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Utilities Pressed on Fuel Costs: Findings of a Regulatory Review Have Led to a Call for Major Changes.

Posted on: Thursday, 26 January 2006, 15:00 CST

By Russell Ray, Tulsa World, Okla.

Jan. 26--Energy bills have risen to alarming levels, and the higher cost of fuel for utilities is the biggest factor. As a result, state regulators have taken a hard look at the way utilities determine fuel costs. Their findings have led to a call for major changes. The Public Utility Division of the Oklahoma Corporation Commission, after reviewing the fuel costs of several Oklahoma utilities, found that some companies estimate their fuel costs, overcharge customers and wait more than a year to repay them. "Some public utilities have collected and are holding millions of dollars of fuel overpayments made by customers," the PUD said in papers filed this week at the commission. PUD Director Joyce Davidson said consumer fuel costs should not be estimated. State law requires utilities to use actual costs when determining consumer fuel charges. PUD's findings are based on a review of four utilities: Oklahoma Natural Gas Co., American Electric Power-Public Service Co. of Oklahoma; Oklahoma Gas & Electric Co.; and Arkla Inc. All four utilities estimate a portion of their fuel costs, Davidson said. She is asking the commission to require utilities to apply actual costs to their fuel cost adjustments on a monthly basis. The goal is to create a uniform system that reduces fluctuation in customers' bills. "We're trying to streamline the process," Davidson said. "We're just trying to get them all as close as we can to the same sheet of music." Some utilities adjust their fuel costs on a quarterly or annual basis. A monthly adjustment would reduce the amount of overcollections and undercollections, Davidson said. "I don't want the utilities to be out of any money, and I don't want the ratepayers to be out of money," she said. But creating a system that eliminates overpayments or underpayments would be difficult because fuel costs are constantly changing. "The issue is once you know what it is that you've actually spent, how quickly do you bill that or recover that?" Davidson explained. Corporation Commissioner Bob Anthony has said that the cost of home heating for many Oklahomans would be lower if ONG, the state's largest gas utility, adjusted its base fuel cost every month instead of every quarter. ONG now is charging customers $12.01 for every dekatherm of gas consumed. That's well above current market prices. Gas futures fell 22 cents Wednesday to close at $8.46 per dekatherm. A dekath erm is equal to 1 million British thermal units, or 1,000 cubic feet. ONG says it believes its fuel adjustment method is accurate and fair but is open to suggestions.

AEP-PSO, the chief supplier of electricity in Tulsa, adjusts its consumer fuel costs annually, although that figure can be changed if fuel prices fluctuate significantly either way. The utility's consumer fuel charge is based on actual costs, although some estimation is involved, said Alan Decker, director of regulatory services for AEP-PSO. "We're always trueing up to actual costs," Decker said. "We use estimates to get to a factor to collect."

AEP-PSO switched to an annual adjustment to reduce volatility in consumers' bills, Decker said. "We thought that's what our customers wanted," he said. The utility now is undercollected on its fuel costs, Decker said. ------------ Russell Ray 581-8380 russell.ray@tulsaworld.com

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Copyright (c) 2006, Tulsa World, Okla.

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Source: Tulsa World

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