OG&E Seeks To Raise Electric Rates on Oklahoma Customers for Old Coal Plant’s Unapproved Expenses

New Report Shows Coal Plant Highly Uneconomic        

 OKLAHOMA CITY-- OG&E has again asked permission to raise electric utility rates on families, small businesses, and industry, to pay hundreds of millions of dollars for the utility’s past, unapproved decision to retrofit the 40-year-old Sooner coal-fired power plant.  Already denied approval twice in recent years by the Oklahoma Corporation Commission (OCC) and the courts, OG&E filed this new request over the holidays with the OCC. The company’s data indicates that typical family would see their monthly electric bill rise nearly 8% as a result of this rate case.

 Located between Stillwater and Ponca City, the Sooner coal plant has struggled to operate in a modern electric grid that features newer, more efficient, cost-competitive generation sources, like Oklahoma’s abundant wind energy. OG&E’s new rate case is the third time since 2014 that the utility has sought approval for the expensive equipment in question, with no approval in hand at present since previous requests were rejected by the OCC or the courts.

 OG&E now seeks to raise rates on its customers nearly $78 million annually, and then collect those increased fees for years to come. This hefty hike would start recovering the more than half-billion-dollar cost of the Sooner coal plant project, along with some less pricey items. Certain other costs the utility wants to recover include a far cheaper coal-to-gas conversion project at the company’s Muskogee power plant, and a handsome increased profit for company shareholders (with a 9.9% return on equity) on top of the project costs.

 To highlight just how bad a decision the utility is making, today Sierra Club is releasing a new economic report that demonstrates that the Sooner plant is a drain on OG&E customers. Using government figures and OG&E’s own data from its earlier attempts to get approval for the project, this new report shows that Sooner is selling much less electricity than OG&E had forecasted, and is not earning anywhere near enough money to pay for the cost of the new equipment or even justify keeping the plant open.

 "We are disappointed by OG&E and we strongly object to their request to collect half a billion dollars through higher electric rates on Oklahoma families. Rather than modernizing and locking in significant amounts of low cost wind and solar like utilities in neighboring states, OG&E continues coming back again and again to the Commission asking for a bailout of their old polluting coal plant," said Johnson Grimm-Bridgwater, Director of the Oklahoma Chapter of the Sierra Club. "In addition, for a utility that today imports more out-of-state coal to Oklahoma than any other, we think the request by OG&E to raise its profit margin on the backs of ratepayers is completely unacceptable. We hope the OCC follows the decision of the state Supreme Court and stands by its first, correct rejection of the Sooner coal plant bailout in 2015.”

OG&E first requested approval from the OCC in 2014 to add expensive equipment to the Sooner coal plant, rather than carefully looking at less expensive options, such as cheap Oklahoma wind power. The utility wanted to recover roughly half a billion dollars of ratepayer money for the retrofit, plus a sizeable profit on top of that for company shareholders. The OCC denied that request in late 2015.

Just weeks after the OCC rejected OG&E’s first effort, the company filed a second request, seeking a determination that it was reasonable for the utility to proceed regardless of the prospective cost impact on ratepayers. The OCC approved that second request, but Sierra Club successfully appealed the OCC’s decision to the Oklahoma Supreme Court. The high court reversed and vacated the OCC’s second decision in early 2018, agreeing with Sierra Club that the decision was unlawful--a victory for Oklahoma ratepayers. In doing so, the Supreme Court emphasized the OCC’s earlier determination that OG&E had failed to show that the project’s costs were reasonable.

OG&E’s new rate case filed with the OCC a few days ago is yet another try by OG&E to raise rates and foist an unnecessary cost onto ratepayers.  And that cost is in addition to the millions in profit off that expense that company shareholders are asking to recover--all from Oklahoma families and businesses, to keeping running an old, outdated coal plant that hasn’t been cost-effective in recent years.

OG&E imports hundreds of millions of dollars’ worth of Wyoming coal to operate the coal plant--money that ought to stay inside Oklahoma and create jobs within our own state. Sierra Club will continue to defend ratepayers from having to bailout this expensive, unnecessary, and polluting power plant until OG&E chooses a different path.