ONG Lowers Rates, Withdraws Supreme Court Appeal
A long and often contentious processes came to a close last week
in Oklahoma with an Oklahoma Corporation Commission (OCC) order
approving a comprehensive agreement between Oklahoma Natural Gas
the OCC staff and the Oklahoma Attorney General's office.
The major results of the agreement are that ONG will lower its
rates by $20 million and withdraw its state supreme court appeal of a
1998 OCC order that required unbundling of its upstream gas
transportation and storage operations (see NGI, Aug. 10, 1998; and May
31, 1999, July 19 and Sept. 6, 1999). The agreement also allows
ONG to transfer to its utility service territory about 35,000 Oklahoma
customers of its affiliate Kansas Gas Service. In addition the
commission authorized ONG to begin assuming responsibility for the
maintenance and safety of the service lines that connect customers'
homes and businesses to ONG's distribution mains.
"We believe this plan accomplishes several goals, including
lower costs for our customers," said ONG President Ed Farrell. "We
are preparing for a future that will include greater customer
choice, in which Oklahoma Natural will be permitted to serve our
customers with more flexibility than in the past. This is one of
the important steps we are taking in that direction. In addition,
these decreases in base rates will help offset the rising price for
natural gas, which is now benefiting Oklahoma producers and
The rate reduction for an average ONG residential customer will
be about $23 annually. Former Kansas Gas Service residential
customers should realize a rate reduction of $85 per year.
A significant part of the rate reduction is the result of
changes in how ONG obtains "upstream" services, including
transportation and storage. The transmission lines and gas storage
formerly owned by the utility have been separated from ONG and are
now operating in competitive markets. ONG will use a competitive
bidding process to purchase transportation services, as well as for
Oklahoma Natural Gas Company is a division of Tulsa-based ONEOK,
Inc, providing gas distribution service to 800,000 customers in the
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