News from the Oklahoma Corporation Commission

Matt Skinner, Public Information Officer

Phone: (405)521-4180, FAX: (405) 522-1623,   www.occeweb.com

May 16, 2002

COMMISSION APPROVES SETTLEMENT

Multi-million dollar agreement with ONG on behalf of ratepayers is called “significant”

The Oklahoma Corporation Commission today approved an order finalizing a settlement agreement with Oklahoma Natural Gas. The agreement contains approximately 48 million dollars in savings for ONG ratepayers. The settlement includes those gas costs borne by consumers from the winter of 2000-2001 that the Commission determined were imprudent, as well as gas costs that were the result of contracts ONG entered into with Dynamic Energy Resources, Inc. of Tulsa. Specifically, 34.3 million dollars of the settlement involves past overcharges in the two cases, while there will be an estimated 14 million dollars in savings to ratepayers as a result of the required renegotiation of the Dynamic contracts.

However, Commission Chairman Denise Bode said the agreement’s significance is not limited to dollars and cents.

“The settlement is significant in several ways. First, we were able to recover for ratepayers almost all of the gas costs from the winter to 2000-01 that the Commission determined were imprudent. In addition, The Commission order requires that the price paid for gas under the Dynamic contracts be sharply reduced. This means that residential ratepayers will start seeing a total savings of approximately 40 dollars in gas costs beginning in June. While the agreement does not grant as much direct cash relief as I would have liked, the bottom line is that our appeal has been at the Oklahoma Supreme Court since last fall, the Dynamics case has dragged on for years, and we must rely on the advice of counsel that this is the best we can do under the circumstances.

“However, in a broader sense this is validation of the Commission’s role in the changing world of utility regulation. Make no mistake. This completed agreement shows there is a sheriff that will make sure consumers are protected and that companies receive fair treatment, whatever may happen in the area of deregulation.

“All utility companies now know beyond a shadow of a doubt the Commission will be monitoring the marketplace and exercising our prudency review authority when necessary. This agreement is a very important precedent, particularly in light of the fact Oklahoma’s utilities have this week filed their energy plans for next year, detailing for the Commission what steps each intends to take to ensure an adequate supply of energy at the best possible price for their customers.”

Commission Vice-Chair Bob Anthony had words of praise for Chairman Bode’s handling of the matter.

“Without Chairman Bode’s persistence and leadership, consumers probably would have received nothing from these two gas overcharge cases. She authored our ‘prudency review’ rule that gave us the authority needed in such cases, and for years provided the needed votes to pursue these cases.”

Specifically, the agreement with ONG requires that ratepayers who have been ONG customers since December of 2001 be given a 13 dollar credit on their July bills. ONG customers will then continue to see a separate savings entered on their bill every quarter as a result of the settlement. This will continue until December 2005, at which time there will be a final calculation of the total benefit from the renegotiated contracts. That total will appear as a credit on consumers’ bills at that time. The exact amount is dependent on the consumer’s gas usage, as well as market conditions over the time of the contracts.

(All OCC advisories and news releases are available at the Commission web site www.occweb.com)

Average Residential Savings ONG Settlement
	Savings from Dynamic Contract	Savings from ONG	Total Savings
2002	$.84	$13.00	$13.84
2003	$10.68	$4.21	$14.89
2004	$1.63	$9.28	$9.28
2005	expired contract	$8.79	$8.79
TOTALS	$13.51	$35.28	$48.48

Average Customer Savings  ONG Settlement
	Savings from Dynamic Contract	Savings from ONG	Total Savings
Residential	$13.51	$35.28	$48.43
Commercial	$46.68	$79.37	$126.05
Industrial	$339.32	$532.27	$871.59
Large Industrial	$1054.31	$2236.42	$3290.73