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Power providers to seek billions from Oklahomans in wake of storm

Takeaways: Five factors that will determine your utility bills following Oklahoma's winter storm

Natural gas-fired turbines put power onto the grid at Oklahoma Gas and Electric Co.'s Mustang Power Plant in west Oklahoma City during February's winter storm. [Chris Landsberger/The Oklahoman]
Natural gas-fired turbines put power onto the grid at Oklahoma Gas and Electric Co.'s Mustang Power Plant in west Oklahoma City during February's winter storm. [Chris Landsberger/The Oklahoman]

More regulated utilities kicked off cases seeking to recover billions of dollars of storm-related costs from customers at the Oklahoma Corporation Commission this week.

On Thursday, Oklahoma Gas and Electric (OG&E) and Public Service Co. of Oklahoma (PSO) filed requests to start regulatory recovery proceedings with the agency. Oklahoma Natural Gas (ONG), which supplies residential and many commercial customers with that fuel, filed its case before the commission last week.

While it isn’t yet clear what the total costs will be, OG&E alone aims to recover $1 billion in costs — more than what it spent in all of 2020 to keep power flowing into the grid, officials said Thursday morning.

PSO, meanwhile, reported on Thursday that its preliminary estimates on storm-related costs stand at about $825 million.

“Natural gas demand rose dramatically during the recent winter weather, which, combined with severe supply issues, caused a significant escalation in prices (on spot markets),” said Brian Alford, OG&E spokesman. “We estimate the cost to support our customers’ demand during the record-low cold temperatures to be approximately $1 billion in terms of natural gas and purchased power. To add perspective, this amount exceeds our total fuel costs for all of last year.”

Alford said under normal permitted recovery processes — part of regularly filed and approved rate cases — the utility would claw back those costs on bills customers receive in 2021.

But that, he continued, “would create an excessive burden for our customers. We do not want that, so we are taking this unprecedented step to ask the Oklahoma Corporation Commission to extend the recovery period to 10 years, instead of a few months.”

OG&E serves 858,000 customers across Oklahoma and parts of Arkansas, while PSO serves 550,000 customers across northeast, southern and southwestern parts of the state.

While bill-specific increase details are not yet clear, Alford said OG&E officials expect the approach will support state leaders' calls to lessen the burden of storm-related costs on Oklahomans, something a PSO executive echoed.

PSO also will continue to keep in place new and expanded payment plans for customers, will accommodate customers requesting removal from voluntary automatic payment plans, and will request that it be allowed years to recover costs that otherwise cannot be addressed, he also said.

“We understand these fuel cost increases may create hardships for some customers, and our priority has been to find a way to minimize those impacts. The costs associated with last week’s events were extraordinary. This filing is part of our effort to work with customers, regulators and others to find solutions,” said Matthew Horeled, PSO’s regulatory and finance vice president.

Separate from fuel costs, residential utility customers also are likely to see one-time increases in their next bills if they used more power during the intense cold, various officials said.

The amount will vary based on factors such as how a customer heats their home. Electric-supplied central heating units use more electricity than their natural gas-fired counterparts. No matter how those units were fueled, they worked extra hard.

Extraordinarily cold temperatures forced some units to consume two to three times as much energy as they would during optimal conditions.

Extra time common

While total storm-related costs and how those will impact customers’ bill are not yet known, every power provider in the state has indicated they plan to stretch out repayment periods to lower ultimate impacts on Oklahomans’ wallets.

That certainly is the case when it comes to ONG, a regulated natural gas utility that serves 884,000 residential and commercial customers inside the state. It spent $1.5 billion to acquire the gas it needed to supply customers during February, officials said.

Its request, if approved, “would defer extraordinary gas and other related costs associated with the recent extreme winter weather event over a reasonable period of time to prevent those costs from hitting customer bills all at once,” a statement it issued on Thursday reads.

That also likely will be the case with CenterPoint Energy, a regulated natural gas utility that serves Oklahomans across southwestern and central Oklahoma, when it files its expected case with the agency soon.

Even power providers not under commission control are making similar promises.

The Oklahoma Municipal Power Authority provides electricity to about 250,000 customers who live and work in 42 member communities located across the state.

A spokesperson said the organization preliminarily estimates it had to spend between $50 million and $70 million to keep natural gas flowing to generating stations it uses to push power onto the grid and to make other buys from the open market it needed to supply its customers with electricity.

The association is part owner of a combined cycle natural gas plant between Arcadia and Luther, part owner of another natural gas-fired plant near Newcastle and uses natural gas generation near Ponca City as well.

She said the organization’s board has informed member communities about the increased costs, noting that OMPA spent more on its storm-related costs than it had budgeted for natural gas buys over the past several years for its generating stations. Still, its costs could have been higher, were it not for its part ownership in hydropower generating resources.

It also has told its member communities it will spread those increased cost impacts out over a five- to seven-year period.

“When you are talking conditions that cold, you have to run everything you can just to protect human life,” said Dave Osborn, general manager of the authority. “You saw what happened in Texas — people died down there. Consumers are very concerned, and the OMPA is doing everything it can to minimize the impact of this.”

The Oklahoma Association of Electric Cooperatives indicated it too will do what it can to lighten the load for customers. Cooperative customers, who are cooperative members, only are charged enough by the power provider to pay its costs and to make reasonable and prudent upgrades to its system.

“These extreme weather conditions provided unseen challenges to the electric utility industry,” said Chris Meyers, the association’s general manager. “Our member-systems are diligently working to lessen the impact of these unprecedented events to their consumer-members in the best manner possible.”

In part, he said cooperatives are offering member-owners flexible payment options and are facilitating connections between them and financial assistance programs. Cooperative boards are looking for other ways to defer those impacts as well, he added.

Restraints urged

At least one consumer-focused advocate on Thursday called for regulators to do all they could to protect Oklahomans as these cost recovery applications are considered.

VOICE, a coalition of congregations and other civic institutions working on issues that face families, asked Thursday for the commission, Oklahoma’s Attorney General and state lawmakers to do whatever is necessary to protect Oklahoma families from substantial bill increases.

VOICE leaders said they are concerned that the breakdown in the energy markets, the lack of adequate winterization of our infrastructure and the rapid increases in the price of natural gas may leave consumers holding the bag.

“Utility companies are allowed to request recovery of costs at the Oklahoma Corporation Commission,” said Eric Jergensen, a VOICE leader representing Oscar Romero Catholic Worker House. “This is the letter of the law, but the spirit of the law is to protect consumers, not leave them vulnerable.”

Others worry about ongoing issues for many consumers and don't want to see additional financial struggles.

“Many people are still struggling from job losses, disruptions or illness from the pandemic. Our nation is talking about giving families $1,400 to deal with the pandemic crisis, and we cannot allow a utility to swoop in and capture this money,” said Doug Holsted, a VOICE leader with St. Charles Borromeo Catholic Church.

Jack Money

Jack Money has worked for The Oklahoman for more than 20 years. During that time, he has worked for the paper’s city, state, metro and business news desks, including serving for a while as an assistant city editor. Money has won state and regional... Read more ›