SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
June 19, 1995
(Date of report)
ONEOK Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-2572 73-0383100
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
100 West Fifth Street Tulsa, OK 74103
(Address of principal executive offices)
(918) 588-7000
(Registrant's telephone number, including area code)
Page 1 of 15
<PAGE>Item 5. Other Events.
On June 19, 1995, the Commission approved a settlement agreed to
by all active participants in the pending rate proceedings,
including the Commission Staff, the Attorney General, and certain
intervenors, which settled all issues in the proceedings. Under
the approved settlement, the Company will receive a $14.9 million
increase in base rates, of which $1.15 million applies for only
two years. In recognition of the current highly competitive
conditions in the industrial gas market, rates for large
industrial customers were restructured and reduced, with revenue
losses associated with such restructuring shifted to the general
system "core" (residential and commercial) customers. The price
of PIK gas to be included in the weighted average cost of gas
(WACOG) was reduced to the cost of SISP gas and limited to an
adjusted index price, the amount of PIK and SISP gas which could
be taken and included in the PGA was increased but limited to 50
percent of the total general system supply on an annual basis,
and the revenue loss resulting from the pricing change for PIK
gas was shifted to the general system customers' base rates. The
settlement also provided for limited (up to 10 percent) rate
recovery for large industrial customer revenue losses resulting
from future contract renegotiation and a temperature
normalization adjustment clause. The Company anticipates that
the result of such rate increases and rate restructuring and gas
acquisition and pricing changes could be a net annual reduction
of $6.7 million in burner tip gas costs to the general system
core customers. As a part of the settlement the Company agreed
not to file for a general rate increase for two years.
Sequentially
Numbered
Item 7.c) Exhibits. Page
(99)* Before the Corporation Commission 4-15
of the State of Oklahoma, Joint
Stipulation
*Filed herewith.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized, on this
22nd day of June, 1995.
ONEOK Inc.
By: (J. D. NEAL)
J. D. Neal
Vice President, Chief
Financial Officer, and
Treasurer
<PAGE> Exhibit (99)
BEFORE THE CORPORATION COMMISSION OF THE STATE OF OKLAHOMA
IN THE MATTER OF THE APPLICATION )
FOR A CHANGE OR MODIFICATION IN )
THE RATES, CHARGES AND TARIFFS OF ) CAUSE NO. PUD 940000477
OKLAHOMA NATURAL GAS COMPANY, A )
DIVISION OF ONEOK INC. )
APPLICANT: OKLAHOMA NATURAL )
GAS COMPANY )
)
RELIEF REQUESTED: MODIFICATION OF ) CAUSE PUD NO. 950000017
SPECIAL INDUSTRIAL SALES PROGRAM )
)
APPLICATION OF OKLAHOMA NATURAL )
GAS COMPANY FOR MODIFICATION OF )
ITS SPECIAL INDUSTRIAL SALES PROGRAM )
APPLICANT: OKLAHOMA NATURAL )
GAS COMPANY )
)
RELIEF REQUESTED: AMENDMENT OF A ) CAUSE CD NO. 950000391
DEVIATION FROM THE GENERAL PRIORITY )
SCHEDULE ESTABLISHED BY )
OAC 165:10-17-12 IN ORDER TO MODIFY )
SPECIAL INDUSTRIAL SALES PROGRAM )
)
APPLICATION OF OKLAHOMA NATURAL )
GAS COMPANY TO AMEND ITS LIMITED )
DEVIATION FROM THE GENERAL PRIORITY )
SCHEDULE ESTABLISHED BY OAC )
165:10-17-12 IN ORDER TO MODIFY )
ITS SPECIAL INDUSTRIAL SALES PROGRAM )
JOINT STIPULATION
COME NOW the parties to this proceeding and present the
following Joint Stipulation for Commission review and approval as
their compromise resolution of these Causes. The terms of the
proposed Joint Stipulation are as follows:
<PAGE>
I. REVENUE REQUIREMENT
A. Oklahoma Natural Gas Company's ("Oklahoma Natural") base
revenues will be increased by a total of thirteen
million, seven hundred fifty-six thousand dollars
($13,756,000) and structured in the core utility
business (non-PCL) base rates, as defined in the
prefiled testimony of Oklahoma Natural. This increase
shall be spread among the various rate classes generally
consistent with the rate design methodology recommended
in the prefiled testimony of the Attorney General.
