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NewsOK Q&A: Anyone can take part in utility rate cases

Eric Davis

Eric Davis is an attorney in the Firm’s Clean Energy Practice Group and the Government Relations and Compliance Practice Group. He represents clients in a range of regulatory and energy matters.

In this article, Oklahoma City Attorney C. Eric Davis discusses the process utility companies must go through to request rate increases and how different parties can participate.

Q: Oklahoma’s two largest electric utilities have rate cases ongoing at the Corporation Commission. How does the rate case process work?

A: In Oklahoma, investor-owned electric companies are “rate-regulated” by the Oklahoma Corporation Commission. Regulating the rates of investor-owned utilities is necessary based on their monopoly status, i.e., customers generally can’t choose among other competing utilities for the same service. As a result, companies like Oklahoma Gas and Electric Co. and Public Service of Oklahoma must seek approval from the three elected Corporation Commissioners before increasing rates. When a utility requests a rate increase, the resulting procedure is referred to as a “rate case.” A rate case is a formal, evidence-based, court-like process, open to the public. In a rate case, the commission determines the amount of revenue a company reasonably needs to operate, and then decides how best to allocate any increase (or decrease) among the company’s customers. This allocation process involves dividing customers into classes (such as residential, commercial, industrial, municipal, public schools), and even subclasses, and then, ideally, assigning rates across classes in an equitable manner.

Q: What types of issues exist in OG&E’s and PSO’s current rate cases?

A: Primary drivers in any rate case include the utility’s operational costs, costs associated with plant investments, and the utility’s right to earn a fair profit. On the generation side, national trends evidence a shift toward renewable and natural gas resources, and conflicts abound concerning how utilities should deal with their existing fleets, including coal plants. In its current rate case, OG&E has requested about $54 million annually to recover the cost of retrofitting its Sooner coal plant to reduce air pollution. Meanwhile, historically low load growth and other market trends are causing electric utilities to reconsider the manner in which they obtain rate increases from the commission. In PSO’s ongoing rate case, the company is proposing a “performance-based rate plan,” in which its earnings would be subject to more frequent, annual reviews, allowing for periodic rate adjustments. Such annual reviews, while occurring with more regularity, would be structured differently and allow for less in-depth analysis than a traditional rate case. However, PSO has proposed a backstop, stating it would file a full-blown rate case after three years.

Q: Who may participate in rate cases?

A: Anyone can take part in a rate case, whether by emailing public comment to the commission, or formally intervening as a party. Formal parties have the right to issue discovery, present witnesses, and cross-examine witnesses of other parties, including the utility’s witnesses. Common parties include the commission’s staff, the attorney general, large industrial customers, AARP, and the Department of Defense. Intervening parties may aim to influence utility policies, or ensure the utility’s costs are reasonable. Parties also may advocate on behalf of particular customer classes during the rate design process, ensuring costs are fairly apportioned among customers.

 

Published: 2/6/19; by Paula Burkes
Original article: https://newsok.com/article/5622090/qa-by-c-eric-davis-anyone-can-take-part-in-utility-rate-cases

Phillips Murrah attorneys quoted in OCC, OG&E story in The Oklahoman

Oklahoma Corporation Commission judge says no to replacing OG&E’s Mustang plant in $1.1 billion compliance case

By Paul Monies, Published: June 9, 2015 – Read the entire story here.

William Humes

Bill Humes represents individuals and both publicly-owned and private companies in matters involving energy and environmental issues, state and federal regulatory practice, public policy concerns, and government relations.

Oklahoma Gas and Electric Co. should be able to recover some costs related to environmental compliance, but should not get pre-approval to spend $400 million to replace its aging Mustang generating plant, an administrative law judge recommended Monday.

Corporation Commission Administrative Law Judge Ben Jackson said the utility also should explore adding wind energy, echoing a request by nearly all the parties in OG&E’s complex and lengthy case for environmental compliance and replacement generation.

In his 30-page report, Jackson recommended against any increase in rates at this time. But he said OG&E should be allowed to recover environmental costs already expended or under contract.

Jackson said other costs for environmental compliance should be decided in the utility’s next rate case, which is expected to be filed later this year.

Read the entire story here.
The last section of the story quotes Bill Humes and Jim Roth:

Reaction from intervening parties

Jim Roth copy

Jim Roth represents individuals and both publicly-owned and private companies in a range of business, energy and environmental issues, as well as a variety of public policy and regulatory matters.

Some of the parties involved in case were still studying the report Monday. Attorney Bill Humes, who represented The Wind Coalition, the Oklahoma Hospital Association and Oklahoma Cogeneration LLC, said at first glance the administrative law judge agreed with many of the recommendations of his clients.

“To disallow Mustang and to require more investigation into wind is exactly what our clients were looking for,” Humes said. “Everyone is sympathetic to OG&E’s need to comply with the EPA rules, but it has to be reasonable and the lowest cost. OGE’s plan was neither. It was a great plan for shareholders, but not for customers.”

Former Corporation Commissioner Jim Roth, who represented The Wind Coalition along with Humes, said he was glad the judge recommended additional wind power as a condition of the environmental compliance.

“It appears the judge’s recommendation takes to heart the unanimous request of all customer class parties that OG&E should be required to add low-cost, clean wind energy before any costs for extending their older coal plants should be considered.”