Corporation Commission Misinformed On Electric Restructuring, Senator Easley Sets Record Straight

The state entity that currently regulates electric utilities is continuing its efforts to sabotage electric restructuring in Oklahoma - this time by issuing a flawed report that attempts to link an Oklahoma proposal with a vastly different restructuring statute in California.

Senator Kevin Easley, who authored electric restructuring legislation this year, said the latest report from the State Corporation Commission offers a blatantly distorted view of Oklahoma's restructuring efforts.

"We specifically drafted our legislation to avoid the kinds of mistakes that were made in California. Suggesting that the Oklahoma and California plans are the same is like saying that apples and oranges are the same fruit. It just isn't true," said Senator Easley.

A staff report presented to the Corporation Commission Wednesday indicated that the California and Oklahoma plans are very similar. One staff member even predicted that state residents would experience the same utility cost increases as San Diego consumers if drastic changes were not made in the Oklahoma legislation.

"That's hogwash. Anyone who makes that claim either hasn't read the Oklahoma bill or is deliberately trying to distort it. I had really hoped for a more professional approach from the Corporation Commission, but apparently it's more concerned with protecting its political turf than
honestly discussing the implications of electric restructuring," said Senator Easley.

The state legislator pointed out that there are a number of significant differences between the Oklahoma and California plans, including:

The lack of electricity to supply California customers in San Diego stems from the lack of generation and transmission capacity in that region and in the state. California has about the same amount of new capacity under construction as Oklahoma while the growth of electricity usage in California is substantially greater. Oklahoma electric usage is growing at about 1% to 2% annually but in California the growth in electric usage is more like 7%.

The Corporation Commission staff's comparison of Oklahoma to California did not include any discussion of Oklahoma's examination of the California experience and the subsequent efforts to avoid the mistakes made in California. For example:

The California requirement that all purchases must be made through their mandatory Power Exchange has created improper pricing of electricity.
Oklahoma, in the development of recommendations for generation and transmission management, has adopted a position that a mandatory power
exchange was unworkable and that transmission must be managed on a regional basis to allow the benefits of electric restructuring to be realized by all consumers.

Oklahoma has and continues to be an exporter of electricity. We generate more electricity than Oklahoma consumers use. New power plants are being built in Oklahoma. One plant built by Associated Electric in Pryor is already operating and five more plants are in various stages of construction. The combined total of that new capacity will add about 25% to the total capacity of all existing generation located in Oklahoma. Other proposed plants are on the drawing board. All of these plants, those built, under construction and proposed, will burn Oklahoma natural gas. We will, for the first time, produce an Oklahoma commodity and manufacture a product, electricity, in our state rather than exporting the raw material for a manufacturing process in a different state. Oklahoma will benefit from jobs, from additional royalties, and from taxes on the gas and on the manufacturing process and product.

The proposed legislation had more consumer protection provisions than California's current law. The legislation provided consumers with a variety of safeguards that would ensure reliable, safe and economical electricity while fostering and environment that encouraged the development of a competitive and active electricity market place.

Oklahoma has approached the issue of electric restructuring in an orderly and structured manner. Our original legislation passed in 1997 called for a thorough study process. From July, 1997 to October, 1999 the Legislature has conducted more hearings, collected more data, and analyzed the actions taken by the 23 other states that have adopted electric restructuring. The objective of providing choices to Oklahoma consumers while ensuring that a safe and reliable electric market continues has been the main focus of this legislative process.

"We've done everything humanly possible to ensure that the California experience will not be repeated in Oklahoma. Texas has done the same thing, passing an electric restructuring law under the leadership of Governor George Bush. He's still standing behind it in the wake of the California problems and the Texas law isn't even as consumer friendly as the one we've proposed in Oklahoma," noted Easley.

This isn't the first time that the Corporation Commission has attempted to derail electric restructuring. In the final weeks of the legislative session, it announced its opposition to an electric restructuring bill, even though the final draft was not finished. The final version of the measure ultimately had more consumer protection provisions than advocated by the commission.

Senator Easley said the commission's public actions on electric restructuring have more to do with politics than consumer protection.

"When you try to increase competition and lower rates through restructuring, you take away some of the authority of the Corporation Commission in the process. Commissioners wield a lot of power over the electric utilities and they don't want to give that up. They're trying to protect their political turf, not consumers," said Senator Easley.

Contact info

Senate Communications Division - (405) 521-5605