OG&E agrees to $64 million rate cut
Oklahoma Gas and Electric Co. residential customers will save an average of $18.71 on their July bills and receive $4.44 ongoing in monthly savings if a settlement announced Wednesday is approved by state regulators.
OG&E reached the settlement with Attorney General Mike Hunter's office, the Oklahoma Corporation Commission's Public Utility Division and utility consumer groups. The agreement calls for the utility to cut its annual rates by $64 million, with half of the savings going to residential customers and half going to other customers, including businesses and government agencies.
"The historic $64 million rate reduction represents the largest received by an Oklahoma utility," Hunter said. "It will put real money in the pockets of Oklahomans. We're hopeful the Corporation Commission will take swift action to approve this before the end of the month so it can be enjoyed by ratepayers as soon as possible."
An Oklahoma Corporation Commission administrative law judge is scheduled to take up the settlement proposal on Friday.
If approved by the Corporation Commission, the agreement would settle the rate case OG&E filed last year. The case addresses the nearly $400 million OG&E has invested to modernize its Mustang Energy Center along with savings from changes to the federal tax rate.
"We're pleased we were able to get this settlement agreement," OG&E spokesman Brian Alford said. "The parties recognized in this agreement the value and strategic impact of the Mustang Energy Center to our customers, our communities and the state."
Mustang Energy Center upgrades included replacing a 78-year-old generator with a new, 462-megawatt, natural gas-fired power plant.
OG&E in November asked for a $1.8 million rate increase, while the attorney general's office called for a $100 million rate reduction. The settlement plan includes savings to the utility, which OG&E in November estimated at about $70 million.
"We needed to return those dollars to customers in what would be the most effective way to do that," OG&E's Alford said. "We began looking at that and came to the conclusion that we should incorporate the benefits of tax reform into our filings. So we deferred the filing to early 2018 to ensure President Trump did sign the reform and we could include that in our filing."
The settlement plan allows for OG&E to recover the $400 million it spent upgrading its Mustang Energy Center and its solar power generating facility near Covington.
Wednesday's settlement agreement does not include the costs of installing environmental scrubbers at OG&E's coal plants at the Sooner power plant or in Muskogee. Alford said the utility likely will file a rate review later this year to address those costs.
"Today's settlement agreement will help mitigate the effects of the cost increases associated with these environmental projects," Alford said.
The settlement deal included negotiations with several consumer groups, including the attorney general's office, AARP, Oklahoma Industrial Energy Consumers, and Walmart.
"This is welcome news to the thousands of OG&E customers across the state who are struggling with the high cost of utilities, prescription drugs and rent," said Sean Voskuhl, AARP's Oklahoma director.