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ONG Seeks to Block Oklahoma Unbundling Order

August 10, 1998
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ONG Seeks to Block Oklahoma Unbundling Order

Oklahoma: where competition does not come sweeping down the plain. 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 bidding for 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 the Oklahoma Supreme Court appealing the interim order and sought a stay of its implementation. ONG said the order is unconstitutional "in that it exceeds the commission's jurisdiction and authority and constitutes an invasion of internal management direction."

Likewise, ONG maintains commission unbundling rules and administrative and hearing procedures are unconstitutional. ONG spokesman Don Sherry said the order gets into such areas as the construction of bids for gas supply, asking the company to reduce takes from certain existing contracts in order to bid out larger volumes. "There is case law here in the state of Oklahoma having to do with the extent to which the Corporation Commission can get into the actual management of a utility."

ONG President Jim Kneale said his company is not trying to stall competition. In fact, as existing contracts expire, ONG will go ahead and solicit bids for supply for this winter's heating season to serve the Oklahoma City and Tulsa areas. "It's vitally important to both consumers and Oklahoma's natural gas industry that these changes are achieved in a reasonable, prudent and legal fashion. Taking apart a sophisticated, fully integrated system such as ONG's must be done with caution. We have long supported the concepts of greater competition and customer choice in the natural gas business. But this order was based in large measure on the proposal of a major competitor [Transok]."

The interim order was approved by the OCC in a 2-to-1 vote with commissioners Denise Bode and Bob Anthony voting in favor and Chairman Ed Apple dissenting. Bode said the OCC remains committed to providing ONG customers with savings from competitive bidding. "Time is important to make these customer savings possible by the start of the winter heating season, which begins Nov. 1," she said. Bode and Anthony noted the order was designed to allow ONG to work with the commission on "the best possible way to configure the necessary changes to transition Oklahoma's natural gas utility industry into the era of savings through competitive bidding."

The unbundling plan calls for ONG to remain a regulated utility providing distribution service. However, its existing services and assets upstream of the citygate - gas supply, gathering, storage, and transportation - would be separated and brought under a new company, ONEOK Gas Transmission (OGT). ONG was ordered to seek upstream services through competitive bidding. Tulsa and Oklahoma City are to be the first cities receiving competitively bid gas supply and services; however, any savings generated would be spread across the entire ONG system, according to the commission's order.

Joe Fisher, Houston

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