OK Delays Retail Unbundling, Blames ONG
The Oklahoma Corporation Commission (OCC) delayed the state's
retail gas unbundling 20 months, saying tax and other issues need
more consideration and noting upstream unbundling must come first
A commission order delayed the start of retail competition from
Oct. 1, 1999 to June 1, 2001. Retail unbundling affects gas
utilities serving more than 25,000 customers. Groups wanting to
propose competitive purchase programs now have more time to submit
their proposals for commission consideration.
OCC Chairman Ed Apple said he agrees with hearing testimony that
significant tax and municipal franchise issues should be addressed
prior to restructuring the gas service industry. "I think these
issues could take two years or more to resolve. We would be
premature in setting this year (1999) as a target date for starting
Commissioner Bob Anthony said delays in implementing gas
industry restructuring at the wholesale level forced the change in
starting time for retail competition. The commission revised its
gas rules in 1998 to begin separating integrated gas systems into
individual services at the wholesale level. Oklahoma Natural Gas
Co. (ONG) appealed several issues to the Oklahoma Supreme Court,
staying the effectiveness of the order. The Supreme Court has not
ruled on the appeal.
"Oklahoma Natural Gas has caused this delay. We are also
disappointed that the Supreme Court did not dismiss the ONG appeal
of an interim order which would have benefited consumers during
last year's heating season," Anthony said.
"I don't think that we would at all accept Commissioner
Anthony's characterization of ONG as the reason that the
commission chose to delay customer choice at the retail level."
said ONG spokesman Don Sherry. "There were and remain a lot of
issues to be resolved with respect to downstream unbundling, not
the least of which would be considerations having to do with
revenue for cities and towns in the state of Oklahoma. There are a
lot of issues that still require careful study and deliberate
thinking before we get to that phase. To that extent I think what
the commission has chosen to do is appropriate. But to suggest that
it's entirely the fault of Oklahoma Natural gas Co. is just a
continuation of a well established practice of finger pointing."
Wholesale competition must come before retail choice, said
Commissioner Denise Bode. "More importantly, consumers need to have
time to prepare for the coming change. This revised schedule takes
that into account."
Anthony said most of the savings will occur from upstream
restructuring and competitive bidding for gas procurement. "These
savings have to be in place before they can be passed through to
the retail customers."
In other OCC-ONG news, last week the commission voted to proceed
with an interim rate case over the objections of ONG, which said
the action creates "a rate case within a rate case" (see NGI March
15, 1999). The vote affirmed a previous commission order, and a
hearing on interim rates is expected in mid-June.
Oklahoma's attorney general, OCC staff and others recommended
interim rates take effect during ONG's ongoing rate case. ONG
maintained the work required to develop interim rates would only
retard progress of the ongoing rate case, which also could provide
savings to customers.
The ONG rate case was opened last year. In February, ONG asked
the commission for a rate reduction in conjunction with a proposal
to sever some functions of the company and make them deregulated.
Oklahoma Attorney General Drew Edmondson and others balked at that
Joe Fisher, Houston