s power supply services, said the company spent approximately $154 million in the past two years on major capital projects at seven generating plants.
For example, the 30-yearold water treatment system at the River Valley plant in Le Flore County was overhauled because it contained equipment that “had already failed in service or was exhibiting end-of-life properties,” Doupe said. One piece of equipment “failed years ago and was effectively unusable.” In addition, the clarifier “needed significant investment to become reliable, and many of the tanks were being patched regularly.”
Vegetation control The company has asked the commission to authorize annual expenditures of about $58 million on vegetation management, an increase of $28 million over the $30 million per year that was approved nine years ago for inclusion in OG&E’s base rates.
The company requested an increase to the previously approved spending level “to realign with current costs, inflation, and increased labor expenses,” said Robert Shaffer, manager of asset management.
Tree-related outages jumped from 2,538 in 2019 to 3,891 in 2020 and have exceeded 3,000 every year since, he reported.
OG&E relies on specialized vegetation contractors to complete all its line clearance work, including tree trimming and tree removals. Since the commission last approved the company’s vegetation management expense level in 2015, OG&E contractor costs have increased by approximately 63%, he said.
According to Shaffer, OG&E’s vegetation management program consists of “saw work, herbicide, growth regulators, and removals on the distribution and transmission systems” in the company’s service territory. The work also includes mowing and management of land within substations, switching stations, and other facilities owned by OG&E, he said.
Inflation pressure OG&E is “investing in new infrastructure to support new and expanding businesses in our service area, to address storm damage, to add new lighting technology, to replace defective and failing equipment, and to upgrade certain assets, facilities, and tools used in providing electric service to the communities OG&E serves,” Shoop said.
“Not only do our customers demand improvements in reliability, security, and resilience, but a thriving Oklahoma economy depends on those improvements,” he said. OG&E provides electricity to nearly 900,000 customers.
“We serve a few customers on the far eastern side of Stephens County, near Ratliff City; in Jefferson County we serve the towns of Ringling and Cornish; and we have some transmission operations in other southwest Oklahoma counties but do not serve any customers there,” Carson Cunningham, OG&E senior communications specialist, told Southwest Ledger.
In addition to its investments in capital improvements, “OG&E, like other businesses, has experienced the same inflation on prices for equipment and materials,” he said.
The cost of OG&E’s debt has increased after new debt issuances in the past two years, Shoop said. The weighted average cost of debt has risen from 4.50% to 4.85% “and the cost to service that debt has risen accordingly.”
Interest rates “have contributed to a request for a higher return on equity” of 10.5%. Also, market changes have resulted in higher pension and post-retirement medical expenses, he said.
If approved by the Oklahoma Corporation Commission, the rate hike would result in an increase of $19.02 a month for the typical residential customer. That increase would consume most of the fuel factor reduction of approximately $21 per month for the average residential bill that was implemented last November.
Hearings planned An administrative law judge will conduct a hearing on the merits of the case May 28 in the Concourse Theater in the tunnel between the Will Rogers and Sequoyah Memorial Office Buildings in the State Capitol Complex. The hearing will resume on June 17, also in the Concourse Theater.
For additional information, contact Deputy Attorney General A. Chase Snodgrass at (405) 521-3921 or by email at chase.snodgrass@oag.ok.gov. Another contact is Michael Velez, Deputy General Counsel, Public Utility Division, Oklahoma Corporation Commission, at (405) 522-5930, email Michael.Velez@occ. ok.gov.
In addition, comments can be addressed to: OG&E Rate Case Comments, c/o Office of General Counsel, Oklahoma Corporation Commission, P.O. Box 52000, Oklahoma City 73152-2000.
Customer comments Some customers have already weighed in on the issue. “My homeowner’s insurance for 2024 went up sharply, as did my car insurance… It is difficult to find work that pays enough to cover the increases in groceries, meds, etc. I live in Norman and we voted down OG&E’s request” for renewal of a franchise agreement, wrote Celia Elwell. “Please compare this company’s profits, salaries and bonuses, etc., look me in the eye and tell me I need to be squeezed more by utility companies.”
Monty Adams had a similar complaint, writing, “We feel helpless a lot of times. Please consider us out here that are having a really hard time.”
Thomas Thomson of OKC complained, “Considering the record profits OG&E made in 2022 over 2021, it seems obvious they do NOT need a rate increase. Some of those profits should be rolled into their proposed grid improvements. That is how business works.”
Stephanie Cook of Shawnee wrote, “I have done everything I can financially afford to make my house more energy efficient, but my summer electricity rates are nearing car payment territory already. This is an unacceptable burden on the people of Oklahoma who rely on OG&E for their power.”
“OGE Chairman Sean Trauschke won’t be hurt by an increase in HIS electric bill; after all $19 is nothing to a man who got a $1.2 million bonus in 2022. If the upper echelon at OGE would give up their bonuses, they’d have a sizable slush fund to draw from for their projects without involving the hardworking, honest citizens who will never, ever see $1M in their lifetimes,” suggested one customer.
Still another OG&E customer wrote, “As a resident on a fixed income, I feel that most in my position … are stretched to the limit already and cannot afford any more increases in our monthly bills.”