ONG Seeks to Block Oklahoma Unbundling Order
Oklahoma: where competition does not come sweeping down the
plain. That's at least the case since Oklahoma Natural Gas (ONG)
last week sought to block the Oklahoma Corporation Commission's
(OCC) upstream unbundling order that specified competitive bidding
for Tulsa and Oklahoma City gas supplies.
The OCC issued an interim order July 31 (See NGI Aug. 3, 1998)
that ONG has found much fault with. ONG filed a petition with the
Oklahoma Supreme Court appealing the interim order and sought a
stay of its implementation. ONG said the order is unconstitutional
"in that it exceeds the commission's jurisdiction and authority and
constitutes an invasion of internal management direction."
Likewise, ONG maintains commission unbundling rules and
administrative and hearing procedures are unconstitutional. ONG
spokesman Don Sherry said the order gets into such areas as the
construction of bids for gas supply, asking the company to reduce
takes from certain existing contracts in order to bid out larger
volumes. "There is case law here in the state of Oklahoma having to
do with the extent to which the Corporation Commission can get into
the actual management of a utility."
ONG President Jim Kneale said his company is not trying to stall
competition. In fact, as existing contracts expire, ONG will go
ahead and solicit bids for supply for this winter's heating season
to serve the Oklahoma City and Tulsa areas. "It's vitally important
to both consumers and Oklahoma's natural gas industry that these
changes are achieved in a reasonable, prudent and legal fashion.
Taking apart a sophisticated, fully integrated system such as ONG's
must be done with caution. We have long supported the concepts of
greater competition and customer choice in the natural gas
business. But this order was based in large measure on the proposal
of a major competitor [Transok]."
The interim order was approved by the OCC in a 2-to-1 vote with
commissioners Denise Bode and Bob Anthony voting in favor and
Chairman Ed Apple dissenting. Bode said the OCC remains committed
to providing ONG customers with savings from competitive bidding.
"Time is important to make these customer savings possible by the
start of the winter heating season, which begins Nov. 1," she said.
Bode and Anthony noted the order was designed to allow ONG to work
with the commission on "the best possible way to configure the
necessary changes to transition Oklahoma's natural gas utility
industry into the era of savings through competitive bidding."
The unbundling plan calls for ONG to remain a regulated utility
providing distribution service. However, its existing services and
assets upstream of the citygate - gas supply, gathering, storage,
and transportation - would be separated and brought under a new
company, ONEOK Gas Transmission (OGT). ONG was ordered to seek
upstream services through competitive bidding. Tulsa and Oklahoma
City are to be the first cities receiving competitively bid gas
supply and services; however, any savings generated would be spread
across the entire ONG system, according to the commission's order.
Joe Fisher, Houston
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