Oklahoma utility regulators gave their approval July 23 to a modest increase in rates for customers of Oklahoma Natural Gas Company.
The $41,078,183 rate hike – a decrease of $426,567 from ONG’s original request – would have resulted in an increase of $3.20 per month for residential customers and $1.02 per month for the average low-income customer. However, because of an EDIT (Excess Deferred Income Tax credit), the impact on ratepayers was lowered by $18.17 for residential customers and $5.38 for low-income ratepayers. The joint stipulation also provides for a rebate of $3.18 million in energy efficiency overcharges, resulting in an additional rate decrease of 26 cents for residential customers.
The stipulated settlement agreement results in an overall $1.69 monthly increase in residential gas bills, and a 57-cent monthly increase for low-income residents. As the commission pointed out, the increase actually took effect June 27.
The rate hike compromise was approved 3-0 by the state Corporation Commissioners and was signed by ONG, the commission’s Public Utilities Division, and the state Attorney General’s office. Oklahoma Industrial Energy Consumers did not sign the agreement but also did not oppose the settlement.
The agreement states that the parties “further agree that this Joint Stipulation represents a fair, just and reasonable settlement of all issues in this proceeding among the Stipulating Parties.”
The rate increase was part of ONG’s request made in February 2025 for approval of a Performance Based Rate Change Plan for Program Year 2024.
Oklahoma Natural Gas serves 924,000 residential, commercial and industrial customers in Oklahoma. It is based in Tulsa, but its service territory also includes Oklahoma City and Guthrie and more than three dozen cities and towns southwest Oklahoma: Elgin, Fletcher, Apache, Cyril, Cement, Carnegie, Chickasha, Marlow, Rush Springs, Ninnekah, Blanchard, Tuttle, Verden, Anadarko, Fort Cobb, Gould, Hollis, Duke, Eldorado, Frederick, Davidson, Grandfield, Manitou, Tipton, Duncan, Comanche, County Line, Mountain Park, Mountain View, Hobart, Lone Wolf, Gotebo, Snyder, Waurika, Ringling, Ryan and Terral.
ONG also serves Fort Sill in southwest Oklahoma. In 2001 the commission authorized ONG to charge rates under a special contract to provide natural-gas distribution service to Fort Sill. The company agreed to track the assets, expenses and revenues associated with that service, and to exclude them from its overall rate cases.
Accordingly, $1.3 million in revenue collected from Fort Sill in calendar year 2023, and $279,267 in expenses to provide service to the Army post that year, were not incorporated into ONG’s current rate increase application.
Improvements listed Elizabeth Chandler, a rate specialist with ONG, said in pre-filed testimony that ONG invested $272.3 million in capital improvements since its last performance-based rate change.
She said that included $24 million for line or equipment replacement due to obsolescence, inadequacy or construction change; $7.5 million for software and computer equipment; $1.8 million for installation and replacement of compressed natural gas fill stations; $17.8 million to buy meters and other measurement devices; $13 million for purchases of tools and mobile construction equipment; and $3.56 million for facilities.
ONG also spent $58 million to replace lines and equipment “due to corrosion or deterioration,” Chandler said. Aging pipelines “are more prone to leaks and failures,” thereby “disrupting customer service with unplanned repairs,” Slaughter noted.
The company spent $28.57 million to replace or move utility lines “due to highway, street, or other government construction,” Chandler said. That included relocation of a line in conjunction with the US-81 bypass project at Chickasha.
Many of the line relocation projects are reimbursable, Cory Slaughter, ONG’s director of rates and regulatory, acknowledged. Therefore, they are “amortized to revenue over five years…,” he said.
The utility also spent $88 million on meter and service installation for new customers, and $22.68 million for installation of lines to connect new customers, Chandler said.
Approximately 41% of the capital additions last year resulted from installation of lines and services to connect new customers, Slaughter said.
“The largest projects … are for enhancement of the Mustang area that is forecasted to see 10,000 houses built over a 10-year period,” he said. Other large projects include enhancement of the Greenhill area of north Tulsa, Mid-America Industrial Park at Pryor, residential growth in north Oklahoma City, “and to relieve capacity constraints in the El Reno area.”
As of Dec. 31, 2024, ONG had more than 48,000 “new meter prospects from individuals or entities that have agreed to receive future service from the company,” Slaughter said.
Last year the company also spent approximately $1.2 million on inducements “to defray the cost of venting and piping for 289 residential units that otherwise might have gone all-electric,” he said. “This provides those customers the same energy choice and ability to save on heating bills as other residential customers.”
ONG’s rate hike request included $10.56 million on payroll and related benefits. That included $4.1 million on “annual company-wide market adjustments” to “ensure the company remains competitive within our local markets and retains employees who consistently meet or exceed performance expectations,” Slaughter said.
It also included $2.7 million on pay raises for 815 field operations employees. “The market was outpacing the rate of pay for these employees,” he said.
ONG also added 35 employees to its field operations unit. The utility is shifting “a significant portion of line locating services from outside contractors to company employees,” Slaughter said. The “primary reason” for this transition is “to reduce line locating costs.”
Those extra employees resulted in a $1.2 million increase in vehicle expenses in 2024, because of the acquisition of another 60 vehicles and increases in the cost of fuel and parts, Slaughter said.
The company experienced a $3.5 million increase in health care expenses that was driven by “an increase in medical claims in 2024 over 2023, as well as higher administrative fees from providers,” Slaughter told the Corporation Commission.