B. Oklahoma Natural will collect through a tariff rider on
the core utility rates one million, one hundred forty-
eight thousand dollars ($1,148,000) per year for two
years, representing a two-year amortization dating from
the date of the order entered in these Causes to recover
exactly the unamortized balance of the Edmond Storage
gas loss.
II. RATE RESTRUCTURING
A. The parties adopt Staff's proposal regarding the
restructuring of the Payment-In-Kind ("PIK")/Pipeline
Capacity Lease ("PCL") rate class ("Competitive Market
PCL Class") with certain modifications. The following
reflects the terms to which the parties agree:
<PAGE> 1. The price of PIK gas will be Oklahoma Natural's
Special Industrial Sales Program ("SISP") cost or
cash equivalent cap price for each contract which has
cash equivalent cap provisions.
2. Revenue loss of twenty-six million, four hundred
sixty-three thousand, four hundred eighty-one dollars
($26,463,481) (which is based upon the test year PIK
price of $3.015 per Mcf) as a result of the PIK
pricing change set forth in the immediately preceding
paragraph, will be shifted to the general system
customers' base rates through a PCL tariff rider.
3. Any reduction in Oklahoma Natural's PIK gas volumes
from its PCL customers, which currently Oklahoma
Natural delivers to its core customers, will be
replaced by direct purchases of SISP gas. The total
of PIK and SISP gas included in the general system
Purchased Gas Adjustment ("PGA") Clause shall be
limited on an annual basis to fifty percent (50%) of
the total general system supply.
4. Such SISP gas will be included in Oklahoma Natural's
Weighted Average Cost of Gas ("WACOG") at actual
purchase price. However, the actual purchase price
of SISP gas shall not exceed an index price comprised
of the average of Inside FERC, Natural Gas
<PAGE> Intelligence, and Gas Daily, as reported in the first
issue of each publication, plus five (5) cents per
MMBtu for deliveries into the system.
5. The maximum rate for customers in the Competitive
Market PCL Class, as defined in Oklahoma Natural's
proposed tariffs filed in these Causes, shall be
$.16/MMBtu for fertilizer customers and other
customers with annual test period volumes exceeding
five million (5,000,000) MMBtu, and $.34/MMBtu for
all other Competitive Market PCL Class customers.
The revenue losses associated with these maximum
rates in the amount of eight million, nine hundred
sixteen thousand, six hundred thirty dollars
($8,916,630) will be shifted to the general system
customers' base rates through a PCL tariff rider.
This amount shall be added to the PCL tariff rider
referenced in Section II, A. 2.
6. On the effective date of the Commission's Order
approving this Joint Stipulation, all contracts for
customers in the Competitive Market PCL Class shall
automatically be modified such that the maximum rates
described herein shall become the maximum rates under
those contracts.
<PAGE> 7. The parties agree that the results of the marginal
cost study referenced herein shall be presented to
the Oklahoma Corporation Commission wherein the
Commission shall determine, after notice to all the
parties and hearing, the appropriate marginal cost
for each type of service available. The parties to
this Joint Stipulation acknowledge and agree that the
minimum rate for all members of each class identified
shall be based upon the aggregated marginal cost of
the services provided.
B. Oklahoma Natural agrees to not file an application for a
general rate increase prior to twenty-four (24) months
from the date of the issuance of the final order in
these consolidated Causes subject to the Commission's
approval of this Paragraph B. For the purposes of this
Joint Stipulation, a rate application dates to the
filing of a Notice of Intent as required by the Minimum
Filing Requirement Rules. The parties agree that the
cash equivalent revenue from the thirty-five (35)
customers in the Competitive Market PCL Class is twenty-
five million, twenty three thousand, four hundred
seventy dollars ($25,023,470) for the test year, which
equates to the "base level revenue" to be received from
<PAGE> this class. Rate treatment of such revenue shall be as
follows:
1. Reductions in such revenue that are within minus ten
percent (-10%) of the base level revenue will be
added to the PCL tariff rider. Such calculations
will be made subsequent to each calendar quarter for
the most current 12 month period.
