Oklahoma: where competition does not come sweeping down theplain. That’s at least the case since Oklahoma Natural Gas (ONG)last week sought to block the Oklahoma Corporation Commission’s(OCC) upstream unbundling order that specified competitive biddingfor Tulsa and Oklahoma City gas supplies.

The OCC issued an interim order July 31 (See NGI Aug. 3, 1998)that ONG has found much fault with. ONG filed a petition with theOklahoma Supreme Court appealing the interim order and sought astay of its implementation. ONG said the order is unconstitutional”in that it exceeds the commission’s jurisdiction and authority andconstitutes an invasion of internal management direction.”

Likewise, ONG maintains commission unbundling rules andadministrative and hearing procedures are unconstitutional. ONGspokesman Don Sherry said the order gets into such areas as theconstruction of bids for gas supply, asking the company to reducetakes from certain existing contracts in order to bid out largervolumes. “There is case law here in the state of Oklahoma having todo with the extent to which the Corporation Commission can get intothe actual management of a utility.”

ONG President Jim Kneale said his company is not trying to stallcompetition. In fact, as existing contracts expire, ONG will goahead and solicit bids for supply for this winter’s heating seasonto serve the Oklahoma City and Tulsa areas. “It’s vitally importantto both consumers and Oklahoma’s natural gas industry that thesechanges are achieved in a reasonable, prudent and legal fashion.Taking apart a sophisticated, fully integrated system such as ONG’smust be done with caution. We have long supported the concepts ofgreater competition and customer choice in the natural gasbusiness. But this order was based in large measure on the proposalof a major competitor [Transok].”

The interim order was approved by the OCC in a 2-to-1 vote withcommissioners Denise Bode and Bob Anthony voting in favor andChairman Ed Apple dissenting. Bode said the OCC remains committedto providing ONG customers with savings from competitive bidding.”Time is important to make these customer savings possible by thestart of the winter heating season, which begins Nov. 1,” she said.Bode and Anthony noted the order was designed to allow ONG to workwith the commission on “the best possible way to configure thenecessary changes to transition Oklahoma’s natural gas utilityindustry into the era of savings through competitive bidding.”

The unbundling plan calls for ONG to remain a regulated utilityproviding distribution service. However, its existing services andassets upstream of the citygate – gas supply, gathering, storage,and transportation – would be separated and brought under a newcompany, ONEOK Gas Transmission (OGT). ONG was ordered to seekupstream services through competitive bidding. Tulsa and OklahomaCity are to be the first cities receiving competitively bid gassupply and services; however, any savings generated would be spreadacross the entire ONG system, according to the commission’s order.

Joe Fisher, Houston

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