News from the Oklahoma Corporation Commission

Jim Palmer, Director of Information

April 26, 2000

(OKLAHOMA CITY)—Public utilities division director Ernest Johnson and energy chief Ken Zimmerman presented a status report on electricity restucturing legislation to the Oklahoma Corporation Commissioners (OCC), consumer groups, some members of the legislature, representatives of electric utilities and spokesmen for interested organizations.

The commission staff update talked about the good intentions of the proposed legislation but clearly cited several concerns and issues. Among the eleven areas of concern were rates for small consumers, the unbundling of services, consumer education, consumer protection and bill of rights, affiliate transactions and code of conduct, competition and enforcement, market monitoring, stranded cost recovery, reliability and quality of service, licensing of marketers, jurisdiction and public benefits.

Staff recommends that the price of electricity must not increase due to restructuring, particularly for small consumers (residential and small commercial). The staff calls for structurally deregulating electricity assets at fair market value so ratepayers can at least share in the value above book.

The status report calls for consumer education to begin immediately and continue for at least 5 years at a funding level of $12-14 million. Staff wants a clear and comprehensive customer bill of rights to be established and enforced by regulators.

Staff recommends the state have full latitude to establish stringent affiliate rules and oversee actions of municipal retail electric sellers.

Regulators must be allowed to establish definitions of competition, continually assess its existence and take action to promote competition.

Staff calls for allowing the commission to assess and remedy market power problems and work to prevent mergers that harm competition.

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The report says regulators must be allowed to assess and determine the amount of recoverable stranded costs for an electric utility.

Staff recommends the quality, reliability and safety of customer service must not decline due to restructuring. Regulators must be allowed to oversee coordinated efforts to ensure this result.

Regulators must be allowed to develop and enforce customer related standards for retail electricity providers. Existing customer protections must continue.

Full regulatory authority and review of unbundling and the existence of competition must not be diminished without a demonstrated benefit to customers.

Public benefit programs such as universal service and low income service must be established and funded. Customers must be informed of changes by every means possible and access to customer information must be stringently safeguarded.

The commission staff also presented an alternative plan for electricity competition in Oklahoma. The "Oklahoma Plan" provides three options for customers. First, it allows large industrial and commercial customers to buy electricity at unregulated rates from retail energy suppliers. Secondly, it provides small consumers a portfolio of several electric service options through their local utility, including an environmentally friendly or "green" choice. Thirdly, all customers have the option to continue buying electricity under a cost-of-service rate that is regulated by the commission.

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