As natural gas prices continue to come down nationally, states and utilities continue to ensure the reductions flow through to customers. The Oklahoma Corporation Commission (OCC) on Wednesday gave unanimous approval to a lower fuel charge for Oklahoma Natural Gas (ONG) customers. However, the commission also warned that the United States’ energy supply/demand balance for the future is less than solid.
The fuel charge — also known the Purchased Gas Adjustment (PGA) — is a “pass-through” to the consumer of what ONG paid for the gas. The reduced PGA will result in an estimated total savings of about $13 million. OCC Chairman Jeff Cloud said it is another sign the natural gas market has begun a return to normalcy.
“No agency, federal or state, has jurisdiction over energy prices,” explained Cloud. “They are set by market forces. Natural gas prices had already been rising when Hurricanes Katrina and Rita hit, and the sudden loss of about a quarter of the nation’s natural gas production at a time when supplies were already rather tight caused national prices to skyrocket.”
The chairman noted that prices peaked at more than $15/Dth in December, but began declining, as much of the nation enjoyed a fairly warm winter and demand did not meet expectations. Cloud noted that it is important to remember that even as prices come down, they still remain high on an historic basis, adding that “this nation still faces problems when it comes to meeting natural gas demand in the future.”
While agreeing that ONG’s move was important, OCC Commissioner Denise Bode also warned that the future is still up in the air. “While it’s wonderful to see ONG address the concerns of commissioners on behalf of the consumer, the fact remains that this nation is still in a precarious position when it comes to its energy needs, particularly in regards to natural gas,” she said. “The current push to import liquefied natural gas (LNG) to solve the problem is like a debtor borrowing more money to get out of debt.”
She also said increasing the country’s dependence on foreign energy is not the answer. “We must do more to encourage development of America’s natural gas resources, as we have in Oklahoma by reducing red tape. As a result, Oklahoma is now the number two gas producing state in the nation. At the same time, gas and electric utilities, and those who regulate them, must exercise vigilance on behalf of the consumer when it comes to controlling fuel costs as much as possible. I want to assure consumers we will be vigilant in closely examining ONG’s gas purchasing practices to be sure Oklahomans are getting the best deal possible.”
Commissioner Bob Anthony said ONG’s latest request to lower its PGA is a welcome answer to concerns he raised in January. “Consumers have been crying out for relief, and I appreciate OCC staff and the company for being responsive,” he said. “We saw natural gas prices falling on the national market, but that amount was not immediately reflected in ONG’s PGA, which has been filed on a quarterly basis. This latest PGA reduction request comes only a few weeks after ONG asked for, and was granted, a lower PGA. I thank the company for responding to the concern I raised in January regarding the fact that ONG was basing its PGA on a projected quarterly price, and as a result the gas charge borne by ONG customers did not come down as quickly as the national market prices.”
Under Wednesday’s action, the ONG purchased gas adjustment borne by the customer will lower to approximately $8.45/Dth, a drop from the previous PGA of approximately $9.58/Dth. It’s estimated the average residential customer will save about $11 a month under the new PGA. ONG will file a new PGA in April.
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