ONG disputes accusations by Corporation Commission

Thursday, May 31st 2001, 12:00 am
By: News On 6

OKLAHOMA CITY (AP) _ Oklahoma Natural Gas Co. officials disputed accusations by the state Corporation Commission staff that the utility company overcharged customers about $72 million for natural gas this past winter.

In prefiled testimony Wednesday, ONG Vice President Bill Eliason said the staff's criticisms were ''20/20 hindsight.'' Customers paid rates that were comparable to or better than other local distribution companies in the region, Eliason said.

``Despite the fact that we just completed a very cold winter, all of our customers received safe and reliable service as a result of this (gas supply) portfolio,'' he said.

Ed Farrar, a manager in the commission's public utility division, criticized ONG for purchasing most of its gas in a package with gas storage services, and for purchasing the package from an affiliate _ a company owned by the same company that owns ONG.

The company failed to act prudently in acquiring gas, Farrar claimed in prefiled testimony May 11.

He also recommended the commission develop a way for customers to get a refund from ONG, and that the public utility be barred from recovering some of its unrecovered gas costs.

The filings come in advance of a commission hearing on ONG set for June 25-26.

On Thursday, administrative law Judge Robert Goldfield will conduct a hearing on the commission staff's request that ONG's parent company, Oneok Inc., be held in contempt for refusing to turn over requested documents.

The commission staff has said the documents are needed to determine whether ONG paid a ``fair, just and reasonable'' price for the gas it supplied to its customers last winter. The cost was passed on to customers.

ONG Gas Control Manager William Kimler said the method ONG used to acquire the gas resulted in an aggregate savings of more than $2.6 million over a two-year period.

James Armstrong, ONG rates and regulatory affairs manager, said the staff review was ``flawed, and not properly planned or supervised.''

The agency lacked a written plan or guide for the review, Armstrong said.

``In fact, from staff's approach to this matter it is easy to conclude that staff skipped over any actual prudency review and instead focused only on quantifying Oklahoma Natural's guilt,'' Armstrong said.

``Higher underlying gas costs were being reflected in bills across the country. This was not just a phenomenon in Oklahoma or on Oklahoma Natural's system.''

Armstrong said the staff recommendation that the commission suspend recovery of all of ONG's gas costs through customers' bills was ``draconian'' and ``extremely harsh and punitive.''

Deferring the recovery of a large amount of gas cost expense could have a ``tremendous'' impact and increase future customer bills, he said.

ONG purchased more than 60 percent of its gas from one of its affiliates through a competitive bid contract. The ONG affiliate refused to give the commission staff records of its sales to nonrelated third parties, saying the commission had no authority to see those records.

The commission staff said the records would show whether the affiliate charged third parties more or less than the affiliate charged ONG.

ONG said the price charged to third parties was irrelevant because the contract was awarded through competitive bidding.