HomeTop StoriesOG&E consumers may be facing a historic rate hike. Where does...

OG&E consumers may be facing a historic rate hike. Where does all the extra money go?

When it comes to rising electric bills, Rick Dowell sees Oklahoma Gas and Electric Co. as a utility pursuing a historic rate hike that will not only hurt residential consumers but could send Oklahoma City’s economy into a tailspin.

Dowell and thousands of other OG&E customers face a 13.85% increase in their bills if the utility’s request is approved by the Oklahoma Corporation Commission.

OG&E estimates that the average residential customer will see an average of $19.02 added to their monthly bill. Dowell, who owns and manages 30 office buildings, says the impact on businesses will be much worse.

By Dowell’s calculation, his annual bill has increased from $485,383 in 2020 to $736,019 in 2023. He estimates that with the rate increase, electricity costs at his properties will increase his annual OG&E bill to $837,957.

The increases in Dowell’s bills also represent frequent fluctuations in separately assessed fuel costs, which OG&E said do not include any profit-taking by the utility. But similar complaints were made by private customers who wrote to the Corporation Commission, with one showing how their bill rose from $1,288 in 2019 to $1,882 in 2023.

“This is a killer, I don’t know what these guys are thinking,” Dowell said. “And it seems so sneaky. No one seems to know what is going on.”

More: Why OG&E customers could see a $25 drop in their bills, before a $19 increase

The requested increase coincides with the drop in fuel prices

The hearings will begin June 17, when OG&E and opponents of the increase will present arguments to an administrative law judge, who will then make a recommendation to the three members of the Corporation Commission who have the final say on the issue.

If approved, the requested rate increase would be the third increase in customer bills since 2017, excluding separately assessed fuel costs. None of the previous increases come close to the $332.5 million increase that OG&E is currently seeking.

A $9 million request added $1 to the average monthly housing bill in 2017. A rate review in 2018 resulted in a $64 million decrease, reducing the average housing bill by $4.44 per month. A 1.9% rate increase was approved in 2022, increasing the average monthly housing bill by $2.07.

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Kimber Shoop, director of regulatory policy and planning at OG&E, said the utility is timing the rate increase to coincide with recent declines in individual fuel prices that have risen sharply in recent years.

OG&E crews work to repair power lines at NW 162 and Western after a traffic accident in this 2022 photo.

OG&E crews work to repair power lines at NW 162 and Western after a traffic accident in this 2022 photo.

“It’s been a while since we’ve had a significant rate increase,” Shoop said. “We have tried to keep those costs down and maintain affordability. But we have made many necessary investments in our tower delivery system, especially to strengthen the electrical grid, maintain reliability and replace aging assets and infrastructure.”

Shoop said the utility faces challenges from high material and labor costs, a changing climate causing more weather extremes and cybersecurity against hackers. Utilities in other states have been hit by attacks on substations by suspected domestic terrorists.

“Part of our efforts is strengthening the network so that no matter what happens, our network can survive these storms,” Shoop said. “We have completed more than 500 grid improvement projects on 193 circuits, adding 35 substations, along with reliability improvements and distribution automation.”

Dowell questions why OG&E’s request won’t create a pain point for the utility and allow the utility to make more profits while customers will be forced to make painful cuts to their own homes and businesses.

Meanwhile, there was a big difference in public comments about the rate increase. At a recent public comment hearing hosted by the administrative law judge and company commissioners, all but a few more than a dozen spoke in favor of the rate increase.

Supporters who came from across the state to a recent public hearing included civic leaders, nonprofit representatives and economic development executives who spoke about the utility’s public service efforts. All individuals contacted by The Oklahoman confirmed that OG&E has asked to support the rate hike.

Comments submitted via telephone and email, meanwhile, were overwhelmingly against the rate increase.

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Not all rate increases will go to infrastructure costs and improvements. The utility faces paying up to $70 million in damages if it loses one or both of the cases filed in recent years by apartment developers who allege OG&E and its contractors were negligent in connecting their properties to the electrical grid. OG&E confirmed that these damages, if identified, will impact the fees charged to customers.

