Oklahoma Natural Gas Co. executives fired back at criticism that they did not serve customers well in last winter’s heating season, charging that the Oklahoma Corporation Commission’s review of ONG’s gas purchasing practices was incomplete and did not comply with the commission’s rules. Hearings this week are looking into charges that ONG was “imprudent” in buying winter gas supplies, causing customers to be overcharged.

The commission staff has prepared a report on ONG that concludes that the state’s largest gas utility’s actions led to excessive gas costs last winter, which totaled more than $72 million. The costs were passed along to ONG customers, and the commission staff is recommending refunds (see Daily GPI, June 27).

ONG’s James Armstrong, manager of rate and regulatory affairs, testified that residential customers’ bills paid over the past year “have compared favorably to the bills received by residential customers in neighboring states.” He also said the OCC was premature in calling for a review on purchasing practices. Armstrong noted during testimony that of 21 gas distribution companies in the region, ONG’s residential rate was the seventh lowest in the past year.

However, commission attorney Maribeth Snapp said ONG’s parent company ONEOK Inc. and ONG affiliates had denied the staff request for certain data. Armstrong said that the information request was still pending, but said that if the staff didn’t have the required information, “for whatever reason, I don’t think the rules make an allowance and say, `well you can make partial prudency reviews or do part of a review and bring in an interim recommendations.'”

ONEOK and subsidiaries OMET and OGS were cited for contempt on May 31 for refusing to comply with the commission staff’s request related to natural gas sales, and assessed a fine of $2,000 a day beginning May 8, 2001 and lasting until the companies complied with the order to surrender the documents. ONEOK has appealed to the Oklahoma Supreme Court, and Snapp said the state’s high court could take two or more years to rule following appeals.

“I know there’s been some cases that have gone for quite a while,” Armstrong said. “We’re dealing with big dollars and if that’s what it takes, then I guess that’s what it should take.” When asked by Snapp what ratepayers could expect until the court had made a decision, Armstrong countered that “Oklahoma Natural is not going anywhere. I don’t see why they think we’re going to skip town or whatever.”

Pete Walker, who was ONG’s vice president of gas supply between 1976 and 2000, said summer gas buying does not lead to lower consumer prices in the winter, and he said the increasing volatility of today’s gas market could cause higher prices.

“One can no longer count on being able to buy less expensive gas in the summer months,” Walker testified. “One must make a judgment call prior to summer and prior to each heating season without knowing what many of these factors will be.”

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