Oklahoma utility to request rate hike from state

Oklahoma Gas and Electric Co. officials said Monday a rate hike the utility is seeking will push consumer electric bills up by an average of $7 a month.

OG&E spokesman Brian Alford said the utility plans to formally ask the Oklahoma Corporation Commission for a rate increase of between $100 million and $110 million on Thursday. It is the first time OG&E has sought a rate hike since the commission authorized a $42 million boost in 2006.

Between 1985 and 2005, OG&E reduced its base electric rates nine times totaling $167 million. But Alford said OG&E has invested more than $1.2 billion in its electrical system since 2004 and more than $500 million of that investment is not being recovered under the current rate system, which is based on 2004 costs.

"We have stayed out as long as we can," Alford said.

Alford said the utility is sensitive to the fact that it is seeking a rate hike at a time when declining prices for oil and natural gas and a nationwide recession is threatening businesses and jobs.

"There never is a good time," Alford said. "But in order for us to continue to provide service that our customers can depend on, we need to recover that cost."

OG&E is the state's largest electric utility with 770,000 retail customers in Oklahoma and western Arkansas.

The utility is also seeking a $26 million rate increase in Arkansas, which accounts for about 10 percent of the utility's customers. The increase would cost OG&E residential customers in Arkansas an average of $12 more per month.

Under Oklahoma Corporation Commission rules, the utility can implement the higher rates 180 days after its request even if the commission has not ruled on the request, Alford said. The utility may be forced to send refunds to consumers if all or part of the request is rejected, he said.

The utility will also ask that the commission boost OG&E's authorized return on equity from the current 10.75 percent up to 12.25 percent.

OG&E currently operates nine generating plants, including two coal-fired plants and seven powered by natural gas, and does not plan to build another fossil fuel plant until at least 2020.

Instead, the utility will focus on developing renewable energy, including wind power, and conservation efforts, Alford said. Higher rates are needed to replace aging infrastructure like utility poles, transmission lines and substations and to invest in new technology, he said.

OG&E now has about 170 megawatts of wind generation capacity and plans to add 700 additional megawatts of wind capacity.

The utility also plans to invest in so-called "smart grid" technology which will allow it to read meters and turn service on and off remotely and provide consumers with equipment they can use to monitor real-time power usage and cost.

"They're able to drive costs out of their consumption," Alford said.

The utility expects consumption to increase overall but that the new technology will allow customers to become better consumers of energy, he said.