Rep. Sterling: Legislature proposes solution to utility bill increases
With all the concern about the impending high utility bills from February’s winter storm that we are all bracing for, I want to give you an update on two pieces of legislation that were passed by the State Senate last week.
Senate Bill 1049 and Senate Bill 1050 would help consumers avoid major increases in utility bills after the severe winter weather outbreak two months ago. This legislation would allow ratepayers to lower monthly costs associated with the weather event and also allow them to pay costs out over an extended period of time.
It’s estimated that Oklahoma utility ratepayers are obligated to pay approximately $4.5 billion in increased energy costs related to February’s severe weather. Without action, ratepayers will face dramatic increases in energy bills, and bills would be due immediately. Families and seniors on fixed incomes could be faced with choosing between paying their energy bill or paying for food and medicine. And, if we do nothing, small businesses could be forced to make layoffs to or cutbacks to pay their energy bills.
I believe these bills will hopefully strike a good balance between protecting the interests of Oklahomans while also ensuring utility companies receive what is due to them.
The legislation will utilize securitization by spreading out the costs from Oklahoma’s winter weather event without adding unnecessary or high financing costs.
Securitization of debt allows ratepayers to spread repayment over a period of months and pay smaller, monthly amounts. This solution will not increase Oklahoma’s bond indebtedness or cause any harm to the state budget.
Here is a breakdown of the legislation:
1. Allows increased costs related to the February 2021 winter storm to be scrutinized via the issuance of bonds backed by ratepayer revenues.
2. Creates a property right based on the customer charges for the securitization, which guarantees the holder of the bond will be repaid.
3. Allows the Oklahoma Development Finance Authority to issue ratepayer-backed bonds, and requires the ODFA to report regularly on the bond activity until the debt is retired.
4. Requires ratepayer-backed bonds go through the Council of Bond Oversight review and get approval from the Attorney’s General’s Office and the Oklahoma Supreme Court.
5. Provides for the issuance of loans made pursuant to notes, bonds, revenue bonds, or other forms of indebtedness to reduce for unregulated utility customers the extreme financial impact of costs related to February 2021 winter storm.
It directs the ODFA to:
1. Receive and review applications for the determination of utility costs related to the February winter storm.
2. Issue written approval or disapproval of an unregulated utility’s application.
3. Issue bonds necessary to fund the Unregulated Utility Customer Protection Fund from which loans are issued.
4. Issue loans to unregulated utilities for the amount approved in the application process.
5. Requires utility bonds issued to fund the loan program go through the Council of Bond Oversight review, and authorizes ODFA to apply for approval of the bonds by the Oklahoma Supreme Court.
6. Requires reporting to the governor and legislative leaders on the status of loan applications, when a loan is issued to an unregulated utility, and provide regular updates to those leaders until the debt is retired.
Now that the bills have passed the Senate, the House expects to take them up quickly, as this is a priority for many of our members. Both bills have an emergency declaration attached, so if approved by the House, they will take effect immediately upon Gov. Kevin Stitt's signature.