WNeil Crittenden learned that Oklahoma was in danger of being hit by an extreme winter storm last winter. He did what the officials told him to do: he kept his heat on and his water running so his pipes wouldn’t freeze. To keep his pipes thawed, the 40-year-old Oklahoma City resident used hair dryers.
Crittenden did not know that the energy he used would eventually cost him a lot. Utilities that were not prepared for winter storm Uri’s ravaging of the south central US in February 2013 caused chaos. The storm caused blackouts across several states and led to the deaths of at most 223 people.
Oklahoma’s gas supply was in crisis. With demand soaring and critical equipment freezing, the state’s gas supply was at its lowest point. Oklahoma Natural Gas, the state’s largest gas company, made a last-minute purchase of fuel from the extremely expensive spot market at almost 600 times the usual price to keep the heat on.
Officials now say that Crittenden and other residents will have to pay the entire $1.37bn bill, almost a year later. The Oklahoma Corporation Commission is expected approve the plan this month.
Imagine you went to the gas station, filled up $50 with gas, and the price was based on what the sign said. Crittenden explained that you will be required to enter into a payment plan in order to pay off the 1,000-fold increase in price two months later.
Oklahoma is not going to challenge the prices charged by the utility to its customers. Instead, it will use securitization, which works in a similar way to a credit-card to pay off the debt. It will collect customers’ fees to pay $1.4bn in interest and pay off the $1.4bn. As much as$7.80 per month for the next 25-years
Many states have used securitization for climate-related costs like the repair of downed power lines following a hurricane. However, it has not been used for fuel prices. Experts in economics and energy say it can be misused to support unprepared energy systems, which are being affected by worsening extreme weather.
It sets the precedent that there cannot be any upper limits on the cost of gas that can be passed on to consumers, said Kylah McBab, an energy consultant who was also a policy adviser to Oklahoma’s secretary of energy under Mary Fallin.
This is scary for me as a consumer.
Consumer watchdogs wonder why Oklahoma Natural Gas didn’t have better preparedness with weatherized power stations or emergency fuel contracts. They also want to know who is benefiting from the $1.4bn that state regulators agreed to keep secret.
They claim state leaders have not properly questioned the charges, and instead have rushed into a plan for paying off the debt. This is partly because Oklahoma’s oil and gas industry is so powerful. The fourth largest producer of gas in the United States is Oklahoma.
Critics believe Oklahoma’s story is part the national trend of regulators failing in their duty to challenge the industries that they oversee as climate change worsens, extreme weather becomes more common.
Regulators enjoy tremendous power over energy policy decisions in the United States. But they too often rely on the utilities they are supposed regulating. Poor regulation can lead to higher consumer rates and more carbon pollution, according Charlie Spatz of Energy and Policy Institute (a watchdog utility organization).
Oklahoma leaders claim they are offering customers a better deal by charging a flat fee for monthly power bills. This is regardless of how much energy was used during the storm. They also mandate a $687 exit fee to gas customers who choose to switch from gas heating and cooking to electric.
Oklahoma Natural Gas claims that it was prepared for the storm partly because it had bought gas at lower prices in the summer, and stored it in storage for winter. The company stated that the exit fee was not punitive and would ensure all customers paid their fair share.
The Corporation Commission stated that regulators couldn’t comment on pending cases. Republican Bob Anthony, however, expressed dissatisfaction at the way the governing board voted on recent securitization case stemming out of the storm.[The commissioners]Anthony stated that you have the right of holding any of these companies in contempt and that you can inspect their records at any time.
He voted against the Oklahoma electric utility’s securitization. The request was approved by the two Republican commissioners.
Anthony stated, “I’m disappointed when people want me to, go along with them, because we are here for justice.” I don’t think my job is to impose excessive interest obligations upon ratepayers.
