Constitutional challenge filed against Oklahoma storm costs bond sale

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A former Oklahoma lawmaker filed a protest on Friday against a pending application to the Oklahoma Supreme Court seeking his permission to stage a bond sale, according to a regulated utility, needed to reimburse costs related to storm.

The Oklahoma Development Finance Authority (ODFA) is seeking court approval for a bond sale worth up to $800 million that it proposes to use to repay $760 million in costs that Oklahoma Gas and Electric Co. paid to continue generating power during February’s winter storm.

The Oklahoma Corporation Commission has already voted 2-1 to classify these costs as prudent and reasonable and to approve the utility’s securitization application.

But the state law authorizing the remedy also requires Supreme Court approval.

Former state Rep. Mike Reynolds, R-Oklahoma City, said he believed such a sale was prohibited by the Oklahoma Constitution.

In short, the state constitution prohibits him from incurring debt without the approval of a vote of the people, he said.

“They will claim it is not a debt because it will be secured by future payments made by taxpayers,” Reynolds said, referring to language included in state law authorizing the sale of bonds to reimburse storm-related utility costs.

“But the enabling language also says that a lien can be posted on the securitization. You can’t file a lien unless you have a debt.”

What is the Oklahoma the constitution says

Unlike the federal government, Oklahoma is constitutionally required to operate with a balanced budget.

However, it was changed at some point to allow Oklahoma to create debt to keep the government going during the height of the Great Depression and the start of World War II.

Constitutional language also allows the state to go into debt if it needs funds to repel an invasion, quell an insurrection, or defend the state in times of war.

Beyond that, however, it states: “No debt shall hereafter be incurred by or on behalf of this State, unless such debt is authorized by law for any work or object, therein shall be clearly specified; and this law shall impose and provide for the collection of a direct annual tax to pay, and sufficient to pay, the interest on the debt which becomes due, and also to pay and discharge the principal of such debt within the twenty-five years from the time it was contracted.

“No such law shall come into force until it has been put to the people at a general election and has received a majority of all votes cast for and against it at that election” , he also says.

Other topics

Reynolds’ objection also challenges the fact that the ODFA filing did not include the dissenting opinion to the OG&E securitization approval filed by Oklahoma Corporation Commissioner Bob Anthony, nor the exceptions that AARP had filed in the case.

His objection also points out that Oklahoma Attorney General John O’Connor did not support the settlement agreement stipulated in the case (although he has repeatedly stated that he supports the use of securitization to eliminate storm-related costs).

Reynolds wrote that O’Connor’s silence is interesting, given the stipulated deal the commission approved, shifting some storm costs from OG&E’s largest customers to residential customers, and given that his office doesn’t has yet to release details of its investigation into potential awards. manipulation that could have taken place during the storm.

“Anyway, being an election year, the Attorney General is apparently trying not to take sides. He obviously doesn’t think this is a good deal for residential ratepayers (i.e. voters), and in the absence of any formal legal opinions, that in itself is worth noting,” Reynolds wrote.

OG&E isn’t the only utility looking to secure its storm-related costs from the company’s commission. Public Service Co. of Oklahoma and Oklahoma Natural Gas have cases under review, as do several other smaller regulated utilities.

The ODFA, created by the Oklahoma Legislature nearly 50 years ago, works with hospitals, schools, local governments and even utilities to sell bonds that raise capital to pay for projects to improve the services they provide to their constituents.

The agency is playing a central role in the winter storm cost securitization plan drawn up by lawmakers.

The act allowed utilities to securitize debt using bond sales conducted by the ODFA to reduce monthly fuel costs that would otherwise have to be passed on to utility ratepayers over a short period to repay billions of additional dollars. costs.

Business writer Jack Money covers Oklahoma’s energy and agricultural beats for the newspaper and Oklahoman.com. Contact him at jmoney@oklahoman.com. Please support his work and that of other Oklahomas journalists by subscribing to The Oklahoman.

About Charles D. Goolsby

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