PSO's Rate Hike Before Commission

Electric bills are never popular.  But, some say Public Service Company of Oklahoma is figuring its fuel costs the wrong way.  The News On 6's Steve Berg reports that's the issue in a hearing before the Oklahoma Corporation Commission this week.

This month, the average customer started paying $17 more a month, to cover PSO's natural gas costs.  A large share of PSO's electricity is generated from natural gas.

The problem, say critics, is that PSO is basing that increase on the expected price of natural gas over the next year, not the actual price of natural gas.

Surprisingly, given how much people hate higher electric bills, there were no residents at all at the hearing, either in Oklahoma City or in Tulsa via teleconferencing.

Industrial customers are paying more too though, and their lawyers were making their thoughts known.

"I think statutes are very clear in that estimates are not to be used in setting the fuel factor," said Mark Garrett, an attorney with the Oklahoma Industrial Energy Consumers.

Garrett says state law doesn't allow PSO to use the market's projected cost of natural gas when gauging its fuel costs, but he says that's what they do.

"PSO collects estimated fuel costs and then eventually the estimated costs are trued-up to actual through the over-under mechanism," said Mark Garrett, an attorney with the Oklahoma Industrial Energy Consumers. "I believe the better approach and what statute contemplates is collecting actual costs."

As Garrett himself points out though, PSO has to, as he put it, true-up the estimated costs with the actual costs.  In other words, if gas prices turn out to be lower than PSO expects, the customers must be compensated, because PSO is not allowed to make a profit off the fuel.

At the same time though, he agrees that if gas prices are higher than PSO expects, they can charge the customer more. 

Either way, PSO says it's willing to listen.

"We'd be happy to go back and change up the process and work in any way possible to make sure our customers are not hit as heavy as they have been in terms of fuel costs.  It's up to the commission to decide how they would like that to happen, and we'll work with them to make that happen," said PSO's Andrea Chancellor.

The bottom line is who pays the cost up-front and who gets compensated later:  PSO or the customer?

PSO argues that it evens out either way.  The bad news is that both sides believe that gas prices are going up.

Related story:

5/16/2008  PSO Says Rates To Go Up