STAFF STATUS REPORT NO 7 ELECTRIC RESTRUCTURING OKLAHOMA

STAFF STATUS REPORT NO. 7 ELECTRIC RESTRUCTURING OKLAHOMA CORPORATION COMMISSION DELIBERATIONS April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF

ELECTRIC RESTRUCTURING ISSUES b ASSESSMENT OF PROPOSED OKLAHOMA LEGISLATION FEDERAL ACTIVITY UPDATE b NATIONAL NEWS HEADLINES b April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 2

ASSESSMENT OF LEGISLATION b KEY RESTRUCTURING PRINCIPALS • ELECTRIC RESTRUCTURING IS THE PROCESS OF PROVIDING CUSTOMER CHOICE FOR GENERATION SERVICES. • ELECTRIC RESTRUCTURING NEEDS TO AVOID AN UNFAIR SHIFT OF RISK TO RATEPAYERS. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 3

ASSESSMENT OF LEGISLATION b The proposed legislation attempts to address the concerns of stakeholders. b Provides for customer choice. b Facilitates the development of competitive generation services. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 4

ASSESSMENT OF LEGISLATION STAFF’S RESTRUCTURING CONCERNS AND ISSUE AREAS 1. Unbundling of Services 2. Jurisdiction 3. Affiliate Transactions & Code of Conduct 4. Public Benefits 5. Consumer Education, Protection, and Bill of Rights 6. Competition and Enforcement 7. Market Monitoring 8. Stranded Cost Recovery 9. Reliability and Quality of Service 10. Licensing of Marketers April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 5

ASSESSMENT OF LEGISLATION RECOMMENDED CHANGES AND ADDITIONS 1. Unbundling of Services · Should require structural unbundling of electric services and rates. · Removes all jurisdiction of the Commission over the transmission portion of presently bundled service. · Ties the hands of the Commission to value assets transferred to affiliates by requiring transfer at book value. · Removes all Commission jurisdiction over generation, including any jurisdiction over siting and safety. Impacts reliability issues. · No provision to provide for cost of service rates for basic service for small consumers. • Prohibits the Commission from considering several hundred million dollars of ratepayer capital reimbursements to utilities. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 6

ASSESSMENT OF LEGISLATION RECOMMENDED CHANGES AND ADDITIONS 2. Jurisdiction · Should allow for regulatory reviews of which services will be unbundled. (eg. , VAR Support and other ancillary services). · Should allow for regulatory determination of when billing and metering are to be unbundled. · No provision for resolving disputes between electric companies and telephone companies. (Harmonics). · Regulatory authority to investigate and conduct periodic assessments to ensure that competition continues to exist after restructuring is initiated. · Need to continue regulation of cooperatives. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 7

ASSESSMENT OF LEGISLATION RECOMMENDED CHANGES AND ADDITIONS 3. Affiliate Transactions & Code of Conduct • Section I should be modified to make it clear that the affiliate rules will not supersede applicable federal affiliate rules, but should permit the state to adopt more stringent standards over activities within the state’s jurisdiction. As stated, Section I could remove state regulatory jurisdiction over transactions between distribution companies and affiliate transmission owners subject to FERC jurisdiction. • Self-regulating municipals may not be able to fairly consider discrimination, market-power and anti-competitive acts by municipal retail energy suppliers. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 8

ASSESSMENT OF LEGISLATION RECOMMENDED CHANGES AND ADDITIONS 3. Affiliate Transactions (Cont’d) • Should prohibit any encumbrance or pledge of utility assets as collateral for an unregulated affiliate’s obligations, and utility assets should be exempt from seizure for an affiliate’s liabilities. • Code of Conduct must be enforceable to ensure that a competitive market will develop. b 4. Public Benefits • Provides only for public benefits programs currently funded. • No provision for ensuring that rates and terms are advertised so that customer types (internet access alone may discriminate against low income electricity users). • No provision for strict procedures for customer privacy and release of customer information. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 9

ASSESSMENT OF LEGISLATION RECOMMENDED CHANGES AND ADDITIONS 5. Consumer Education and Protection & Bill of Rights · To be successful, consumer education planning must begin this year. (as soon as possible) · Consumer education must continue at least five years following the implementation of restructuring. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 10

