OGE warns storm cost could top $100 million

By the OGJ Online Staff

HOUSTON, Feb. 5 -- OGE Energy Corp. Tuesday warned the cost of the Jan. 30 ice storm could exceed $100 million, likely requiring its Oklahoma City-based utility unit to seek a rate hike to cover the cost of repairs.

Oklahoma Gas & Electric said the storm, the costliest in OG&E's 100-year history, affected at least 195,000 customers. Heavy coatings of ice caused extensive damage in a 15,000 sq mile area.

"This is the most extensive damage we have ever seen,'' said Paul Renfrow, OGE Energy director of public affairs. He said more than 2,000 people, including some 700 outside contractors, are working to restore power to affected areas in northern, northwestern, and central Oklahoma.

"Repairs are ongoing and the final cost is not yet known, but our preliminary estimate is that it could be more than $100 million, 80% of which is a capital expense," Renfrow said. While no one storm would typically have a material impact on OG&E's financial position, the January ice storm has far exceeded all historical benchmarks, he said.

By comparison, the Christmas 2000 ice storm cost OG&E about $18 million, and the tornado outbreak of May 3-4, 1999, cost about $21 million.

OGE said the January the ice storm took down hundreds of miles of power lines, thousands of power poles, transmission structures, transformers, and fixtures. Tens of thousands of trees shattered, causing severe problems with the power delivery systems in more than 60 affected towns. In the Enid area, 27 small towns are blacked out because the transmission lines serving those towns are still down.

The ice storm struck two days after OG&E filed a $22 million annual rate increase with the Oklahoma Corporation Commission (OCC). In that filing, OG&E cited the need for increased security after the Sept. 11 terrorist attacks, upgrades to its power generation and transmission systems, and extensive infrastructure work associated with earlier disastrous storms.

Renfrow said OG&E officials were studying the issue of financial relief for the January ice storm. "Certainly, we have never dealt with a storm of this magnitude before," he said. "This is still very much a crisis situation. For many of those who have power, they could be only one problem away from losing it again."

Oklahoma's largest utility, OG&E serves 700,000 customers in Oklahoma and western Arkansas.

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