The main message that came from the comments and information provided in the forum was to rally a call to action and emphasize the need for pushback from Empire customers big and small opposed to the significant rate increases being proposed.

MIAMI – Empire District Electric Oklahoma customers and stakeholders are fired up and are not going to accept a $3.8 million a year proposed rate hike without a fight.

A community forum on Friday at the Miami Civic Center hosted by the Miami Regional Chamber of Commerce packed the council chambers to overflow with stakeholders affected by the proposal including residents, Native American tribal leaders, school superintendents, mayors and business leaders. All of those present were upset, concerned or downright mad about the possible impacts of such a massive rate hike of electric utility rates for the community and Empire’s customers.

The main message that came from the comments and information provided in the forum was to rally a call to action and emphasize the need for pushback from Empire customers big and small opposed to the significant rate increases being proposed.

Oklahoma State Representatives Ben Loring and Chuck Hoskins led the forum and kicked it off by explaining Empire’s initial and subsequent proposals.

Outrage

“They’re asking to take $3.8 million out of our local economy and send it to their stockholders in Canada,” Loring said. “That is a huge concern and should be a huge concern, not only for those customers of Empire Electric, but for every citizen here in northeastern Oklahoma…That is an unacceptable amount in my opinion.”

The concern is great in a community and state with economic hardships and state budget cuts that customers will face devastating rate shock consequences.

During the commentary portion of the meeting, many expressed great shock, dismay and fear regarding the possibly dire results if the measure is passed.

“The Quapaw Tribe paid $2 million last year in electric fees, an increase to this magnitude is probably going to cost us five to 10 jobs,” Quapaw Tribe Chairman John Berrey said. “…We’re going to fight this as long as we can. We want this madness to stop.”

“We can’t afford an increase. We’re barely getting along now,” Mickey Johnson of Quapaw said.

“The Wyandotte area, and it would be safe to say Ottawa County, is low to moderate income and the elderly population rises every year, and they’re on fixed incomes,” Wyandotte Nation’s Second Chief Norm Hildebrand said. “To raise their electric bill by almost 40 percent is just totally unfair to them…We’ve been trying to develop the Wyandotte area and trying to get businesses to come in and to develop an industrial park, and this kind of a rate increase would have an effect on that.”

Hildebrand said with more and more federal and state cuts looming tribal programs for the poor and elderly will suffer as well, and the rate hike would cause even greater hardship to community members.

Ottawa County school districts, Quapaw, Commerce, Fairland, and Wyandotte and Welch in Craig County, face larger electric utility bills in budgets already trimmed to the bone.

“As far as Commerce Schools, our electric bill last fiscal year was around $100,000, so this will mean a teacher’s salary if we have to pay this rate increase,” Commerce Schools Superintendent Jim Haynes said.

Berrey and others said the effects on fixed income, and single family households would be devastating in Ottawa County, one of the most economically struggling counties in the state.

Empire will now have to prove justification for the rate changes through evidence presented in a hearing before the Commission Administrative Law Judge scheduled to begin at 8:30 a.m. on April 24 at the Oklahoma Bar Association located at 1901 North Lincoln, Room #B101 in Oklahoma City.

The judge will listen to all arguments and public comment at the April 24th hearing and make a recommendation in May. Any appellate arguments would be scheduled for June 13.

“This will be an opportunity to make public comments to the Administrative Law Judge on how this rate case is going to impact you,” Oklahoma Industrial Energy Consumers Attorney (OIEC) Tom Schroedter said.

Schroedter is representing seven potentially heavily impacted large industry customers, including some local tribes, and gave an overview by phone of the proceedings and answered questions.

“We have characterized such a rate increase as unconscionable,” Schroedter said.

The OCC has until June 20 of 2017 to make a final decision on the rate increase, if no order is rendered, under Oklahoma law Empire could then implement a rate increase.

There are four parties to the proceedings; the applicant Empire, the OCC staff, the Oklahoma Attorney General representing the consumers’ interest and the OIEC representing industry customers’ interests.

“The OCC’s duty is to balance the interests of the ratepayers and the utility,” Schroedter said.

Schroedter explained similarly large rate requests had been made by Empire for customers in other states, Kansas and Arkansas, and Empire withdrew its applications in those states and agreed to a moratorium on any rate cases for Empire customers there until 2018 until mergers underway there are completed, but he said Empire was allowed to recover environmental compliance costs.

Empire filed the application rate changes for Oklahoma customers with the OCC on Dec. 21, 2016. Empire is seeking an increase in annual revenues of approximately $3.8 million per year or a 27.58 percent average increase in electric bills for all Empire customers.

If this rate change is approved, a residential customer using 1,000-kilowatt hours of electricity monthly would see approximate increases of $37.39 or 37.75 percent, a commercial customer using 1,000-kilowatt hours would see approximate increases of $36.68 or 20.37 percent, and a power transmission customer would see approximate increases of 30.76 percent a month.

Recommendations

The OCC is currently making the recommendation for a $3 million rate request. The Attorney General’s Office is currently recommending and arguing for a substantially lower rate increase of $868,000 and the OIEC is recommending $808,000 to cover the expenditures for federal environmental upgrades.