ASSESSMENT OF LEGISLATION RECOMMENDED CHANGES AND ADDITIONS 5. Consumer Education and Protection & Bill of Rights (con’t). · Based on the analysis of the JEUTF Subcommittee on Consumer Education and Protection, consumer education in Oklahoma requires $12 -$14 million in funding. The proposed funding amounts contained in Section 6 are insufficient. · Does not provide nor fund community service programs for low income or at-risk consumers as recommended by JEUTF Territorial and Competitive Issues Work group. · Cooperative members have no complaint recourse at the Commission if electric cooperatives opt out of OCC regulation. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 11

ASSESSMENT OF LEGISLATION RECOMMENDED CHANGES AND ADDITIONS 5. Consumer Education and Protection & Bill of Rights (con’t). – – – April 26, 2000 JEUTF Consumer Bill of Rights The right to choose a retail electric energy supplier. The right to remain with a local distribution company through its affiliate. (No choice is a choice). Right to a three day cooling off period after making a choice without a penalty. Right not be contacted by telephone by a retail supplier for primary or ancillary electric utility service(s) by written request to be added to “No Call List. ” Right to choose for a consolidated bill or separate bills. Right to pay utility bill within 20 days after it is mailed by billing agent. OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 12

ASSESSMENT OF LEGISLATION RECOMMENDED CHANGES AND ADDITIONS 5. Consumer Education and Protection & Bill of Rights (con’t). JEUTF Consumer Bill of Rights – Right to seek assistance from the Consumer Services Division of the Oklahoma Corporation Commission for unresolved disputes. – Right to safe and reliable electric service. – Right for protection against slamming, cramming, and/or other deceptive marketing practices. – Right to be informed about making a choice for retail electric energy suppliers. – Right to choose a renewable energy source, if available, to protect the environment. – Right to clear and accurate billing information. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 13

ASSESSMENT OF LEGISLATION RECOMMENDED CHANGES AND ADDITIONS 5. Consumer Education and Protection & Bill of Rights (con’t). JEUTF Consumer Bill of Rights – Right for third party verification, written confirmation of service, or electric confirmation prior to a change of service providers. – Right to be informed of any penalties for non-fulfillment of a service contract. – Right to be informed that I may request for an interpretation of any contracts by the retail electric energy supplier if my primary language is not English prior to changing my electric service. – Right that my service cannot be changed except by a responsible adult as defined by law that understands the contractual terms of the agreement and can lawfully make the decision for the change of service. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 14

ASSESSMENT OF LEGISLATION RECOMMENDED CHANGES AND ADDITIONS 6. Competition and Enforcement · Fails to provide regulatory authority to delay restructuring until there is a showing of competition. · Fails to address the extent of ISO control, and liability for decisions made by control area operators at the direction of the ISO. · Does not address regulatory assessment of whether competition exists prior to deregulating generation and related services. · Fails to provide for sharing mechanism enabling ratepayers and shareholders to share in the excess over book value when generation assets and services are spun off. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 15

ASSESSMENT OF LEGISLATION RECOMMENDED CHANGES AND ADDITIONS 6. Competition and Enforcement (Cont’d) · Fails to impose a duty on utilities to try to renegotiate or reduce federally mandated cogeneration contract obligations. · Fails to require officers and directors of the utility to be separate and financially independent of unregulated affiliates. · Fails to require or authorize funding for periodic apples-toapples comparisons of service offerings. · Fails to identify a bidding process that provides small customers comparable buying power as large users of electricity. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 16

ASSESSMENT OF LEGISLATION RECOMMENDED CHANGES AND ADDITIONS 7. Market Monitoring · No provision to correct abuses of market power or to remedy the situation if competition fails after institution of open access. · No provision regarding the regulatory authority to prevent mergers which would impair competition. 8. Stranded Cost Recovery • Fails to provide regulatory authority to determine the amount of recoverable stranded costs of an electric utility. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 17

ASSESSMENT OF LEGISLATION RECOMMENDED CHANGES AND ADDITIONS 9. Reliability and Quality of Service · No single entity responsible for reliability, which may make it difficult to coordinate activities with FERC. · Names OCC, certain coops, municipals and GRDA as responsible for reliability, but does not give them jurisdiction to affect reserve requirements, order back-up service, review or remedy causes of service interruptions, establish restoration priorities or emergency plans. · Fails to say what is to happen if there is no RTO or ISO on July 1, 2002. · Fails to address how to remedy any increases in the price gap for electricity between different classes of customers (particularly for small consumers). · Includes no provision to address customer service quality. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 18

ASSESSMENT OF LEGISLATION RECOMMENDED CHANGES AND ADDITIONS 10. LICENSING REQUIREMENTS · Should require strict procedures governing the disclosure of customer information. · Fails to address resolution of disputes between REES and retail customers of electricity. · Should Prohibit of preferential treatment of services provided by a LDC to one consumer over another consumer. · Should continue all existing consumer protections. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 19

