Last Updated on October 17, 2021, 9:15 AM | Published: October 17, 2021
This guest opinion piece is from Nick Singer. He has been a candidate for office and worked as an organizer, activist, consultant, lobbyist, and volunteer for a range of progressive causes. He is based in OKC.
OPINION – Oklahoma City (Free Press) — Every month, Oklahoma residents pay their utility bills. We have an expectation for the lights to remain on and natural gas to flow. In February 2021, for a few days, Oklahoma hit some of its coldest temperatures on record. Utilities briefly had to disrupt our electricity supply and natural gas supplies hit critical levels.
Natural gas is the fuel chosen to meet electricity demand when others can’t. For a few days, our industrial infrastructure nearly failed to deliver. Simultaneously, the natural gas market broke and prices rose to astronomical levels which utilities then paid to meet increased demand. Utility companies bought more gas by cost in those two days than they do in a year. If we, the ratepayers, had to pay those bills in a single month it would total thousands of dollars.
This sounds complicated. It sounds expensive. It is, but there are many, very important people and companies who are paid extremely well to monitor, manage, regulate and decide how these systems work. There are a myriad of state, federal, and even local governments, laws, and regulations interacting to keep the lights on and all parties happy.
Our job is to pay our bill, their job is to deliver the goods.
So, when we approach an issue like this, there are a lot of fingers to point and people to blame. I’m going to attempt to simplify and assign the correct amounts of responsibility to each party.
First, ratepayers should be off the hook. The Governor, Legislature, Corporation Commission, Southwest Power Pool, Attorney General, and even OG&E, ONG, and PSO have some language somewhere in their constitution, charters, or bylaws that their purpose is to support, maintain or protect the public interest.
Screwing up royally and sticking us with the bill isn’t it.
Utilities are attempting to solve a crisis they created. These companies knew the energy spot markets left them vulnerable in a crunch. Cold weather events in recent years, here and in Texas, demonstrated that their infrastructure could fail in extreme cold. There are two ways to look at prudent and reasonable, a concept regulators use to determine if they should get paid. Was it prudent to keep the lights on and gas flowing in a cold snap? Sure. Was it prudent to be so exposed to the spot market or rely on infrastructure so susceptible to cold you had to pay these ridiculous prices? Definitely not!
The Legislature passed a bill at warp speed to create a process called securitization. This is a fancy term for, stretching the cost out for years plus interest. In more technical terms, our future rate payments are a debt-paying instrument that will go to the bond market to pay off the astronomical purchases.
Securitization is horrible public policy! There is zero accountability and it actually incentivizes companies to make the same mistake again and stick consumers with another 28-year bill. There are ways to go after profiteers and protect ratepayers, they did none of them.
The Governor signed it and has been awfully quiet about investigating who the heck got paid all this money and why. It’s important for the executive branch to make sure laws were followed and look out for the public.
The Attorney General is the people’s lawyer and is supposed to represent us in these cases. Since Mike Hunter went down, they have been silent about their investigations into price gouging or whether these charges are prudent and reasonable. On the current OG&E Settlement Agreement, they don’t have any opinion at all. That’s bad!
The Southwest Power Pool (the company that manages the grid) has lots of very important people and stacks of documents, slides and studies about how much they ensure reliability and low costs and yet, in these cases, can’t seem to hold the people who profited wildly from a crisis accountable. It’s not low cost when we are paying a billion dollars in fuel charges and interest.
OG&E gets to be the bad guy here because they filed the first case. They are the trial balloon for this charade. Corporate interests are to move this along as fast as possible. They are already out the money and have huge debts they want to service and get off the books.
The issues here are a few things:
First, they are protecting bad actors.
OG&E knows who was paid stratospheric gas prices. They know where infrastructure failed, why, and how much it’d cost to have prevented that or fix it in the future. They know they are incredibly profitable, have increased their dividend to shareholders for 14+ years, and have many avenues to service debt that isn’t on the backs of ratepayers.
They are doing this because they think they can.
Utilities are regulated monopolies because providing electricity is expensive and capital intensive. You cannot run competing power plants or lines. The key word is “regulated.” They don’t get whatever they want. Regulators have incredible power here.
The Oklahoma Corporation Commission is a constitutionally created regulatory body that has incredible power over these companies. There are three commissioners, who are elected statewide. Two votes and they can do a lot. Like so many things in law, they can justify this in many ways. At least as easily as they can justify giving away the farm to various natural gas interests, then can decide to protect ratepayers and find exorbitant charges are not prudent or reasonable.
Ultimately, this is political and about greed.
OG&E won’t go bankrupt if you make them eat this cost over some number of years. Maybe execs would have to give up some stock options, maybe the dividend could only be $250M per year instead of $300M+ for a few years but ultimately, they’d recover.
Or OG&E could go play some hardball with the people that really screwed us. Maybe their buddies in midstream operations and natural gas storage don’t want to give up those fat February checks, but OG&E needs to be having those tough conversations.
If these guys had built a bunch of new infrastructure or drilled new weather-resistant natural gas wells in two days in February to stave off an emergency, we could still be pissed but at least have something to show for it.
We got nothing for this cost. A few folks who were sitting on some gas at just the right moment profited off of a natural disaster. That’s wrong. Ratepayers didn’t do that and all the people who are responsible cannot keep passing the buck. It has to stop somewhere else.
Free Press from time to time invites or accepts opinions written by persons who are not in our organization but are known to us in the community or state. If you would like to write an opinion for us, please write to info (at) freepressokc.com.
