ONG's proposed $1,320 utility service 'exit fee' explained: Why it triggers debate, criticism

In Business
2021-12-04 11:00:18Z
By The Oklahoman

What's the fairest way to collect $1.37 billion from gas utility customers if those customers can just cancel their service?

It's a big question being weighed now by the Oklahoma Corporation Commission, which is considering whether to approve a 25-year plan to let Oklahoma Natural Gas recoup costs associated with the brutal February winter storms.

But if a customer can avoid their individual costs by switching, for example, to an all-electric household, someone else would have to pay their share.

Snow covered gas meter in a backyard in Edmond, Friday, February 19, 2021.

To prevent that scenario, ONG plans to charge customers up to $1,320 if they switch to another fuel source.

This proposal is triggering debate among regulators, and outright criticism from consumer advocate groups.

Oklahoma's corporation commissioners expressed hesitation about the fee during a hearing last month. Commissioner Todd Hiett likened it to "tripping over dollars to save a dime."

AARP Oklahoma, an advocate for senior citizens living in the state, came out strongly against not just the termination fee, but also against the cost recovery plan. Sean Voskuhl, AARP Oklahoma state director, said ONG is attempting to collect the exorbitant price they paid for natural gas in the worst possible way.

"ONG is not only charging everyone the same flat fee whether they live in a mansion or a studio apartment, but they are also trying to lock them into a lifetime agreement of which the only way out is to pay a ransom. This is no way to treat customers," Voskuhl said.

OG&E customers may soon see impacts of February storm on bills. Here's what to know

Recovering winter storm costs

During the winter storm, ONG was forced to buy from a wildly reactive market to meet customer demand. Comparatively, ONG spent just $222 million buying natural gas during all of 2020.

As one regulator put it, "decisions were being made during that storm to literally keep people alive."

That comment was made during a recent Oklahoma Corporation Commission hearing where OCC Public Utilities Division Director Brandy Wreath presented details of the agreement. Final approval is now up to Oklahoma's three elected corporation commissioners.

According to the plan, ONG would pay its immediate debt by issuing bonds to investors. Customers would be on the hook to gradually repay those bonds over the next 25 years. To make the investment more attractive, the plan's designers created an "exit fee" to ensure the entire amount due would be paid, even if a customer switches their home's fuel source.

More: Expect higher gas bills after ONG gets approval for $15.25 million rate hike

What is the exit fee?

When state lawmakers wrote the framework for utilities to recover costs by issuing bonds, they included a requirement that customers can't switch fuel sources to avoid paying what they owe. An exit fee helps secure those funds, Wreath said.

"This is not a utopian situation where because you're no longer a customer, your debt just disappears. Somebody has to pay this. This was legally and prudently incurred expenses on behalf of the ratepayers, based on their usage and extremely increased market costs," he said at a recent OCC hearing.

The exit fee charges customers up to $1,320 if they choose to switch to another fuel source. The amount is reduced over time as customers pay the monthly charge.

The exit fee, or termination fee as it's sometimes described, will only be charged to customers who cancel ONG service for the expressed purpose of fuel switching.

How much is my utility bill going up?: Check what your provider is estimating here

Who pays?

All ONG customers, except for certain low-income households, are responsible for monthly charges of less than $10 over the next 25 years or until the $1.37 billion bond is paid off.

The exit fee won't be charged to customers who physically move out of the system, but new ONG customers will have to pay the monthly charge even if they weren't around during the storm.

If you move out of state, or to another residence without ONG service, you won't be charged the termination fee.

"The assumption is that somebody else will move into where they lived and would pay the securitization charge," said Corey Slaughter, ONG rates and regulatory director.

You would also be exempt if, for example, your house is destroyed by fire or severe weather.

"It's only going to be charged in the case where a customer notifies us that they are terminating service in order to switch to an alternative fuel source," Slaughter said. "When you fuel switch, it goes away and it's gone forever from that address, and that's where the termination fee comes into play."

Preparing for winter weather: How to get your home ready for cooler weather this fall and winter

Story continues below.

Why is an exit fee needed?

Technically, it's a termination fee that adheres to state law adopted this year specifically for the February 2021 winter storm.

After consulting with debt securitization experts, the Oklahoma Legislature required that utilities' cost recovery plans include a "nonbypassable mechanism" to ensure that a customer's obligation is paid if they switch providers, switch fuel sources or materially change their usage.

It's meant to equalize the playing field, so that customers who can afford to switch to a completely new source of fuel and shut off their account don't leave their neighbors paying their debt.

ONG said Wednesday it doesn't track the number of customers who leave for another fuel source.

"The termination fee is one small part of the securitization process designed to minimize the impact to all our customers as a funds recovery mechanism and not as a hindrance for customers who would seek to leave the natural gas system," spokeswoman Liza Steger said.

