Anthony Says ONG Overpaying for Gas Supply

The Associated Press - November 3, 1999

Oklahoma Natural Gas Co. officials say an Oklahoma Corporation Commissioner's finding regarding a supply contract is just another part of a vendetta against the utility company. 

Commission Chairman Bob Anthony said Tuesday that ONG is paying 50 percent more for gas than it should under the contract. He cited an analysis showing that ONG, a division of Tulsa-based ONEOK Inc., has paid $3.073 per million British thermal unit (Btu) under a long-term supply contract over the past six years. 

Spot prices over the same period have averaged about $2.024 per million Btu, Anthony said. A British thermal unit is equal to about a thousand cubic feet. 

ONG pays the higher price under a contract that initially began with Dynamic Energy Resources. The utility entered into separate agreements with two predecessor companies in November 1993 to continue supplying the gas after Dynamic went out of business. 

ONG has paid about $31 million under the two contracts over the six-year period, according to the commission. 

Gas costs are passed along to the utility's ratepayers through a so-called gas adjustment clause. The supply contracts contain a "regulatory out" clause that would allow ONG to void the contract if the commission barred the company from passing all the costs along, Anthony said. 

"It would seem in both the company's stockholder and ratepayer best interest to hold costs as low as possible," he said in a statement. "You would think ONG would welcome an opportunity to present these agreements to the commission for a prudence review." 

ONG spokesman Don Sherry said ONG doesn't have the option of buying spot market gas to ensure supplies for retail customers. Spot market contracts usually last for 30 days. 

"The numbers are absolutely meaningless," Sherry said. "The whole premise is entirely bogus and Mr. Anthony knows it." 

The company pays more for long-term gas contracts to ensure that customers have a secure gas supply, Sherry said. 

The Corporation Commission wouldn't allow the company to get its gas through short-term contracts, he said. Spot supplies can be interrupted. 

Sherry attributed Anthony's finding to a vendetta against the company. 

"This is just another chapter in a continuing saga in which the commissioner is trying to harm ratepayers," Sherry said. 

© 1999 Associated Press

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