Kansas Gas Service, consumer, business groups reach deal to recoup costs from February winter storms

Andrew Bahl
Topeka Capital-Journal
Kansas Gas Service workers survey a potential gas leak in 2016. The company is proposing an upcharge of between $5 and $17 after historically cold temperatures in February.

The state's largest gas provider and a number of consumer and business advocacy groups have reached a deal in the company's bid to recoup hundreds of millions of dollars in cost increases from February's Winter Storm Uri, though the deal ultimately needs regulatory approval.

The agreement, filed last Friday, are a part of Kansas Gas Service's effort to repay over $360 million in extraordinary costs from the historically cold temperatures seen throughout the region earlier this year.  

That figure is lower than KGS' initial filings with the Kansas Corporation Commission earlier this year, with the company, the Citizens Utility Ratepayer Board and other organizations agreeing to a deal that would see the company pass along $55 million less in carrying costs than initially anticipated.

More:Customers of Kansas' main natural gas utility to see bills rise after February cold snap

James Zakoura, an Overland Park attorney who represents one of the groups, the Natural Gas Transportation Customer Coalition, said this was a considerable development for residential ratepayers, who will pay 78% of the overall cost.

"Let's manage this in a manner that has the lowest carrying costs and the lowest ultimate costs for the customers," Zakoura said. "The (KCC) has been consistent with that since February."

As part of the agreement, KGS would issue bonds to be paid off long term in a bid to tamp down rate increases, a process known as securitization. The KCC would need to sign off on that plan as well, which will likely come by the end of next year.

The company would recoup the bond cost over five, seven or 10 years, depending on the plan eventually approved by KGS and, later, regulators. The cost to residential ratepayers would range between $5 and $11 a month. 

The agreement also includes a provision which would credit ratepayers if a civil suit or federal or state investigation brings civil damages from price gouging related to the winter storm.

More:Did price gouging occur during winter storms? Federal regulators say the answer is coming soon.

That element is key, with federal energy regulators saying in September that they expected the results of an investigation into price gouging during February's Winter Storm Uri sooner rather than later.

Attorney General Derek Schmidt said earlier this year the natural gas price spikes during the February winter storm "appear to violate Kansas law," and he is seeking expert help with the investigation and potential lawsuits.

It comes after the KCC and Black Hills Energy reached an agreement earlier this month to spread $87.9 million in fuel costs over a five-year period, equating to a $11-per-month increase for ratepayers. The company serves about 1117,000 residents, primarily in south-central and southwest Kansas.

And Evergy, the largest electric utility for much of eastern Kansas, has proposed a $4.69 per month charge for the next two years in a bid to make up for the $153 million in extraordinary costs incurred by the company.

Andrew Bahl is a senior statehouse reporter for the Topeka Capital-Journal. He can be reached at abahl@gannett.com or by phone at 443-979-6100.