Kansas regulators won't release natural gas invoices of who got ... - The Topeka Capital-Journal

Kansas regulators block release of winter storm natural gas invoices

Kansas regulators won't release natural gas invoices of who got paid during winter storm
Jason Alatidd

State regulators have decided that Kansas energy customers who are footing the bills for hundreds of millions of dollars in extraordinary natural gas costs from the February 2021 winter storm aren't allowed to know what the suppliers got paid.

That means that, even though customers could be refunded if price gouging lawsuits win any money, the information necessary to pursue those lawsuits remains hidden.

The Kansas Corporation Commission has denied a Kansas Open Records Act request from Jim Zakoura, an attorney specializing in energy law at Foulston Siefkin who is pursuing two such lawsuits.

The KCC last month denied Zakoura's request for Black Hills Energy's invoices from Winter Storm Uri.

The commission decided that the public doesn't need the documents to pursue litigation, and determined that making the supplier invoices public "would cause harm to both Black Hills and the public" by potentially affecting "their ability to compete for low cost gas supplies in the future."

Zakoura has asked the commissioners to reconsider, and the Citizens' Utility Ratepayer Board has intervened.

"The primary focus of this docket is whether Kansas citizens, including residential and small commercial ratepayers, have the right to know the details surrounding why their natural gas utility bills are as high as they are," wrote David Nickel, a CURB attorney. "The public 'right to know' goes to the very heart of the public policy benefit inherent in KORA. It should not be discounted without the benefit of a full record in this case."

Public disclosure could help recover money for customers

Zakoura is currently involved in two federal class action lawsuits against several energy companies, one from customers of Kansas Gas Service and the other from customers of the Kansas Municipal Gas Agency, alleging violations of the Kansas Consumer Protection Act.

Under the law, when Gov. Laura Kelly declared a disaster emergency for the winter storm, prices were not supposed to increase by more than 25%. Gas prices jumped 24,419% during the storm, according to the attorney general's office.

Zakoura argued in his KORA request that information on prices and volumes purchased will show whether the payments to gas suppliers complied with Kansas law, and if not, help calculate damages.

"The KORA request is for documents that would identify those suppliers and the prices that they charged Black Hills in February 2021, to identify those instances wherein the KCPA may have been violated, and if so, to recover funds for any violation that is found to have occurred — with those funds returned to retail ratepayers to reduce their financial obligation of $87.9 million," he said.

The KCC suggested Zakoura proceed with the limited information that is public, ask the suppliers for the invoices or use discovery in litigation. Zakoura said the public versions of the supplier contracts and invoices are 99.9% redacted."

Records in the KORA docket for the Black Hills invoices also indicate Zakoura has filed a separate request for Evergy's invoices.

Natural gas company doesn't want invoices to be public

The company argued that releasing the documents would amount to disclosing trade secrets and confidential information.

"Black Hills contends that the requested information has been maintained as highly confidential, and public disclosure of the requested information would cause substantial harm to the public interest and to Black Hills by interfering with its ability to acquire adequate gas supplies to serve its customers at a reasonable price," wrote Douglas Law, the company's attorney.

"Black Hills acquires gas supplies through a confidential competitive bidding process, and disclosure of the requested information could make potential suppliers reluctant to bid on Black Hills gas supply packages, putting Black Hills at a competitive disadvantage in acquiring gas supplies through this process and resulting in harm to Black Hills' customers through higher gas costs."

Zakoura argued that supplier invoices from more than 2.5 years ago based on public index prices should not be considered confidential, especially since the yearlong confidentiality provision in the contracts has now expired.

"On its face, the contentions that one-time, one-month supplier invoices are confidential is preposterous," he wrote.

CURB has intervened, noting that while it does not have an opinion on whether the invoices are confidential, it does not believe that Black Hills has provided enough evidence.

"CURB merely suggests that the Commission may want to explore and the determine the alleged harm to a greater extent based on a more expansive record," Nickel wrote.

Kansas energy customers are paying extra

State regulators have determined that utility companies prudently incurred unavoidable additional costs to keep gas and electricity supplied during Winter Storm Uri. The KCC then ordered utility customers to pick up 100% of the bill for excess costs, though customers would get a refund for part of that if lawyers are successful in recovering any money.

Zakoura argued that the public should have access to the invoices because the KCC has ordered that utility customers must pay for the excess costs.

"Black Hills should not be permitted on the one hand to recover $87.9 million from retail ratepayers, and on the other hand to imped efforts of recovery for those same retail ratepayers," Zakoura wrote.

Black Hills disagreed.

"Black Hills cooperated with the Commission and other parties in its Storm Uri proceeding to settle on the amount of recovery, the method of recovery, and the term of the recovery period," Law wrote. "That proceeding was efficient under the belief that confidential information provided in the proceeding would be protected."

Law added that because Attorney General Kris Kobach has pursued price gouging litigation and has access to the confidential invoices, "the public is protected from unlawful gas supply prices by the Kansas Attorney General."

So far, the attorney general's legal efforts have been unsuccessful at recovering any money for Kansans. A federal judge has dismissed Kobach's only lawsuit seeking damages, though he may refile.

The KCC previously reported to the Legislature the following utility recovery plans for extraordinary costs:

- American Energies incurred about $318,000 that customers will pay back either over five years or in a lump sum.
- Atmos Energy incurred $92.7 million, with securitization financing costs increasing that to $118.5 million. That will cost the average customer $5.78 more per month for 10 years.
- Black Hills Energy incurred $87.9 million, which the average customer will spend $11.47 more per month to pay for it over five years.
- City of Eskridge incurred $1.1 million, and customers will pay it back over 10 years.
- Evergy Kansas Central incurred $122.2 million, and an average customer is paying $2.82 more per month for two years.
- Kansas Gas Service incurred $366 million, with securitization financing increasing the cost to $450 million. The average customer will pay $5.64 more per month for 10 years.
- Southern Pioneer incurred $17 million, leaving an average customer paying $7.89 more per month for three years.
- Empire incurred $10.8 million, with average customers paying $7.32 more per month for 15 years.

That $807.8 million is being paid by 1.6 million Kansas customers, Zakoura said.

Additionally, the Kansas State Treasurer's Office has reported the low-interest loan program for municipal utilities adds on $78.4 million across 55 loans. That raised the economic impact to $886.2 million in additional costs for Kansas utility customers, Zakoura said.

Jason Alatidd is a statehouse reporter for the Topeka Capital-Journal. He can be reached by email at jalatidd@gannett.com. Follow him on X @Jason_Alatidd.