OG&E cost cuts passed on to you;
Bills: Drops in natural gas give relief

by Don Mecoy

Daily Oklahoman - June 23, 2006

Customers of Oklahoma Gas & Electric Co. will get some relief from the heat this summer, as the company will cut its fuel costs by $22 a month for the average customer.

That monthly savings represents a home consuming 1,400 kilowatt-hours of electricity, an average amount for residential customers, OG&E spokesman Brian Alford said. Those using more electricity, such as commercial customers, will bank larger savings.

Customers will see the savings on OG&E bills that arrive after July 3, Alford said. "It's indicative of how far natural gas costs have fallen in recent months," Alford said.

In a filing with the Oklahoma Corporation Commission, OG&E indicated it will reduce the fuel cost adjustment on customers' monthly electric bills from 1.76 cents per kilowatt-hour to 0.22 cents. The price of natural gas closed at $6.58 per thousand cubic feet Thursday on the New York Mercantile Exchange, down from more than $15 in December.

Despite the significant cut, customers will pay higher rates this summer than they did last year. OG&E is paying 3.1 cents per kilowatt-hour for energy in July, Alford said. Last June, the utility was paying 2.8 cents per kilowatt hour, he said. That price peaked in January at 4.6 cents per kilowatt hour.

Also, the Corporation Commission in December approved a $42.3 million rate increase for OG&E that boosted the average residential customer's bill by about $3 a month.

The state's largest electric utility, which serves about 675,000 Oklahoma customers, passes along fuel costs on a dollar-for-dollar basis. OG&E regularly adjusts customers' fuel costs to ensure the company books no profit or loss from its purchases in the sometimes-volatile energy markets.

About 30 percent of the electricity generated by OG&E comes from natural gas. Roughly 70 percent of the utility's power is generated by coal, which has much more stable prices, Alford said. In a move designed to cut summer energy costs, OG&E last month agreed to a contract to buy 440 megawatts of electricity from Redbud Energy's power plant in Luther.

If the state experiences a normal or warmer-than-normal summer, the relatively low-cost electricity from Redbud's natural gas power generators would displace power from older, more-expensive plants, allowing OG&E customers to save money on their electric bills. If, however, the state has an unusually mild summer, the power from Redbud could displace less-expensive electricity from OG&E's coal-fired power plants.

Public Service Co. of Oklahoma, which has more than a half million state customers, cut its rates in April by about 14 percent because of a decline in natural gas prices. 

© 2006 The Daily Oklahoman

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