OK Delays Retail Unbundling, Blames ONG

The Oklahoma Corporation Commission (OCC) delayed the state's retail gas unbundling 20 months, saying tax and other issues need more consideration and noting upstream unbundling must come first anyway.

A commission order delayed the start of retail competition from Oct. 1, 1999 to June 1, 2001. Retail unbundling affects gas utilities serving more than 25,000 customers. Groups wanting to propose competitive purchase programs now have more time to submit their proposals for commission consideration.

OCC Chairman Ed Apple said he agrees with hearing testimony that significant tax and municipal franchise issues should be addressed prior to restructuring the gas service industry. "I think these issues could take two years or more to resolve. We would be premature in setting this year (1999) as a target date for starting retail competition."

Commissioner Bob Anthony said delays in implementing gas industry restructuring at the wholesale level forced the change in starting time for retail competition. The commission revised its gas rules in 1998 to begin separating integrated gas systems into individual services at the wholesale level. Oklahoma Natural Gas Co. (ONG) appealed several issues to the Oklahoma Supreme Court, staying the effectiveness of the order. The Supreme Court has not ruled on the appeal.

"Oklahoma Natural Gas has caused this delay. We are also disappointed that the Supreme Court did not dismiss the ONG appeal of an interim order which would have benefited consumers during last year's heating season," Anthony said.

"I don't think that we would at all accept Commissioner Anthony's characterization of ONG as the reason that the commission chose to delay customer choice at the retail level." said ONG spokesman Don Sherry. "There were and remain a lot of issues to be resolved with respect to downstream unbundling, not the least of which would be considerations having to do with revenue for cities and towns in the state of Oklahoma. There are a lot of issues that still require careful study and deliberate thinking before we get to that phase. To that extent I think what the commission has chosen to do is appropriate. But to suggest that it's entirely the fault of Oklahoma Natural gas Co. is just a continuation of a well established practice of finger pointing."

Wholesale competition must come before retail choice, said Commissioner Denise Bode. "More importantly, consumers need to have time to prepare for the coming change. This revised schedule takes that into account."

Anthony said most of the savings will occur from upstream restructuring and competitive bidding for gas procurement. "These savings have to be in place before they can be passed through to the retail customers."

In other OCC-ONG news, last week the commission voted to proceed with an interim rate case over the objections of ONG, which said the action creates "a rate case within a rate case" (see NGI March 15, 1999). The vote affirmed a previous commission order, and a hearing on interim rates is expected in mid-June.

Oklahoma's attorney general, OCC staff and others recommended interim rates take effect during ONG's ongoing rate case. ONG maintained the work required to develop interim rates would only retard progress of the ongoing rate case, which also could provide savings to customers.

The ONG rate case was opened last year. In February, ONG asked the commission for a rate reduction in conjunction with a proposal to sever some functions of the company and make them deregulated. Oklahoma Attorney General Drew Edmondson and others balked at that proposal.

Joe Fisher, Houston

©Copyright 1999 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.