Oklahoma Electric Restructuring JEUTF Meeting August 25, 1999

1. Oklahoma Electric RestructuringJEUTF MeetingAugust 25, 1999 Comments and Position Statements of Oklahoma Corporation Commission Commissioner Bob Anthony Commissioner Denise A. Bode Commissioner Ed Apple Presented by Kenneth R. Zimmerman, Ph.D.

2. Price Increases for Small Consumers • OCC supports retail choice for all customer groups (industrial, commercial, and residential), including small consumers • The OCC is concerned, however, that small consumers may not fare well in a competitive marketplace, since there is great uncertainty that REESs will seek their business JEUTF Meeting - August 25, 1999

3. The “Oklahoma Plan” • A significant risk inherent in electric restructuring is that it may be irreversible. If restructuring fails to produce the promised benefits or if unanticipated and serious problems occur, it would not be realistic to force a re-creation of the system now in place • The best option is to develop a restructuring plan aimed at preserving most of the benefits of the present system that also helps us move significantly toward retail choice and the potential benefits it can bring JEUTF Meeting - August 25, 1999

4. The “Oklahoma Plan” • The OCC’s “Oklahoma Plan” not only provides for customer choice at the earliest opportunity, but also facilitates competition and provides the necessary protections for the most vulnerable customer group, small consumers • The plan is consistent with current legislation, in that it achieves the goal of “increased customer choice” -- It also adheres to the principles and directives outlined by the legislation • “Public good” programs are held harmless under this plan JEUTF Meeting - August 25, 1999

5. The “Oklahoma Plan” • The proposed plan is also consistent with, although not identical to, restructuring plans adopted by several other low cost electric states (e.g. Oregon, Washington) JEUTF Meeting - August 25, 1999

6. The “Oklahoma Plan” • The OCC’s “Oklahoma Plan” provides three options for customers: • Allows industrial and large commercial customers to buy electricity from REESs at unregulated rates • Provides small consumers a portfolio of several electric service options (through local utility), including an environmentally friendly or “green” choice • All customers have the additional option to continue buying electric energy under a cost-of-service rate, that will be regulated by the OCC JEUTF Meeting - August 25, 1999

7. The “Oklahoma Plan” • Industrial and large commercial customers who choose direct access will not be able to return to cost-of-service rates, but will have available market-based rates from a default provider and/or a provider of last resort JEUTF Meeting - August 25, 1999

8. The “Oklahoma Plan” • As much existing generation & transmission as necessary needs to be retained at “cost-of-service” rates to serve existing customer load requirements, especially small customers • As existing customers choose other power providers, those portions of existing generation and transmission can be unbundled and removed from OCC regulation • As new customers enter the utility system, additional generation and transmission will be purchased through competitive bidding JEUTF Meeting - August 25, 1999

9. Utility Affiliates “Code of Conduct” • The OCC supports development & adoption of a code of conduct for relations between utilities & their competitive affiliates which is, • Comprehensive (covers all utilities/utility affiliates) • Enforceable • Enforced by a single authority, irrespective of whether that authority is the OCC • Negates all competitive advantages the competitive affiliate could possibly gain from its utility affiliate JEUTF Meeting - August 25, 1999

10. Licensing of REESs and Aggregators • The OCC supports licensing requirements for REESs and Aggregators which, • Are Comprehensive (covers all REESs and Aggregators) • Are Enforceable • Are Enforced by a single authority, irrespective of whether that authority is the OCC • Ensure fair competition • Protect customers from deceptive & fraudulent marketing practices JEUTF Meeting - August 25, 1999

11. Licensing of REESs and Aggregators • The OCC supports licensing requirements for REESs and Aggregators which, • Ensure customers receive the clear and complete information they need to make informed choice among REESs • Ensure fair, expedient, and thorough investigation and resolution of complaints • Ensure the privacy of customer account information JEUTF Meeting - August 25, 1999

12. Consumer Bill of Rights • The OCC supports development and implementation of a Consumer Bill of Rights • This Bill of Rights should include at least the following: • Right to Choice of Service Providers • Right to Service Quality • Right to Simple, Quick, Effective Redress of Complaints • Right to Protection from Marketing Abuses • Right to Unbiased and Accurate Information & Education • Right to Personal Information Privacy • Right to Appropriate Service Standards JEUTF Meeting - August 25, 1999

13. Service Reliability • With restructuring the existing level of service reliability must be maintained • To meet this goal, the OCC proposes to develop and implement, • OCC standards for distribution service quality • OCC standards for distribution level power balancing JEUTF Meeting - August 25, 1999

14. Thank You I Will Attempt to Answer Any Questions You Have JEUTF Meeting - August 25, 1999