OG&E Customers Can Expect Higher Bills

Arkansas customers of Oklahoma Gas and Electric (OG & E) could see their bills increase by more than ten percent for electricity used after August 1. A similar increase, which went into effect on July 1, has recently affected the utility’s Oklahoma customers.

OG & E proposed last week to the Arkansas Public Service Commission a twenty-five percent increase in the energy cost recovery rider rate, one of the several components of a customer’s overall monthly bill.

The commission’s executive director, John Bethel, said the rider aims to recover the cost of fuel used by an electric utility to generate electricity and the cost of purchased energy by it from any other provider. According to the filing, OG & E estimates that the average Arkansas customer who uses 1,000 kilowatt hours per summer month and pays roughly $82.29 a month will now pay $91.13 for the same amount afterAugust 1; an increase of 10.7 percent. This same customer who pays about $65.72 for winter use of the same amount of electricity will pay 13.5 percent more, or $74.56.

“What’s driving the need to change the rate is the cost of natural gas that they use directly and how the cost of natural gas affects the market price of energy that they purchase,” Bethel said. “It’s high. That’s the disappointing aspect of this. It looks like it will remain high going into the winter. It’ll have an effect on electric prices and the amount of gas used for space heating this winter.”

Since late March, the Henry Hub benchmark price for natural gas has increased about 35 percent to its highest level since December 2005, according to the Energy Information Administration. This price falls after the winter heating season in more typical years. Because the price of crude oil has risen 42 percent just this spring, competition puts pressure on natural gas prices.

In its filing, OG & E says it plans to “under-recover its fuel cost under the Rider ECR by approximately $12.69” million through August 2008 and by $19.59 million by March 2009 without a cost recovery adjustment. Bethel says that waiting to make the change until its time for the annual change in estimate could result in the company requiring an even bigger adjustment to make up for the unrecovered cost prior to it and potentially put even more pressure on the consumer.

“It will go into effect unless the commission suspends it. What we’ll do as the staff, we will evaluate the filing and supporting information and make sure we believe it is accurate …Unless we determine there’s a mistake or misstatement, we’ll permit it to go into effect,” said Bethel.

Typically, the commission would let the change go into effect but a few years ago it suspended one proposed by Entergy electric utility and investigated it.

Oklahoma regulatory rules allow a utility like OG & E to make a change in cost recovery on much shorter notice, and the Oklahoma Corporation Commission can rescind it on review effective back to the time it was implemented, says Matt Skinner, the spokesman for OCC. OG & E is the first electric utility operating in Arkansas to request a cost recovery change this year, said Bethel.

“OG & E has more natural gas generation that Entergy and Swepco (electric utilities) for example. Entergy has more coal and nuclear, and Swepco has more coal than does OG & E,” Bethel commented.

OGE Energy Corp, the parent company of OG & E, posted a net loss of $11.3 million for first quarter 2008 compared to a net income of $1.9 million last year. Shares of OGE Energy closed Thursday at $31.41, a drop of 37 cents. In the past 52 weeks, the price ranged from a $38.30 high and a $29.12 low.