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Regulators Approve Oklahoma Natural Gas Rate Increase

In granting a natural gas rate increase settlement for Oklahoma Natural Gas Co. (ONG), a division of ONEOK Inc., the Oklahoma Corporation Commission (OCC) early last week said the resolution provided a good balance between the need to ensure safe and reliable gas service and consumer concerns.

The OCC approved a settlement to allow an increase in base revenue of $54.5 million and set ONG's authorized return on equity at 10.5%. Several expenses that currently appear on customers' bills as separate line-item charges will be moved into base rates (approximately $28 million), effectively reducing the rate increase to a net amount of approximately $26.5 million. The result is that a typical residential consumer may experience an increase of $3.95 per month on their bills, depending on current natural gas prices.

The settlement, which was negotiated by the OCC's Public Utility Division, the office of the Oklahoma Attorney General and the Oklahoma Industrial Energy Consumers organizations, will leave the rates of Low Income Home Energy Assistance Program customers unchanged.

OCC Commissioner Dana Murphy said while she understands that a rate increase during the current economic recession is difficult for consumers, she noted that an audit of ONG, which serves more than 800,000 customers across three-quarters of the state, proved the increase to be warranted.

"I understand people are very concerned about any rate increases right now," Murphy said. "They're feeling the pinch of the economic situation and every bit adds up when trying to make ends meet. In this economic climate, any utility's rate increase request must survive intense scrutiny. Our audits showed ONG has reduced operating costs through more efficiency. At the same time, ONG has paid significant amounts to make sure its system will reliably deliver gas to customers during the coming winter. This money was spent on new pipe, repairing customer lines and replacing meters. These are costs consumers are willing to pay to make sure they have heat, but they are not willing to pay for unnecessary fringes. The Commission has made sure only necessary costs have been added. This is a fair result -- making for a small bill increase and assuring safe, reliable service."

OCC Vice Chairman Jeff Cloud said he was pleased to see the agreement is balanced, has an eye toward the future and protects the most vulnerable.

"Under the law, the commission is charged with the difficult task of balancing what the company needs to provide safe and reliable service with the vital need of the customer to have service that is affordable," Cloud said. "The parties to the case worked diligently to strike that balance. Under the agreement, those Oklahomans who are clients of the Low Income Home Energy Assistance Program will not see a change in their rates. The agreement also helps efforts to promote the use of compressed natural gas (CNG) as a motor fuel, as it sets up tariffs for those who fuel CNG vehicles at home."

The new rates will be reflected in customer bills beginning later in December.

"This agreement allows us to continue to invest in our system and maintain the high standards of service and reliability that our customers have experienced for more than a century," said Roger Mitchell, president of ONG.

As a result of the new rates, residential customers who use 50 Dth or more per year will pay a fixed charge of $26.75 per month for ONG's delivery service, plus the cost of the natural gas, taxes and miscellaneous fees. Customers using less than 50 Dth per year of natural gas will pay a fixed charge of $11.20 per month and $3.7323/Dth for delivery, in addition to the cost of the gas, taxes and fees.

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