More: Oklahoma's winter could be brutal, according to the Farmer's Almanac predictions

Steger also said ONG expects this fee to be a rare occurrence.

But fuel switching is something ONG's parent company, ONE Gas, warns all its investors is among the risks of being a shareholder, said Mike Bartolotta, co-head of public finance at Hilltop Securities, the firm that helped write the securitization plan.

Without a termination fee, other costs associated with servicing the bond could rise, Bartolotta said. If the OCC rejects the termination fee, ONG might have to hold more cash in reserve to ensure their bonds receive a better credit rating.

At a hearing last month to review the plan, Bartolotta addressed a question about why ONG needs an exit fee while Oklahoma Gas & Electric, which is also pushing for a securitization plan, does not.

"Everybody uses electricity," he said. "Not everybody uses gas, and so the ability for fuel switching could be a potential issue."

Regulators warned that without a guaranteed cost recovery system, any bonds they market to investors could be less attractive and more expensive to sell.

A riskier investment means ONG and their customers will have to pay higher interest rates to lure investors.

"The happier an investor is with a lower risk, that means they're willing to take a lower interest rate, which means consumers pay less, which means (consumers) save more money," Wreath testified.

Nationwide worker shortage complicates holiday hiring. How it's impacting Oklahoma

Is it legal?

So far, no one has gone to court challenging the legislature's nonbypassable mechanism or ONG's proposed exit fee. It is, however, a possibility.

During public comments at a recent OCC hearing, constitutional law professor Gary Allison said he is considering a challenge based on the Commerce Clause, a provision in the U.S. Constitution that prohibits government interference with interstate business.

"Oklahoma, in its history, has had many cases where the U.S. Supreme Court found that it has erected various barriers to the ability of people to make decisions on where they want to be in the market with respect to particular products," Allison said. "And either the Oklahoma legislature or the regulatory agencies have imposed barriers to the free flow of decisions that might cause them to change one product for another or one supplier to another."

AARP would rather not even need the legality tested. The organization wants corporation commissioners to reject ONG's request and instead "adopt a fair and reasonable process that includes shared sacrifice between the utility and those profiting from the winter weather event."

Staff writer Dale Denwalt covers Oklahoma's economy and business news for The Oklahoman. Have a story idea for Dale? He can be reached at ddenwalt@oklahoman.com or on Twitter at @denwalt. Support Dale's work and that of other Oklahoman journalists by purchasing a digital subscription today at subscribe.oklahoman.com.

This article originally appeared on Oklahoman: Why ONG is charging customers 'exit fees' to cover winter storm costs

COMMENTS

generic cialis

(2021-12-05 00:13:39Z)

cialis coupon https://cialiswithdapoxetine.com/# cialis alternative

(2021-12-05 01:51:05Z)

cialis black is it safe https://cialiswithdapoxetine.com/# cialis tablets

buy cialis usa

(2021-12-05 01:56:11Z)

can ubuy cialis on streets https://cialiswithdapoxetine.com/# cheap cialis

fastest delivery of cialis

(2021-12-05 03:17:46Z)

cialis 20 mg https://cialiswithdapoxetine.com/# cialis dosage

cialis support 365

(2021-12-05 03:39:32Z)

best prices for cialis 20mg https://cialiswithdapoxetine.com/# cialis dosage

cialis tablets

(2021-12-05 03:51:33Z)

cialis generic https://cialiswithdapoxetine.com/# generic cialis

(2021-12-05 05:19:33Z)

cialis online https://cialiswithdapoxetine.com/# cheap cialis

cialis without a doctor prescription

(2021-12-05 06:31:20Z)

cialis 20mg https://cialiswithdapoxetine.com/# generic cialis

(2021-12-05 06:47:54Z)

best prices for cialis 20mg https://cialiswithdapoxetine.com/# cialis without a doctor prescription

cialis alternative

(2021-12-05 07:22:40Z)

(2021-12-05 07:43:45Z)

best prices for cialis 20mg https://cialiswithdapoxetine.com/# cialis 20mg

cialis pills

(2021-12-05 07:45:16Z)

cialis support 365 https://cialiswithdapoxetine.com/# cialis pills

(2021-12-05 08:16:11Z)

cialis pills https://cialiswithdapoxetine.com/# cialis dosage

cialis generic

(2021-12-05 09:38:19Z)

cialis online https://cialiswithdapoxetine.com/# buy cialis online

cialis black is it safe

(2021-12-05 10:02:42Z)

cialis alternative https://cialiswithdapoxetine.com/# cialis alternative

cialis tadalafil & dapoxetine

(2021-12-05 10:08:40Z)

