OKLAHOMA CITY – State regulators gave their blessing recently to the transfer of utility assets and accounts of 351 predominantly rural customers from Oklahoma Natural Gas Co. (ONG) to the Fort Cobb Fuel Authority (FCFA).
That number includes 218 active and 133 inactive accounts of current and former ONG customers, located primarily in northeastern, northwestern, and central Oklahoma, that are served by ONG from multiple taps on the interstate transmission pipeline system of Southern Star Central Gas Pipeline Inc.
The transfer becomes effective in October.
Southern Star, based in Kentucky, is a transporter of natural gas to America’s heartland, with approximately 5,800 miles of natural gas transmission pipeline in the Midwest and Mid-Continent regions of the U.S.
ONG, headquartered in Tulsa, provides natural gas service to approximately 875,000 residential, commercial and industrial customers throughout Oklahoma. FCFA is a local distribution company, based in Eakly, that provides natural gas to approximately 4,000 rural customers at various locations in Oklahoma.
The 133 inactive accounts “do not serve any customers,” said Cory Slaughter, ONG’s Director of Rates & Regulatory. The 218 active accounts are “Farm Tap” customers ONG provides with natural gas service that falls under the jurisdiction of the regulatory Oklahoma Corporation Commission, Slaughter said.
Southern Star and its interstate pipeline operations are under the jurisdiction of the Federal Energy Regulatory Commission (FERC).
Southern Star filed an application with FERC to sell to the Fort Cobb Fuel Authority all of its domestic meters in Oklahoma, including those that ONG uses to provide service to its Farm Tap customers. Southern Star has an “ongoing effort to eliminate ownership and operation of domestic meters associated with farm taps on its system,” Slaughter informed the Corporation Commission.
FERC approved Southern Star’s application on April 8, 2021, subject to approval by Oklahoma’s Corporation Commission, which occurred on July 22.
The transfer of those 351 customer accounts from ONG to FCFA also includes the sale of assets such as meters and pipe. An agreement inked between ONG and FCFA ensures that the Farm Tap customers will continue to be provided with “safe and reliable natural gas utility service … at rates, terms and conditions regulated by” the Corporation Commission.
ONG notified all of the 218 active accounts individually of the pending service transfer to FCFA, attorney Curtis Long told Corporation Commissioner Dana Murphy. ONG also refunded the customer deposits and accrued interest to all 351 accounts that are being transferred, Linh Pham of the Corporation Commission’s Public Utility Division testified last month.
FCFA is acquiring ONG’s meters associated with those 351 accounts for “nominal consideration,” records reflect. The cost of removing the old meters and installing replacement units would be nearly triple the $10,900 net book value of the equipment that’s already in place, the ONG/FCFA service transfer agreement states.
The inactive account holders “dropped off” ONG’s service “for one reason or another,” Long said. Nevertheless, the customer meter “is still there” and could be reactivated by FCFA at the customer’s request, he said.
FCFA buys gas from third-party non-affiliated gas suppliers and distributes the fuel to its customers, according to attorney Ron Comingdeer. Comingdeer is the managing attorney with Crowe & Dunlevy law firm in Oklahoma City and formerly was the deputy general counsel of the Corporation Commission.
Fort Cobb Fuel Authority is a privately held company owned and operated by Navitas Utility Corp., which is based in California. The Navitas website says it provides natural gas to communities in 17 Oklahoma counties; those towns include Alma, rural Carnegie, Eakly, rural Fort Cobb and the rural Fort Cobb Lake area, Gracemont, Lookeba, Sickles and Velma in southwest Oklahoma.
FCFA’s domestic tap rate structure is “substantially different” from ONG’s, Thomas Hartline, president of Navitas Utility Corp. and secretary/treasurer of Fort Cobb Fuel Authority, informed the Corporation Commission.
A document filed in the case shows that flat monthly service fees for ONG and for FCFA residential customers are:
• ONG: $33.35/month with no delivery fee.
• FCFA: $18/month + 45½¢ per 100 cubic feet (CCF) of gas consumed.
The average FCFA residential user in the company’s Fort Cobb division (southwestern Oklahoma) consumes 365 CCF of natural gas per year, and the average FCFA customer in the company’s LeAnn division (northern Oklahoma) consumes 548 CCF annually, Hartline testified.
Thus, on average, domestic tap customers in the FCFA’s Fort Cobb Division will pay approximately $18.13 less per year than they’re paying ONG now, while domestic tap customers in FCFA’s LeAnn Division will pay about $65.14 more per year, Hartline said.
Customer accounts FCFA will acquire from ONG are in Welch, Commerce, Quapaw, Bluejacket, Miami, Wann, Barnsdall, Blackwell, Pawhuska, Nowata, Bartlesville, Dewey, Copan, Purcell, Orlando, Newkirk, Tonkawa, Edmond, Oklahoma City, Norman, Guthrie, Yukon, Cashion, Maysville, Ratliff City, Noble, Newcastle, Perkins, Tryon, Stillwater, Cushing, Agra, Drumright, Cleveland, Perry, Waukomis, Enid, Nash, Ponca City, Medford, Nardin, Billings, Verden, Amber, Helena, and Capron (a Woods County town of 24 approximately seven miles south of the Oklahoma/Kansas state line).