The Oklahoma Corporation Commission at press time Friday was toissue its rule for upstream unbundling of the Oklahoma Natural Gas(ONG) system. The unbundling plan calls for ONG to remain aregulated utility providing distribution service. However, itsexisting services and assets upstream of the citygate – gas supply,gathering, storage, and transportation – would be separated andbrought under a new company, ONEOK Gas Transmission (OGT). Inaddition, ONG will seek upstream services through competitive bid.

If no one bids against OGT, or if OGT is the winning bidder, allservices would end up being provided under the existing regulatedrates. The order would base the cost of upstream services on ONG’smost recent rate case in 1994.

“The way we look at it is there is no down-side,” said LarryLago, an aide to OCC Commissioner Bob Anthony. “The company alreadyhas rates in place, and if there are no bids received, those rateswill remain in place, so the process will be revenue neutral.”

Lago said the commission needed to get the order out Friday tostick with the planned unbundling schedule. Bidding for apercentage of upstream services, except storage, is to begin Nov. 1for Oklahoma City and Tulsa, the state’s largest cities. Ifcompetitive bids from suppliers other than OGT are accepted,savings stemming from Tulsa and Oklahoma City will be spread overthe entire ONG system. The plan is for competitive bidding forupstream services for the rest of ONG’s territory to begin April 1,1999. This round would include storage as well as the otherservices. Storage also would be added to the subsequent round ofcompetitive bidding for Tulsa and Oklahoma City.

Kathleen Magruder, vice president of rates and tariffs for EnronEnergy Services (EES), said Friday before the commission’s ordercame out that she couldn’t say whether Enron would participate incompetitive bidding. At recent oral arguments, she said Enron aswell as Enogex and Transok said they would not be bidding if thepackage put out by ONG was included in the order. Magruder said thecompanies were hoping the commission would require the bid to bebroader in scope than what ONG proposed.

Oklahoma’s other major LDC, Arkla, already has been takingcompetitive bids. “They’re kind of in a little more uniquesituation in that they are a distribution utility only, and theywere getting no other services from their parent company, NorAm,”Lago said. “They already kind of had a wall between NorAm andArkla. In this case [with ONG], we’re taking a fully integratedcompany and trying to divide it in two.”

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