ONG Makes 'Bold' Proposal to OK Regulators

The way one observer sees it, Oklahoma Natural Gas and ONEOK Gas Transportation can ask for whatever they want in their joint restructuring filing with the Oklahoma Corporation Commission (OCC); they won't get everything. "It's a pretty bold proposal. I can tell you, ONG's not going to get what they filed for. If you're asking for something, you might as well ask for the moon," said the source, who asked to be anonymous.

Last week's upstream unbundling filing with the OCC details how ONG intends to carry out the competitive bidding process outlined in OCC rules adopted in January. Under those rules, ONG will solicit competitive bids for upstream services, including gas transportation, storage and supply, that are required for the operation of the company's distribution system. The application also identifies the upstream assets to be owned and operated by ONEOK Gas Transportation. "I think people are surprised by the audacity of shifting so many assets into distribution," the observer said. He also noted ONG did not file any written testimony with its plan, which is lacking data on such things as demand, existing gas contracts and existing pipeline capacity agreements.

"I would say putting an unbundling plan together in almost two months is almost unprecedented," said David Crisp, ONG manager of rates and regulatory reporting. Crisp said ONG's plan is "fair and reasonable. "We created aggregation systems that enhance the possibility of multiple pipelines serving those aggregation systems."

The filing requests permission to lower the volume requirements for industrial customers who wish to participate in the company's pipeline capacity lease program. It also asks the OCC for permission to charge flat monthly rates for various classes of customers. For residentials, the rate would be $17.96; for small commercial and industrial customers, $21.26; and for low-income residentials, a discounted flat rate of $12.98. Currently, customers pay the utility through a step rate system tied to the amount of gas flowing through their meters. Spokesman Weldon Watson said the switch to flat rates would be revenue neutral to the company.

The observer predicted "a huge push" to get more information from ONG as well as a number of proposals for alternate plans. Commission staff also might be asked to come up with an alternate plan. "I think you'll see some of the other parties coming up with vastly different proposals. I'd say at least two, maybe three. My guess is those other three alternate plans will likely coalesce into one."

Joe Fisher, Houston

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