Oklahoma’s record winter heating costs last season were caused by inadequate planning by Oklahoma Natural Gas Co., and thus customers should get some of their money back, according to witnesses testifying before the Oklahoma Corporation Commission this week. The Commission is looking into charges that ONG did not adequately prepare for the last winter season, which caused rates to escalate.

Thomas Norris, a Houston-based energy consultant, testified that ONG had failed to purchase gas “prudently,” telling the commission that it was “speculating or did not care” that winter price spikes could occur. Norris was hired by the Oklahoma Public Utility Division of the Commission to review ONG’s purchasing practices.

Last winter, ONG customers’ heating bills more than doubled when gas prices rose to almost $10/MMcf. Ken Zimmerman, who works for the Commission on energy issues and helped to prepare a report that suggested consumers were owed a refund, said “imprudent actions” led to costs of more than $72 million, which were then passed on to the state’s ratepayers. Typically, he said, natural gas is purchased in the summer months when prices are lower, he told the Commission.

However, ONG attorney Stuart Campbell claimed that the review was being performed in hindsight and reminded the commissioners that gas prices are difficult to predict. ONG bought about 60% of its winter gas supply from ONEOK Energy Marketing and Trading, an ONG affiliate. At least one commissioner, Ed Apple, is siding with ONG, calling the staff’s report ambiguous and imprecise.

Last week, ONG in a statement said it was “very prudent” and that it had bought natural gas at prices that were competitive with “others in the region.” ONG was expected to call its own witnesses before the full Commission votes on the staff’s recommendations.

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