News from the Oklahoma Corporation
Commission
Phone: (405)
522-2100, FAX: (405) 522-1623, www.occ.state.ok.us
COMMISSIONERS
TAKE GIANT STEP FORWARD TO ADDRESS RISK OF UTILITY BILL SPIKES
search for
solutions to volatile utility costs include use of market hedging and two pilot
programs
(OKLAHOMA CITY) – The Oklahoma Corporation
Commission has ordered the largest gas and electric utilities serving the state
to present plans to lessen the impact of energy price volatility upon
consumers. In an historic move, the Commissioners are working with all of the
major gas and electric utility companies at the same time for the benefit of
consumers and the utilities that serve them. It is a concerted effort to find
solutions to the impact of high market prices for energy which have plagued
Oklahomans and the nation for more than a year.
The Commission has given its
blessing to two separate pilot programs and to the search for market hedging
methods and risk management programs which represent a diversified, balanced
portfolio aimed at reducing exposure to high prices for both consumers and the
utilities.
The Commission has
unanimously given Oklahoma Natural Gas Company (ONG) permission to proceed with
a 12-month pilot program starting in the fall of 2002. The Pilot program will
offer customers the chance to take part in a voluntary, fixed price payment
plan (VFP) designed to avoid the volatile aspects of spot market pricing. The
pilot program will also help determine customer acceptance of such a plan. ONG
will be allowed to collect reasonable and prudent costs of the program.
Arkla-Reliant Energy
Resources Inc. (ARKLA) has had its pilot program for hedging approved by the Commission
for financial transactions not to exceed ten percent (10%) of its annual gas
supply for twelve (12) months ending March 31, 2002.
The Commission will further
work with ONG and other utilities under a notice of inquiry to consider future
hedging plans they may implement to reduce the impact of price volatility on
their customers.
Oklahoma’s largest electric
companies, including Public Service Company of Oklahoma (PSO) and Oklahoma Gas
& Electric (OG&E) will be reviewed by the Commission as their chosen
hedging programs are implemented to help reduce the volatility of market prices
on both gas and electricity.
-occ-