News from Corporation Commissioner Bob Anthony
Jim Thorpe State Office Building
Phone:(405) 521-2261
FOR IMMEDIATE RELEASE
Contact: Larry Lago
(405)521-2211
ONG CUSTOMERS MIGHT BE DUE ANOTHER 28 MILLION DOLLARS
Commissioner Anthony calls on Attorney General, OCC Staff To Act On Allegations Of Overcharge
(Oklahoma City) Citing testimony by an expert witness in a now-settled case involving Oklahoma Natural Gas, Corporation Commission Vice-Chair Bob Anthony says certain ONG gas contracts deserve a closer look by the Attorney General and Commission staff.
“In recommending the Commission adopt the recent 48 million dollar settlement with ONG, both the A.G. and Commission Consumer Services Division (CSD) staff said they fully supported the testimony submitted in the case by CSD expert witness Tony Say,” explained Anthony. “ Mr. Say testified he had found four contracts with ‘peculiar pricing scenarios’ that resulted in what he estimated to be 28 million dollars (before interest) in overcharges to ONG’s customers. These contracts fell outside the scope of the recent settlement with ONG, and still await closer examination.
“What is of concern is whether the costs borne by ONG customers under these contracts meet the ‘fair, just, and reasonable’ provision of existing law. As his recent filing in the OG&E rate case illustrates, the Attorney General has the legal responsibility to represent ratepayers. Surely this matter deserves the same attention. Even in the wake of the recent settlement with ONG of certain past gas costs, the Attorney General and/or Commission staff can and should take a close look at the allegedly suspect contracts.”
Anthony noted the contracts in question predate the so-called “unbundling” gas utility rules (sometimes referred to as “deregulation”), some of which have been criticized by both the AG and Anthony. However, Anthony says the rule changes have positive aspects.
“Under these rules, gas utilities had to stop entering into individually negotiated contracts, and move to competitive bidding for natural gas supply and upstream services. Contracts such as the four pointed out by Mr. Say, or those the Commission ordered reduced under the recent ONG settlement, are a thing of the past.”
Anthony noted that the original ONG settlement agreement brought to the Commissioners for approval in April contained language that no issues would be raised regarding the prices paid under past contracts, regardless of whether those contracts were covered by the settlement. That provision was removed by motion of Commissioner Ed Apple.
“That is one of the reasons I was willing to vote for the amended settlement offer although I opposed the first,” Anthony said.
ONG buys gas from a variety of sources and passes that cost dollar-for-dollar to customers through the company’s purchased gas adjustment clause.
NOTE TO EDITORS: Please see attached concurring opinion, filed today, for more detail regarding the preceding.
APPLICANTS: MICHAEL EDWARD McADAMS and JOHN POWELL-
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WALKER |
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CAUSE NO.
PUD 980000188 |
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RELIEF SOUGHT: RELIEF FROM IMPROPER AND EXCESSIVE |
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PURCHASED GAS COSTS |
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APPLICATION OF ERNEST G. JOHNSON, DIRECTOR OF THE PUBLIC |
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UTILITY DIVISION, OKLAHOMA CORPORATION COMMISSION, TO |
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REVIEW THOSE ASPECTS OF OKLAHOMA NATURAL GAS |
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COMPANY’S PURCHASED GAS ADJUSTMENT CLAUSE RELATED |
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CAUSE NO. PUD
200100057
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TO LEAST COST PROCUREMENT PRACTICES AND RELATED |
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AFFILIATE TRANSACTIONS |
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IN THE MATTER OF COMMISSIONER BOB ANTHONY’S INSPECTION |
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OF THE BOOKS AND RECORDS OF ANY PUBLIC SERVICE |
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CORPORATION AND EXAMINATION, UNDER OATH, ANY OFFICER, |
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AGENT, OR EMPLOYEE OF SUCH, IN RELATION TO THE BUSINESS |
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CAUSE
NO. PUD 960000039 |
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AND AFFAIRS OF ARKANSAS LOUISIANA GAS COMPANY, A DIVISION |
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OF NORAM ENERGY CORP. AND OKLAHOMA NATURAL GAS |
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COMPANY A DIVISION OF ONEOK, INC. PURSUANT TO OKLAHOMA |
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CONSTITUTION ARTICLE 9 SECTIONS 18, 28 AND 34 |
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APPLICATION OF ERNEST G. JOHNSON, DIRECTOR OF THE PUBLIC |
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UTILITY DIVISION, OKLAHOMA CORPORATION COMMISSION, TO |
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CAUSE
NO. PUD 980000128 |
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REVIEW THE FUEL ADJUSTMENT CLAUSE OF OKLAHOMA NATURAL |
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GAS COMPANY FOR THE CALENDAR YEAR 1996 |
