News from the Oklahoma Corporation
Commission
Matt Skinner, Public Information
Phone: (405)
521-4180, FAX: (405) 521-6945 m.skinner@occemail.com
December 17,
2004
COMMISSION
APPROVES PSO/AMERICAN AIRLINES AGREEMENT
Special contract will help
keep thousands of jobs in Oklahoma
Following
the lead set by voters and area officials in their approval of incentives to
keep the
Commission
Chairman Denise Bode called it a “pure pocketbook issue for all involved.”
“We
are talking about a facility that directly employs more than 8,000 people in
“Obviously,
the loss of this facility would be a major blow to individual Oklahomans and to
the state’s economy as a whole,” Bode continued. “Further, it is worth noting
that if this facility should close and the jobs lost, electric rates in PSO’s
service area would probably have to go up as well as there would be a far
smaller base to support the cost of providing electricity.”
Commissioner
Jeff Cloud said the final proposal is the result of the diligent efforts of
commission staff, PSO and the
“The
original proposal would have passed on to PSO’s customers the entire cost of
this contract. The agreement approved today means the company will bear at
least 15 percent of the cost. It’s expected that the rest of the cost will
be paid through a reduction in the so-called ‘off-systems sales margin credit’.
This small credit is part of the fuel adjustment clause on the PSO electric
bill. If for some reason the off–system sales don’t generate enough money for a
credit, PSO will have to make up the difference itself, with no added cost to
customers,” Cloud said.
(MORE)
(PSO-American
cont.)
“Also,
under the original proposal PSO’s biggest customers – who are also major
employers and contributors to our economy – would have paid as much as $50,000
a year more in power costs,” Cloud added. “I want to especially thank the
members of the Oklahoma Industrial Energy Consumers (OIEC), and OIEC executive
director Tom Schroedter for their invaluable assistance in analyzing this issue
and helping to craft a solution that does not pose a burden on other sectors of
Oklahoma’s economy.”
Commission
Vice-Chair Bob Anthony issued a dissenting opinion in the matter.
Under
the agreement, the monthly bill of a PSO residential customer using 1,000
kilowatt hours a month would increase about 23 cents.
-occ-
(All OCC advisories
and news releases are available at the Commission web site www.occ.state.ok.us)
EDITORS – PLEASE NOTE: COMMISSIONER ANTHONY’S DISSENTING OPINION FOLLOWS
Dissenting Opinion of Commissioner Bob Anthony Cause PUD No. 200400261
TO: Commissioner Denise Bode
Commissioner Jeff Cloud
FROM:
Commissioner Bob Anthony
DATE: September 15, 2004
RE: Deliberations of PSO Special
Contract With American Airlines
I
do not support making average PSO residential customers pay an additional 23
cents per month for three years to subsidize American Airlines electric bills
by up to $1.6 million per year for that period. Instead, the Oklahoma
Corporation Commission could issue an order upholding the recommendations of
the PUD Staff and the OIEC allowing a special discounted electricity
contract between PSO and American Airlines with the discount to be covered
by PSO shareholders and not the utility’s other customers. Recovery of the proposed discount is a
subsidy whether or not it is disguised as a reduction in the amount of
off-system sales credited back to ratepayers.
The Commission should not set an example for other
distressed companies in the PSO service territory to seek special treatment at
the expense of the electric company’s remaining customers. For example, there are between 15 and 20
other industrial customers in the vicinity of American Airlines. Extending the same treatment to just these
customers located in the same geographic area could add an additional 55 cents
for each 1,000 kilowatt hours per month on the bills of the utility’s residential
customers.
PSO
utility customers are already facing the possibility of significant increases
in their utility bills. These could come
from a potential hike requested in the company’s pending rate case; possible
recovery of increased vegetation management costs needed to meet the Commission’s
new reliability rules, and the possibility of allowing PSO to recapture the
amount in the fuel adjustment clause the company says was under-collected as a
result of allocation errors at the AEP corporate level. These pending cases or applications, if
granted in full, would be over $100 million in additional costs to ratepayers,
with more than $50 million of that amount being an annual increase.
