Oklahoma’s new law turns consumers into utility bankers

Your Turn

Jason M. Walter and Grant Musick

Guest columnist

Recently, the Oklahoma Corporation Commission heard a second round of testimony on a deal that would fund roughly half a billion dollars in construction projects for Oklahoma Gas and Electric Co. (OG&E). The company is seeking approval to raise prices to finance these projects through a method known as Construction Work in Progress (CWIP).

This move is enabled by Senate Bill 998, a new state law that allows utility companies to use CWIP and charge customers before any benefits are delivered. As OG&E awaits a decision on its rate increase request, customers are bracing for higher utility bills. The discontent over SB 998’s CWIP provisions highlights a growing tension between infrastructure development and consumer protection.

Critics at both the state and federal levels have voiced strong objections. In 2024, Federal Energy Regulatory Commissioner Mark Christie warned that CWIP incentives, 'run the risk of making consumers the bank for the transmission developer.' Unlike a real bank, Christie noted, customers don’t earn interest on the money they front — instead, they pay utilities a profit, known as a return on equity (ROE), for the 'privilege' of serving as the utility’s de facto lender.

When SB 998 was introduced, Corporation Commissioner Todd Hiett warned that the law 'shifts investment risk from the utility to the consumer,' effectively forcing ratepayers to subsidize a single industry. The commission itself urged lawmakers to block the bill in May, arguing that it undermines the commission’s ability to protect consumers. Their memo was ignored, and SB 998 became law without Gov. Kevin Stitt’s signature on May 14, 2025.

Proponents of SB 998 insist that CWIP will save customers money in the long term by reducing financing costs and encouraging infrastructure investment. Yet regardless of whether one prioritizes utility development or ratepayer protection, it’s clear that utilities stand to benefit most from this change. Having successfully lobbied for the bill’s passage, companies are already lining up to take advantage, with Commissioner Hiett describing the surge of filings as a flood.

The controversy doesn’t stop there. Some observers question whether Oklahoma lawmakers even have the authority to revoke or limit the Corporation Commission's powers without a constitutional revision. SB 998 mandates that 'the Commission shall permit a separate rate adjustment mechanism' for recovering costs related to new natural gas generation capacity, but also imposes a 180-day timeline for approval. Both steps constrain the Corporation Commission's traditional discretion. The timeline in particular interferes with the commission’s quasi-judicial role by compressing the time for review, raising due-process concerns for affected customers and intervenors.

That directive may conflict with Article 9, Section 18 of the Oklahoma Constitution, which charges the commission with 'supervising, regulating and controlling all transportation and transmission companies' and 'correcting abuses and preventing unjust discrimination and extortion.' In the view of some, this provision explicitly gives the commission, not the Legislature, the power to regulate utilities.

As SB 998 takes effect, the sides are clear. Utilities and their shareholders should be taking on the risk, but instead are benefiting from a legislative win years in the making. Regulators are warning of erosion of consumer protection. Until SB 998 is repealed or ruled unlawful, ordinary Oklahomans are left footing the bill for risks they never agreed to.

Jason M. Walter is an associate professor of economics who teaches policy analysis at the University of Tulsa. Grant Musick is an economics undergraduate from Springfield, Missouri, attending the University of Chicago.