OG&E not happy with regulator's rate cut proposal
Wednesday, August 7th 2002, 12:00 am
By: News On 6
OKLAHOMA CITY (AP) _ Oklahoma Gas and Electric Co.'s financial health could be damaged if a proposal to lower utility rates forgo granting compensation to the company is approved, officials said Tuesday.
Under a recommendation by the Oklahoma Corporation Commission staff, the utility would not get $92 million in compensation for the devastating storm or get an $11.7 million rate increase it asked for earlier.
The proposed rate cut of $39.1 million annually would decrease electric bills to the average residential customer by about $18.50 per year, or $1.50 per month, according to testimony filed late Monday with the commission.
OG&E officials called the plan flawed.
``It completely overlooks the fact that the company is still recovering from the largest storm in OG&E's history,'' company spokesman Brian Alford said.
OG&E, which serves 650,000 Oklahoma customers, said the Jan. 30 storm was the costliest in its 100-year history. The storm affected service to 195,000 customers.
Alford said the present economic climate is volatile.
``Utilities all across the country are seeing their stocks drop in value and their credit ratings downgraded,'' he said.
OGE Energy Corp.'s stock on the Dow Jones Utility Index has fallen 10 percent during the same time period.
``While the commission staff proposal is not as extreme as the attorney general's and others, we strongly disagree with their call for such a significant rate cut,'' Alford said.
Attorney General Drew Edmondson, who is charged with protecting consumer interests in the state, has asked the commission to reduce the utility's rates by $106 million a year.
Commissioners have the final say on utility rate matters.
The commission staff's recommendation concludes a review of OG&E rates that began last year. Hearings will be held before one of the commission's administrative law judges in late September.
Corporation Commission spokesman Matt Skinner said the staff is mandated by state law to base utility rates on a reasonable rate of return for the company's investment.
Utility rate reviews consider the rate of return a utility gets for its investment versus capital and labor expenses and other operating costs, such as storm damage repairs.
Utility companies have a right to profit, but there's a limit on the cost ratepayers should have to bear, Skinner said.
The commission's administrative law judge is scheduled to make a ruling on the case by Oct. 14. The case is expected to reach commissioners by Nov. 20.
A final ruling in the case is expected before the end of the year.