Corporation Commission plans investigation into ONG's purchasing practices
Saturday, February 10th 2001, 12:00 am
By: News On 6
OKLAHOMA CITY (AP) _ With Oklahomans paying record amounts for natural gas, the Oklahoma Corporation Commission has begun an investigation to see whether those prices are justified.
The commission plans to look into the purchasing practices of Oklahoma Natural Gas Co., and determine whether they resulted in unreasonable gas costs that should be refunded to customers.
ONG spokesman Don Sherry said the company is willing to undergo the examination.
``We will cooperate and we are confident that what we have done in trying to obtain gas is both consistent with commission policies and in the best interest of our ratepayers,'' Sherry said.
The agency will look specifically at ONG gas purchases between December 1999 and January 2001 to determine if the company saved all it could in buying the gas, said Ken Zimmerman, energy chief of the Corporation Commission's public utilities division.
The price ONG pays for gas is directly passed on to consumers.
Zimmerman said if the company is found not to have used ``least cost procurement practices,'' the commission could require a refund of a portion of consumers' bills.
Sherry said ONG has been very cautious and deliberative in buying gas, and said the investigation is understandable given the high prices being paid by consumers.
He said ONG is already working on providing materials the Corporation Commission asked to use for its investigation.
Zimmerman said the commission will be looking to see that ONG bought gas from different sources and with different kinds of arrangements, such as option swaps and futures contracts.
``In other words, the old saying, 'Don't put all your eggs in one basket,''' he said.
Zimmerman said a utility should mix its portfolio of options so that price volatility can be minimized even in an unpredictable market.
By looking at all of the gas purchases, sales and gas contracts, ``we'll reach a conclusion about how gas flowed, who paid what for what,'' he said.
``Then we'll also look at the actual procurement practice itself, how they actually went about making the decisions as to how to procure their gas,'' Zimmerman said.