OKLAHOMA CITY – The affordability of electricity in Oklahoma surged from among the lowest in the nation to the highest in the U.S. in just three years.
According to recent data from the U.S. Energy Information Administration, Oklahoma experienced a 49% increase overall in electric rates from June 2021 to June of this year.
Similarly, this state went from having the most affordable electricity rates in June of last year to 18th nationally this year.
From June 2021 to June 2022, electricity prices surged from 7.3 cents per kilowatt hour to 10.87 cents per kilowatt hour across all sectors (residential, commercial, industrial, and transportation). Among all 50 states and the District of Columbia, the average electricity cost increase across all sectors was 14% – but in Oklahoma it was more, 49%, the largest increase experienced by consumers in any state.
In June 2021 Oklahoma had the most affordable electricity in the nation across all sectors. In June 2022, Oklahoma ranked No. 18 for most affordable electricity in the nation and ranked last in the West South Central region, behind Texas, Louisiana and Arkansas.
Looking at costs for just residential customers, Oklahomans experienced a 31% increase in electricity costs between June 2021 and June 2022 – again, the largest increase for residents in any state.
According to the Alliance for Electrical Restructuring in Oklahoma, OGE Energy Corp. (OG&E’s parent company) reported annual net income of $360 million in 2021, while American Electric Power (PSO’s parent company) reported more than $2 billion in net income.
The average nominal retail electricity price paid by U.S. residential electric customers in 2021 rose at the fastest rate since 2008, increasing 4.3% from 2020 to 13.72 cents per kilowatt-hour, the U.S. Energy Information Administration reported. This increase was similar to the change in the U.S. Consumer Price Index, which was 4.7% in 2021.
Prices for most types of energy commodities rose significantly in 2021, including the cost of power generation fuels, especially natural gas, which helped push electricity prices higher in 2021. The cost of natural gas delivered to U.S. power plants in 2021 averaged $4.98 per million British thermal units (MMBtu), more than double the $2.32/MMBtu average recorded in 2020.
Severe weather events in 2021, including the major winter storm in February that year, also contributed to higher average electricity prices. The extreme cold weather in the Central United States restricted the flow of natural gas for power generation. The constraints on electricity supply created price spikes in the wholesale electricity market throughout the United States, raising electricity retail prices for many customers.
The state Supreme Court gave the Oklahoma Development Finance Authority permission in May to issue up to $800 million in ratepayer-backed revenue bonds to cover $760 million in debts that OG&E incurred during the February 2021 winter storm. Those “securitization” bonds commanded a much higher than anticipated interest rate, which added approximately $600 million in interest charges to the principal amount that ratepayers will have to pay over the next 28 years, Corporation Commissioner Bob Anthony noted. A surcharge of at least $3.34 per month has already begun appearing on OG&E customers’ monthly bills to cover the $1.4 billion securitization debt.
In addition, on July 1 OG&E began billing its customers for a $30 million rate increase approved by the Oklahoma Corporation Commission.
Meanwhile, OG&E reported profits of $1.52 billion in 2021, and on May 5 reported a profit of $279.5 million in the first quarter of 2022, said AARP Oklahoma State Director Sean Voskuhl.
The ODFA also was authorized to issue up to $725 million in securitization bonds for Public Service Co. of Oklahoma’s extraordinary expenses from the 2021 winter storm. PSO serves more than 568,000 customer accounts in eastern and southwestern Oklahoma. That debt will be repaid over a 20-year period.
Last December the Corporation Commission approved an increase in PSO’s base rates that will enable the electricity provider to recoup approximately $700 million in new investments. The monthly bill of a residential customer who uses 1,100 kilowatt-hours per month increased $5.07, or approximately 4.72%, according to commission Administrative Law Judge Dustin Murer.
Britons brace for
massive increases
in gas, electric bills
If misery loves company, Oklahomans have kindred spirits in Britain. They, too, are feeling the pain of utility bills.
The British were notified that their household gas and electricity bills will almost double in October. Consequently, millions may not be able to afford to heat or light their homes this winter unless the government provides them with a cushion.
The country seems unprepared for the crisis even though Russia disrupted global energy markets by cutting back the flow of natural gas to Germany and other European countries in retaliation for the West imposing sanctions after its troops invaded Ukraine.
In Britain, a nation where rising prices at gasoline stations and grocery stores have become familiar, the sheer magnitude of the looming increase has been stunning. A typical British household would pay £3,549 (about $4,200) over a year for electricity and natural gas – an 80% increase.
In Britain, natural gas accounts for approximately 40% of electricity generation but has a disproportionate effect on its cost. The price hike announced recently follows a 54% jump in April.
The government will have to provide assistance to millions of households, former Conservative energy minister David Howell told The New York Times.
The energy crisis is sweeping through the British economy. The Federation of Small Businesses has warned of the impact on everything from fish-and-chip shops to launderettes. The group estimated that electricity bills for small businesses had risen nearly 350% since February 2021, and gas bills more than 400%.
Chief executives of six large pub chains and breweries and the head of the British Beer and Pub Association urged the government to provide “swift and substantial” intervention. Without it, “there is no doubt we will witness a huge number of pubs close their doors for good, leaving individuals without jobs during a cost-of-living crisis,” they wrote.
For example, one pub owner reported that by the beginning of October she must renew her electricity contract, but the only price she can get is 118,000 pounds ($135,000) a year — up from at most 27,000 pounds.
Some businesses have already closed, including a small radio station, cafes and shops, the Times reported. Others, including a food bank and hospices, have expressed concern about whether they can afford rising bills.