Oklahoma's lawmakers are hoping to minimize the impact of February's severe weather on consumers and prevent exorbitant rate spikes for households.
Power providers conservatively spent billions of extra dollars to keep energy flowing to customers during this latest storm. This meant customers could see astronomical increases in their bills if utilities passed their costs along to consumers in the usual way.
For example, before the storm, an average residential customer of a regulated natural gas utility was paying about $100 a month for service, said Brandy Wreath, the Oklahoma Corporation Commission's legislative liaison.
That same average customer could have faced a bill of $1,967 during the first month of a traditional repayment term, and could have expected to see similarly high bills for another seven months because providers are required to retire additional costs incurred during a storm in a relatively short period of time.
But measures co-authored by Sen. James Leewright, R-Bristow, and Rep. Gary Mize, R-Guthrie, would allow both regulated and non-regulated power providers (and their customers) an opportunity for a much longer period of time to retire those costs, thereby reducing the increases on monthly bills.
The measures recommend pooling expenses into larger bonds or loans that could be sold to investors. Lawmakers and other government officials expect those bonds and loans would carry a much lower interest rate than individual power providers could get if they took out loans individually.
"Consumers will still pay more, because those costs aren't going away," Wreath said. "But this will bring that per-customer impact down significantly to a more manageable level."
The measures propose authorizing the Oklahoma Development Finance Authority to issue bonds and loans to provide additional time for power providers to retire qualified storm-related costs.
One measure would allow the authority to sell bonds to investors that would securitize storm costs for power providers in Oklahoma that are regulated by the Oklahoma Corporation Commission (OCC).
These power providers include Oklahoma Natural Gas, CenterPoint Energy, Oklahoma Gas and Electric Co., Public Service Co. of Oklahoma, a few smaller natural gas providers and a few electric cooperatives.
Regulated entities would be required to submit those costs to the commission.
The commission would determine how much of those costs are eligible, how long providers' customers should be given to retire them, issue appropriate orders setting up debt retirement schedules and routinely audit the data to make sure the processes flow smoothly.
Upon notification from the commission that orders were issued, the development finance authority would be authorized to issue bonds to investors after getting approval from Oklahoma's Council of Bond Oversight, the Oklahoma Attorney General and the Oklahoma Supreme Court.
The other measure would authorize the development finance authority to set up an Unregulated Utility Consumer Protection Fund where it could issue loans to power providers that aren't normally regulated by the corporation commission for qualified storm-related expenses.
Power providers qualifying for that relief include most of the state's electric cooperatives and independent power providers that get their energy through the Oklahoma Municipal Power Authority and the Grand River Dam Authority.
While not normally regulated by the corporation commission, these providers' storm-related costs also would be reviewed by that agency as part of their approval evaluation by the development finance authority.
When loans are approved, it would issue bonds to investors to provide revenue for those loans, provided the proposals are approved by the Council of Bond Oversight and the Oklahoma Supreme Court.
The finance authority also will be required to make reports annually to Oklahoma's governor and legislative leaders on statuses of the funds, plus make periodic reports when loan requests made by unregulated power providers are approved or rejected and when loans and bonds are issued to any power providers that seek the relief.
State Sen. Leewright said the proposed laws attempt to address complex situations.
"Doing nothing would financially devastate Oklahoma families, businesses and our overall economy," he said. "If we do nothing, these costs for families, seniors and fixed-income single working families would force them into struggling between deciding whether to pay for necessities or to pay their electric and gas bills."
Wreath said Monday the proposed laws also help consumers because they forbid power providers from making a profit through the recovery of those added expenses.
Ken Wagner, Oklahoma's Secretary of Energy and Environment, praised the efforts of everyone involved in crafting the proposed solutions.
He said the measures provide safeguards to consumers of power providers across the state, regardless of how they are regulated.
"We are doing this in a way that benefits the consumer, helps credit of utilities, and it also doesn't directly obligate the authority or appropriations of the state's authority or indebtedness," Wagner said. "This is the best possible outcome of a bad situation."
Leewright and Mize also both stressed that Oklahoma taxpayers will not be responsible for retiring the debt if a power provider fails to repay what it owes, and that Oklahoma will not carry the debt on its books.
"What these bills do is to allow those costs to be spread out over a longer period of time to ease the burden on ratepayers," Mize said.