OG&E 2011 Annual Report Download - page 87

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2011. Pursuant to the settlement agreement in OG&E’s 2011 Oklahoma
general rate case filing, OG&E proposed that recovery in base rates for
the costs of transmission projects it constructs and owns and that are
authorized by the SPP in its regional planning processes should be lim-
ited to the Oklahoma retail jurisdictional share of the costs for such
projects allocated to OG&E by the SPP. On March 28, 2011, the OCC
issued an order in this matter approving the settlement agreement.
OG&E Fuel Adjustment Clause Review for Calendar Year 2009
On October 29, 2010, the OCC Staff filed an application for a public
hearing to review and monitor OG&E’s application of the 2009 fuel
adjustment clause. On December 28, 2010, OG&E responded by filing
the necessary information and documents to satisfy the OCC’s minimum
filing requirement rules. An intervenor representing a group of OG&E’s
industrial customers filed testimony on March 11, 2011 seeking a $15.5 mil-
lion refund related to (i) a purported failure by OG&E to maximize the
use of its coal-fired power plants and (ii) an inappropriate extension of
the existing gas transportation and storage contract between OG&E
and Enogex. OG&E filed rebuttal testimony on April 4, 2011 in opposi-
tion to the claims of the intervenor. On August 11, 2011, all parties to
this case signed a settlement agreement in this matter, stating that (i)
OG&E was prudent in its operations during 2009; (ii) a third party expert
should be hired to evaluate OG&E’s future gas transportation and stor-
age needs and that OG&E should file a plan for meeting its future gas
transportation and storage needs by mid-2012; and (iii) with respect to
the existing gas transportation and storage contract with Enogex, OG&E
will return $8.4 million to its customers in settlement for all periods under
the contract through April 30, 2013. In August 2011, OG&E credited
$4.9 million to its customers and will credit the remaining amount on
a monthly basis through April 30, 2013. The OCC issued an order
approving the settlement agreement on August 29, 2011.
OG&E Smart Grid Project
On December 17, 2010, OG&E filed an application with the APSC
requesting pre-approval for system-wide deployment of smart grid
technology and a recovery rider, including a credit for the Smart Grid
grant awarded by the U.S. Department of Energy under the American
Recovery and Reinvestment Act of 2009. On June 22, 2011, OG&E
reached a settlement agreement with all the parties in this matter. OG&E
and the other parties in this matter agreed to ask the APSC to approve
the settlement agreement including the following: (i) pre-approval of
system-wide deployment of smart grid technology in Arkansas and
authorization for OG&E to begin recovering the prudently incurred costs
of the Arkansas system-wide deployment of smart grid technology
through a rider mechanism that will become effective in accordance
with the order approving the settlement agreement; (ii) cost recovery
through the rider would commence when all of the smart meters to be
deployed in Arkansas are in service; (iii) OG&E guarantees that customers
will receive certain operations and maintenance cost reductions resulting
from the smart grid deployment as a credit to the recovery rider; and (iv)
the stranded costs associated with OG&E’s existing meters which are
being replaced by smart meters will be accumulated in a regulatory asset
and recovered in base rates beginning after an order is issued in OG&E’s
next general rate case. OG&E currently expects to spend $14 million, net
of funds from the U.S. Department of Energy grant, in capital expendi-
tures to implement smart grid in Arkansas pursuant to the settlement
agreement. On August 3, 2011, the APSC issued an order in this matter
approving the settlement agreement.
OG&E FERC Transmission Rate Incentive Filing
On February 18, 2011, OG&E submitted to the FERC a request seeking
limited transmission rate incentives for five transmission projects. OG&E
requested recovery of 100 percent of all prudently incurred construction
work in progress in rate base for five 345 kilovolt Extra High Voltage
transmission projects to be constructed and owned by OG&E within the
SPP’s region. OG&E also requested to recover 100 percent of all prudently
incurred development and construction costs if the transmission projects
are abandoned or cancelled, in whole or in part, for reasons beyond
OG&E’s control. On April 19, 2011, the FERC granted these incentives
for the Sooner-Rose Hill, Sunnyside-Hugo and Balanced Portfolio 3E
transmission projects discussed below.
OG&E Pension Tracker Modification Filing
On February 22, 2011, OG&E filed an application with the OCC
requesting that OG&E’s pension tracker be modified to include the
difference between the level of retiree medical costs authorized in OG&E’s
last rate case and the current level of these expenses as a regulatory
liability, effective January 1, 2011. On June 23, 2011, a settlement
agreement was filed by parties in the case stating that the pension
tracker should be modified as proposed by OG&E and that the level of
retiree medical costs included in base rates will be reviewed and deter-
mined in OG&E’s next rate case. On September 27, 2011, the OCC
issued an order in this matter approving the settlement agreement.
OG&E Demand and Energy Efficiency Program Filing
To build on the success of its earlier programs and further promote
energy efficiency and conservation for each class of OG&E customers,
on March 15, 2011, OG&E filed an application with the APSC seeking
approval of several programs, ranging from residential weatherization
to commercial lighting. In seeking approval of these programs, OG&E
also sought recovery of the program and related costs through a rider
that would be added to customers’ electric bills. On June 30, 2011,
the APSC issued an order approving OG&E’s energy efficiency plan for
2011 and approving OG&E’s energy efficiency cost recovery rider for
2011. In Arkansas, OG&E’s program is expected to cost $7.0 million
over a three-year period and is expected to increase the average resi-
dential electric bill by $1.47 per month.