OKLAHOMA CITY — Public utilities’ customers in Oklahoma and several other states are roundly criticizing electricity and natural-gas providers for repeated price hikes over the past two years. Two state regulators and leaders of the Oklahoma Legislature have waded into the fray.
Natural gas provider Summit Utilities, for example, is under fire in both Arkansas and Oklahoma.
Numerous complaints about customer service, billing errors and gas prices have been directed at Summit, a Colorado-based company that acquired CenterPoint Energy’s natural gas distribution assets in Oklahoma in January 2022.
Summit absorbed from CenterPoint almost 100,000 residential, commercial, industrial and transportation customers in 91 Oklahoma cities and towns. Those include Lawton, Elgin, Fletcher, Sterling, Cache, Geronimo, Altus, Apache, Arapaho, Blair, Burns Flat, Chickasha, Comanche, Duke, Duncan, Mangum, Marlow, Martha, Olustee and Temple.
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, expressed their grievances, too, to an Oklahoma City television reporter and the Ledger.
In response, Summit President and CEO Kurt Adams sent a letter to the utility’s Oklahoma customers earlier this month.
“[W]e believe it’s our responsibility to provide safe and reliable energy solutions with a commitment to customers and the communities we serve,” Adams wrote.
Complications with the implementation of a new computer system, combined with unusually high energy costs this winter, “have been annoying and frustrating to our customers.” Summit is “working to provide you the customer service experience you deserve,” he said.
Billing process errors and confusion “have been perhaps your most frustrating experience with us,” Adams wrote. “We have quickly resolved the billing issues and are confident that your bills accurately reflect your usage and the rates approved” by the Oklahoma Corporation Commission.
Because of the transition to new customer service and billing systems, “we voluntarily suspended disconnecting customers and charging late fees last fall,” Adams wrote.
“That suspension will continue through the winter,” he vowed, and before suspensions are lifted, “we will give customers ample notice.”
Because customers also have expressed frustration with long call wait times, Summit hired an additional 50 customer service representatives in Arkansas and Oklahoma, Adams said.
While call volumes and wait times were high in November and December, “the average call wait time has been 7 minutes over the last 3 weeks,” he wrote in his letter dated March 3.
Adams acknowledged that the cost of natural gas “significantly impacts every family and business we serve.”
Summit does not profit from the cost of natural gas, he wrote. “Our customers pay what we pay.”
The utility company is required to adjust that cost of gas on Nov. 1 and April 1 every year through a filing with its regulators, he said.
“While markets remain volatile, we have seen a downward trend in the cost of gas across the country,” Adams wrote. “As a result, we expect that when we file at the end of this month your cost of gas will come down.”
Surpluses of gas 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.
Another Summit executive said high natural gas costs were to blame for the previous 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 an OKC television reporter.
Public utilities in Oklahoma are regulated by the 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 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,” Matt Skinner, public information manager for the Corporation Commission, confirmed.
Arkansas AG seeksinvestigation; lawsuit alleges price gouging
In Arkansas, Attorney General Tim Griffin filed a petition March 16, asking the Arkansas Public Service Commission to investigate Summit’s billing and gas pricing practices.
Immediate action by the commission is needed, Griffin asserted, to address more than 2,800 customer complaints – primarily about billing errors and natural gas prices.
“It’s the PSC’s job to get to the bottom of this,” Griffin said, saying that his role is to field customer complaints and serve as the public advocate for Summit ratepayers.
A lawsuit was filed March 2 in Pulaski County Circuit Court on behalf of all 425,000 Arkansas customers of Summit Utilities, alleging price gouging and mismanagement of monthly billing procedures.
Summit purchased the natural gas distribution system in Arkansas from CenterPoint Energy Resources Corp. in April 2021 and completed a conversion of ratepayers to its system in December 2022, according to the suit.
“Since then, Summit has utterly failed to appropriately provide utility gas service to its customers in Arkansas, and moreover, has price-gouged them with substantial overbilling, and further manipulated their billing methodology,” the lawsuit says.
The Arkansas suit was filed by Little Rock attorney Scott Poynter, who filed lawsuits in Oklahoma accusing oil and gas exploration/production companies of causing earthquakes in the Sooner State.
Oklahoma regulator requests investigation by AG Drummond
AARP Oklahoma State Director Sean Voskuhl declared last year that “price gouging from Winter Storm Uri” left Oklahoma customers “on the hook for billions of dollars” in extraordinary utility fuel bills “for decades.”
Responding last August to Voskuhl’s comments, 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.
Earlier this month, Kim David, the newest member of the utility-regulating Corporation Commission, sent a letter asking state Attorney General Gentner Drummond to investigate “possible market manipulation and violation of the federal Commodity Exchange Act by natural gas marketers during Winter Storm Uri in February 2021.”