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APPLICATION OF ERNEST G. JOHNSON, DIRECTOR OF THE PUBLIC |
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UTILITY DIVISION, OKLAHOMA CORPORATION COMMISSION, TO |
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CAUSE
NO. PUD 980000127 |
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REVIEW THE FUEL ADJUSTMENT CLAUSE OF OKLAHOMA NATURAL |
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GAS COMPANY FOR THE CALENDAR YEAR 1997 |
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APPLICATION OF ERNEST G. JOHNSON, DIRECTOR OF THE PUBLIC |
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UTILITY DIVISION, OKLAHOMA CORPORATION COMMISSION, TO |
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CAUSE
NO. PUD 200000100 |
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REVIEW THE FUEL ADJUSTMENT CLAUSE OF OKLAHOMA NATURAL |
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GAS COMPANY FOR THE CALENDAR YEAR 1998 |
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APPLICATION OF ERNEST G. JOHNSON, DIRECTOR OF THE PUBLIC |
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UTILITY DIVISION, OKLAHOMA CORPORATION COMMISSION, TO |
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CAUSE
NO. PUD 200100103 |
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REVIEW THE FUEL ADJUSTMENT CLAUSE OF OKLAHOMA NATURAL |
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GAS COMPANY FOR THE CALENDAR YEAR 1999 |
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Part 5 of
Commissioner Bob Anthony’s Concurring Opinion regarding Order No. 463681
issued May
16, 2002 Approving Settlement and Amended Stipulation
and
Concurring
Opinion of Commissioner Bob Anthony regarding
PUD
98-188, PUD 2001-57, Page
2
PUD
96-39, PUD 98-128,
PUD
98-137, PUD 2000-100,
PUD
2001-103
The
resolution of two ONG gas overcharge cases has been characterized as a $48
million settlement. This settlement was
presented to the Corporation Commission and approved on May 16, 2002. One reason I voted for the settlement was
the likelihood of future consideration of an additional $28 million, before
interest, of ONG overcharges claimed in testimony supported by the Attorney
General and the Commission’s Consumer Services Division (Commission Staff).
Contracts #4905, #5896,
#4783, and #6135 appeared to be related to some type of settlements. The very peculiar pricing scenarios of those
four contracts were similar to the Dynamic pricing scheme in some ways. In review, the prices paid by ONG were
extremely high. The index plus prices
were extremely high and in some instances ONG was paying a commodity charge and
a demand charge. A commodity charge is
the cost of the commodity or cost of gas, and the demand charge is a
reservation cost. I did not see any
reference to these settlement contracts in any of the annual reports I
reviewed. I estimated the overpayment
of these four contracts to be in excess of 28 million dollars.
On April 30, 2002, at the
Commission hearing to consider the first signed proposed settlement presented
by the parties, I criticized the Attorney General as legal representative of
consumers for not offering a witness in either of the ONG gas overcharge
cases. Furthermore, I criticized the
Attorney General for not providing testimony specifying the dollar amount of
excessive charges that he believed were made by ONG under the Dynamic Energy
Resources, Inc. contract. (See the
attached transcripts dated June 27, 2001 pages 85-86 and April 30, 2002 pages
58-60.)
On May 3, 2002, perhaps in
response to my criticism on April 30, 2002, the Attorney General filed his
Statement of Position in PUD 98-188, a case that sought relief from improper
and excessive purchased gas costs under the Dynamic Energy Resources, Inc.
contract with ONG. The Attorney
General’s statement concludes, “Therefore, the Attorney General supports Mr.
Say’s findings as contained in his prefiled testimony of February 25, 2002.”
The
signed Settlement and Amended Stipulation that was approved by the Commission
on May 16, 2002 deleted a sentence contained on page 6 in Section V of the
April 30, 2002 proposed settlement. The
offending provision that was deleted pursuant to a motion offered by
Commissioner Apple stated, “It is agreed and understood that no issues will be
raised regarding the contract price of gas under any Oklahoma Natural
contract(s) that was entered into prior to the promulgation of OAC 165:45-17.”
On June 7, 2002, the Commission
issued Order No. 464287, and I concur in the adoption of this final order for
an arithmetic review of ONG’s fuel adjustment clause or purchase gas adjustment
(PGA) clause for the calendar years 1996, 1997, 1998 and 1999. The order states, “ … yearly fuel adjustment
clause hearings do not address issues of prudency. It is outside the scope of the statutory annual fuel adjustment
clause hearing to make a determination whether the underlying charges are fair,
just, reasonable and prudent. These
determinations are left for a separate proceeding under other Commission
authority.” Therefore, this order
allows the Attorney General, who has a legal responsibility to represent
consumers, or the Commission Staff to file a case to seek relief from an
estimated $28 million in overpayment charges to ratepayers as claimed in the
testimony supported by the Attorney General and Commission Staff in PUD 98-188
regarding the four ONG contracts.
Filed
by Commissioner Bob Anthony on July 11, 2002.