ONG base rate may increase by $9.5 million
BY ROD WALTON World Staff Writer
Friday, June 15, 2012
6/15/12 at 5:06 AM
Oklahoma Natural Gas will raise its base rate by $9.5 million annually if regulators approve an agreement reached by ONG, a business advocacy group and state officials.
The utility initially applied for a $16.2 million hike under its annual performance-based rate structure. The increase was whittled down by $6.7 million under a joint stipulation also involving the state Attorney General's Office, Oklahoma Industrial Energy Consumers and Corporation Commission's public utility staffers, officials said Thursday.
The rate change still requires a June 28 hearing before an administrative law judge and, ultimately, approval by the three Corporation Commissioners. Oklahoma Natural Gas would implement the proposed rate change later this year.
"We look at it every year," Brandy Wreath, acting director of the regulatory panel's public utility division, said. "We look at all the revenues and expenses on a yearly basis. Then, once a year, they have a filing and we decide if they've earned as much as they're supposed to."
An Oklahoma Natural Gas letter sent to its customers this week indicated that the rate increase would be offset by lower fuel cost factors and the elimination of riders to recoup expenses which were added under the old rate structure. In fact, ONG noted, the average monthly service charge for residential customers would rise about 96 cents but overall bills, including lower fuel-cost adjustments, would fall $105 annually this year compared to 2010.
"It allows us the opportunity to continue to improve the system and provide safe, reliable natural gas for our customers," ONG spokeswoman Cherokee Ballard said.
Ballard estimated that the utility has spent $93.9 million on infrastructure investment since the last rate case nearly three years ago. Wreath said that the utilities also are facing greater expenses to meet new Pipeline Safety Act requirements for inspections in residential and school areas.
Small commercial or industrial sales customers would see bills rise by 16 cents monthly, and large commercial customers would get an 85 cent decrease, Ballard noted.
Oklahoma Natural Gas last gained a rate increase of $54.5 million annually in December 2009. The old system focused on "rate of return" on a gas utility's investment over a longer period, but the newer performance-based rate involves an annual review of whether they are making or losing money. The new system also eventually eliminates the temporary riders sometimes added to bills to cover specific expenditures.
"This is really designed for gas companies," Wreath said. "It gives them a little more stability" in maintaining overall rates.
ONG's annual rate review resulted in no change last year, he noted. The infrastructure improvements and costs to meet pipeline requirements this year have justified an increased base rate, Wreath added.
Tulsa-based ONEOK Inc. owns ONG as part of its natural gas distribution segment. The distribution segment earned $98.8 million in operating income for the first quarter, down from $103.1 million in the same period last year.
Oklahoma Natural Gas rate hikes in recent years
2005: ||$57.7 million|
Original Print Headline: ONG deal may raise base rates by $9.5M
Rod Walton 918-581-8457
A gas meter, taken in Tulsa, Okla. JAMES GIBBARD/Tulsa World