TULSA – Public Service Co. of Oklahoma has asked the state Corporation Commission for permission to increase its net revenues by $173 million annually, to reflect current levels of investment and costs incurred to serve customers.
If the Corporation Commission approves the requested rate-base increase, the bill for the average residential customer who uses 1,100 kilowatt-hours per month would go up about $14.11 a month, or 10%, said Wayne Greene, PSO’s region communications manager. For commercial accounts the increase would be 8.1%; for industrial customers, 8.9%, he said.
PSO customers have already experienced two rate hikes in the last 11 months that have raised the “average” residential customer’s utility bill by almost $10 a month.
Late last December the commission approved new base rates that boosted bills for the average residential customer by $5.07 per month. That increase allowed the electricity provider to recoup approximately $700 million in investments made in its service grid since March 2019, according to the Corporation Commission.
Earlier this year the Oklahoma Development Finance Authority sold $696.6 million in “securitization” bonds to pay for fuel and purchased-power expenses PSO incurred in February 2021 during Winter Storm Uri, along with associated financing costs. PSO customers will be paying on those bonds for a projected 20 years.
For the average residential customer, the surcharge earmarked for those bonds is “about $4.72 a month,” Greene said, adding, “Your actual cost will depend on your usage.”
The proposed new price hike would enhance energy security, reliability, long-term affordability, resilience, safety, and economic growth, officials of the utility company said.
The proposal will provide funding to harden the PSO electrical grid, “meaning power outages would be less frequent, smaller and shorter, while encouraging clean energy and protecting the public and our workers,” said PSO President and Chief Operating Officer Leigh Anne Strahler.
PSO’s increased grid investments have reduced total power outages by more than 13 million minutes since January 1, 2020, she said.
The additional funding also would expand PSO’s renewable energy fleet, providing fuel-free power from wind farms and solar facilities as a hedge against a major source of inflation: rising fuel prices. And Oklahoma would be more competitive for attracting jobs and investment because of several aspects of the proposal, Strahler said.
The company’s investment in fuel-free power capacity “will help meet the future needs of PSO customers while helping to shield them from fuel-driven inflation and sudden price spikes” such as those that occurred during the February 2021 winter storm, Strahler said.
PSO’s “fuel-free power plan” would feature the $2.47 billion purchase of three new wind farms and three new solar facilities in Texas and Kansas.
The utility estimates a 30-year lifespan for the wind farms and a 35-year lifespan for the solar generation facilities.
Production tax credits from the project would be credited to PSO customers over a 20-year period. PTCs were created under the Energy Policy Act of 1992 and are a 10-year, inflation-adjusted federal income tax credit for each kilowatt hour of electricity generated by certain types of renewable or zero carbon emission projects.
The wind and solar resources PSO wants to buy would produce renewable energy credits that would be sold, which would produce revenues that would be credited to customers via the utility’s fuel cost adjustment ‘rider.’
PSO does not need permission from the utility-regulating Corporation Commission to buy the wind farms and solar facilities; it can do that with just the approval of the company’s officials and stockholders. But PSO does need pre-approval from the commission in order to recover the purchase price as a “prudent cost” that can be incorporated into the company’s future rate base.
“These are difficult times for many people, and all of us at PSO are committed to working efficiently and investing in technology to keep prices competitive while maintaining reliable service,” she said.
“We work with customers to address individual needs and help our customers reduce their energy use. We offer weatherization assistance, rebates, incentives, valuable conservation information and flexible payment options to help customers manage their bills.”
PSO, a Tulsa-based unit of American Electric Power, is an electric utility company serving more than 568,000 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, Temple, Hobart, Apache, Temple, Rush Springs, Carnegie, Cement, Cyril, Davidson, Duke, Elmer, Fort Cobb, Frederick, Gotebo, Gould, Grandfield, Granite, Headrick, Hollis, Lone Wolf, Manitou, Martha, Mountain Park, Mountain View, Roosevelt, Snyder, Terral, Tipton and Waurika.