A road block to retail competition in Oklahoma was smashed lastweek when Oklahoma Governor Frank Keating vetoed Senate bill 565, alast-minute attempt to derail gas unbundling in the state. The billwould have pushed back the effective date for unbundling untilOctober 2001 and erased the final rules completed by the OklahomaCorporation Commission in April and approved by the legislature andthe governor.
“I have vetoed [this bill] because the provisions of thislegislation would be a step backward for the deregulation of thenatural gas industry and slow benefits gas consumers in Oklahomaare expecting,” Keating said. “The [OCC] has spent nearly two yearsin promulgating rules which encourage competition in the naturalgas industry, including provisions for the deliberate and carefultransition to competitive markets. The requirement in [SB 565] thatthe [OCC] ‘promulgate rules implementing unbundling of natural gasservices,’ renders the current rules in effect a nullity.,[mandating] that the rulemaking process begin all over again.”
Enron’s Kathleen Magruder, director of regulatory policy, saidthe governor “did the right thing. We’re very pleased he decided toveto it and we’re looking forward to going forward with thecollaborative discussions to restructure the natural gas industryin Oklahoma and to begin retail competition. It was inappropriatefor the legislature to come back in the 11th hour and try to changewhat interested parties had spent two years putting together.”
Under the OCC’s current rules, downstream unbundling, includingoffering a choice of suppliers to all retail customers, isscheduled to take place in November 1999. Upstream unbundling,including and auction of upstream capacity, is scheduled to beginthis November.
ONG and Arkla, the state’s two largest gas distributors, werethe main forces supporting the bill. “It addressed some problems wefelt existed in the rules developed by the OCC,” said ONG spokesmanDon Sherry. “Much of our concern was directed at the upstreamportion of the rules. Specifically, there was an issue regardingthe ability of our affiliate to compete on an equal basis withother companies when a competitive situation existed. We [are]under a heavier regulatory burden.to prove in effect there [is] acompetitive situation that allows us to compete.
“With respect to the downstream part of it, we felt this was avery aggressive timetable. There were simply some logisticalsituations that would have been better met had there been moretime. There also are some issues that are not yet fully resolved,some tax implications.” He noted in Oklahoma LDC’s collect either afranchise tax or a gross receipts tax based on the total fees incustomer bills. “When we get into downstream unbundling and thecustomer is buying the commodity elsewhere, obviously our bill isgoing to be smaller, therefore the amount of the taxes collectedwill be [lower]. Those were our concerns. Our position now is we’regoing to move forward and do everything we can to make thistransition smooth and make unbundling work.”
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