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OIEC Rejects Referee's Recommendation on AEP-PSO Rate HikeBy
2009-01-13
The referee, Maribeth Snapp, presided over recent hearings into American Electric Power-Public Service Company of Oklahoma’s rate hike request and has recommended that Oklahoma Corporation Commissioners allow AEP-PSO to increase its rates by $70 million and recover an additional $22 million through other rate recovery mechanisms. OIEC contends such a rate hike during the current economic crisis would create undue hardship on all of PSO’s customers, especially energy-consuming companies that are providing jobs to thousands of hard-working Oklahomans.
“This is a terrible time to hit Oklahoma companies in the pocketbook with additional unexpected costs when they are facing other price pressures and weakening revenues,” said Tom Schroedter, OIEC Executive Director.
“A rate hike of this magnitude would compound the pain that many employers are already facing right now. OIEC is counting on Oklahoma’s elected representatives – the corporation commissioners – to be sensitive to the poor timing of this adverse recommendation and convene a hearing to consider the views of OIEC and other consumer representatives who are advocating for a fair decision that considers the well-being of Oklahomans and their employers,” rather than creating excess profits for Ohio-based AEP.
In response to AEP-PSO’s request to raise electric rates by more than $126 million, OIEC testified against any increases exceeding $40 million. OIEC also contends any rate increase should be spread properly among customer classes to eliminate rate class subsidies and to avoid inequitable shifting of costs to Oklahoma job-creating employers. The commission, which has scheduled a deliberation for Wednesday, may rule on the rate increase as early as this week.
In testimony before the Oklahoma Corporation Commission in December, representatives of several large companies and members of the OIEC said AEP-PSO’s proposed rate increase would damage their ability to compete with companies in states that have business-friendly utility structures.
“This rate increase will have dramatic ramifications on our business, make no doubt about that,” Kevin Wilson vice president of operations for Bama Companies told commissioners. Bama employs 875 people at three facilities in Tulsa. “The current and future state of our economy, let alone the factors that impact us as citizens every day, should be given very, very close scrutiny by our commissioners.”
AEP-PSO's rate hike, if enacted, could also jeopardize jobs for industrial customers, such as Kimberly-Clark. The company employs 400 people and contract another 150 in the state and electricity is around 16% of the cost of their product.
"The 30 percent rate increase would adversely impact economic development in Oklahoma, severely damage our ability to maintain or increase investments and our ability to stay competitive with internal and external benchmarks," said Jim Conway, financial manager of the Jenks facility for Kimberly-Clark.
OIEC works to ensure just and reasonable utility rates for OIEC members based upon the utilities’ cost of providing service to those members. OIEC has been active on behalf of industrial and other large consumers of energy for more than 10 years, successfully advocating for utility cost reductions or avoidance of utility cost increases for its member companies. For more information on OIEC or the referee’s recommendation, call Tom Schroedter at (918) 594-0400. < < Back to News