Record withdrawals

The U.S. set a record for the amount of natural gas drawn out of storage last week.

Residential utility customers who get their power from Oklahoma Gas & Electric won’t see a bill increase as part of a rate case the company filed Tuesday with regulators, company officials predicted.

On Tuesday, the utility filed a $72 million rate increase request with the Oklahoma Corporation Commission.

But company officials also said savings it estimates it will get from the Tax Cuts and Jobs Act approved by Congress and signed into law by President Donald Trump absorb about $68 million of the requested increase.

“The president’s signing of tax reform in December was fortuitous for customers and the company,” OG&E spokesman Brian Alford said.

“Today’s filing reflects those benefits, as well as our ongoing efforts to manage costs,” he stated as part of a release announcing the filing.

Why an increase?

Donald R. Rowlett, OG&E’s managing director of regulatory affairs, filed testimony with the commission related to the rate increase request that said the utility seeks to pay for upgrades it has made to its system, to give it a better return and to more realistically compensate it for aging assets.

The upgrades Rowlett testified about involve the recently

completed installation of seven natural gas-fired, quick-start combustion turbines at its Mustang Power Plant in Oklahoma City.

The new turbines replaced two much-older natural gas-fired turbines that weren’t as efficient or as responsive to the energy provider’s needs. Rowland testified the new turbines (which have a capacity of 462 megawatts) also would improve the reliability of its electrical grid.

“Quick-starting combustible turbines were highly desirable for several reasons,” Rowlett testified. “This quick-start ability allows the units to supply power during peak demand, serve unscheduled demand, and supply ancillary services to the grid ... while delivering better reliability, improved efficiency, better load responses, improved operational flexibility and lower emissions rates.”

He said the capacity also enables the utility to better meet ebbs and flows of power demands based upon wind generation levels at any one time. The estimated cost to upgrade the plant (less costs for debt, equity and taxes) currently stands at $355 million, compared to an initial estimate of more than $411 million.

As for improving return, Rowlett said the utility continues to seek a reasonable amount to contain its financing costs, which he said benefits its customers.

Comparatively speaking

Rowlett testified OG&E expects a reduction in its federal corporate income tax rate will reduce its annual revenue requirement by about $63 million annually.

He said OG&E also already is tracking what that reduction means on utility customers’ current bills, and is tracking over collections related to its deferred income tax liability (estimated at $7 million for 2018).

He testified that its

customers would begin to recognize the benefits of the lower tax rates when the commission approves new rates associated with this case.

“All things considered, the average residential customer will not see an increase in their bills when compared to current rates,” Rowlett said. “OG&E is not proposing to change residential electric rates as a result of this application.”

Typically, numerous parties intervene in rate cases, including Oklahoma Attorney General Mike Hunter, who represents the utility’s customers.

Last week, Hunter had asked the Corporation Commission to approve recommendations from his office that would have required utilities to immediately adjust customers’ bills lower to compensate them for the reduced tax liability created by the federal law, which lowered corporate tax rates from 35 to 21 percent.

Late Tuesday, a spokeswoman for Hunter’s office said OG&E’s filing was still being reviewed.