Newspaper article THE JOURNAL RECORD

Whether Deregulated or Not, OGE's Ready for Tomorrow

Newspaper article THE JOURNAL RECORD

Whether Deregulated or Not, OGE's Ready for Tomorrow

Article excerpt

While retail electric deregulation was once considered a potential growth area for regulated utilities, the picture has changed dramatically in the last two years.

In spite of that fact, OGE Energy's president believes his company is still well positioned in the market -- regulated or not.

"In these times of uncertainty, I want to assure you of OGE's high-quality assets, conservative strategy and transparent financial statements," Steven E. Moore told shareowners gathered for the company's annual meeting. "These are attributes which we have stressed for many years, even though they are only recently being favored by many industry observers and shareowners."

Moore noted that 2001 was a historic year for the industry.

"In California, deregulation was rescinded, and regulation was reinstituted. Pacific Gas and Electric Company, one of California's largest electric utilities, continues to plan for their emergence from bankruptcy after being caught between volatile wholesale and retail power markets," he said. "Enron, once considered a leader in the energy markets, declared bankruptcy and is now surrounded by allegations of wrongdoing and by lawsuits. New regulatory and legislative rules resulting from Enron's catastrophic failure are still being debated and decided."

Moore said those events have led to "several trends" in the industry -- primarily renewed opposition to electric deregulation.

"The move toward deregulation of electricity has slowed, if not stalled completely, in many areas of our country," he said. "Retail access is available in 16 states and the District of Columbia. In 26 states, there is no activity on restructuring. In seven states, including Oklahoma and Arkansas, previous restructuring activity has been indefinitely delayed."

At one point, a deregulated or "restructured" market was considered a potential source of major profit for OGE.

A report prepared by the Oak Ridge National Laboratory for the Oklahoma Corporation Commission in June 2001 (using 1999 figures), predicted that if Oklahoma's electric market were deregulated, the total cost of electricity in the state would increase $486 million per year, or 18 percent, with most of the profit going to the utilities owning coal-fired generation facilities, such as OG&E. …

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