The Oklahoma Corporation Commission, Public Utility Division (PUD) reviews the processes utilities use to purchase commodities during its annual fuel audits. Almost all fuel purchased on the behalf of Oklahoma ratepayers is procured through competitive bidding. The annual review looks in depth at bidding processes, bid evaluations, and contract negotiations. PUD considers whether or not the winning bid was the lowest cost for ratepayers while still ensuring the bid was reasonable. PUD reviews the process to ensure that affiliated bidders are not given preferential treatment.
In addition to price, it is also important to consider the reliability of the bidder in electricity or gas. Suppliers must show an ability to guarantee delivery to avoid disruption of utility services.
There is generally a delay of two months from the time the companies purchase fuel to the time it is billed to customers. For example, fuel purchased in May would be billed to customers in July. Most utilities also have tariffs that require them to change the fuel factor less frequently to minimize volatility. Due to this practice, the companies are required to maintain an over/under recovery account to insure that only the actual cost of fuel, no more and no less, is billed to the consumers. This account is trued-up periodically and audited by PUD and other parties, including the Attorney General. This true-up can result in a fuel rate that can be either a positive or negative adjustment, depending on the market.
It is also important to note that the commodity or fuel portion on your bill includes more than just the commodity cost. The companies are required to have other consumer protections in place which require additional costs to be passed on to ratepayers. These costs are directly associated with getting natural gas or electricity in to the regulated utilities distribution system. These costs include, but are not limited to transport, storage, and reservation fees.
Current annual fuel reviews can be monitored through the Commission's active energy cases link and imaging system.