FEDERAL ACTIVITY UPDATE FERC ORDER NO. RM 99 -2000 b b On December 20, 1999, the Federal Energy Regulatory Commission issued Order No. RM 2000 (Final Rule) to advance the formation of regional transmission organizations. The FERC called on all transmission owners to join regional transmission organizations (RTOs) in order to enhance competition in the wholesale market. The FERC expects each public utility to be a participant in a working RTO no later than December 15, 2001. The Final rule does not mandate RTO participant. Instead the Final Rule offers incentives (both carrot and sticks) to encourage transmission owners to join RTOs voluntarily. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 20

FEDERAL ACTIVITY UPDATE FERC ORDER NO. RM 99 -2000 b b Principal stick is that the FERC will evaluate market–based rate filings and merger applications by recalcitrant utilities on a case-by-case basis to ensure that the applicant in those proceedings have adequately mitigated market power absent their participation in an RTO. The carrot provides maximum flexibility in forming an RTO and the possibility of incentive rates for transmission owners that join an RTO. The only mandatory requirement in the Final Rule is that each public utility must report to the FERC the utility’s plan to participate in an RTO in its region or describe its efforts to participate in an RTO. Utilities that are not members of a Commission approved regional transmission entity as of March 5, 2000 must submit their reports to the Commission by October 2000. Utilities that, as of March 6, 2000, are members of a regional entity that the FERC has found complies with the independent system operators principles set forth in Order No. 888 must submit their reports to the Commission by January 15, 2001. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 21

FEDERAL ACTIVITY UPDATE FERC ORDER NO. RM 99 -2000 b b b The Commission directed each transmission owner, including nonjurisdictional transmission owners, participate in good faith in the collaborative workshops to facilitate RTO formation. Regional workshops were established. On March 29 -30, 2000 a collaborative workshop was held in Kansas City for our region. The objective of the workshop was to develop strategic processes and schedule further collaboration by transmission owners, market participants, interest groups and government officials attempting to reach mutual agreement on how best to establish RTOs in their respective regions. The process requires the participants share information about the status of RTO development or RTO proposals, identify impediments to RTO formation in this area, explore processes that could most expeditiously advance agreements on RTO formation, and determine what role, if any, FERC Staff should play. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 22

FEDERAL ACTIVITY UPDATE FERC ORDER NO. RM 99 -2000 · Issues at the Kansas City meeting: · RTO should complement state electric restructuring. · RTO should be designed in a manner that allows the most efficient generator be available to the customer. · RTO must be independent in order for the market to have trust in the process. · No cost shifting. Cost shifting should be minimized to ensure that electric restructuring results in a positive experience to the retail customer. · RTOs should include all transmission owners. · Resolve the seam issue to facilitate transactions involving two or more RTOs. Resolving the seams issue meets the goal of promoting efficient transactions, and allows the transmission owners to recover the cost of providing service. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 23

FEDERAL ACTIVITY UPDATE FERC ORDER NO. RM 99 -2000 · Develop processes to allow transcos to join RTOs. Processes must address functions such as available transmission capability, scheduling of outages, planning and expansion of transmission facilities, market monitoring, dispute resolution, congestion management, security coordinator, transmission tariff administration, and independence issues. · Follow up collaboration meeting is expected in the near future. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 24

FEDERAL LEGISLATION b b b It is not anticipated that Congress will have any electric utility restructuring legislation before the end of the year. Congressmen Murkowski and Barton will have to be very aggressive to get their bills passed by August before the Congress takes a break. (Chris Mele of NARUC reporting to the NARUC Electric Restructuring Ad Hoc Committee April 7, 2000) The Clinton Administration Bills, S. 1047 and H. R. 1828, will not pass this session. (Ibid. ) Congress will not pass the H. R. 667 Burr Bill and the H. R. 1587 Sterns Bill. (Ibid. ) April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 25

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NARUC’s Positions on Issues in Federal Legislation b b Opposes granting FERC authority to exempt companies from State books and records requirements. Supports an appropriate Federal role to resolve disputes between States. • Date Certain Mandate – Strongly supports the absence of a date certain mandate for States to enact restructuring. • Reliability – Legislation should provide a continuing role for States in ensuring reliability of all aspects of electrical service, including generation, transmission, and power delivery services. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 34

