Electric Utilities Seeking Rate Hikes of
More Than $100 Million
(November 5) American Electric Power-Public Service Company of
Oklahoma (AEP-PSO) and Oklahoma Gas & Electric Co. (OG&E), the state's two largest
electric utilities, went to state regulators on Nov. 1 and asked to raise consumer rates
by more than $100 million due to higher costs and new investments.
In documents filed at the Oklahoma Corporation Commission,
OG&E asked to raise rates by $91 million while AEP-PSO requested a rate increase of
$36.3 million. Together, the two utilities serve more than 1.2 million Oklahoma customers.
AEP-PSO said the increase, if approved, would amount to an
additional $2.50 a month for the average residential customer. The monthly cost for the
average OG&E residential customer would rise temporarily by $4 a month, the utility
said.
AEP-PSO, Tulsa's chief power provider, said it has not raised
rates since 1993. Since then, the utility has invested about $1 billion on improvements in
generation, distribution and transmission, said Alan Decker, director of regulatory
services for the company. "On an annualized basis, our revenues are less than our
costs," he said.
AEP-PSO customers now pay, on average, 6.7 cents per
kilowatt-hour, up from 5.49 cents, the average for 2002. The increase stems from higher
prices for natural gas, which is used to make half of AEP-PSO's power supplies.
OG&E's rate increase would fund improvements in efficiency
and reliability, which would lead to customer savings, the utility said. The savings,
OG&E said, would eventually offset the higher rate.
The increase, if approved, would cause rates for OG&E
residential customers to rise $4 a month in the last half of 2004. But by January 2005,
the improvements would push residential rates about $1 below levels charged in January
2003, OG&E said.
Funds from the rate increase would be used to purchase a 77
percent interest in the McClain Power Plant in Newcastle. The $160 million acquisition
would result in lower consumer costs because the power from McClain would replace more
expensive power supply contracts, OG&E said.
"We need to recover the cost of the plant through a rate
increase," said OG&E spokesman Brian Alford. "The good news is the savings
will offset the rate increase required to pay for it."
The rate request is part of a plan designed to lower customer
costs, OG&E said. Last year, state regulators approved a settlement calling for a $25
million rate reduction in 2003. The settlement allowed OG&E to acquire cheaper power
from a new power plant and required the utility to deliver $75 million in customer savings
over three years following the acquisition.
The Corporation Commission has six months to issue a final order
related to both proposed rate increases.
Source: Tulsa World