OG&E announced Friday that technology and mild summer temperatures helped lower fuel costs and led to a cost reduction.
OG&E also announced Friday it will lower its monthly Oklahoma fuel cost recovery effective with the first customer billing cycle in October. The average residential customer will see a reduction of $2.70 per month.
The company said the fuel cost reduction stems from its ability to reduce wind-related grid congestion by adding technology that better controls the flow of electricity on its transmission system. Other contributing factors include a milder-than-expected summer and lower costs for natural gas, which is used to generate electricity.
In July 2017, the company raised its fuel factor by about $9.60 to recover approximately $100 million of actual and additional forecasted under-recoveries.
“Grid congestion along with higher-than-normal actual and forecasted weather contributed to the need to increase the fuel cost recovery in July,” said OG&E spokesman Brian Alford. “Since that increase, we’ve completed the addition of new technology that has improved the flow of electricity on the grid and subsequently reduced the financial impact of that congestion. We also realized a milder-than-expected summer.”
Alford said lower summer temperatures decreased customers’ energy use, which helped offset the need to purchase higher-cost power. In addition, a slight decline in natural gas prices contributed to the lower fuel factor.
The cost of fuel used to generate power is passed on to customers without any profit to OG&E, and the amount appears as a line item on customer bills. The company periodically reviews its fuel cost to ensure it is neither over- or under-collecting its fuel costs.
“When we increased fuel recovery in July, we said that we would review the fuel factor in the fall to determine if adjustments were needed,” Alford said. “In this case, we found that we would likely over-recover fuel before the next scheduled fuel update in April. Rather than wait nearly eight months and significantly over-recover, we are passing the benefit to customers beginning in October.”
Oklahoma Gas & Electric Company, a subsidiary of OGE Energy Corp., is Oklahoma’s largest electric utility. It has more than 840,000 customers in Oklahoma and western Arkansas. OG&E has 6,700 MW of electric generation capacity fueled by low-sulfur coal, natural gas, wind and solar. For more information about OG&E, visit http://www.oge.com.