"Leveling the playing field" with "postage stamp" electricity.

• Author: Hale, Harold
• Position: How Oklahoma's electric cooperatives successfully competed against rivals despite enactment of restructuring legislation by the state

In October, 1995, the Oklahoma Legislature, through its Legislative Electric Utility Task Force, began a careful examination of issues involved in restructuring the state's electric utility industry. The Task Force was made possible through passage of Senate Joint Resolution 29, which provided for a series of information-gathering hearings. Funding for the Task Force Hearings was made possible by a grant from the National Conference of State Legislatures (NCSL).

The purpose of the Task Force was to try and settle on a public policy for electric service providers in Oklahoma that was agreeable with current and proposed federal policies, and at the same time, meet the changing needs and demands of citizens residing in and doing business in the state. Eventually, these Task Force hearings led to restructuring legislation being introduced and passed by the Oklahoma Legislature in both the '97 and '98 Legislative sessions.

All electric service providers operating within the state were allowed to make presentations to the Task Force at various times on a wide variety of issues. As the Task Force narrowed its focus, four key issues began to emerge as being critical to Oklahoma's electric utility restructuring effort. Those four issues were:

1. Feasibility of an Independent System Operator (ISO)

2. Technical Issues Associated with Electric Utility Restructuring

3. Financial Issues Related with Restructuring (taxes, transition fees, etc.)

4. Consumer Issues (social programs, stranded costs to be borne, etc.)

   The Oklahoma Association of Electric Cooperatives (OAEC), a statewide association comprised of 28 electric distribution cooperatives and two generation and transmission cooperatives, outlined position statements for each of the four primary issues. All positions were recommended and approved by the OAEC Government Relations and Corporation Commission Board Committees, and were authorized by the OAEC Board of Directors.

   It should be noted here that OAEC's comments on these critical issues were inclusive and dependent, meaning that support for any restructuring legislation in the state was contingent upon rural electric cooperative positions being incorporated into any subsequent industry restructuring bill.

   "Leveling the Playing Field" with help from an unlikely source

   Recognizing early on that "customer choice" of commodity electricity suppliers was going to be the single-most important theme of industry restructuring in the state, managers and directors from Oklahoma's electric cooperatives began to discuss the ramifications of "choice," how each distribution cooperative would be impacted, and, consequently, how the two cooperatively-owned G&Ts would be affected. Prices for both wholesale and retail electricity among all Oklahoma electric utility providers were already among the lowest in the nation, so how could "choice" be of benefit to both consumers and utilities? According to state REC managers and directors, these issues involved defining the terms of "fair and equal" competition.

   How could Oklahoma's electric distribution cooperatives compete on a level playing field when they: (1) had 3.9 consumers per mile...