Oklahoma Supreme Court reverses order, potentially increasing Winter Storm Uri cost for consumers

OKLAHOMA CITY — The Oklahoma Supreme Court struck down an order prohibiting municipalities from collecting franchise fees and other fees or taxes on costs from Winter Storm Uri. 

The justices reversed the Corporation Commission’s order Wednesday and remanded the case back to the board. The court, ruling 8-0, found that the Corporation Commission does not have the authority or jurisdiction to prevent municipalities from collecting franchise fees. 

Justice Dustin Rowe, who wrote a concurring opinion, said this leaves municipalities with millions in lost revenue with no clear answer on if they will be repaid and who the responsibility for making payments would fall on.

“Who is paying the franchise fees associated with the winter storm?” Rowe wrote. “Will payment be made from the securitized revenue or from the utility companies’ balance sheets? I suppose the answer to these questions will be litigated in the district court. From there, the district court can determine whether the burden of an additional ($60 million to $100 million) will fall onto the people of Oklahoma.”

The Oklahoma Corporation Commission is responsible for regulating various industries in Oklahoma, from the state’s public utilities to its towing and oil industries. 

Justice James Edmondson wrote the majority opinion for the state Supreme Court. He wrote that the Corporation Commission had no authority to make decisions on municipal fees or taxes and franchise fees. 

“The February 2021 Regulated Utility Consumer Protection Act does not give the Commission the authority to determine a utility’s gross receipts tax liability or determine such liability is legally unenforceable via a utility rate or tariff because of that Act,” he wrote. 

Edmonson concluded that the commission’s “determination that the February 2021 Regulated Utility Consumer Protection Act changed, amended, or altered a utility’s legal obligations concerning municipal franchise fees and gross receipts taxes is a determination not sustained by law and must be reversed.”

The Corporation Commission issued its order in August 2022. The Oklahoma Municipal League argued against it and said the commission had no jurisdiction in this matter. 

The City of Oklahoma City filed a “petition in error,” or an application to reverse an action from a lower court, against the commission in September 2022. 

Commissioner Bob Anthony, who dissented in the 2022 Commission order said in a statement that it “improperly waived utility company tariffs and violated contract rights.” Anthony is term limited and will be replaced by Brian Bingman who was elected Nov. 5. 

“Justice Rowe is right to wonder who will be required to pay that additional $60-100 million owed to Oklahoma’s towns and cities,” Anthony said in a statement. 

Commissioner Todd Hiett said he could not comment on the Court’s opinion. 

“Being the Court has remanded the case back to the Commission, it would be inappropriate for a Commissioner to comment,” he said in a statement. “I will engage during the public hearings where certainly I will have comments. … This stands to potentially have an impact on customers.”

During the winter storm that lasted two weeks in 2021, public utilities reported that natural gas prices spiked nearly 40,000%. This created additional energy costs for Oklahoma consumers totaling over $4.5 billion. 

The Corporation Commission permitted the state’s three largest public utilities, Oklahoma Natural Gas, OG&E and PSO, to securitize that debt by adding a monthly surcharge that will last nearly three decades.