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Commission: “No” to ONG Termination Fee; “Yes” To Fuel Cost Recovery

By Office of Public Information
Tuesday, January 25, 2022

The Oklahoma Corporation Commission (OCC) today issued an order approving a plan for paying the natural gas costs incurred by Oklahoma Natural Gas (ONG) during the February 2021 winter storm. However, the Commission said “No” to a proposal that would have imposed a fee on ONG customers who terminate their natural gas service to switch to a different fuel source.

OCC Chairman Dana Murphy said today’s order was the result of an exhaustive review of the evidence, testimony, and proposals in the case.

“While the law and the record support the order’s provisions to lower customers’ bills from what they’d otherwise be billed for the February 2021 storm and to extend out the repayment time frame, we weren’t persuaded to impose a termination fee,” said Murphy.

Murphy said the order allows the costs to be securitized under a law passed by the legislature after the February winter emergency event.

“This means that the monthly impact to ratepayers will be far less than it otherwise would have been,” Murphy said. “It’s estimated that the natural gas costs owed would have cost an average residential consumer $15.32 per month without securitization. Securitization allows the cost to be spread out over up to 25 years, dropping the monthly payment to an estimated $7.82 for the majority of ONG customers.”

Murphy noted the February winter storm caused an unprecedented increase in natural gas prices in a market outside of the OCC’s control.

“The Federal Energy Regulatory Commission and the Oklahoma Attorney General are investigating what happened to the market, and if something is found that could lower costs to ratepayers, that will be instituted,” Murphy said. “Today’s decision also orders the company to credit to customers any proceeds, government grants or other funding sources the company receives for the costs of the February 2021 winter weather event.”

Commissioner Todd Hiett said the fuel costs in question in today’s order have been carefully scrutinized.

“At the core of this case is the fuel cost recovery by the utility as allowed by law,” Hiett noted. “All parties to the case had access to all documentation concerning those costs, including the Commission’s Public Utility Division which conducted a full audit on those costs to determine that ONG did not make a profit on the fuel costs to be recovered and that other requirements were met.”

Hiett said there is no easy answer to the issue of the high fuel costs from the February storm.

“There is no getting around the fact that under state law, regulated utilities can pass fuel costs to the consumer. The costs incurred during the storm were part of an all-out effort to keep lights on and furnaces working. Without the securitization law, the costs would be even higher for ratepayers. Of key concern now is what is being done to reduce the chances of this happening again. The Commission has held a number of hearings on this since the storm, and it’s an ongoing effort.”

This comparison chart outlines ONG securitization charges compared to other financing methods.

Commissioner Bob Anthony's dissented in the case, voting against the order. Read his dissenting opinion in the case.

Last Modified on Feb 01, 2022