fastest delivery of cialis https://cialiswithdapoxetine.com/# generic cialis

(2021-12-05 10:36:59Z)

cialis black is it safe https://cialiswithdapoxetine.com/# cialis alternative

cialis coupon

(2021-12-05 10:47:23Z)

cialis tadalafil & dapoxetine https://cialiswithdapoxetine.com/# cialis online

(2021-12-06 16:11:14Z)

cialis tadalafil & dapoxetine https://cialiswithdapoxetine.com/# cialis dosage

best prices for cialis 20mg

(2021-12-06 16:18:54Z)

cialis 20mg https://cialiswithdapoxetine.com/# cialis 20 mg

(2021-12-06 16:33:09Z)

generic cialis https://cialiswithdapoxetine.com/# cialis 20 mg

cialis dosage

(2021-12-06 17:06:31Z)

cialis price https://cialiswithdapoxetine.com/# cheap cialis

can ubuy cialis on streets

(2021-12-06 18:07:45Z)

cialis support 365 https://cialiswithdapoxetine.com/# cialis 20 mg

(2021-12-06 18:33:10Z)

cialis generic https://cialiswithdapoxetine.com/# cialis 20mg

(2021-12-06 18:42:06Z)

cialis price https://cialiswithdapoxetine.com/# cialis 20 mg

(2021-12-06 18:57:32Z)

cialis without a doctor prescription https://cialiswithdapoxetine.com/# buy cialis usa

(2021-12-06 19:17:14Z)

cialis dosage https://cialiswithdapoxetine.com/# cialis pills

(2021-12-06 20:28:22Z)

cheap cialis https://cialiswithdapoxetine.com/# cialis without a doctor prescription

cialis with dapoxetine overnight to

(2021-12-06 20:28:28Z)

can i take cialis with daxpoteine https://cialiswithdapoxetine.com/# cialis pills

(2021-12-06 21:03:00Z)

cialis tadalafil & dapoxetine https://cialiswithdapoxetine.com/# cialis without a doctor prescription

(2021-12-06 21:27:52Z)

(2021-12-06 23:09:28Z)

cialis black is it safe https://cialiswithdapoxetine.com/# cialis dosage

(2021-12-06 23:27:02Z)

cialis alternative https://cialiswithdapoxetine.com/# cialis 20mg

(2021-12-07 00:24:10Z)

can ubuy cialis on streets https://cialiswithdapoxetine.com/# cialis dosage

(2021-12-07 00:53:38Z)

(2021-12-07 01:25:49Z)

cialis 20mg https://cialiswithdapoxetine.com/# cialis price

cialis 20 mg

(2021-12-07 02:27:27Z)

cialis coupon https://cialiswithdapoxetine.com/# cialis coupon

(2021-12-07 02:55:38Z)

cialis coupon https://cialiswithdapoxetine.com/# cialis pills

(2021-12-07 03:41:58Z)

best prices for cialis 20mg https://cialiswithdapoxetine.com/# cialis tablets

(2021-12-07 03:54:52Z)

cialis support 365 https://cialiswithdapoxetine.com/# buy cialis online

(2021-12-07 03:57:56Z)

cialis alternative https://cialiswithdapoxetine.com/# cialis pills

cialis online

(2021-12-07 04:14:42Z)

cialis with dapoxetine overnight to https://cialiswithdapoxetine.com/# cialis coupon

gmxypmii

(2022-06-13 12:13:18Z)

https://hydroxychloroquinex.com/ how to get hydroxychloroquine tablets

xpxjjvul

(2022-06-13 12:37:38Z)

does hydroxychloroquine require a prescription generic hydroxychloroquine

fomcqjzr

(2022-06-13 13:40:29Z)

hydroxychloroquine for sale over the counter buy hydroxychloroquine from india

whomycks

(2022-06-13 13:49:30Z)

hydroxychloroquine hcq over the counter hydroxychloroquine 200mg for sale

cmtjexmv

(2022-06-13 14:01:00Z)

buy plaquenil canada

irinowau

(2022-06-13 14:31:55Z)

how to get off plaquenil hydroxychloroquine 200mg tab

fpwwxzjr

(2022-06-13 14:52:42Z)

http://hydroxychloroquinex.com/ generic hydroxychloroquine 200 mg

soynhkub

(2022-06-13 15:07:33Z)

buy hydroxychloroquine 200mg hydroxychloroquine buy plaquenil for sale kiteboarding

rhuykqfa

(2022-06-13 15:32:23Z)

plaquenil cheap https://hydroxychloroquinex.com/

swoadits

(2022-06-13 15:54:04Z)

where can you buy hydroxychloroquine order plaquenil online

ttjddsaz

(2022-06-13 15:55:42Z)

