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Kansas Regulators Say They Can't Demand Company Records Over $1 Billion In Natural Gas Bills

 A gas furnace.
Brian Grimmett
Kansas News Service
A gas furnace.

State regulators deny an advocacy group's request to subpoena a firm that helped set natural gas prices that went up more than 2,000% during February's deep freeze.

WICHITA, Kansas — State regulators this week rejected a plea to pursue one company’s records to explore how Kansans ended up on the hook for nearly $1 billion in natural gas bills during February’s winter storm.

A consumer advocacy group contends that ruling by the Kansas Corporation Commission significantly dashes hopes of exposing gouging or of fighting predatory billing.

“It’s an economic tragedy for our state,” said Jim Zakoura, who represents a group of natural customers including universities and churches. “There’s $1 billion in charges and we have nothing to show for it.”

In a ruling Thursday, the KCC denied the Natural Gas Transportation CustomerCoalition’s requestto subpoena S&P Platts Gas Daily.

The group argues that the way the indexing firm chose to set its prices drove up costs on the main natural gas pipeline in the state.

From Feb. 10 to Feb. 17, the index price for that pipeline rose from about $2 per unit of gas to more than $600.

Zakoura said the rates represented an attempt to exploit the surge in demand rather than a reflection of the natural gas market. Other smaller-but-significant pipelines in the state sold gas as much as $500 cheaper at times.

“There can be no investigation here that’s meaningful without an investigation of the index,” Zakoura said.

State regulators said they don’t have the authority to regulate a natural gas index company with offices outside of the state of Kansas. They said even if they were successful in getting the information requested in the subpoena, they wouldn’t be able to recalculate the index’s price from February or order rebates.

“We are focused on the conduct of our regulated utilities,” KCC Chairman Andrew French said at the Thursday hearing, “and whether they acted appropriately under the circumstances.”

The commission’s staff previously argued in filings that they found that Kansas Gas Service followed standard purchasing practices. Preventing the company from recouping the extra costs it paid because of high gas prices would be unfair, the staff contends, because Kansas Gas Service was only doing what it had to to keep natural gas flowing to customers.

Kansas Gas Service is asking regulators to approve a plan torecover more than $450 million in expenses from its customers over a 10-year period.

Approval would effectively mark the single largest utility rate increase in state history.

Kansas Gas Service spokeswoman Dawn Tripp said the company purchased large amounts of the necessary gas before the winter storm and only had to purchase a small portion of gas when prices shot up.

She said the company is not doing any independent investigation of the high wholesale prices, but that it has disputed bills with some suppliers.

State regulators also said the kind of investigation the Natural Gas Transportation Customer Coalition is asking for is better suited for federal regulators, who are also currently looking into the impacts of unregulated natural gas prices during February’s winter storm.

Brian Grimmett reports on the environment, energy and natural resources for KMUW in Wichita and the Kansas News Service. You can follow him on Twitter @briangrimmett or email him at grimmett (at) kmuw (dot) org.

The Kansas News Service is a collaboration of KCUR, Kansas Public Radio, KMUW and High Plains Public Radio focused on health, the social determinants of health and their connection to public policy.

Kansas News Service stories and photos may be republished by news media at no cost with proper attribution and a link to ksnewsservice.org.

Copyright 2021 KMUW | NPR for Wichita. To see more, visit KMUW | NPR for Wichita.

Brian Grimmett comes to KMUW after taking a year break from journalism, but he’s excited to jump back in to the fray. Previously, Brian spent almost five years working at KUER 90.1 FM in Salt Lake City. He worked his way up, starting as an intern and sticking around long enough until they relented and gave him a full-time job. At KUER, Brian covered a wide range of topics, but mainly focused on covering the Utah state legislature.