Attorney General And PSO Disagree Over Rate Hike Request

Tuesday, May 29th 2007, 6:57 pm

By: News On 6

OKLAHOMA CITY (AP) _ A proposed electricity rate increase that Public Service Company of Oklahoma says will help pay for more than $2 billion in new generation and distribution facilities is opposed by Attorney General Drew Edmondson, who is recommending a rate cut.

On Wednesday, the Oklahoma Corporation Commission will reveal its staff's recommendation in the case that could push the bill of an average residential customer who uses 1,000 kilowatt hours of electricity a month up about 8 percent, or around $6.50 per month, according to PSO's Web site.

``This is vitally important for our company,'' Stan Whiteford, spokesman for Tulsa-based PSO, said Tuesday. Over the next five years, PSO plans to spend $1.12 billion on new generating plants, $582 million on distribution facilities, $302 million on transmission facilities and about $60 million on computer upgrades and other improvements.

In pleadings filed with the commission last week, the company said it is receiving $47.9 million less revenue each year than it needs to accomplish its goals. The cost of some of the planned investment in new and refurbished transmission and distribution facilities is included in PSO's rate increase request, according to the Web site.

PSO, which serves about 514,000 customers in eastern and southwestern Oklahoma, requested the rate increase on Nov. 21. The request was the focus of testimony and hearings before the commission earlier this month.

PSO has also asked the commission to adopt an adjustable rate mechanism to reflect the investment PSO will make in the new facilities. The plan would allow annual review of PSO's rates and earnings and would substitute for the filing of traditional rate cases over the next several years.

``We feel like the testimony put us in the best possible position for as successful rate outcome,'' Whiteford said.

But Edmondson's office filed papers opposing the increase. Instead, Edmondson is recommending a $17.4 million reduction in rates.

Among other things, Edmondson, who represents ratepayers in public utility cases, said that depreciation expenses, capital costs and other financial issues claimed by PSO are overestimated and should be rejected by the commission.

The company has not increased base rates since 1994. Since then, PSO has invested about $1.3 billion in electric infrastructure across Oklahoma, according to company officials.

The company said its new generation facilities and refurbished transmission and distribution lines and equipment which will more than double PSO's current rate base.

If approved by the commission, the rate hike will increase industrial rates about 1 percent and commercial rates would climb about 4.9 percent.

PSO has reduced its base rates twice in the past decade, in 1997 and 2005. Rates were also reduced through a series of rate credits following a merger involving its parent company, American Electric Power.