PSO base rate increase calculated

Public Service Co. of Oklahoma announced Friday it’s increasing its base rate it charges its customers by $80 million.

The increase was authorized earlier this week by Oklahoma’s Corporation Commission after months of hearings involving testimony from dozens of witnesses representing the utility and other interested parties before an administrative law judge.

In its case filed in mid-2017, PSO had sought to increase its base rate by $156 million, or 11 percent, so it could recover more than $625 million in costs for electrical upgrades it had made since its last rate case and boost its profit.

The judge who heard the case recommended that PSO be allowed to increase its rate base by about $81.2 million, or about half what it had requested.

Commissioners on Wednesday adjusted that recommendation somewhat higher, allowing PSO to recover some costs the judge had recommended against allowing.

While commissioners authorized PSO to boost its return on equity more than what the judge recommended, they still didn’t agree to allow the utility a 10 percent return it had

requested.

Instead, the commission granted PSO a 9.3 percent return. That return on equity is what regulated utilities are allowed to earn as profit relative to the amount of equity invested in their business.

A PSO spokesman said Friday the adjustments agreed to by commissioners boosted the allowed base rate increase to $111 million.

However, the commissioners’ order also requires PSO to compensate customers for the tax breaks it received through the 2017 Tax Cuts and Jobs Act approved by Congress and signed into law by President Donald Trump in December.

After calculating in that compensation, the rate increase was trimmed by $31 million.

Attorney General Mike Hunter earlier had called for the company to compensate its customers for the tax break by reducing its base rate by at least $24 million.

Hoping for more

A spokesman said this week the utility is appreciative commissioners allowed the utility to recover some expenses the judge had recommended against allowing. However, he added

the utility had hoped for more.

“We are concerned about the authorized rate of return, which is lower than returns awarded to utilities around the country,” said Ed Bettinger, a communications manager for PSO.

He said the rate of return doesn’t fully compensate the utility for its affordable pricing and service it provides its customers.

“Although the order is a positive step in the right direction, we still are not recovering all of our costs to serve customers,” he said. “We are evaluating next steps to ensure that PSO can remain financially sustainable and able to continue to invest in Oklahoma for the benefit of customers.”

Bettinger said Friday the $80 million rate base adjustment the commission allowed represents a total increase of about a 5 percent.

However, he also said specific impacts on bills will differ, depending on the type of customer.

Bettinger said the utility continues to analyze the specific impacts the rate increase will have on each class of its customers, and expects to release that information next week.

PSO has 30 days from the date of the order to submit its new tariffs (rates) to the commission for review and approval, he said.