Oklahoma Utility Wants Customers to Pay Up to $1,375 to Quit Gas
(Bloomberg) -- An Oklahoma gas utility says residential customers should have to pay a fee of as much as $1,375 to cut off their gas service and switch to an all-electric home.
Oklahoma Natural Gas, a division of ONE Gas Inc., says the proposed termination payment would help the utility cover the extraordinary costs it racked up during a February winter storm that resulted in record high gas rates. The utility wants to securitize about $1.4 billion of the storm costs by issuing bonds that would be paid off through customer bills over 25 years.
“The termination fee is one small part of the securitization process designed to minimize the impact to all customers,” said Liza Steger, a spokesperson for Oklahoma Natural Gas. “This fee is intended only as a funds recovery mechanism and not as a hindrance for customers who would seek to leave the natural gas system.”
For those homeowners who decide to ditch gas, they would pay a termination fee of either $35 or $55, depending on usage class, multiplied by 25 or the number of years remaining for the recovery of the debt, according to a regulatory filing. That would make the fee as high as $1,375 in some cases. There isn’t a fee in place now for those who want to stop service, the utility said.
For those customers who stay, they’ll be paying for the impact of the February 2021 storm in the form of higher gas rates over the same period. The utility estimates the securitization will save customers as much as $700 million, depending on the recovery time frame approved by state regulators.
Environmental advocates say that switching to all-electric homes will help combat global warming given that businesses and homes accounted for about 13% of U.S. greenhouse gas emissions in 2019, according to the U.S. Environmental Protection Agency. The natural gas industry has been fighting against efforts by environmentally minded towns and cities to ban the use of gas in homes and buildings. Oklahoma is among a handful of U.S. states including Louisiana and Texas that have passed laws that would prohibit such local actions.
©2021 Bloomberg L.P.