NARUC’s Positions on Issues in Federal Legislation – NARUC supports legislation establishing mandatory compliance with industry-developed reliability standards and providing explicit authority to FERC and the States to cooperate to enforce those standards. • Reciprocity – Reciprocity requirements limit the number of competitors available to lower prices and improve services. • Regional Transmission Organizations – Supports voluntary regional bodies to be formed, operated and governed, primarily by the states, with limited intervention from FERC. These voluntary regional bodies, would address siting of transmission facilities. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 35

NARUC’s Positions on Issues in Federal Legislation – Supports legislation leading to voluntary formation of regional transmission systems (RTOs). RTO functions include reliability, market monitoring, pricing, congestion management, planning and interregional coordination. FERC should provide deference to States acting on a regional basis. – Congress should provide for a State commission advisory role in RTO governance that allows deference to State commissions that reach consensus concerning these issues. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 36

NARUC’s Positions on Issues in Federal Legislation b b Interstate compacts • Supports Congress requiring the establishment of national interconnection and power quality standards, developed and adapted by appropriate technical standards organizations, such as the Institute of Electrical and Electronics Engineers, Inc. , for facilities by a date certain. • The States should have the flexibility to adopt these rules or their own rules. Grandfather Clause • NARUC is concerned that a savings clause limited only to “local distribution” could actually be harmful to consumers since it: (1) creates confusion over the responsibility to review service disruptions; (2) implicitly supports the view that legislation preempts State regulation of non-distribution related reliability; and (3) raises the question that NERC (a non-governmental entity) might otherwise cover distribution issues. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 37

NARUC’s Positions on Issues in Federal Legislation b Market Power and Merger Review – Supports a merger policy where both Federal and State regulators thoroughly evaluate mergers to assess their impact on competition, access to transmission facilities and electric rates. – Congress should not preempt jurisdiction in the States to address market power concerns, including the authority to require behavioral and structural remedies to address excessive market power. – NARUC advocates the mitigation of market power, and urges Congress to preserve State flexibility to use options, such as the code of conduct, as needed. – As market power abuse may require the application of well tailored structural solutions, legislation should clarify that the States are authorized to require divestiture where appropriate and necessary. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 38

NARUC’s Positions on Issues in Federal Legislation – As market power abuse may require the application of well tailored structural solutions, legislation should clarify that the States are authorized to require divestiture where appropriate and necessary. – Congress should also clarify that State regulators have authority to ensure effective retail markets and should eliminate any barriers to the exercise of that authority by the States should be primarily responsible for expeditiously handling retail complaints alleging undue discrimination in the marketplace. Appeals by market participants may be made to the FERC. b Aggregation/Customer Protection/Disclosure – Congress should affirm that States have authority to determine the terms and conditions of retail service, including the terms and conditions upon which aggregation is available. – Congress should affirm that aggregators are subject to State licensing, registration and consumer protection requirements. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 39

NARUC’s Positions on Issues in Federal Legislation · Congress should not preclude a State or State commission from prescribing and enforcing laws, regulations, or procedures regarding consumer protection. · Congress should provide that aggregated consumer information should be made available by the local distribution company to other electric suppliers upon request and payment of a reasonable fee. However, any retail customer who believes that disclosure of such aggregated information would reveal energy use information of a competitively sensitive nature has the right to request the local distribution company not disclose such information. Congress should affirm that any consumer privacy disputes are to be resolved by the State Commission using its own consumer protection rules. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 40

NARUC’s Positions on Issues in Federal Legislation b PURPA and PUHCA · NARUC supports reform or repeal of PUHCA as competition becomes effective under comprehensive legislation. · NARUC supports legislation to lift PURPA’s purchase requirement where a State determines that generating markets are competitive or that the public interest in resource acquisition is protected. · NARUC opposes FERC authority to order the recovery of costs in retail rates or to otherwise limit State authority to require mitigation of PURPA contract costs. States that originally approved these contracts are in a better position to address this issue than FERC. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 41

NATIONAL NEWS HEADLINES · Energy Secretary Bill Richardson warns of summer power outages – again – Energy Secretary Bill Richardson said that if power outages occur this summer as they have in the past two years, you can put the blame on Congress, not the administration. Energy Online, April 4, 2000 · Energy Secretary Bill Richardson again urges Congress to act on electricity – The Secretary stated that Congress must act on electric restructuring now in order to bring order to the patchwork deregulation that is taking place in the states. Energy Online, April 12, 2000. April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 42

