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ONG Lowers Rates, Withdraws Supreme Court Appeal

ONG Lowers Rates, Withdraws Supreme Court Appeal

A long and often contentious processes came to a close last week in Oklahoma with an Oklahoma Corporation Commission (OCC) order approving a comprehensive agreement between Oklahoma Natural Gas the OCC staff and the Oklahoma Attorney General's office.

The major results of the agreement are that ONG will lower its rates by $20 million and withdraw its state supreme court appeal of a 1998 OCC order that required unbundling of its upstream gas transportation and storage operations (see NGI, Aug. 10, 1998; and May 31, 1999, July 19 and Sept. 6, 1999). The agreement also allows ONG to transfer to its utility service territory about 35,000 Oklahoma customers of its affiliate Kansas Gas Service. In addition the commission authorized ONG to begin assuming responsibility for the maintenance and safety of the service lines that connect customers' homes and businesses to ONG's distribution mains.

"We believe this plan accomplishes several goals, including lower costs for our customers," said ONG President Ed Farrell. "We are preparing for a future that will include greater customer choice, in which Oklahoma Natural will be permitted to serve our customers with more flexibility than in the past. This is one of the important steps we are taking in that direction. In addition, these decreases in base rates will help offset the rising price for natural gas, which is now benefiting Oklahoma producers and Oklahoma schools."

The rate reduction for an average ONG residential customer will be about $23 annually. Former Kansas Gas Service residential customers should realize a rate reduction of $85 per year.

A significant part of the rate reduction is the result of changes in how ONG obtains "upstream" services, including transportation and storage. The transmission lines and gas storage formerly owned by the utility have been separated from ONG and are now operating in competitive markets. ONG will use a competitive bidding process to purchase transportation services, as well as for gas supply.

Oklahoma Natural Gas Company is a division of Tulsa-based ONEOK, Inc, providing gas distribution service to 800,000 customers in the state.

Rocco Canonica

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