When in Debt
Oklahoman officials warned about higher prices before the winter storm. However, no one expected them to rise from $2 to 3 per thousand cubic feet up to almost $1,200. According to the The Oklahoman, Oklahoma’s price rises were three times greater than spot prices at Houston’s fuel trading locations. Energy Information Administration.
Monthly bills were predicted to reach thousands. Leaders in Oklahoma knew that this would lead to extreme hardship. Oklahoma has the Third-highest rate of povertyin the country, and was already struggling for recovery from the coronavirus epidemic.
Mike Hunter, the then attorney general of the United States, was appointed to act as the storm’s administrator. AnnouncementHe said that he was investigating evidence of market manipulation by utility companies. His findings could have prompted the gas companies to lower their charges to the utility as well as its customers. However, he was forced to resign after an extramarital affair. John OConnor has since largely focused on this topic. Federal Covid-19 vaccine challengeThese regulations Resuming the state death penalty.
Oklahomans weren’t being billed for the enormous fuel costs when state legislators set up a special committee in order to review storm costs.
The securitization bill was introduced by legislators in April 2021. It was signed by the governor on 23 April. It was only one option. However, legislators and regulators at Corporation Commission never reexamined the question of whether Oklahoma Natural gas customers should be required to pay $1.4bn.
Ashok Gupta from the environmental group Natural Resources Defense Counsel, a senior energy economist, stated that it was a failure by the regulatory body to do its job effectively, even from an administrative point of view.
Other states have rejected utility requests to repay storm Uri-related debts. Minnesota officials deniedA gas utility requests to recover $500m. A small community in south-eastern Kansas suedMarch price gouging by BP Energy
Oklahoma regulators have recovered money from natural-gas utilities BeforeWhen they believed they had overpaid for fuel. The Corporation Commission ordered Oklahoma Natural Gas to reimburse $34 million to customers after a 2002 cold snap.
Oklahomans are resisting the increase in bills they were told to expect.
Fern McIntosh from Tulsa, responding to a call for public comments, pleaded for policymakers.
She said that I am a retired lady with low income. I barely eat now.
Who is benefiting?
Consumer advocates have accused regulators of being too close to the industry they regulate. Recent reports reveal that three of the Corporation Commission’s elected officials have each been convicted. ReceivedCampaign finance reports show that more than $200,000 has been donated by employees, subsidiaries and political action committees to companies they regulate.
Todd Heitt, Dana Murphy, and Dana Murphy were not available to comment on campaign donations. Anthony claimed that his votes were independent, and that his voting record showed that.
Oklahoma Natural Gas filed a protective order two days after the February storm to keep the names of the gas companies that profited from the price rise. The Corporation Commission, which supervises utilities, reached an agreement within 48 hours. Oklahoma Natural Gas stated that its request for confidentiality with its suppliers was industry-standard.
However, there has been a huge price increase of over 600 times the normal price. This has led to calls to improve transparency.
The Corporation Commission’s public utility division, which operates independently of its elected commissioners has filed a request for Oklahoma utilities to disclose their suppliers from the storm.
Brandy Wreath (director of this division) said, “As a ratepayer I would like to know too.”
Wreath claimed Oklahoma Natural Gas wasn’t to blame for the cost, as it didnt make any money from gas sales. He also noted that the lawyers and experts involved in this case were able examine who made the most of the gas sale.
Wreath stated that the federal government was ultimately responsible to ensure customers are protected in natural-gas markets. The Federal Energy Regulatory Commission has been Investigating possible price manipulationIn the electricity and natural gas markets, 14 suspicious trades were found but they have not been identified. This work is unlikely to be completed before Oklahoma’s deal is finalized.
Oklahomans were only made aware of the higher bills after receiving a November letter by the utility asking them to weigh in on the plans already in place.
Paul Betow, a Muskogee resident of 61 years who has lived in Oklahoma his entire life, had a grim outlook.
Betow said that they are trying pass this off to make it average out for 28 more years. In 28 years, I will be dead.
This story is a collaboration Floodlight Oklahoma Watch.