The Oklahoma Corporation Commission (OCC) delayed the state’sretail gas unbundling 20 months, saying tax and other issues needmore consideration and noting upstream unbundling must come firstanyway.

A commission order delayed the start of retail competition fromOct. 1, 1999 to June 1, 2001. Retail unbundling affects gasutilities serving more than 25,000 customers. Groups wanting topropose competitive purchase programs now have more time to submittheir proposals for commission consideration.

OCC Chairman Ed Apple said he agrees with hearing testimony thatsignificant tax and municipal franchise issues should be addressedprior to restructuring the gas service industry. “I think theseissues could take two years or more to resolve. We would bepremature in setting this year (1999) as a target date for startingretail competition.”

Commissioner Bob Anthony said delays in implementing gasindustry restructuring at the wholesale level forced the change instarting time for retail competition. The commission revised itsgas rules in 1998 to begin separating integrated gas systems intoindividual services at the wholesale level. Oklahoma Natural GasCo. (ONG) appealed several issues to the Oklahoma Supreme Court,staying the effectiveness of the order. The Supreme Court has notruled on the appeal.

“Oklahoma Natural Gas has caused this delay. We are alsodisappointed that the Supreme Court did not dismiss the ONG appealof an interim order which would have benefited consumers duringlast year’s heating season,” Anthony said.

“I don’t think that we would at all accept CommissionerAnthony’s characterization of ONG as the reason that thecommission chose to delay customer choice at the retail level.”said ONG spokesman Don Sherry. “There were and remain a lot ofissues to be resolved with respect to downstream unbundling, notthe least of which would be considerations having to do withrevenue for cities and towns in the state of Oklahoma. There are alot of issues that still require careful study and deliberatethinking before we get to that phase. To that extent I think whatthe commission has chosen to do is appropriate. But to suggest thatit’s entirely the fault of Oklahoma Natural gas Co. is just acontinuation of a well established practice of finger pointing.”

Wholesale competition must come before retail choice, saidCommissioner Denise Bode. “More importantly, consumers need to havetime to prepare for the coming change. This revised schedule takesthat into account.”

Anthony said most of the savings will occur from upstreamrestructuring and competitive bidding for gas procurement. “Thesesavings have to be in place before they can be passed through tothe retail customers.”

In other OCC-ONG news, last week the commission voted to proceedwith an interim rate case over the objections of ONG, which saidthe action creates “a rate case within a rate case” (see NGI March15, 1999). The vote affirmed a previous commission order, and ahearing on interim rates is expected in mid-June.

Oklahoma’s attorney general, OCC staff and others recommendedinterim rates take effect during ONG’s ongoing rate case. ONGmaintained the work required to develop interim rates would onlyretard progress of the ongoing rate case, which also could providesavings to customers.

The ONG rate case was opened last year. In February, ONG askedthe commission for a rate reduction in conjunction with a proposalto sever some functions of the company and make them deregulated.Oklahoma Attorney General Drew Edmondson and others balked at thatproposal.

Joe Fisher, Houston

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