The lengthy and at times acrimonious fight between Oneok and theOklahoma Corporation Commission (OCC) over upstream unbundlingappears to be over. On Thursday, the OCC voted 2 to 0, with onecommissioner absent, to unbundle the upstream gas gathering andstorage services of Oklahoma Natural Gas (ONG) and Kansas GasService, divisions of Oneok Inc.

The commission determined there is competition for ONG’s gasgathering and storage assets and therefore they should be removedfrom utility regulation by the commission effective Nov. 1. Theaction is part of an agreement negotiated between ONG and OCC staffand consumer groups. ONG is to buy gas supply through a competitivebidding process, and suppliers will make their own arrangements forgathering and storage services.

Thursday’s vote followed a hearing that included testimony thatthe bidding process will save customers about $11.3 millionannually in gathering and storage costs. That is in addition to aone-time credit of $5 million to appear on customer bills inSeptember.

The OCC last week approved a stipulation among ONG, commissionstaff, Enogex, Transok, Octagon Resources Inc., Williams PipelineCentral Inc., Oklahoma Industrial Energy Consumers and GPM Corp.The Office of the Attorney General participated in the discussionsbut did not sign the final agreement.

The stipulation guaranteed ONG residential customers a one-time$5 million dollar credit in lieu of an ONG interim rate hearing.The credit, about $7 per residential customer, covers the interimperiod of Sept. 1, 1999, to May 5, 2000.

ONG will request competitive bids for gas supplies for the1999-2000 heating season and will seek competitive bids fortransmission service effective Nov. 1, 2000.

ONG will seek a stay of its appeal of last summer’s OCCunbundling order pending before the Oklahoma Supreme Court and willdismiss the appeal once final orders are issued in the new ratecase. In the meantime, the company agreed to implement certainconsumer protections from the unbundling order as part of thestipulation.

Commissioner Denise Bode pointed to the multi-million dollarrate reduction in Oklahoman’s utility bills but also emphasized theimportance of customers gaining greater access at competitiveprices to gas that is now being exported.

“The $5 million rate reduction is the icing on the cake weexpect with a new open gas market in Oklahoma. Right now, we export70% of our gas out of Oklahoma. This agreement will allow greateraccess to that Oklahoma gas by Oklahoma consumers, large and small,with competition at better prices. The consensus that finallydeveloped among the regulators, ONG, and its competitors andcustomers to move forward is great news for all Oklahomans.”

This is an important, positive step forward in a process that webelieve will benefit our customers and our state, as well as ourcompany,” said ONG President Ed Farrell. “Everyone involved hasworked extraordinarily long and hard to create fundamental changesin how we serve our customers.”

Removing gathering and storage from utility regulation is abeginning step in the move to unbundle gas services to introducecompetition to Oklahoma. Later this year, the OCC is to examine theissue of competition and deregulation with respect to transmissionpipelines that deliver gas to ONG’s distribution system. ONG saidit would implement a competitive bidding process for those servicesbeginning next year. Utility rates for gas delivery are to remainregulated and under OCC jurisdiction.

Commissioners Bode and Ed Apple voted in favor of the orderThursday. OCC Chairman Bob Anthony was absent but concurred withthe results of the order in a separate opinion.

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