Regulators order $42 million rate increase for OG&E

Oklahoma City, Dec., 13, 2005 — OG&E Electric Services said it is pleased the Oklahoma Corporation Commission has recognized the need for rate relief in ordering a $42.3 million increase, but noted the amount of the rate order will require OG&E to reduce planned electric system upgrades and expansion projects. OG&E has invested $600 million in such work since 2003 and will now consider when to return to the Commission to seek further rate relief.

OG&E sought an increase of $89 million to reflect the new McClain power plant, as well as increases in general business expenses and an ongoing program to replace aging poles, wires, transformers and related equipment. The Commission’s Public Utility Division staff had proposed a rate increase of only $13 million and various intervenors in the case had proposed a rate reduction. The new rates are scheduled to go into effect in January.

“We proposed reasonable funding of our investments that would keep our customers’ electric rates below the national and regional averages,” said Steven E. Moore, Chairman, President and CEO of OGE Energy Corp., parent company of OG&E. “In order to ensure the long-term reliability of our system, we will need to invest additional dollars and will need additional rate relief in the not-too-distant future.”

The company said under the rate order, signed late Monday, small businesses will see a slight decrease in their monthly electric bills, but will not experience the level of reductions proposed by OG&E. OG&E also said the rate order includes an increase of about $3 per month for the average residential customer, while effectively lowering large industrial customers’ monthly bills. The new rate design, which was contrary to OG&E’s proposal, was recommended by the Commission’s Public Utility Division staff and intervenors in the rate case, including the state Attorney General and an industrial energy consumer group.

The rate order does include OG&E’s proposals for new summertime assistance program for low-income customers, and a Guaranteed Flat Bill program that will enable residential customers the option to pay the same amount every month, and no rate increase for Tinker Air Force Base. The Commission’s order also permits OG&E to earn a small return on under-recovered fuel expenses to help finance high fuel costs. This will benefit customers and the company by spreading the impact of high natural gas prices over a longer period of time.

OG&E serves about 744,000 customers in a service area spanning 30,000 square miles in Oklahoma and western Arkansas. OGE Energy also is the parent company of Enogex Inc., a natural gas pipeline business with principal operations in Oklahoma.

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