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Arkla Begins Unbundling Process

Arkla Begins Unbundling Process

While neighboring LDC Oklahoma Natural Gas continues its attempt to stave off unbundling, Arkla moved forward last week with a collaborative process involving stakeholders that is intended to produce a downstream unbundling plan next April with full retail competition by October 1999.

"We had a real good turn out from interested stakeholders, including pipelines, marketers, commission people, public interest groups and we spent a fair amount of time discussing how we hope to proceed and what the timeline would be given the calendar that's been established in Oklahoma. It's a fairly tight schedule," said Paul Ruxin, an attorney from Jones, Day, Reavis and Poge who is assisting the utility.

ONG has decided to delay its own collaborative process on downstream unbundling pending a Supreme Court decision on its appeal of the Oklahoma Corporation Commission's unbundling order. In contrast to ONG, Arkla already has completed upstream unbundling. "We're proceeding down what appears to be an independent path from ONG here," said Ruxin. "ONG is still substantially a vertically integrated system, but Arkla already has been through the difficult act of becoming in effect a pure citygate-to-burner-tip entity. It's that, plus a commitment by Arkla to be a part of the new model, that [sets us apart from ONG]," he said.

In 1985, Arkla split its transmission and distribution operations. Its pipeline operations have been FERC jurisdictional for the last six years. Arkla has been buying capacity on its own accord and making its own supply arrangements since the implementation of FERC Order 636. "The main problem for ONG is it just hasn't gotten that far in the process," said Arkla's Chuck Harder, assistant general counsel.

Arkla has 115,000 customers in Oklahoma, mainly in small desegregated communities. The utility has no storage, peak shaving or compression, so alternative suppliers will have to carry less utility baggage upon entering the Arkla system next winter. But Arkla intends to remain a competitor in its territory.

"Certainly we don't think in the future that Arkla will be in the regulated gas sales business," said Ruxin. "When choice comes and it's a competitive offering, Arkla's participation as a provider of commodity will be similar to that of other commodity providers."

Rocco Canonica

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