OKLAHOMA CITY, Feb. 27 /PRNewswire-FirstCall/ -- Citing that it last adjusted its rates using 2004 costs, OG&E today filed a request with the Oklahoma Corporation Commission to increase average electric rates for an Oklahoma residential customer by about $8 per month.
Along with the residential increase, the company is requesting an increase of approximately 1 percent for small business and an increase of about 5 percent for larger commercial and industrial electric customers. Schools and municipal lighting accounts will not be affected.
In its filing, the company said that it has spent approximately $1.6 billion investing in new power plants and making required improvements to power lines, substations and related equipment that ensures that the company can reliably meet growing demand for electricity.
"Like any business, OG&E must periodically revisit its rates, or prices, and adjust them to meet current business conditions," said Jesse Langston, OG&E Vice President of Utility Commercial Operations and the company's policy witness. "Where we differ from other businesses, however, is that we can't adjust prices to cover rising costs unless we have approval from regulators. We also can't close plants or reduce production to offset higher costs; to do so would jeopardize the reliable delivery of electricity."
He added that OG&E's current rates were last set based on 2004 costs. Since then, the company has experienced increased business costs and invested more than $1.6 billion in the electric system - more than half of that investment, $900 million, is not included in today's electric bills.
Regulated utilities in Oklahoma set future base rates based on costs established during a prior test year. Because OG&E's last test year was 2004, in its current filing, the company is requesting that 2008 be used as the test year for future base rates.
"Before we file any rate increase request, we ensure that our own belt has been tightened and that our performance is strong. Our 2008 test year demonstrates our success in these areas," Langston said. "Today, for example, our workforce headcount is virtually identical to where it was in 1961, although our customer count has more than doubled. Our operating and maintenance costs are 25 percent better than the next best utility in our region, and we've been nationally recognized for our residential customer service."
In addition to investment and cost recovery, the company is proposing additional dollars to expand low- and fixed-income programs and for the expansion of its Positive Energy(R) Smart Power initiative, which provides customers with money-saving tools and improves the utility's operating efficiency.
"We recognize that there is no good time to request a rate increase," Langston said. "We've worked to delay our filing, but the fact is that our rates don't adequately cover the cost of doing business."
In total, the company is seeking an annual increase of about $110 million. OG&E's Oklahoma rates, now about 25 percent below the national average, would remain below that average after the proposed increase.
If approved by the Commission, OG&E's new rates would be expected to go into effect before the end of the third quarter of 2009.
OG&E, a subsidiary of Oklahoma City-based OGE Energy Corp. , serves more than 770,000 electric customers in a service area spanning 30,000 square miles in Oklahoma and western Arkansas.