2. Revenue in excess of base level revenue or more than
minus ten percent (-10%) of the base level revenue
will be realized or lost, as applicable, totally by
Oklahoma Natural until the next general rate
proceeding.
3. Any change, due to lost customers, to the base level
revenue is subject to Commission approval.
C. Oklahoma Natural will submit for in camera review and
Commission approval the renegotiated contracts for the
Competitive Market PCL Class customers after they are
renegotiated.
D. The parties adopt the changes to Oklahoma Natural's
Purchased Gas Adjustment Clause as proposed by Staff
witness Edwin Farrar, except for the incentive
provisions therein.
<PAGE>III. SPECIAL INDUSTRIAL SALES PROGRAM/LIMITED DEVIATION
A. Oklahoma Natural's application in these Causes for an
amendment to SISP to permit it to replace any declines
in PIK gas volumes with SISP gas should be granted up to
a maximum of fifty percent (50%) of its general system
gas supply on an annual basis, in accordance with the
provisions set forth in Section II, above.
B. Oklahoma Natural's application in these Causes for an
extension of its limited deviation from OAC:165-10-17-12
to permit implementation of the amendment to SISP should
be granted so that the total of PIK and SISP gas
included in the general system Purchased Gas Adjustment
("PGA") Clause shall be limited on an annual basis to
fifty percent (50%) of the total general system supply.
IV. OTHER SPECIFIC TERMS
A. Temperature Adjustment Clause - The parties adopt
Staff's proposed alternative to Oklahoma Natural's
proposed Temperature Adjustment Clause, including
Staff's proposed reporting requirements and independent
verification of accuracy.
B. Studies to be Performed
1. Oklahoma Natural agrees to perform a Marginal Cost
Study and System-Wide Load Study, as proposed in
Staff's testimony filed in these Causes, subject to
<PAGE> Oklahoma Natural reaching an agreement with Staff as
to the scope and magnitude of the studies.
2. Subsequent to the completion of such studies,
Oklahoma Natural and Staff agree to discuss the
performance of a Gas Supply Planning/Gas Supply
Portfolio Study and Design Day Characteristics Study.
3. With respect to Oklahoma Natural's Organizational
Structure and Operations, Oklahoma Natural agrees to
develop a process to ensure ongoing dialogue with
Staff.
4. Staff and Oklahoma Natural agree, no later than
ninety (90) days after the date of the order entered
in these Causes, to begin a dialogue to reach an
agreement concerning the scope and timing of the
studies referred to herein.
5. Any disagreement between Staff and Oklahoma Natural
in reference to the content and timing of these
studies may be presented to the Commission.
6. Oklahoma Natural, Staff, and the Attorney General
agree to cooperate in the continuing informal review
of gas supply issues and the studies contemplated
herein.
C. Other Postretirement Benefits ("OPEB") - The parties
acknowledge that within the stipulated revenue increase
<PAGE> is a recognition of recovery of all Oklahoma Natural's
deferred SFAS 106 related costs, calculated on an
accrual basis, as of June 30, 1995, and that this
balance will be amortized over 18.25 years, effective as
of the date of the order entered in these Causes.
D. Deferred Pension Expense - The deferred pension costs
recorded on Oklahoma Natural's books as of November 30,
1994, which were not provided for in Order No. 388124
entered in Cause No. PUD 910001190, will be amortized
over 9.33 years, effective as of the date of the order
entered in these Causes.
E. AFUDC and/or IDC -Oklahoma Natural will not accrue
IDC/AFUDC for the amount of Construction Work in
Progress ("CWIP") equal to the amount of three million,
one hundred ninety-six thousand, seven hundred seventy-
two dollars ($3,196,772) as proposed by Staff in these
Causes. This is consistent with the concept approved in
the Commission's Order No. 388124 entered in Cause NO.
PUD 910001190.