NATIONAL NEWS HEADLINES · No sense of deregulation urgency at Iowa Statehouse. Business groups, consumer organizations, environmental activists and others all have their ideas about how the electric industry should be restructured, but no sense of urgency has touched the state legislature. Energy Online, April 6, 2000 · Another dollop of electric choice takes effect – Michigan – Detroit Edison Co. completed another allocation of an additional 225 megawatts of capacity to successful bidders. Energy Online, April 6, 2000 April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 43

NATIONAL NEWS HEADLINES · Deregulation bill said to shortchange renewables – Iowa – The American Wind Energy Association has complained that the deregulation legislation before the Iowa state legislature will do little or nothing to promote renewable energy. Energy Online April 6, 2000. · Nevada utilities say state deregulation law “unconstitutional – Nevada’s two electric utilities went to federal court to have the state deregulation law declared unconstitutional Energy Online, March 29, 2000. · Business groups say that kids favor electric deregulation – A coalition of Iowans representing school children, rural residents, low-income people and other groups called today for the passage of the electric choice bill. Energy Online, March 21, 2000 April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 44

NATIONAL NEWS HEADLINES · Cal-ISO Staff says keep $750 power price cap – The Staff of the California ISO has recommended that the current price cap of $750 per megawatt-hour for the state’s wholesale power prices should not be changed. Energy Online, March 9, 2000. · Governor delays opening of retail power market – The Nevada Governor has postponed indefinitely the scheduled opening to competition of the retail electric market. Energy Online, March 1, 2000 · Florida bill aims to deregulate state’s electric industry - A bill creating a group to study deregulating Florida’s electric industry and giving consumers a choice of their power providers. Energy Online, April 11, 2000 April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 45

NATIONAL NEWS HEADLINES b b North Carolina deregulation plan fuels South Carolina electric debate – Tentative plans to deregulate North Carolina’s electric utilities by 2006 may bring new attention to similar efforts in South Carolina. Energy Online, April 8, 2000. Utility rate restructuring lets Arizona customers go power shopping – More than 710, 000 customers in Arizona will be able to shop for other power suppliers based upon a new shopping credit that will reduce their charged rates. Arizona Republic, April 11, 2000 April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 46

NATIONAL NEWS HEADLINES · Competitors electrify utilities market – Consumers have been largely unmoved by their freedom to choose a supplier, however this is expected to change in the future. USA Today, March 24, 2000 · Iowans enthusiastic about electric competition – Four out of five Iowans are in favor of being able to choose their electricity supplier. Edison Electric Institute, March 21, 2000 April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 47

NATIONAL NEWS HEADLINES · Texas reliability likely unaffected by competition - It has been concluded that the rush toward competition could damage the reliability of America’s power system. Texas leaders report that it will not happen in Texas. Department of Energy’s Power Outage Study Team Report · Consumer education efforts underway – The Texas PUC has begun to implement a consumer education based program designed to help consumers understand how electric competition will work. Coalition for Affordable Power, Texas · Texas has plenty of company on the road to Competition- As Texas legislators were opening up the state’s electric marketplace to competition, eight other states (Arizona, New Jersey, Delaware, Arkansas, Maryland, New Mexico, Ohio and Oregon) were doing the same. Coalition for Affordable Power, Texas April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 48

NATIONAL NEWS HEADLINES · RDI study shows the reliability issue will continue to grow - A Resource Data International (RDI) study says the electricity generating capacity in the United States and Canada will be insufficient to meet demand twelve years from now. UPI, March 13, 2000 · New Jersey BPU President summarizes the status of electricity restructuring for state legislators – Approximately twelve percent of New Jersey’s power load has switched power providers since deregulation began four and a half months ago. The Star-Ledger, March 17, 2000 April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 49

NATIONAL NEWS HEADLINES · Many factors impact whether electricity prices will increase Wholesale electricity prices could increase up to 35% by 2008 over 1999 levels with continued strong demand climbing natural gas prices. PRNewswire, March 23, 2000 · Competition fails to light up Illinois power – Illinois Power Co. has dodged and stalled in an effort to avoid letting Illinois schools buy cheaper power from IP’s competitors. Knight Ridder/Tribune Business News, March 24, 2000 · New Jersey: Energy America to pay $280, 000 to settle deceptive marketing – Under terms of a Feb. 2 settlement with the state of New Jersey, Energy America will pay a total of $280, 000 to resolve allegations that its sales agents violated the law by using deceptive sales and marketing practices to convince utility customers to switch electricity suppliers. Current Connection, March 2000 April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 50

