GAS COMPANY says claims of overcharges 'irresponsible'


Saturday, May 12th 2001, 12:00 am
By: News On 6



OKLAHOMA CITY (AP) _ Oklahoma Natural Gas Co. called state information released Friday ``irresponsible'' for suggesting the company overcharged customers by as much as $72 million.

The Oklahoma Corporation Commission staff released its findings as part of a commission study on ONG natural gas purchasing practices. A hearing is set next month.

``The staff's conclusions are irresponsible, unfounded and inflammatory, and we intend to demonstrate that when we file our own testimony later this month,'' ONG President Ed Farrell said in a news release.

Corporation Commission staff found that ONG's winter gas costs were excessive and that customers should receive a refund. In addition, ONG should be ordered to stop ongoing efforts to recover winter gas costs from ratepayers, commission staff recommended.

The company is still owed $53.5 million in unrecovered gas costs, said ONG spokesman Don Sherry. The full cost of gas was not passed on to ONG customers last winter in order to ease the financial burden on consumers, he said.

ONG, the state's largest natural gas utility, said it acquired its supply of gas through a commission-sanctioned competitive bidding process. Successful bidders included an affiliated company, ONEOK Energy Marketing and Trading.

Farrell said ONG customer paid at or below average prices in the region last winter when falling supply, rising demand and cold weather combined to drive prices to record highs nationwide.

``If we had overcharged our ratepayers, why is it that ONG customers paid at or below the regional average this winter, and less than the customers of another utility that the staff commends?'' Farrell said.

But ONG's failure to acquire gas storage in the summer, when gas prices are low, exposed customers to the ``full shock of gas price volatility during the winter of 2000-2001,'' according to testimony by Ken Zimmerman, chief of the commission's energy division.

Edwin Farrar, a certified public accountant, testified that ONG's decision not to acquire gas storage for the 2000-2001 heating season resulted in excess costs of about $72 million.

``Holding storage capacity or use of financial hedges are the most effective ways to protect against seasonal price spikes,'' Zimmerman said. ``ONG took no steps to insulate its customers from large swings in market prices, that in the winter of 2000-2001 were quite significant.''

ONG's gas costs rose to about $10 per thousand cubic feet in January, which caused heating bills for many of its customers to more than double.

``ONG's customers should not be required to pay these excessive costs,'' the commission's staff concluded.