V. GENERAL TERMS
A. The parties to this Joint Stipulation believe this
Stipulation represents a complete, reasonable settlement
of these Causes and therefore serves the public
<PAGE> interest. This Stipulation disposes of all the issues
raised by the parties.
B. The net impact of the total adjustments including the
increase in base rates agreed to in this Joint
Stipulation is attached hereto as Exhibit A. It
demonstrates that while the amount will vary based upon
the price of spot market gas, the net reduction to the
core customers is anticipated to be in excess of six
million, seven hundred thousand dollars ($6,700,000) on
an annualized basis.
C. The parties agree that the final order entered in these
Causes shall contain the terms of the Joint Stipulation.
D. The parties specifically state and recognize that the
Joint Stipulation represents a negotiated settlement
with respect to these Causes and is a balance and
compromise of the positions of each of the parties in
connection herewith. Accordingly, the Commission shall
explicitly recognize that the execution of all of this
Stipulation by each party hereto shall not be construed
as agreement or acquiescence by any one or all of the
parties to any particular calculation, adjustment,
theory, or issue.
E. The parties hereto agree that the approval of this Joint
Stipulation shall have no precedential value, either
<PAGE> binding or persuasive, in any other proceeding before
the Commission, whether involving Oklahoma Natural or
any other entity. Provided, however, that although this
Joint Stipulation is not intended to be nor should it be
construed as being precedential for future rate cases,
the parties hereto, through their execution of this
document, do intend that the provisions of this document
do resolve these Causes.
F. Failure of the Commission to adopt the Joint Stipulation
in its entirety shall render the Joint Stipulation
void.
G. This Joint Stipulation supersedes any previous
settlement document executed by the parties in these
Causes.
WHEREFORE, the undersigned parties submit this Joint
Stipulation as their negotiated settlement of the Causes set
forth herein, and respectfully request the Commission to order
approval of this Joint Stipulation.
OKLAHOMA NATURAL GAS COMPANY,
A Division of ONEOK Inc.
Dated: 6/1/95 By: (JOHN A. GABERINO, JR.)
John A. Gaberino, Jr.
Arrington Kihle Gaberino & Dunn
<PAGE> PUBLIC UTILITY DIVISION
OKLAHOMA CORPORATION COMMISSION
Dated: June 1, 1995 By: (ANDREA POTEET JOHNSON)
Andrea Poteet Johnson
Assistant General Counsel
W. A. DREW EDMONDSON
ATTORNEY GENERAL, STATE OF OKLAHOMA
Date: 6/1/95 By: (RICK D. CHAMBERLAIN)
Rick D. Chamberlain
Assistant Attorney General
TERRA NITROGEN LIMITED PARTNERSHIP
Dated: 6/1/95 By: (GRAYDON D. LUTHEY, JR.)
Graydon D. Luthey, Jr.
Hall, Estill, Hardwick, Gable,
Golden, & Nelson
OKLAHOMA INDUSTRIAL ENERGY CONSUMERS
Dated: 6/1/95 By: (WILLIAM J. BULLARD)
William J. Bullard
Williams, Box, Forshee & Bullard
TRANSOK, INC.
Dated: 6/1/95 By: (MICHAEL D. PALMER)
Michael D. Palmer
<PAGE> Exhibit A
Oklahoma Natural Gas Company
Cause No. PUD No. 940000477
Customer Impact
Of Settlement Stipulation
General System Volumes (Mcf) Total
Total General System Volumes 77,544,661
Percentage To Be Priced at SISP/PIK Rates 50.00%
Volume To Be Priced at SISP/PIK Rates 38,772,331
Estimated Price Differential
Spot Price - 12 Months Ended December 1994 $1.730
General System - 12 Months Ended December 1994 $3.200
Difference ($1.470)
Gas Cost (Savings) ($56,995,326)
PCL Tariff Rider
50% PCL Tariff Rider $35,380,111
Net (Savings) ($21,615,215)
Base Rate Increase Plus Edmond Storage Loss Rider $14,904,000
Net (Decrease) In Burner
Tip Cost To Core Customers ($6,711,215)
