OKLAHOMA CITY — The state Corporation Commission appears to be ‘back to square one’ on the $155 million rate increase application by Public Service Co. of Oklahoma.
Commission Chairman Todd Hiett described the case as “a complicated issue.” Thomas Schroedter, executive director and general counsel for Oklahoma Industrial Energy Consumers, said it was “somewhat of a mess.”
Tulsa-based PSO, the commission’s Public Utility Division, Attorney General Gentner Drummond’s office, and the AARP prepared a settlement agreement in the case and, as “stipulating parties,” presented it to the Corporation Commission.
The OIEC, the U.S. Department of Defense, the Petroleum Alliance of Oklahoma, Walmart Inc., and the Alliance for Electric Restructuring of Oklahoma declined to sign it.
Administrative Law Judge Linda Foreman spurned the settlement agreement, and the OIEC opposed the settlement “vigorously,” Schroedter told Southwest Ledger.
“I’ve never seen a case quite like this one before,” where four parties support a settlement, but five parties oppose it, Hiett said
Foreman reviewed testimony in the case and made specific suggestions to the commission based on the evidence presented. The OIEC supported “most” of her recommendations, Schroedter said, “although there are a few issues we oppose.”
The ALJ added that “all parties to this case were unable to reach a consensus.”
For example, the ALJ wrote that a capital structure of 50% equity and 50% debt “is in the public interest.”
The stipulating parties, though, proposed a capital structure of 45.38% debt and 54.62% equity. That ratio “favors shareholders to the detriment of PSO customers,” Foreman asserted.
PSO initially requested a 10.4% return on equity, but negotiated an agreement with the stipulating parties of a 9.5% ROE. Foreman recommended a 9.3% ROE.
Matthew Horeled, PSO Vice President, Regulatory and Finance, said of the settlement agreement that the utility has “a gross base rate revenue deficiency of $155.2 million.” However, because of production tax credits, fuel offsets and other items, “the total bill impact is $50 million.”
The stipulating parties asked the commission to approve a revised residential Base Service Charge of $17 per month.
The “total bill impact” for an “average” residential customer who uses 1,100 kilowatt-hours of electricity per month would be $3.57 per month, Horeled said.
Commissioners were not confident whether they should relitigate the original request, so they spent nearly two hours listening to abbreviated arguments pro and con.
Adding to the complication was the ALJ’s recommendation that one of three wind farms included in the PSO rate hike application be excluded from the utility’s rate base because it was added after a legal deadline in the current case.
Rock Falls Wind Farm in Grant and Kay counties is a 154-megawatt facility with 60 Siemens turbines, PSO Region Communications Manager Wayne Greene said. Rock Falls was acquired by PSO on March 31, 2023, and was placed into service for the company’s customers as of April 1, 2023, nine months after the June 30, 2022, end of the test-year in the case, Foreman explained of her recommendation.
“It’s not really a settlement,” Schroedter argued. “Only four parties of nine signed it and all of the major customers oppose it.”
Deborah Thompson, legal counsel for the AARP, disagreed and maintained her organization is looking out for customers. “We know what we’re doing.”
Veteran Commissioner Bob Anthony asked, “Where do we go from here?”
Nothing was resolved during the meeting. The commission decided to take the convoluted case “under advisement.”
Anthony subsequently announced that he opposes the proposed settlement agreement. Hiett told Southwest Ledger that he, too, opposes the agreement, largely because it would allow the Rock Falls Wind Farm to be incorporated into the rate base even though it was added after the statutory deadline.
Hiett said the commission might have to take up the entire PSO rate hike record. “Fortunately a full case was entered into the record,” he told the Ledger. “Although it’ll be a heavy lift, the Commission will have to build an order from the ground up based on that record.”
PSO, a unit of American Electric Power, provides electricity to more than 573,000 customer accounts in 232 communities in eastern and southwestern Oklahoma.
The utility serves more than three dozen communities in southwest Oklahoma, including Lawton, Altus, Duncan, Cache, Elgin, Fletcher, Porter Hill, Sterling, Hobart, Apache, Rush Springs, Carnegie, Cement, Chickasha, Cyril, Davidson, Duke, Elmer, Fort Cobb, Frederick, Gotebo, Gould, Grandfield, Granite, Headrick, Hollis, Lone Wolf, Manitou, Martha, Mountain Park, Mountain View, Roosevelt, Snyder, Temple, Terral, Tipton and Waurika.
Jerry Bohnen from OK Energy Today contributed to this report.