As part of an order approved yesterday by the OklahomaCorporation Commission (OCC), Oklahoma Natural Gas has agreed tolower its rates by $20 million and withdraw its state supreme courtappeal of a 1998 OCC order that required unbundling of its upstreamgas transportation and storage operations. The decision was part ofa comprehensive agreement signed by ONG, the OCC staff and theOklahoma Attorney General’s office, and approved by the OCC.

The stipulation agreement also ensures a $20 million rate cutfor ONG ratepayers and allows ONG to transfer to its utilityservice territory about 35,000 Oklahoma customers of its affiliateKansas Gas Service. In addition the commission authorized ONG tobegin assuming responsibility for the maintenance and safety of theservice lines that connect customers’ homes and businesses to ONG’sdistribution mains.

“We believe this plan accomplishes several goals, includinglower costs for our customers,” said ONG President Ed Farrell. “Weare preparing for a future that will include greater customerchoice, in which Oklahoma Natural will be permitted to serve ourcustomers with more flexibility than in the past. This is one ofthe important steps we are taking in that direction. In addition,these decreases in base rates will help offset the rising price fornatural gas, which is now benefiting Oklahoma producers andOklahoma schools.”

The rate reduction for an average ONG residential customer willbe about $23 annually. Former Kansas Gas Service residentialcustomers should realize a rate reduction of $85 per year.

A significant part of the rate reduction is the result ofchanges in how ONG obtains “upstream” services, includingtransportation and storage. The transmission lines and gas storageformerly owned by the utility have been separated from ONG and arenow operating in competitive markets. ONG will use a competitivebidding process to purchase transportation services, as well as forgas supply.

Under the terms of a previous agreement, ONG will dismiss itsOklahoma Supreme Court appeal of an earlier OCC order thatestablished some of the guidelines for unbundling (see Daily GPI,Aug. 7, 1998; July 16, 1999; and June 21, 1999).

Oklahoma Natural Gas Company is a division of Tulsa-based ONEOK,Inc, providing gas distribution service to 800,000 customers in thestate.

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