NATIONAL NEWS HEADLINES · Group purchasing of electricity is catching on around the country – A movement is growing throughout the country that, if successful, will result in reduced electricity rates for millions of homeowners and small businesses. It is called “community choice, ” and under its terms, municipalities purchase electricity on behalf of residents and businesses. Public Citizen, March 30, 2000 · Electricity deregulation legislation principles fall short – Principles fall short of separating companies that generate and sell electricity from those that own and control regulated transmission systems. Public Citizen, April 6, 2000 April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 51

NATIONAL NEWS HEADLINES · Research groups gives New Jersey electric deregulation a failing grade - Just 1 percent of New Jersey households have switched electricity suppliers, the New Jersey Public Interest Research Group Citizen Lobby said during a press conference in which it declared energy deregulation a failure. The Star-Ledger, February 10, 2000 · The big retail “bust”; what will it take to get true competition? - In part because of conflicting goals underlying the design of transition programs, few mass market customers are switching commodity suppliers. The design of default service will have a critical effect on the evolution of competition at the retail level, and on the ultimate cost of electricity for small customers. Electricity Journal, March 2000 April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 52

NATIONAL NEWS HEADLINES · Oklahoma Lawmakers debate fairness of electricity – deregulation plan - the proposed plan for restructuring the industry in Oklahoma is flawed, some say, because it favors existing in-state utilities and deters outside companies from establishing operations in Oklahoma and competing for business. Knight Ridder/Tribune Business News, April 4, 2000 · Utility deregulation stuck in Iowa legislature – Business groups and utility companies are far from seeing the resolution of a bill to deregulate Iowa’s utility industry as the Iowa legislature nears the end of its session. Omaha World-Herald, April 7, 2000 April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 53

NATIONAL NEWS HEADLINES · Door-to-door sales of competitive energy services – Door to door sales are rapidly assuming the first place in customer complaints associated with the move to electric and natural gas competition. In the past year, state regulators have reported a tidal wave of complaints concerning door to door sales by energy suppliers. LEAP Letter, January - February, 2000 · Electricity restructuring cuts costs – Restructuring the electricity industry at the federal and state, (Texas), level should improve reliability, foster competition, innovation, and offer consumers new choices. Dallas Business Journal, January 24, 2000 April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 54

NATIONAL NEWS HEADLINES · U. S. Businesses staying flexible on Power Deregulation – A survey released this week said that business customers appear to be keeping an open mind about changing electricity supplier, and most aren’t concerned about what company supplies their power as long as the lights come on and the price is right. Electricity Forum, April, 2000 · Deregulating power: lower prices, or not? – Manufacturers are virtually guaranteeing that competition in the electric industry will bring lower prices for everyone in Alabama and Alabama Power Company is saying just the opposite. Mobile Register, April 18, 2000 April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 55

NATIONAL NEWS HEADLINES · Texas Utilities Co. to appeal its stranded cost order – The Public Utilities Commission of Texas told Texas Utilities Co. that it could “securitize” $357 million of its stranded costs. The Company is appealing this ruling as it believes it should be allowed $1. 65 billion in stranded cost recovery based upon legislation passed by the Texas Legislature. Energy Online, March 2, 2000 · The Public Utility Commission of Texas grants final approval of settlement regarding Central Power and Lights’ securitization request – The Texas Commission gave final approval to a settlement which will permit Central and Southwest Corp’s subsidiary, (CP&L), to securitize $764 million of its stranded costs. The Company had requested $1. 27 billion in stranded cost recovery. PRNewswire, March 24, 2000 April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 56

NATIONAL NEWS HEADLINES · The power of choice - Competitors electrify utilities market as they try to connect with consumers – Consumer have been largely unmoved by their newfound freedom to choose a supplier since a handful of states began opening their utility markets four years ago. Blame small savings - - typically 2% to 10% off electric or gas bills - - spotty advertising that leaves many unaware of their options and a checkerboard of rules that vary by state and often favor the existing monopolies over upstart competitors. In California, where such costs are high, just 2% of consumers have switched in order to trim up to 5% off their bills vs. 20% to 30% of businesses. Enron Energy Services blitzed state homeowners with ads in 1997 only to quickly retreat to sell energy and energy-saving services to businesses. With profit margins minuscule, “There’s no incentive” to serve consumers, says Lou Pai, CEO of Enron Energy Services. USA Today, March 24, 2000 April 26, 2000 OKLAHOMA ELECTRIC RESTRUCTURING; STAFF 57