Sierra Club to Oklahoma Supreme Court: OCC Order is Unconstitutional

On December 22nd, the Sierra Club filed its opening brief with the Oklahoma Supreme Court asking it to overturn a decision by the Oklahoma Corporation Commission (OCC) that approves Oklahoma Gas & Electric (OG&E)’s proposal to spend $500 million to retrofit OG&E’s Sooner Power Plant—a 37-year old coal-fired power plant which has barely operated since last year. Sierra Club contends that the OCC’s decision unlawfully puts protecting shareholders from financial risk above protecting ratepayers. If the decision stands, families, small businesses, and churches in much of Oklahoma will experience large monthly rate increases to subsidize operation of a plant that cannot economically compete with more modern sources of electricity—especially wind power.

“Customers are exasperated and ready to push back on OG&E’s many attempts to get ratepayers to bail out an idle, dirty coal plant built in the 1970s,” said Johnson Bridgwater, Director of the Oklahoma Chapter of the Sierra Club. “OG&E should  use this money, time and effort to implement cleaner sources of energy that benefit the ratepayer, advances Oklahoma’s economy, and provides entrepreneurs with a share in the booming clean energy economy. The OCC is constitutionally empowered to stand up for ratepayers, and right now it is only standing up for OG&E’s shareholders.”

OG&E first requested approval in 2014 from the OCC to retrofit the Sooner Power Plant and to recover half a billion dollars of ratepayer money for this retrofit. The OCC denied that request, along with other requests, finding that OG&E failed to demonstrate the financial benefit of installing expensive scrubbers for numerous reasons, including ignoring future ratepayer-funded investments that would be needed to maintain the aging Sooner coal plant. The OCC also concluded that OG&E’s plan put customers at risk because it missed opportunities to lock in record-low prices for wind-based electric power.

Barely two months after the OCC rejected OG&E’s first request for a bailout, the company filed another request seeking pre-approval of its decision to install scrubbers at the Sooner plant to remove the risk that shareholders would not be able to recover the $500 million for the retrofit. OG&E didn’t provide any new information to alleviate the OCC’s concerns about risks to ratepayers; in fact, OG&E asked the OCC to make its decision based on the same record from the previous case. Sierra Club and other parties asked the OCC to stand by its previous decision to protect ratepayers as the risks for ratepayers had increased since its previous decision. The independent regional electricity transmission organization, the Southwest Power Pool (SPP), had shut down OG&E’s Sooner plant in the intervening period and put it on standby reserve.

In May 2016, the OCC approved OG&E’s latest request.  The OCC determined that its authority allowed it to preapprove OG&E’s plan without addressing the plan’s impacts upon ratepayers. The OCC bypassed the crucial questions of cost and ratepayers’ interests, while at the same time explicitly stating that it was relieving the risk to OG&E and its shareholders that it would be unable to recover those costs from the ratepayers in the future.

Sierra Club’s brief filed to the Oklahoma Supreme Court argues that both the Oklahoma Constitution and statutes prohibit the OCC from shirking its obligations to protect ratepayers. The Commission’s general constitutional and statutory mandate is limited to ensuring that a utility’s decisions have “a reasonable and fair effect upon the rights of the public,” most importantly a reasonable impact to ratepayers.

“The Oklahoma Corporation Commission (OCC) should focus on its job of protecting ratepayers from unfair rate hikes,” continued Bridgwater of the Oklahoma Chapter of the Sierra Club “The Oklahoma Constitution and the Commission itself both say it is the responsibility of OCC to protect ratepayers’ rights, not serve as a business consultant for OG&E.”