Earlier in the 2023 legislative session, the Alliance for Electrical Restructuring (AERO) in Oklahoma worked with Rep. Ryan Martinez to introduce legislation that would restructure the way consumers purchase electricity in Oklahoma. Rather than being assigned a monopoly vendor (either OG&E or PSO), House Bill 1602 proposed allowing residential and business customers to select a vendor of their choice. As is the case in the 22 states that already have restructured markets, consumers would benefit by being able to shop for cheaper plans, or plans with fixed rates, or plans that are otherwise customized to their preferences (for example, a “green energy” plan powered by renewables).
The bill ran into heavy opposition from monopoly utilities and stalled in committee. However, AERO will continue to push for this policy change for as long as it takes, because we believe it is what is best for Oklahomans. Furthermore, the introduction of credible, well-designed legislation brought several things to light that make the case for electrical restructuring stronger than ever.
First, the illusion of Oklahoma as a place where electricity is consistently affordable has been shattered. Over the last year, residential consumers have faced price hikes of more than 50 percent, while commercial and industrial consumers saw costs more than double. The company line from OG&E and PSO has always been “if it ain’t broke; don’t fix it.” Customers, however, have recognized that the current model is no longer serving them.
Rising prices in Oklahoma also have worked to undermine another myth promoted by the utilities: that Texas’ electricity woes during Winter Storm Uri serve as a cautionary tale against choice and competition. While it’s true that Uri knocked out the Texas electrical grid, causing widespread outages and instances of price gouging, those failures had nothing to do with restructuring. On the contrary, Texas experienced large scale outages because, unlike Oklahoma, it is not part of the 15-state Southwest Power Pool (SPP) and was unable to produce enough electricity for its residents, especially when equipment local to Texas froze. Nothing about HB 1602 would have compromised Oklahoma’s participation in the SPP. Furthermore, the instances of price gouging in Texas can be easily addressed by rules and regulations that prohibit wild surges in price, which is exactly what HB 1602 would have empowered the Oklahoma Corporation Commission to do.
Nevertheless, defenders of the status quo doggedly stick to the narrative of the “Texas disaster,” ignoring the reality of the “Oklahoma disaster” unfolding in front of them. Whereas a small percentage of Texans experienced extreme price shocks after Uri, many who had shopped for fixed rates and good deals avoided any significant increase in price. In Oklahoma, on the other hand, every OG&E and PSO customer now will spend decades paying off over $1.5 billion in rate increases. In the long run, that will have a much bigger impact on Oklahoma’s economy than a brief price surge. Ratepayers have caught on to that and are demanding change.
Finally, our experience in 2023 confirmed what we knew all along: that taking on multibillion-dollar utilities that collectively employ over a dozen lobbyists would be difficult. Difficult, however, is not the same as impossible. Lawmakers have shown a willingness to reject the public policy preferences of the monopolies’ favored legislation when it is out of step with public opinion. In fact, when the utilities lobbied for a bill promising something called “Performance Based Ratemaking,” which would have likely raised prices for consumers and diminished the Corporation Commission’s oversight capabilities, the Senate refused to move it forward. Writing in The Oklahoman, Corporation Commissioner Todd Hiett correctly noted that “when a proposed bill is presented and supported only by a single special interest group, you need to give it a close look.”
Moving forward, Commissioner Hiett’s words are a great place to continue the conversation on why we must bring choice and competition to the electrical market. I cannot imagine that constituents are lobbying lawmakers to limit their choices and assign them a monopoly vendor who continues to raise their prices. Rather, the special interests that profit off that arrangement continue to cling to the status quo. As Commissioner Hiett says, let’s give this arrangement a close look. Our current monopoly system cannot withstand close scrutiny, and whether it is through legislative action or an initiative petition and ballot referendum, change is coming. Mike Boyd
Guest columnist Mike Boyd is executive director for the Alliance for Electrical Restructuring in Oklahoma.