By A.J. Ferate
Two things can be true at the same time.
On one hand, electric consumers deserve the lowest-cost electricity possible. Utilities, the Southwest Power Pool, the Corporation Commission, and consumers all play a role in this. Oklahomans have benefited from this partnership to have some of the lowest utility costs in the nation.
On the other is the reality that national security necessitates building strategic facilities in the United States rather than where our adversaries can control them. For example, building a data center in the United States advantages us far more than it disadvantages us.
So if consumers deserve the low-cost utilities that we in Oklahoma have come accustomed to, and the national security protections that come with maintaining control over domestically-built data centers, what can be done to protect consumers from rising utility costs?
Historically, Oklahoma utilities have worked hard to partner with large industrial users to keep residential electric rates low. They have implemented tariffs to assure that the largest users contribute toward costs that would otherwise have an impact on our home electric bills.
But even as Oklahoma utilities have worked to protect residential consumers, demand continues to increase. Like updating the kitchen in your home to assure resale value and proper plumbing, we must improve and expand our electric grid from time to time to ensure grid reliability. The alternative, California-style blackouts if the need is unmet, is unacceptable.
Currently the Public Service Company of Oklahoma has asked the Oklahoma Corporation Commission for a $600 million rate increase for this very reason. This could raise the average residential bill by about $25 a month. For some this rate increase could require tough economic decisions, but fortunately the increase would be much lower on those households.
The utilities that provide our electricity operate under a basic compact: In exchange for regulated rates, approved by the Oklahoma Corporation Commission, they are obligated to provide safe, reliable, round-the-clock power to every customer in their service territory.
That obligation is not optional. It requires constant planning, investment, maintenance, and upgrades. As more large customers join the grid and pay their share, the cost of building a stronger system can be spread out, so it does not fall mostly on households and small businesses.
This does not mean utilities should get unlimited funding. They need to prove their projections are smart, needed, and good for customers. The Corporation Commission needs to continue carefully reviewing utility requests as they have in the past, make sure costs are shared fairly, and protect residential customers from unfair charges. But oversight should not turn into hostility toward investment.
For those that think utilities are undertaking these projects solely to pad their bottom line, a new report from the Alliance for Innovation and Infrastructure, Ratemaking for a Reliable Grid, makes an important point. The return on equity utilities receive for making these investments is not a guaranteed profit. In fact, the report found that authorized electric utility returns on equity have gone down over the past twenty years, not up, and that the average authorized return in electric rate cases since 2020 was 9.69 percent, which is less than what utilities asked for.
Ensuring a fair rate of return is important because utilities pay for long-lasting infrastructure using both debt and equity. If policymakers set returns too low, investors see more risk. Credit ratings drop, borrowing costs go up, and projects get more expensive or harder to build. In the end, these costs end up on customer bills.
In short, putting too much pressure on utilities might sound good in politics, but it can actually make electricity less affordable in the long run.
Oklahoma is in competition for new projects with other states and cannot build the power system needed for future jobs if we are unwilling to invest. Companies in artificial intelligence, cloud computing, advanced manufacturing, and other energy-heavy industries are searching for places with reliable, affordable, and plentiful electricity.
Those projects can bring jobs, tax revenue, construction work, and long-term investment. But none of this is possible without a power grid that can handle the demand.
States that delay power projects, turn rate cases into political fights, or drive away investment will not win the AI race. The winners will be the states that build. Oklahoma has the resources, skilled workers, and growth mindset to lead. The answer is not to pick sides between consumers and utilities, but to bring them together around one goal: reliable power, fair costs, and enough electricity for the next generation of opportunities.
A.J. Ferate is an attorney in Oklahoma City and former Oklahoma Republican Party Chairman. He formerly served as Chief Counsel to Oklahoma Corporation Commissioner Denise Bode.
