News from the Oklahoma Corporation
Commission
Phone: (405)
521-4180, FAX: (405) 522-1623, www.occ.state.ok.us
November 6,
2001
ELECTRIC RESTRUCTURING:
PROCEED WITH CAUTION, SAYS STUDY
(Oklahoma
City) Restructuring Oklahoma’s
electric industry (commonly referred to as “deregulation”) can benefit
residential consumers, but there do exist problems and potential pitfalls.
That’s the finding of a first-of-its-kind study on restructuring done by the
Oak Ridge National Laboratory at the request of the Oklahoma Corporation
Commission.
“The
study makes clear there are many areas of concern if the consumer is to benefit
from competition,” said Commission Chairman Denise Bode. “For example, one
scenario in the study shows consumers could pay lower electric prices in the
short term, but much higher prices in the long term if such issues as
transmission capacity and differing generating costs from plant to plant are
not taken into account.”
“This
is an extremely important issue,” agreed Commissioner Bob Anthony. “Oklahoma should consider the safeguards
suggested by this national study if it pursues electric deregulation in the
near future.”
The
study warns that any restructuring plan must take into account the inherent
competitive advantage that would be enjoyed by existing low-cost power plants.
Such an advantage could result in higher prices in the long term because newer,
higher-cost plants could be forced out of the marketplace.
The
study also finds that Oklahoma would face an electricity “glut” if the state’s
transmission grid is not upgraded to allow the export of the electricity to
other states. The study says that while such an over-supply of electricity
could result in lower prices for the ratepayer over the short term, prices
could eventually rise sharply as those companies unable to profitably generate
electricity are forced to shut down, thus lessening competition.
The
report presented today to the Commission is the second phase of the Oak Ridge
study. The first phase of the study focused on the immediate impact on Oklahoma
ratepayers if the electric utility industry were to be deregulated today, with
no other
(STUDY,
pg. 2)
concerns
addressed. It concluded there would be
an immediate sharp jump in electric rates.
This is the only restructuring study ever
done using the sophisticated modeling analysis afforded by the Oak Ridge
National Laboratory’s technical and intellectual expertise. It allows for
specific answers to the many “what-if” questions surrounding the complex issue
of restructuring.
The
study will be presented to the Electric Restructuring Advisory Committee
meeting in Tulsa on Wednesday, November 7 (tomorrow). The meeting is scheduled
for 10 a.m. at the Allen Chapman Center on the University of Tulsa campus. The
Committee is composed of legislators and state officials who have been charged
with the task of studying the restructuring issue and making a recommendation
to the Legislature next year. Corporation Commission Chair Denise Bode is a
member of the Committee.
Phase
One and Phase Two of the study are available on the Oak Ridge National
Laboratory’s web site: www.ornl.gov
-occ-
All OCC news
releases are available at the OCC Web Site (www.occ.state.ok.us)