OKLAHOMA CITY – State legislators have estimated that Oklahoma utilities incurred approximately $4.5 billion in increased energy costs associated with the winter storm that gripped this state in snow, ice, and subfreezing temperatures in February.
Without the recent enactment of Senate Bills 1049 and 1050, utility customers would face dramatic increases in their energy bills, and those bills would have come due immediately in four-figure sums or even higher, said Sen. James Leewright, R-Bristow. He chairs the Senate’s Business, Labor and Commerce Committee and is chairman of the Senate Select Committee created to study this issue.
The newly enacted legislation allows the utilities’ extraordinary energy expenses to be “securitized” – the debt will be packaged as marketable securities and sold to investors, perhaps at favorable interest rates – which will enable the extra costs faced by energy providers to be passed through to their customers but over a longer period of time and at a slower pace.
Nevertheless, not everyone is satisfied. That includes at least two state lawmakers.
State Rep. Andy Fugate, D-Del City, filed an unsuccessful amendment to recapture the profits that utility suppliers made during the ice storm.
SBs 1049 and 1050 “do nothing to recover any of the obscene profits made by those who manipulated energy markets during a crisis,” he complained. “Whether customers pay all at once or using an installment plan, the fact remains: the people of Oklahoma will pay for this.” The legislation “merely converts that payment from a lump sum into a utility tax.”
During the winter storm, utility suppliers “manipulated markets to overcharge Oklahomans by $4.5 billion in just a matter of days,” Fugate said.
“That’s $1.5 billion more than we will budget this year for all of Oklahoma’s public school children. It’s outrageous that we are moving to pay this without also working to get any of this money back.”
At least some members of the Legislature contend “this is an issue that truly deserves” the attention of state Attorney General Mike Hunter, Fugate said.
Oklahomans across the state are “struggling to get back to normal” after more than a year of the coronavirus pandemic, said Rep. Mickey Dollens, D-Oklahoma City. “Now they are being asked to shoulder a $4.5 billion energy bill. If the ongoing investigation concludes energy providers manipulated the market to profit off February’s Arctic blast, Attorney General Hunter must stand up for the people who elected him and do everything in his power to reclaim their hard earned dollars.”
LET UTILITIES GO BANKRUPT, ONE CRITIC SAYS
One critic in Oklahoma City wrote on a Lawton social media website, “It’s a joke to roll over and let the utility companies stick it to ratepayers – allowing slick Wall Street lawyers to sell off some bonds to pay the spot market price gouging. I can go for paying for more usage – but not 1,000 percent more for spot market prices. I say bankruptcy, like the 3 Texas utility companies have done.”
Brazos Electric Power Co-operative, a Waco, Texas-based co-op of 16 power distributors serving more than 1.5 million Texans, filed for Chapter 11 bankruptcy protection on March 1.
About a week later Just Energy Group Inc., a Canadian retail energy seller that specializes in electricity and natural gas, filed for Chapter 15 bankruptcy after receiving a bill for more than $250 million from the Electric Reliability Council of Texas (ERCOT), which operates the electric grid and manages the deregulated market for 75% of the Lone Star State.
Houston-based retail electricity provider Griddy Energy LLC also filed for Chapter 11 bankruptcy last month.
Utility companies such as CenterPoint, PSO, ONG and OG&E are customers themselves and have to pay for the gas and/or electricity they procure from others, noted Matt Skinner, public information manager for the regulatory Oklahoma Corporation Commission.
The law allows a utility to pass through its legitimate fuel costs, he added. The job of the Corporation Commission is to conduct a “prudency audit” of the costs that a regulated utility such as PSO, OG&E, CenterPoint and ONG, wants to pass on to its customers.
PRICES EXORBITANT IN SPOT MARKET
The Associated Press reported on Feb. 20 that exorbitant price spikes were recorded in the spot market.
For example, natural gas hit a record $600 per million British thermal units in Oklahoma.
“I don’t think anyone has ever seen fuel costs skyrocket on a spot market the way they did during this polar vortex,” Skinner told an Oklahoma City television station on March 5. “Not just in Oklahoma but throughout the entire region,” he added.
In Winfield, Kan., the city manager reported that a unit of natural gas that sold for about $3 earlier in the month sold for more than $400 on Feb. 18. City Manager Taggart Wall told a Wichita television reporter that Winfield, which budgets about $1.5 million a year for natural gas, expected to pay about $10 million just for the previous week.
Officials in Morton, Ill., reported that gas normally sold for about $3 per unit, but cost nearly $225 the week of Feb. 14-20 as demand soared because of the deep freeze.
A spokesman for the American Gas Association, which represents more than 200 local energy companies, said Feb. 14 and 15 set a record for the largest natural gas demand in U.S. history over a two-day period.
NGI (Natural Gas Intelligence) reported that in the Midwestern U.S., 81 billion cubic feet of natural gas were withdrawn from storage during the subfreezing temperatures. A billion cubic feet of natural gas is enough to meet the needs of approximately 10,000 to 11,000 American homes for a year.