Law & Principles, Energy

Bad bill would hike utility costs for consumers

March 11, 2024

Jonathan Small

In recent years, Oklahoma has gone from having some of the most affordable electric rates in the nation to some of the most expensive.

In September 2022, the Alliance for Electrical Restructuring in Oklahoma showed that electricity rates surged by 49 percent from June 2021 to June 2022, bumping Oklahoma from having the most affordable electricity rates in the nation to having the 18th-highest costs.

Given that trend, you would think Oklahoma lawmakers would be working to lower costs.

Instead, a measure that could further drive up electricity rates has advanced from the Oklahoma House of Representatives.

Under House Bill 4097 there would be no competitive bidding for transmission projects with a rating greater than 300 kilovolts that would be completed within three years. For projects outside the three-year window, competitive bidding would be allowed—but the new transmission line must ultimately be turned over to the incumbent utility.

A group calling itself the Alliance for Secure Energy has promoted HB 4097, declaring it will “Stop Obama/Biden Energy Policy.” (No meaningful data are provided to back that strange assertion.)

In contrast, a coalition of 14 groups—including Americans for Prosperity-Oklahoma, the National Federation of Independent Business, the AARP (formerly known as the American Association of Retired Persons) and other organizations representing consumers—have come out against the bill because of the negative impact it would have on utility rates for everyone.

The coalition says measures like HB 4097 are comparable to passing a state law that says “that only those with existing oil wells in the state could drill new wells.”

The groups call this idea a “scheme from the incumbent utility companies” that “would ostensibly allow competing companies to bid on the construction of high-voltage transmission lines authorized by the Southwest Power Pool, only to subsequently transfer the completed projects to incumbent utility companies.”

In practice, that would do “nothing to expedite the needed electricity infrastructure or enhance reliability,” the groups noted, but would instead “entrench” incumbent utility control and ultimately increase consumer costs because the system effectively deters competition.

The coalition noted this proposal is being advanced even as Oklahoma Gas and Electric (OGE) has requested a $332 million rate increase from the Oklahoma Corporation Commission that would result in an almost 14-percent increase in rates for consumers and a similar request from PSO for a $218 million rate hike has been submitted.

The U.S. 5th Circuit Court of Appeals struck down a similar law in Texas, as did the Iowa Supreme Court, which called the Iowa law “rent-seeking, protectionist legislation” that is “anticompetitive.”

As I’ve noted before, government regulation is largely unnecessary in a free market. But utilities given monopoly control are not part of a free market.

Lawmakers should protect Oklahoma consumers from financial exploitation and kill HB 4097.