Presentation by SPP Chief Operating Officer Lanny Nickell provided to the Corporation Commissioners on March 18, 2021.
Video available upon request by emailing the Commission's Office of Public Information at email@example.com.
A major winter storm swept across North America during the week of Feb. 14, 2021.
The ultra-low temperatures led to a dramatic increase in demand for electricity and heating fuels.
This event strained the electrical grid that spans 14 states, including Oklahoma.
Utility fuel, purchased power costs from February 2021 Winter Storm
Customers who opt in for certain plans related to smart meters (or automated meters) may get general pricing alerts during peak summer months. These alerts are not real-time prices and are to help the customer plan energy use for a future given period.
The minute-to-minute changes of commodity market prices makes it extremely difficult to give useful, real-time price alerts to customers.
The Commission will continue to work with utilities to have cost-effective strategies to limit exposure to these types of price swings in the future.
No. The OCC has no authority over energy trading markets.
The Federal Energy Regulatory Commission (FERC) is investigating allegations of market manipulation during the February Deep Freeze.
No. The OCC audits the purchases of fuel by utilities to ensure the utility only recovers its actual cost at no profit.
The federal government has authority to regulate the natural gas market.
FERC released in September its preliminary findings and recommendations for weatherizing the grid.
The Southwest Power Pool (SPP) in July published its comprehensive review and provided recommendations from the February winter storm, including two related to ensuring fuel is available and two related to planning to ensure power is available.
Probably. Most of us used more energy heating our homes because of the very cold temperatures. The more you used, the higher the bill.
While the rates of regulated utilities will not change because of the storm, the utility is allowed to recover what it had to pay for fuel to provide you your electric or gas service. That cost is not included in the rates. It will be a separate charge. (See securitization question below.)
These costs are subject to a Corporation Commission audit.
Simply put, the Securitization measure approved by the legislature and signed by the Governor will allow utilities covered by the legislation to spread the fuel costs from the storm over a much longer time period, reducing the monthly impact of the charge on their customers.
Normally any extension of recovery of fuel costs would result in extra credit-related charges to the utility that could be passed on to the utility customer. The Securitization measure creates bonds for fuel costs, decreasing the monthly fuel cost charge by allowing for much greater time to recover the costs. Securitization also saves customers millions of dollars by reducing those credit-related charges that would normally be passed on to the customer.
The “rate” is what customers pay for delivery of the utility service (i.e. electricity or natural gas). Rates include the utility’s profit. Rates were not affected by the winter storm. Utility bills have fuel charges and those charges are not part of the utility’s profit.
A utility must buy fuel from the marketplace to provide service to customers. For electric utilities, the fuel generates electricity and is delivered to you. For natural gas utilities, the utility has to purchase natural gas to deliver to you. Regulated utilities are allowed to pass on to the customer fuel costs. State law forbids regulated utilities from making profit from selling fuel.
All fuel costs submitted by the utilities covered under the Securitization legislation must first be audited by the Oklahoma Corporation Commission.
There a couple reasons why you might have received an extraordinarily high bill:
The Oklahoma Corporation Commission has no jurisdiction over municipal utilities.
Even if you turned down the thermostat, the sub-zero temperatures forced heating units to work harder to maintain stable temperatures in your home. The variables are the insulation in your home, and how low you set your thermostat.
Oklahoma is the nation’s fourth-largest state for natural gas production. The production and transportation of natural gas in Oklahoma was impacted by the polar vortex as equipment “froze off” in the extreme cold, limiting available supply.
At the same time, demand soared to record levels.
The situation could be likened to someone who has the money to pay bills when they are due every month or so (rent/mortgage, credit cards, taxes, groceries, etc.). However, if all those costs were unexpectedly required to be paid all at once for the entire year, the person wouldn’t be able to meet demand. That is what happened during the storm, as what is normally months of natural gas demand was packed into just a few days.
The OCC has no permitting authority for a power plant, regardless of fuel source, nor does the OCC have authority to require that a regulated utility use a particular kind of power generation. The OCC’s authority regarding generation facilities is limited to applications from regulated utilities that want to recover the cost of a given generation project.
Many electric generation facilities in Oklahoma, particularly wind facilities, are owned by companies that are independent of a regulated utility.
The SPP is a regional transmission organization (RTO). It manages electric generation 24 hours a day for a 14-state region that includes Oklahoma. The SPP’s mission is to ensure reliable power supplies, adequate transmission infrastructure and competitive wholesale electricity prices for the region.
The SPP employs a diverse energy mix. While fuels can change over the course of a generation day, here is the average “mix” of sources for SPP-dispatched electricity:
For more information on SPP, visit their website.
Regulatory Asset cases: Applications request the extraordinary fuel costs be treated as a 'regulatory asset.' OCC rules allow a utility to recover costs from regulatory assets over many years.
Securitization cases: Application under the new Securitization statute, Senate Bill 1050, the Legislature passed and the Governor signed April 23, 2021.
|Case type||Company||Case #|
|Regulatory Asset||Oklahoma Natural Gas||PUD 202100034|
|Regulatory Asset||Arkansas Oklahoma Gas||PUD 202100037|
|Regulatory Asset||Oklahoma Gas & Electric Co.||PUD 202100039|
|Regulatory Asset||Public Service Co. of Oklahoma||PUD 202100040|
|Regulatory Asset||CenterPoint Energy Resources Corp.||PUD 202100042|
|Regulatory Asset||Liberty/Empire Electric||PUD 202100050|
|Purchased Gas Adjustment||Ft. Cobb Fuel Authority||PUD 202100057|
|Regulatory Asset||Panhandle Natural Gas||PUD 202100059
|Securitization||Oklahoma Gas & Electric Co.||PUD 202100072|
|Securitization||Public Service Co. of Oklahoma||PUD 202100076|
|Securitization||Oklahoma Natural Gas||PUD 202100079|
|Securitization||Arkansas Oklahoma Gas||PUD 202100084|
|Securitization||CenterPoint Energy Resources Corp. d/b/a CenterPoint Energy Oklahoma Gas Company||PUD 202100087|
|Regulatory Asset||Canadian Valley Electric Cooperative||PUD 202100158|
Contact the Office of Public Information if you have questions that aren't addressed here.
If you have questions regarding the 14-state electricity grid, please contact the Southwest Power Pool's communications office.