Oklahoma Natural Gas Co. has been cleared by the OklahomaCorporation Commission of any wrongdoing regarding how it evaluatestransmission service bids for ONG customers, but the company thatfiled the original complaint — Enogex — is appealing thebidding process to the Oklahoma Supreme Court.

The OCC report, issued by an administrative law judge at a closedhearing in Oklahoma City, followed a complaint by natural gastransporter Enogex Inc., which claimed the bids it submitted toprovide transmission services in Oklahoma were wrongfully disqualifiedto favor ONEOK Gas Transmission Co. (OGT), an ONG affiliate and anEnogex competitor (see Daily GPI, Aug. 17).

OCC “found no evidence that ONG favored its affiliate in thecompetitive bid selection regarding gas transportation,” said thereport. OGT bids were in fact also rejected under the same formulaapplied to competing bids, the report concluded.

OGT was awarded the bids as the default provider because all ofthe bids came in above the benchmark cost of providing services.The benchmark prices, which are confidential, were established toensure that the cost of providing services to ONG customers wouldnot go up, and OGT will provide transmission services at thebenchmark prices.

Enogex, an OGE Energy Corp. subsidiary based in Oklahoma City,had claimed that its bids were low, and that the benchmark priceshad been calculated incorrectly and were too low. However, thecommission staff concluded that the benchmark prices actually mighthave been too high.

“If this should be the case, the benchmarks would be lower,” thereport states. “The benchmark comparison revealed that all of theEnogex bids were above the benchmark. It should be noted thatEnogex made many bids, including Oklahoma City and Tulsa, that thebid instruction allowed to be accepted on an individual basis.These bids were all above their respective benchmarks.”

In 1999, the OCC allowed ONG to begin purchasing itstransmission services through a competitive bidding process, one ofthe first steps toward deregulating Oklahoma’s natural gasindustry. The bid process is being used to provide gas for thiswinter season. ONG is the state’s largest natural gas provider,serving about 800,000 customers.

Enogex, which is appealing the method used to evaluate bids tothe state Supreme Court, argues that benchmarks should be based onthe cost of providing transmission services to the entire ONGsystem. ONG and the OCC set different benchmarks for each marketbecause the cost to serve each area of the state varies. OCC saidyesterday it may review how it sets benchmarks, but no changes wereimmediately planned.

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