Okla. Court Voids Rule on Exit Fees

Fortnightly Magazine - June 15 1996
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The Oklahoma Supreme Court has struck down as unconstitutional a state Commission rule that forced electric utilities that acquire a customer from a competitor to compensate the competitor for all associated costs and then pass such costs along to their own customers.

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The court said the rule exceeded Commission authority by usurping the utility management function (em forbidding the utility to choose to absorb costs associated with switching customers. As the court noted, if utility management chose to impose such costs on customers, the Commission could always review their reasonableness through the ratemaking process.

Public Service Co. of Oklahoma had objected to the rule, alleging that unreliable service by rural cooperatives had caused a significant number of consumers to consider switching suppliers, imposing high costs. It also appears that municipalities in the state favor any type of rule that would make it easier for customers to change electric suppliers, because the co-ops are not required to collect and remit sales taxes, a considerable source of revenue for the municipalities. Pub. Serv. Co. of Okla. v. Oklahoma, No. 81,518, March 19, 1996 (Okla.).

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