By Paul Monies, Oklahoma Watch
Oklahoma utility ratepayers could be paying even more money from a huge winter storm almost four years ago after cities questioned if the Oklahoma Corporation Commission could waive franchise fees or municipal taxes from the storm charges on monthly customer bills.
The Oklahoma Supreme Court, in an 8-0 ruling on Wednesday, overturned the agency’s order in 2022 waiving the fees and taxes for more than $3 billion in natural gas costs related to the winter storm in February 2021. It sent the case back to the Corporation Commission for further review. It will likely end up in district court.
Vice-Chief Justice Dustin Rowe, in a concurring opinion, said customers could end up paying up to $100 million more in franchise fees and sales taxes from the $3.07 billion in winter storm charges.
“Will payment be made from the securitized revenue or from the utility companies’ balance sheets?” Rowe asked in his opinion. “I suppose the answer to these questions will be litigated in district court. From there, the district court can determine whether the burden of an additional $60-$100 million will fall onto the people of Oklahoma.”
The city of Oklahoma City challenged the Corporation Commission’s order before the Oklahoma Supreme Court in August 2022. The Oklahoma Municipal League also joined the lawsuit.
Christian Rinehart, deputy general counsel for the Oklahoma Municipal League, said the once-in-a-generation storm negativity affected not only customers and utilities, but municipalities too.
“OML is encouraged by the decision from the Oklahoma Supreme Court,” Rinehart said. “Franchise fees and gross receipts taxes owed to municipalities under contractual legal obligations were protected.”
Outgoing Corporation Commissioner Bob Anthony voted against the order in 2022. Anthony said in a statement Thursday he wished the court had been able to make the same review of the storm costs when it narrowly ruled on the constitutionality of the storm bonds.
“We can only imagine what the court might have done to the OCC’s multi-billion-dollar winter storm bond financing orders if it had not been prevented from considering the protests filed in those cases, some of which made substantially the same legal arguments,” Anthony said. “Justice Rowe is right to wonder who will be required to pay that additional $60-100 million owed to Oklahoma’s towns and cities.”
Former Senate President Pro Tempore Brian Bingman, who won his Corporation Commission race on Tuesday with almost 64% of the vote, will join fellow Republicans Kim David and Todd Hiett on the commission.
At one point during the February 2021 winter storm, natural gas prices in Oklahoma’s trading hub exceeded more than $1,200 per thousand cubic feet, the highest in history. At no other regional trading hub did natural gas spot prices get as high as in Oklahoma. Regional natural gas prices before the storm traded at about $3. Oklahoma Attorney General Gentner Drummond filed lawsuits against natural gas pipeline and marketing companies over what he called market manipulation. A district court judge in Osage County is expected to rule soon on whether those lawsuits can proceed.
Oklahoma Watch, at oklahomawatch.org, is a nonprofit, nonpartisan news organization that covers public-policy issues facing the state.
