Regulators Should Reject OG&E Rate Hike, Judge Recommends

• Joe Wertz
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  Joe Wertz was a reporter and managing editor for StateImpact Oklahoma from 2011-2019. He reported on energy and environment issues for national NPR audiences and other national outlets. He previously worked as a managing editor, assistant editor and staff reporter at several major Oklahoma newspapers and studied journalism at the University of Central Oklahoma.

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OG&E's coal-fired power plant in Muskogee, Okla.

An Oklahoma Corporation Commission Administrative Law Judge recommended state regulators reject several “major portions” of Oklahoma Gas & Electric’s proposal to recover environmental compliance costs.

Judge Ben Jackson on Monday recommended Oklahoma’s three-member Corporation Commission reject the utility’s request to raise rates as much as 19 percent in five years, which The Journal Record‘s Sarah Terry-Cobo reports “is the steepest among any utility in Oklahoma in nearly a decade”:

He recommended that the agency approve the utility’s request to spend $700 million to reduce air pollution, but only if the company considered adding more wind power to the plan.

The company’s plan has two parts, including $700 million to reduce pollution from coal-fired power plants, which is required by federal clean air laws. It also plans to upgrade a power plant on the edge of the Oklahoma City metro, known as the Mustang Modernization Plan.

The plan is controversial in part because its $414 million Mustang upgrade proposal is unrelated to air pollution.

The judge’s recommendation goes to a vote by the three-member Corporation Commission, which can consider exemptions. A hearing date has not been set.

The month-long rate case has drawn a lot of attention and scrutiny, Terry-Cobo reports:

Thirteen groups intervened in the case, representing industrial, commercial and residential customers, OG&E shareholders and environmental activists. Nearly all groups oppose some portion of the utility’s plan, except for the shareholders’ organization. Many groups disagreed with how the company plans to clean up air pollution from two of its power plants. All but the shareholder group agreed the Mustang plan didn’t meet statutory requirements to pass along costs to customers.

Some of the intervening parties seemed pleased with a quick review of the judge’s ruling, The Oklahoman‘s Paul Monies reports:

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.”