Group seeks reforms to restructure OK's electricity market, allow for choice and competition

This is definitely not my topic of expertise, but it's something to keep an eye on.

AERO, Oklahoma Businesses, Seek Law Change Allowing Choice and Competition in Electricity Market

OKLAHOMA CITY – The Alliance for Electrical Restructuring in Oklahoma (AERO) today announced that it will advocate for reforms during the 2023 legislative session that would restructure Oklahoma’s electricity market to allow for choice and competition. If successful, the effort would end the monopoly status of Oklahoma Gas & Electric Company (OG&E), Public Service Co. of Oklahoma (PSO) and Liberty Utilities as brokers of electricity for commercial and industrial consumers.

Currently, all residential and business consumers in large areas of the state are required to purchase electricity from one of three government-anointed vendors. In the greater Oklahoma City metropolitan area, OG&E is the monopoly provider. In Tulsa, PSO serves that role. Liberty services approximately 4500 customers in Eastern Oklahoma.

OG&E and PSO have recently raised rates by a combined $1.575 billion for their customers, insisting the increase is required to offset debts they incurred during last year’s winter storms. This is despite OG&E reporting annual net income of $360 million in 2021 and American Electric Power (PSO’s parent company) reporting well over $2 billion.

“Our monopoly vendors have an inherent conflict of interest,” said AERO Executive Director Mike Boyd. “They cannot serve the interests of their investors by seeking to maximize profits while also serving the interests of Oklahoma’s ratepayers, who need affordable and reliable power. We can fix this system by injecting choice and competition into the market and allowing ratepayers to choose who they purchase their power from.”

Boyd said AERO’s current focus is on reforms that would allow businesses to choose an electricity vendor, similar to how the natural gas market is already structured. Boyd said OG&E, PSO and Liberty would continue to act as the only utilities in their regions, maintaining electricity lines and responding to outages. Businesses, however, would have the option of paying a different vendor for their electricity consumption.

A competitive market would allow businesses to pursue several options unavailable to them now, including fixed rate plans that would be impervious to the kind of weather-related price shocks seen in 2021. Businesses could also purchase “green” electricity plans powered by wind and solar energy.

A study by the Retail Energy Supply Association (RESA) reports that electricity prices have decreased by seven percent in the 14 states that have adopted choice and competition since 2008. In that same time period, prices increased by an average of 21 percent in monopoly states.

Electricity prices have decreased by seven percent in the 14 states that have adopted choice and competition since 2008. In that same time period, prices increased by an average of 21 percent in monopoly states.

Companies doing business in Oklahoma have made similar observations. At a 2021 hearing held by the Oklahoma Corporation Commission, Walmart reported that from 2007 to 2019, its power costs per kilowatt in competitive jurisdictions rose by one percent. By contrast, the company reported its cost per kilowatt in monopoly jurisdictions rose by an average of 22 percent.

The Oklahoma Restaurant Association, the Oklahoma Hotel and Lodging Association, and Care Providers Oklahoma also offered comments in support of reform at the 2021 Corporation Commission hearing, as did representatives from Clearwater Enterprises, Direct Energy, Verdigris Energy and Vistra Corp.

The coalition in support of AERO’s efforts has also grown to include some of Oklahoma’s well-known entertainment venues, such as Cain’s Ballroom, the Tulsa (Brady) Theater, and Tower Theatre in Oklahoma City. Health care providers – including the Bethany Children’s Health Center and several health care companies operating dozens of nursing homes – have also lent their support to the effort.

“When a provider has no competition for its services and consumers have no choices, prices go up, innovation is stifled, and market inefficiencies are everywhere,” said Boyd. “Injecting choice and competition into Oklahoma’s electricity market will lower costs and benefit Oklahoma’s business community and ratepayers, rather than a small group of shareholders.

The Alliance for Electrical Restructuring in Oklahoma – or AERO – is working to restructure the way electricity is purchased in Oklahoma and end the monopoly held by Oklahoma’s three utility companies.