Is a settlement near in OG&E rate case?

A settlement could be near in a long-running rate case for Oklahoma Gas and Electric Co.

The parties were scheduled to have a settlement conference this morning at the Oklahoma Corporation Commission. During a three-hour hearing Tuesday afternoon, commissioners asked several times about the possibility of a settlement in the case, which started last July.

Commissioner Bob Anthony asked if appointing a settlement judge or mediator could be helpful at this point in the rate case.

“Commissioner, I have to tell you that I think the realm of a potential settlement is relatively small, the moving parts are relatively small, so I frankly think bringing a third party up to speed might actually not be productive,” said OG&E attorney Bill Bullard. “The others may have a different view.”

Chairwoman Dana Murphy said she didn’t support a mediator at this point.

“I would not be in favor of that. I think the parties have really worked hard on it,” Murphy said of a potential settlement.

Attorneys for the parties were mum on a settlement after the hearing. They will tell you settlements are always a possibility in rate cases, although nobody talks on the record about the details. OG&E settled its last rate case in 2009 with a $48 million increase. That was offset by an unrelated fuel-cost reduction for customers. OG&E had asked for a $110.3 million rate increase in the 2009 case.

Tuesday’s hearing centered on responses to a May 30 administrative law judge report that recommended OG&E be given what amounts to a $19.2 million rate increase. Much of the testimony was technical in nature, but it boiled down to how much the electric utility should be granted on its “return on equity.” OG&E asked for an 11 percent return on equity, which would amount to a rate increase of $73.25 million. The administrative law judge, Jacqueline T. Miller, recommended a return on equity of 10.75 percent, or a rate hike of $19.2 million.

Several other parties in the rate case, including AARP, commission staff, the attorney general’s office and groups representing industrial users, want OG&E to lower its electric rates. They suggested cuts between $4 million and $57 million.

Because of the length of the rate case, OG&E tried to implement higher interim rates earlier this month. But commissioners rejected those interim rates and held OG&E’s attorneys to an earlier statement on the record in January that the company would not implement interim rates.

Thank you for joining our conversation on Power Play. We encourage your discussion but ask that you stay within the bounds of our commenting and posting policy.