Oklahoma Gas and Electric wasted no time in offering testimony in support of its recently announced intention of taking advantage of a new state law that allows consumer protection from large-load customers such as data centers or big industrial projects.
The case will eventually make it way before the state’s three elected regulators who will make a decision about the request.
Records with the Oklahoma Corporation Commission show the utility filed testimonies of at least three company representatives in support of the utility’s move to ensure high-energy users pay the costs of supplying them with needed electrical power.
Kimber Shoop, Director of Regulatory Affairs for OG&E declared the company recognized the prospect that adding new large loads to the grid could raise concerns from existing customers how the large loads could affect customer rates. It’s why OG&E proposed what is called an XLPL (Extra Large Power and Light) tariff.
“As this Commission is aware, OG&E wants to grow and serve new businesses, but it also wants to maintain affordable rates and reliability for all customers. While OG&E seeks to attract new businesses, the Company also needs to make sure its current customers are protected and OG&E grows its system responsibly,” he stated in his testimony to be considered by the Corporation Commission.
Shoop admitted additional costs will be incurred by OG&E in serving any new large load project, but the utility wants to make sure it protects other customer classes from rate increases caused by the additional investments. One proposed method is a Contribution in Aid of Construction or CIAC payment from the large-load customer to cover the costs of utility infrastructure.
“Any CIAC received from a customer allows the utility to make the infrastructure investment without adding it to rate base and without earning a return on the investment or otherwise including the investment in rates. In the T&CXLLC, the XLPL customer would be required to pay a CIAC reflecting all transmission and distribution infrastructure costs associated with serving its new or expanded load (plus applicable taxes),” he explained.
Gwin Cash, OG&E Senior Manager of Pricing, Rate Administration and Load Analysis offered testimony explaining a proposed pricing structure consisting of three primary billing components: Customer Charge, Capacity Charge and Energy Charges.
The testimony of Matthew DeCourcey, Vice President in Energy Practice with Charles River Associates, was also offered in support of OGE’s request.
“My testimony supports the Company’s proposed Extra-Large Power and Light Tariff (“XLPL Tariff” or the “Tariff”). Specifically, my testimony describes the ways in which the Tariff will protect OG&E’s customers against the risk of stranded costs and cross subsidization of costs across rate classes. I also explain why adding XLPL customers could reduce rates for the Company’s existing customers.”
DeCourcey claimed the XLPL Tariff provides OG&E’s customers with what he called “robust protections” against adverse outcomes.
“First, there is general recognition across the industry that utilities seeking authorization to serve new large load customers must demonstrate that existing customers are protected from the potential adverse effects of stranded costs and that existing customers will not subsidize the cost to serve the large loads. Where that has been the case, regulators have generally approved large load tariffs and special contracts. Second, the terms of the XLPL Tariff will help protect OG&E’s existing customers from stranded costs and from any subsidization of the costs of large load entrants.”
He also contended that adding XLPL customers to the OG&E system “could reduce rates for existing customers” and he recommended the Commission approve the tariff without modification.
Before the Corporation Commissioners will hear the case, an Administrative Law Judge will hold a hearing June 25 at 8:30 a.m. on other motions including one to publish notices in newspapers, another to establish a procedural order for the case, and another to consider OG&E’s request for a protective order regarding certain confidential and proprietary information that might arise in the case.
As of June 24, the Attorney General filed an entry of appearance in the case “to protect the interests of utility customers in the above-referenced proceeding.” Another appearance entry was filed by the Oklahoma Industrial Energy Consumers.