“If the OCC adopts the OIEC or Ag’s recommendation that would mean a 6 percent increase, rather than a 20 to 37 percent rate increase in Oklahoma,” Schroedter said. "We’re very far apart.”

Empire officials argue the company's Oklahoma customers have not received any substantial rate hike in several years and had benefitted from lower rates.

Environmental compliance costs

The company spokesperson, Empire’s Director of Corporate Communications Julie Maus, said after the rate hike rejection from OCC that Empire still needs to begin recovery of the costs incurred for all of the improvements made to the system and would continue seeking the rate hike in a rate change hearing process. Utility companies are entitled to recovery of such investments under state law. (See accompanying MNR article.)

Empire completed $400 million in capital expenditures for environmental compliance upgrades associated with mercury as required by the EPA at its Asbury, Missouri station in 2014 and the recent completion of an overhaul at its Riverton, Kansas plant.

Berrey asked how capital expenditures outside of Oklahoma could be recovered from Oklahoma customers and Schroedter replied that Empire operates as a whole no matter where their assets are located, and costs are allocated to customers in all jurisdictions.

OIEC maintains there is very little evidence provided to support the amount Empire is requesting for environmental compliance costs and very little evidence to support a rate increase for costs outside of that scope. Schroedter said Empire would need to provide evidence to support the amount requested for environmental compliance costs and provide this in the preliminary discovery hearing.

Foreign ownership

Empire is now a subsidiary of Liberty Utilities Co., wholly owned by a publicly traded Canadian utility conglomerate Algonquin Power & Utilities Corp. The requested increase is based on an overall return of 7.59 percent and a proposed return on equity of 9.79 percent.

The first round of the bout with Empire was shut down. Empire had previously tried to invoke a state rule, which would have allowed the company to raise Oklahoma customers' rates to Empire's Missouri customer rates without a hearing, an effort Empire said would have cut costs associated with conducting a full Oklahoma rate case.

Empire was initially asking the OCC for a rate increase of up to 45.37 percent per month per 1,000-kilowatt hours to its Oklahoma customers and filed a request on Sept. 23, 2016. OCC's rules provide when an electric company serves less than 10 percent of its total customers in the state the Oklahoma customers can be prescribed the same rates as the adjacent state. The OCC rejected that request after an outpouring of outrage from Oklahoma customers over the large rate hike request.

Reliability issues

Reliability of service was cited as another main concern of local empire customers, and Schroedter, Haskins, and Loring also claimed Empire ranks lowest to last in the state for reliability of public utility providers.

Tyson Wynn of Welch said Empire does not treat the area as a primary service area, leaving the community with poor response time in emergency situations such as shut off during recent fires.

“The recommendation is Oklahoma customers should not pay a premium for poor service,” Schroedter said.

Alternative solution

An alternative solution was presented of the possibility of the purchase of Empire’s Oklahoma customer grid by investors to seek optional electric utility providers, including REC Electric.

“I would say that there are some discussions going on between a number of different individuals to explore those possibilities,” Loring said.

“We would like to purchase the grid in Oklahoma, and we would like to join with REC or create a cooperative with the City of Miami or something,” Berrey said. “It would create jobs, and it would create stability. We would have a lot better service because every time there’s a storm our power goes out.”

Call to Action

Berrey, Modoc Tribe Chief Bill Follis and several others asked if the OCC would come to Miami to hear customer concerns in a town hall type meeting, especially with such a significant rate increase, and for those who may be unable to afford or are unable to travel to OKC for the public hearing.

Loring said he would try to see if a meeting with OCC was possible.

“The OCC does respond to the will of the people. A significant portion of what they decide will turn on what they hear from our citizens affected directly or indirectly,” Loring said. “We were successful the last time.”

“We need school districts, we need individuals, we need tribes, and we need businesses going to OKC to comment,” Lobbyist Edwards said. “That would be most effective.”

Those gathered vowed to fight the rate increase and encouraged the community to make contact with the OCC to let them know the impact this proposed rate increase would have on the community’s residents, businesses, schools, industries and tribes.

Empire customers may also make comment by several methods - by contacting the Oklahoma Corporation Commission by phone, Chairman Bob Anthony, Vice Chairman Dana Murphy or Commissioner Todd Hiett at 405-521-2211, or Public Information Officer Matt Skinner or Jim Palmer at 405-521-4180 or by email at PUDsubmissions@occemail.com , on Facebook Messenger at www.Facebook.com/OCCPUD, or by mail at : Oklahoma Corporation Commission, 1201 North Lincoln Blvd., Oklahoma City, Ok. 73105. The OCC’s Public Utilities Division Director may be reached at 405-521-2331 for complaints or questions, or at 405-521-4114 and also at PUDsubmissions@occemial.com

The Oklahoma Attorney General’s Office may be reached at Public Utilities Unit Chief Dara Derryberry 405-521-3921 or by email at www.ok.gov/oag and click “Contact the AG” to send comments, or by mail at: Oklahoma Attorney General’s Office, 313 NE 21st Street, Oklahoma City, Ok. 73105.

Melinda Stotts is the associate editor of the Miami News-Record. She can be emailed at mstotts@miaminewsrecord.com or followed on Twitter @MelindaStotts1.