Oklahoma Watch: What to know about Oklahoma Natural Gas’ new storm charges
Customers of Oklahoma Natural Gas will be paying an extra $7.80 per month for the next 25 years under a plan approved Tuesday by the three-member Oklahoma Corporation Commission.
The fee will go toward paying almost $1.4 billion in natural gas costs racked up by the utility last February during a winter storm. The extra, fixed charge on customer bills will pay back bonds issued by the state under a process called securitization.
Oklahoma Watch and Floodlight News wrote about the proposed settlement last week. In a proceeding that lasted less than three minutes, the Corporation Commission approved the settlement in a 2-1 vote. Commissioner Bob Anthony voted against the plan, while Dana Murphy and Todd Hiett voted for it.
Here are some answers to relevant questions about the extra charges:
Will every ONG customer pay the same fixed charge for the next 25 years?
No. The exact amount won’t be known until the bonds are given a credit rating and sold, which will likely happen later this year. But estimates have most residential customers paying between $7.80 and $8.40 per month. Those fixed charges come regardless of how much a customer used natural gas during the storm and are the same no matter the size of a customer’s house. Another class of residential customers, who use less gas per month on average, will be paying between $4.66 and $5.02 per month. About 14,000 customers who are in the utility’s low-income program will not have to pay the extra monthly charges. The fixed charges are higher for commercial, industrial and municipal customers.
Likely later this year. The Corporation Commission will require the utility to put it in a separate line item on bills and identify that the charge is for the fuel costs from the February 2021 storm.
Is there still an “exit fee” for customers who discontinue their gas service and switch to electric for cooking and heating?
No. That exit fee, a one-time cost of $687, was taken out by the Corporation Commission in the final order. Murphy said she didn’t think the exit fee was needed to meet the law’s requirement of non-bypassability or the risk that customers would get out of paying the extra fuel charges.
Why were natural gas prices so high during the storm?
Demand surged as customers used more natural gas to heat their homes and electric utilities needed gas for their generating plants. But the extreme cold affected supply as natural gas equipment froze and many gas producers couldn’t fulfill their contracts. Utilities quickly used up their gas in storage and were forced to buy expensive gas on the spot markets.
Weren’t natural gas prices high everywhere during the winter storm?
Yes, but Oklahoma’s prices were the highest. Natural gas trades at several regional hubs around the country. Most utilities in Oklahoma buy their gas at the Oklahoma hub, where prices hit close to $1,200 a unit during the storm. That was about 600 times the prices in the days before the storm. Oklahoma’s electric and natural gas utilities spent more than $4.5 billion on natural gas during the storm, far exceeding the amounts each of them spent on natural gas in the entire year before.
Who’s responsible for looking into the high prices?
The attorney general and the Federal Energy Regulatory Commission. In the weeks after the storm, then-Attorney General Mike Hunter said his office was looking into possible price gouging. But his successor, John O’Connor, hasn’t provided any updates on the status of that investigation. Federal regulators are looking at possible price manipulations but have not completed any investigations. If any investigations find wrongdoing, the amount clawed back will come off the total owed by ratepayers under the securitization case.
The Corporation Commission has auditors who look at gas purchases, but they don’t investigate prices. The auditors make sure the utility hasn’t profited on the fuel, which is illegal under Oklahoma law, and that any transactions with related companies or subsidiaries were done properly.
Do we know the identities of the companies who sold the gas to the utilities?
No. Utilities typically ask for “protective orders” from the commission to keep the names of their gas suppliers out of the public eye. They argue that’s needed so buyers and sellers don’t get an advantage in future sales because they’ll know how much a customer is willing to pay. But the extremely high prices from last February led consumer groups to call for greater transparency. The commission’s public utility division earlier this month asked utilities to disclose the identities of the sellers, but that is a separate case that is still pending.
What’s the status of other utility fuel cost securitization cases?
The Corporation Commission approved a $749 million charge for customers of Oklahoma Gas & Electric Co. in December on a similar 2-1 vote. That will add about $2 a month for most residential customers for 28 years. Other cases are pending at the Corporation Commission. Public Service Co. of Oklahoma has asked the commission to approve $688 million in fuel costs spread over 20 years. If approved, that would add $4 per month for most residential customers.
Who is challenging the securitization law at the Oklahoma Supreme Court?
A former lawmaker, Mike Reynolds, has filed a lawsuit against Senate Bill 1050, which passed in April 2021. Reynolds, who is not an attorney, is representing himself in the case. He said the securitization bonds need to go before voters for approval.