The Corporation Commission “lacks the legal authority to conduct this type of investigation into these companies,” but as the chief law enforcement officer for the state of Oklahoma, “your office can do so,” David, who replaced Murphy on the Corporation Commission, wrote in her March 6 letter.
Kansas’ attorney general “recently opened its own investigation into similar companies and their actions surrounding Winter Storm Uri,” David said, and she suggested that Drummond should conduct a similar investigation.
Kansas Attorney General Kris Kobach filed a lawsuit in February that accused Macquarie Energy LLC of manipulating the price of natural gas at a key hub along the Southern Star Gas Central Pipeline.
The lawsuit alleges on Feb. 16, 2021, Macquarie purchased gas for next-day delivery “at the single highest price ever paid for Southern Star natural gas,” which Kobach’s office says had the effect of artificially increasing gas prices by “hundreds of dollars” per million British thermal units.
If Drummond were to “determine that wrongdoing occurred, it is my hope that any overpayments can be returned to Oklahoma ratepayers in compliance with the February 2021 Regulated Utility Consumer Protection Act,” David wrote.
In a written statement, Corporation Commission Chairman Todd Hiett agreed with David that an examination into the largely unregulated gas markets must come from the federal government or the state’s attorney general. He also said Kansas and Oklahoma regulators handled the high fuel costs from the February 2021 storm in nearly identical ways.
“Both conducted audits of the utilities’ gas costs to ensure they adhered to state law, both decided to securitize the costs in order to keep the monthly charge to ratepayers as low as possible, and both referred the question of investigations into the actual gas market to the Attorney General and the Federal Energy Regulatory Commission,” Hiett wrote.
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 winter storm in 2021. 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 year 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.
Commissioner Anthony wants utilities investigated
Corporation Commissioner Bob Anthony has called repeatedly for an investigation into the actions of Oklahoma’s public utilities during Winter Storm Uri.
The commissioners voted 3-0 in a special meeting Feb. 22 to strike from consideration a case involving more than $2 billion in costs stemming from increased natural gas prices.
What remains unclear is who will review the finances presented by ONG and whether the agency will use an outside evaluator, as suggested by Anthony.
Anthony repeated his suggestion of using an independent evaluator to closely review the costs cited by ONG. In the filing, he said it’s obvious why an outside evaluator should be used – because fuel costs for ONG, OG&E, PSO and Summit in Winter Storm Uri totaled $4.5 billion.
Anthony later expressed hope that perhaps Attorney General Drummond would ask to reopen the record and case at the level of an administrative law judge.
Corporation Commission approves ONG rate increase; PSO case pending
The Corporation Commission approved ONG’s Performance Based Rate Change Plan calculation that boosted customer bills starting last July.
ONG filed an application a year ago for a base rate hike of nearly $20 million, which resulted in an increase of $1.94 in the average customer’s monthly utility bill and 51 cents more for low-income residential customers.
That rate hike included funding for the company’s Demand Portfolio of Conservation and Energy Efficiency Programs for calendar years 2023-25. Those included an increase in the budget for the Low-Income Energy Efficiency Assistance Program; a budget increase for the tankless water heater component of the Water Heater Replacement Program; and funding for the Heating Assistance Replacement Program (boosting efficiency from 78% to 95%).
ONG serves approximately 905,000 residential, commercial and industrial customers. The utility provides natural gas to more than four dozen cities and towns in 10 southwest Oklahoma counties. Those include Fort Sill, Elgin, Fletcher, Apache, Walters, Carnegie, Cement, Cyril, Fort Cobb, Marlow, Rush Springs, Duke, Eldorado, Davidson, Frederick, Grandfield, Manitou, Tipton, Comanche, Duncan, County Line, Loco, Velma, Gotebo, Hobart, Lone Wolf, Mountain Park, Snyder, Mountain View and Waurika.
Meanwhile, PSO has a $173 million general rate increase application pending with the Corporation Commission.
The utility is seeking recovery of investments it has made in wind farms located north of Weatherford, southwest of Enid, and south of Alva near Cleo Springs; and a wind farm in Kay and Grant counties that PSO is buying because the Southwest Power Pool raised the summer planning reserve margin for power providers in its territory from 12% to 15%. The utility also wants to recoup funds it has spent to replace outdated distribution grid infrastructure and accelerate recovery of investments in a coal-fired generating unit at Oologah that is scheduled to be mothballed in 2026.
The first hearing on that request is set for May 9. A final decision is not anticipated before late June or early July.
AARP State Director Voskuhl has urged the Corporation Commission to impose a moratorium on utility price increases and customer disconnections for nonpayment.