Utility proposes new tariff and customer protections for data centers and other massive power users as Oklahoma competes for energy-intensive economic development projects.
OKLAHOMA CITY – As Oklahoma continues to attract major economic development projects, including energy-intensive data centers, one of the biggest questions for policymakers and consumers has been whether that growth could increase electric bills. A new filing by Oklahoma Gas and Electric Co. argues that it does not have to.
In a proposal submitted Wednesday to the Oklahoma Corporation Commission, OG&E outlined a comprehensive large-load tariff designed to ensure that new, high-energy users such as data centers pay the costs associated with serving their substantial electricity demands. The company says the proposal would protect existing customers while positioning Oklahoma to compete for major economic development opportunities.
OG&E’s filing follows enactment of House Bill 2992, authored by Rep. Brad Boles, R-Marlow, which requires utilities to establish separate terms and conditions for large-load customers and to ensure existing customers are not required to subsidize the costs of serving those facilities.
On Tuesday, Boles secured the Republican nomination for the Corporation Commission, defeating Justin Hornback with 55.3 percent of the vote to Hornback’s 44.7 percent, according to unofficial State Election Board results. Boles advances to the November general election.
The legislation requires utilities to establish separate tariffs and service agreements for large-load customers and to ensure residential, commercial and industrial customers are protected from paying unjust rates resulting from service to those facilities. It also requires safeguards to ensure large-load customers bear costs allocated to them and establishes minimum service terms of at least 10 years.
The filing gives immediate real-world significance to one of Boles’ signature legislative initiatives, moving the measure from policy enactment to regulatory implementation less than a month after it became law.
Strong Protections for Existing Customers
OG&E says its proposed tariff goes beyond those statutory requirements by imposing additional financial protections on large-load customers.
Among the most significant:
- Full Upfront Infrastructure Payments: Large-load customers would pay 100 percent of the costs to connect to OG&E’s grid.
- Customer Protection Charge: A built-in mechanism would allow regulators to identify and correct any future cost shifts. If large-load customers create upward rate pressure, OG&E says the mechanism would allow regulators to identify and recover those costs from large-load customers rather than existing ratepayers.
- Long-Term Commitments: While House Bill 2992 requires service agreements lasting at least 10 years, OG&E is proposing a 15-year minimum service term and strict exit fees intended to reduce the risk of stranded costs.
- Financial Security Requirements: Large-load customers would provide substantial collateral, such as cash or letters of credit, to guarantee payment obligations and protect other customers from financial risk.
- Minimum Billing Requirements: Even if usage fluctuates, large-load customers would pay minimum charges tied to their reserved capacity to help ensure cost recovery remains stable.
- Potential Benefits for Residential Customers: OG&E has proposed a monthly charge on large-load customers that the company estimates could generate approximately $25 million to $30 million annually and could be used to offset residential rates in future rate proceedings.
OG&E said these protections not only seek to prevent cost increases; they also could create downward pressure on residential rates.
An independent review prepared for OG&E by Charles River Associates concluded that the proposed protections compare favorably with those adopted in other states and would help insulate Oklahoma customers from the financial risks associated with large-scale energy demand.
Supporting Growth While Preserving Affordability
OG&E said its residential rates are approximately 21 percent below the regional average and 33 percent below the national average and that it intends to preserve that advantage even as electricity demand grows.
The proposed tariff will now undergo formal review by the Oklahoma Corporation Commission, which is expected to establish a procedural schedule in the case with opportunities for stakeholders and the public to participate. A final decision on the proposed tariff is likely several months away.
