OKLAHOMA CITY — Public utilities and their regulators in Oklahoma and other states have been getting an earful during the last two years from customers upset about high bills attributed to abnormal natural gas prices.
Most recently, complaints have been directed at Summit Utilities, which acquired the natural gas distribution assets in Oklahoma and Arkansas of CenterPoint Energy Inc. in January 2022. Summit absorbed from CenterPoint almost 100,000 residential, commercial, industrial and transportation customers in 91 Oklahoma cities and towns.
A Lawton widow in her 70s who asked to remain anonymous sent the Southwest Ledger copies of her Summit bills for a recent six-month period. Those gas bills multiplied almost ninefold: from $34.23 in mid-August 2022 to $291.70 in mid-January 2023.
Several Summit customers in Canton, in west-central Oklahoma, have voiced their grievances too.
A Canton businessman who serves on the town council told the Ledger his bills typically averaged approximately $250 “at the highest” but tripled from $214 in November to $628 in December and then $764 in January.
“This month the bill dropped a little, to $713,” Cleophas Wooley, proprietor of Movie Poster Service, told the Ledger on Feb. 18.
During the “deep freeze” of February 2021, “My highest bill was a little over $520,” he added.
Movie Poster Service, which contains “well over one million pieces of the best condition authentic vintage movie posters … and other movie memorabilia,” has been located in Canton for approximately 60 years. The business is housed in a downtown building, and Wooley lives next door in a building that’s connected to his store by a hallway.
Debbie Robinson, president of the town’s Grand Art Council, said their nonprofit organization at the theater in Canton, which provides free shows and movies, was billed $43 in December but 10 times as much – $428 – in January.
Robinson, who also owns a small business in Canton, told an Oklahoma City television reporter that her company’s utility bills are “typically like $200 or $198,” but “our last bill was $385, and we’re open only four days a week.”
Similarly, Wooley told the Ledger that his 3,200 square-foot store is open “only when I want it to be.” The front door “remains locked unless someone makes an appointment.” His store caters to out-of-towners, he said, “some from other states and other countries,” such as Australia, Western Europe and Canada.
Carlos Delgado, owner of the El Charro restaurant in Canton, told the TV reporter that his utility bills typically average between $700 and $800, but recently those bills have soared to “around $2,000 a month.”
Canton is a Blaine County town of approximately 425 population.
“We have a lot of older residents on fixed incomes,” Wooley said. “I don’t know how these people are going to manage with these high gas bills, unless they just stay cold, do without their medications or don’t eat.”
Besides Canton, other communities in Oklahoma supplied with natural gas by Summit include Cushing, Ada, Blackwell, Cheyenne, Cromwell, Deer Creek, Earlsboro, Fairview, Garber, Hartshorne, Hominy, McAlester, Medford, Nardin, Okeene, Seminole, Stringtown, Talihina, Tonkawa, Vance Air Force Base, Watonga, Weatherford and Wilburton.
Southwest Oklahoma cities and towns served by Summit include Lawton, Elgin, Fletcher, Sterling, Cache, Geronimo, Altus, Apache, Arapaho, Blair, Burns Flat, Chickasha, Comanche, Duke, Duncan, Mangum, Marlow, Martha, Olustee and Temple.
Gas prices blamed for high utility bills
A Summit executive said high natural gas costs are to blame for the price spikes.
What customers are experiencing in their increased utility bills “is due to the actual cost of gas. It is not related to the acquisition of CenterPoint Energy by Summit Utilities,” Brian Bowen, senior director of external affairs for Summit Utilities, told the OKC TV station.
Public utilities in Oklahoma are regulated by the state Corporation Commission.
“The cost of gas is a commodity price, and it’s based on market supply and demand,” Bowen said.
Cory Slaughter, Oklahoma Natural Gas Co.’s director of rates and regulatory affairs, testified before the state Corporation Commission last year that the weighted average cost of natural gas increased approximately 18% due to market prices.
The coronavirus pandemic, followed by Winter Storm Uri in February 2021 and Winter Storm Elliott in December 2022, “increased demand, which raised the price,” Bowen said.
“The cost of gas and the increase that our customers are seeing in their bills is just a pass-through expense,” he said. “Our customers pay what we pay for the gas.”
The cost of fuel such as natural gas is” indeed a pass-through expense,” said Matt Skinner, public information manager for the Oklahoma Corporation Commission.
Responding last August to comments by Sean Voskuhl, state director of the Oklahoma AARP, then-Corporation Commissioner Dana Murphy wrote, “As a Commissioner, I can’t prohibit utilities from seeking rate adjustments, and I’m required to stay within the limits of the Commission’s Constitutional and statutory authority. The ‘price gouging’ allegation you raise is the result of a so-called ‘free’ market that state agencies,” including the Oklahoma Corporation Commission, “do not control…”
Regulation of the wholesale natural gas market in interstate commerce falls under the purview of the Federal Energy Regulatory Commission.
Customers of Spire Energy in Kansas City, Missouri, complained about their gas bills in December. The utility company blamed the price hike on the cost that Spire had to pay for natural gas purchased from wholesale suppliers.
Earlier this month, Colorado Gov. Jared Polis directed the Colorado Public Utilities Commission and the Colorado Energy Office to work to ease natural gas and energy costs for residents of that state. He sent an eight-page letter to state regulators and the leaders of the state’s utility companies and cooperatives, asking for collaboration in reducing energy costs.
Southern California Gas Co. warned its customers in early January that their utility bill that month would be dramatically higher because of regional and national wholesale prices for natural gas.
Oklahoma utilities securitized their debt
Legislation signed into law in 2021 authorized public utilities in Oklahoma to securitize the extraordinary expenses they incurred for natural gas and supplemental electricity purchases during Winter Storm Uri in February 2021. Customers of Public Service Co. of Oklahoma, Oklahoma Natural Gas Co., Oklahoma Gas & Electric Co. and Summit Utilities Oklahoma will be paying on those utility bonds for several years.
The Corporation Commission authorized Summit to securitize approximately $77 million in “extreme” and “extraordinary” expenses from the 2021 storm. Those bonds will be retired with the proceeds from a utility bill surcharge that Summit customers will pay for 15 years, records indicate.
PSO was allowed by the commission to securitize approximately $700 million for its extraordinary purchases of natural gas and supplemental electricity during the two-week storm. PSO’s securitization surcharge for Winter Storm Uri was calculated at approximately $4.72 per month for the average residential customer who uses 1,100 kilowatt hours of electricity each month, and will be collected for 20 years.
OG&E customers have been hammered in the last 11 months by that utility’s gas purchases to power its electricity generators.
According to company officials, the price hikes included an $8.11 per month fuel cost adjustment in March 2022, a $3.34 surcharge tacked on for fuel and purchased power during the 2021 winter storm, another fuel cost adjustment of $9.73 per month for the average residential customer in October 2022 and $5.46 that will be collected each month through March 2024 for unpaid fuel costs incurred through December 2022.
Ironically, the complaints about abnormal natural gas bills are surfacing at a time when industry officials report that natural gas prices in the U.S. have fallen 40%.
Surpluses of gas also are helping push prices lower. U.S. inventories are projected to end March 16% above the five-year average, according to the federal Energy Information Administration.
Energy companies that logged record profits last year are now coping with falling prices. For example, Chesapeake Energy Corp. based in Oklahoma City has lost more than 11% in 2023 after surging 46% last year.