hydroxychloroquine online sale how to get off plaquenil hydroxychloroquine for sale mexico shipping

bwipafan

(2022-06-13 15:57:47Z)

https://www.hydroxychloroquinex.com/ buy plaquenil 200mg

krlokotc

(2022-06-13 16:20:23Z)

plaquenil 200mg otc hydroxychloroquine for sale plaquenil stock price

hudrpcun

(2022-06-13 16:27:46Z)

plaquenil stock price can hydroxychloroquine be purchased over the counter canada pharmacy hydroxychloroquine

hpzavmuv

(2022-06-13 17:31:43Z)

https://www.hydroxychloroquinex.com/ order plaquenil

vipohump

(2022-06-13 17:59:24Z)

https://www.hydroxychloroquinex.com/ buy hydroxychloroquine online

fduzkwer

(2022-06-13 18:01:32Z)

plaquenil pills http://hydroxychloroquinex.com/

xwvxozxy

(2022-06-13 18:49:40Z)

what is generic for plaquenil hydroxychloroquine for sale from canada

nljqfpko

(2022-06-13 19:28:35Z)

https://hydroxychloroquinex.com/ buy hydroxychloroquine usa

bfsqwtnv

(2022-06-13 19:31:02Z)

order generic plaquenil

wsfwaweq

(2022-06-13 19:58:00Z)

generic hydroxychloroquine 200mg hydroxychloroquine tablets 200mg

pfzlrchc

(2022-06-13 21:09:35Z)

buy hydroxychloroquine over the counter buy plaquenil usa generic hydroxychloroquine otc

lriwwuyv

(2022-06-13 21:56:30Z)

hydroxychloroquine online plaquenil for sale online

ovcexerw

(2022-06-13 22:10:32Z)

hydroxychloroquine online sale plaquenil medication

yhfryysg

(2022-06-13 22:10:36Z)

https://www.hydroxychloroquinex.com/ hydroxychloroquine over the counter

rpmimtrd

(2022-06-13 22:20:57Z)

plaquenil without a doctor prescription hydroxychloroquine 200mg for arthritis pain

qbkmnlal

(2022-06-13 22:49:51Z)

where can i get hydroxychloroquine online http://www.hydroxychloroquinex.com/

onjrrvsr

(2022-06-13 22:50:26Z)

http://hydroxychloroquinex.com/ hydroxychloroquine tablets

uxvnrnds

(2022-06-13 23:22:34Z)

hydroxychloroquine 200mg buy

unfwanwt

(2022-06-13 23:23:09Z)

canadian hydroxychloroquine plaquenil indications

knkqtwbc

(2022-06-13 23:57:46Z)

hydroxychloroquine 200mg for arthritis pain hydroxychloroquine canada order online buy hydroxychloroquine online

gqnumqbn

(2022-06-14 00:03:38Z)

how to get off plaquenil generic plaquenil 200mg

dpyqzijq

(2022-06-14 00:11:06Z)

plaquenil cheap plaquenil generic

aiqhkiyq

(2022-06-14 00:17:48Z)

buy plaquenil over the counter plaquenil generic

bmwghguv

(2022-06-14 00:23:42Z)

where can i purchase plaquenil online doctor to prescribe hydroxychloroquine

bgpsgxat

(2022-06-14 00:28:40Z)

where can i purchase plaquenil how to get hydroxychloroquine tablets

znlreljl

(2022-06-14 00:35:01Z)

https://hydroxychloroquinex.com/ buy hydroxychloroquine online

zysghknr

(2022-06-14 00:49:11Z)

http://hydroxychloroquinex.com/ hydroxychloroquine where to get it

pabvxton

(2022-06-14 01:07:27Z)

buy plaquenil online friends program plaquenil package insert

vfesenin

(2022-06-14 01:16:53Z)

hydroxychloroquine 200mg for arthritis pain hydroxychloroquine online

rqtstecu

(2022-06-14 01:17:31Z)

order hydroxychloroquine without a prescription

fdkziwsf

(2022-06-14 01:22:03Z)

generic hydroxychloroquine hydroxychloroquine 200mg for arthritis pain

asomswnb

(2022-06-14 01:31:23Z)

order plaquenil pill

luzvgfkp

(2022-06-14 02:04:59Z)

cheapest plaquenil online canadian hydroxychloroquine

mlfohkcv

(2022-06-14 02:15:31Z)

buy 200mg plaquenil hydroxychloroquine tablets buy online buy plaquenil

ONG's proposed $1,320 utility service 'exit fee' explained: Why it triggers debate, criticism

Recovering winter storm costs

What is the exit fee?

Who pays?

Why is an exit fee needed?

Is it legal?

More Related News

Leave a Comment

Comments

Top News: Business