More: OG&E is facing a second lawsuit alleging the contractor is responsible for apartment building fires

The $332.5 million increase includes $51 million to increase the cap on shareholder returns from 9.5% to 10.5%. A majority of these shareholders consist of some of the largest asset management funds in the world.

The largest shareholder in OGE Energy Corp., OG&E’s parent company, as of January was Blackrock Inc., which bills itself as the world’s largest asset manager with $10 trillion in assets under management as of Dec. 31, 2023. Reuters reports The compensation package for Lawrence Fink , the company’s CEO in 2023, was $26.9 million.

Other major shareholders include Vanguard Group, State Street Corp, Clearbridge Investments and T. Rowe Price Investment Management.

OG&E CEO Sean Trauschke will speak March 14 during the unveiling of the modernized Science Live!  Auditorium at the Science Museum Oklahoma in Oklahoma City.OG&E CEO Sean Trauschke will speak March 14 during the unveiling of the modernized Science Live!  Auditorium at the Science Museum Oklahoma in Oklahoma City.

OG&E CEO Sean Trauschke will speak March 14 during the unveiling of the modernized Science Live! Auditorium at the Science Museum Oklahoma in Oklahoma City.

Caron Rose, one of dozens who wrote to the Corporation Commission to oppose the rate increase, argued that utility executives, especially OG&E CEO Sean Trauschke, are insensitive to the hardships of a $19 increase for regular customers , while Trauschke’s compensation totaled more than $8.4 million in 2023. .

“Trauschke will not be harmed by an increase in his electric bill,” Rose wrote. “After all, $19 is nothing to a guy who got a $1.2 million bonus in 2022 (the bonus was $1.48 million in 2023). If the upper echelons at OG&E gave up their bonuses, they would have a significant slush fund to draw from for their projects, without involving the hard-working, honest citizens who will never, ever in their lives to see.”

Attorneys representing the shareholders wrote a letter to the Corporation Commission arguing that the increase in returns on profits is necessary to remain competitive with other utilities. OG&E reports 2023 net income was $426.4 million, compared to $439.5 million in 2022.

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The lawyers, Jeff Clark and Ronald Statakem, wrote in support of the rate hike, painting a grim picture of a failing economy, rising costs, political instability, climate change and war. Load growth, transmission inadequacy, cyber-attacks and network congestion, they noted, prompted many warnings of continued power outages.

“It defies common sense to suggest that the financial and business risks facing the company are less today than in March 2017, when the company’s current allowable return on profits was set at 9.5%,” the lawyers wrote. “The risk trend is increasing; the direction of the allowed return on profits in Oklahoma should also increase.”

Utility promises for help for seniors

The AARP, which represents 38 million seniors — about a third of the nation’s entire senior population — is among the groups legally challenging the rate increase. AARP Oklahoma State Director Sean Voskuhl says the rate increase will hit seniors especially hard.

“This outrageous rate hike would increase residential customers’ bills by approximately 14 percent, increasing bills $19 per month or as much as $228 per year,” Voshuhl said. “Oklahomos should not have to choose between buying prescription drugs, putting food on the table, or keeping the lights on and staying warm.”

OG&E counters that the utility is proposing a $60 annual increase to its Silver Energy senior discount program as part of the rate review. But other critics counter that it will not offset the entire increase or address the pressure it will cause for single parents and people living paycheck to paycheck.

Richard Linhardt was among those who spoke out against the interest rate increase, and was the only one to ask for interest rates to be lowered. Linhardt said he has worked with families as a therapist for more than 50 years, researching the conditions of children in state custody.

“When this eventually reaches the people who are marginally floating or near drowning, it will have a significant impact on their lives,” Linhardt said. “If you ever sit in front of a woman with three children, working two jobs and trying to make ends meet, you always felt like it was a form of violence against her. And I always felt helpless to do anything for her. We all need electricity to survive.”

This article originally appeared on Oklahoman: Oklahoma Corporation Commission will decide fate of OG&E rate hike

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