Oklahoma Gas and Electric’s effort to recover financing costs for two planned power plants has sparked a high-stakes regulatory and constitutional challenge, marking the first major test of a new state law that allows utilities to charge customers for construction expenses before projects are complete.
The case centers on a proposed rate increase tied to generation units east of Oklahoma City, scheduled to enter service in 2029. OG&E argues the measure will reduce long-term interest costs. Opponents, including industrial and consumer groups, say the plan forces current customers to subsidize infrastructure intended for future demand and undermines longstanding ratemaking principles.
Consumer and Industrial Groups Challenge New Law
At the heart of the controversy is Senate Bill 998, enacted during Oklahoma’s 2023 legislative session. The law authorizes utilities to seek ratepayer funding for Construction Work In Progress, or CWIP, during the buildout phase of a project. Prior to the law, recovery could only begin after facilities entered service.
OG&E estimates that using CWIP to finance its $506 million Horseshoe Lake project could reduce interest obligations by up to $173 million, a cost it says would otherwise be borne by customers through higher long-term rates. “Historically, we’d go borrow the money to build facilities. Then, when they’re operational and turned on, we’d start putting it into rates,” said Christi Woodworth, OG&E vice president of marketing and communications.
Opponents reject that rationale. AARP Oklahoma and the Oklahoma Industrial Energy Consumers, or OIEC, argue the law unfairly shifts financial risk onto current ratepayers, including those who may never benefit from the new generation capacity. “Basically, they’re asking some, or many of their customers to pay for facilities that they may never see the benefit of,” said AARP attorney Adam Singer.
Singer questioned whether customers who move or pass away before the plants come online should bear the burden of early construction costs. “There’s a reason in my eyes that the company is pushing so hard for these changes, and I think it’s just dollars,” he said. “I think Senate Bill 998 is unconstitutional.”
Thomas Schroedter, executive director of OIEC, echoed those concerns and said the law could ultimately increase overall costs for ratepayers. “It’s not in the best interest of ratepayers if you take the time value of money into account,” said Schroedter, whose organization represents large commercial electricity consumers. He also warned that the statute encroaches on the Oklahoma Corporation Commission’s authority to regulate rates and ensure they remain just and reasonable.
Legal Test Looms as Hearing Approaches
This is OG&E’s second attempt to secure pre-approval for the Horseshoe Lake project. Its first application was rejected by the Corporation Commission in December, partly because it was filed before SB 998 took effect. OG&E has since refiled, arguing that the law now mandates the use of CWIP in order to minimize financing costs.
Schroedter contends the utility should not be allowed to refile under the new statute and said the Commission has already made its decision. “Commissioners denied the company’s request once and OG&E shouldn’t be allowed to have another bite at the apple,” he said.
Both OIEC and AARP have linked the rate case to the expansion of high-load customers such as data centers, which have driven demand forecasts higher across the region. They argue that current customers are being asked to front the cost of infrastructure intended for future industrial users. “OG&E customers are being forced to finance these power plants for these new large-load customers, and it’s not right,” said Schroedter. “The data centers won’t be built for eight years from now and they won’t be paying any of the financing costs of these plants.”
The Oklahoma Corporation Commission has not yet ruled on the constitutionality of SB 998. An administrative law hearing is scheduled for January 8. The outcome will likely determine not only the financing path for OG&E’s current project, but also the future use of CWIP by regulated utilities statewide.
If upheld, the law could accelerate utility construction timelines by reducing capital friction. If struck down or limited by the Commission or courts, utilities may face renewed pressure to justify major infrastructure investments under traditional post-completion rate recovery models.
For now, OG&E argues that CWIP recovery is legally required under the new statute. Opponents maintain that the Commission retains discretion and that the law violates constitutional protections for ratepayers. The case places Oklahoma’s evolving regulatory framework under close scrutiny, with long-term implications for capital planning and customer cost exposure across the state’s utility sector.
