Agreement in principle reached in rate case

<br>OKLAHOMA CITY (AP) _ Oklahoma Gas and Electric Co. has reached an agreement in principle with state regulators who want the utility to reduce its rates by $43 million, or about $5 for the average residential

Wednesday, October 2nd 2002, 12:00 am

By: News On 6

OKLAHOMA CITY (AP) _ Oklahoma Gas and Electric Co. has reached an agreement in principle with state regulators who want the utility to reduce its rates by $43 million, or about $5 for the average residential customer.

The company and the Oklahoma Corporation Commission, which regulates utilities, declined to reveal terms of the tentative pact reached Monday.

Stock in OGE Energy Corp., which owns OG&E, gained nearly 7 percent Tuesday, picking up $1.13 per share to $18. The stock was selling for $17.77 in early trading Wednesday.

OG&E had asked for a $26 million rate increase, and an administrative law judge was prepared to take testimony on the request before the tentative agreement was reached Tuesday.

Aneesh Prabhu, analyst for Standard & Poor's Rating Service, said the agreement is likely to mean a rate decrease, maybe close to the $43 million proposed by the commission.

He said negotiators have agreed on a number and now are working on some of the less important issues.

Like other rating services, Standard and Poor's has been watching the rate case closely, prepared to realign OG&E's credit rating to match its new rate structure.

OG&E has argued that a rate cut would damage its credit rating, making it harder to borrow money, and more difficult to finance capital improvements.

Standard & Poor's current rating for parent company OGE Energy is A-minus, which is toward the lower end of the preferred investment range.

Prabhu said any cut in OG&E rates would prompt him to recommend a credit review by the Standard & Poor's board.

That does not mean the company's credit rating would be lowered, he said, but it would have to be reviewed to ensure it's still in line with the utility's rate structure.

OG&E spokesman Brian Alford said negotiations are continuing and all parties are hoping to finalize an agreement that would be reviewed by an administrative law judge and the three-member Corporation Commission, which would vote on it next month.