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

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.

Customers with the state's largest natural gas utility could see their bills increase by between $5 and $17, depending on how the company elects to pay off cost increases from February winter storms.

The plans, filed Friday by Kansas Gas Service with state regulators, are a part of the company's effort to securitize bonds in a bid to repay upwards of $450 million in extraordinary costs from the historically cold temperatures seen throughout the region earlier this year.

The filings argue prices per unit of natural gas dwarfed the highest cost experienced in the last 15 years and were several times what is normally seen during the month of February. 

"The market gas daily index-based prices rose to unprecedented levels," the filings said. "KGS could not have negotiated with suppliers to obtain price reductions during the Winter Event and there was a high probability that the supply would not have been available if KGS had not purchased the gas supplies when it did and it is likely that customers would have lost service during the coldest days of the Winter Event."

KGS proposed plans allowing it to recoup the securitization bonds over five, seven or 10 years, depending on the plan the company ultimately choses and what regulators approve. The cost to for residential ratepayers would range between $5 and $11.

The ultimate cost to residential consumers would be roughly $600, with small and large businesses paying into the thousands of dollars in the years to come.

The company has touted the benefits of securitizing the cost, where multiple costs are bundled and sold to a third-party firm in the form of bonds, saying it would save customers over $140 million. An alternate plan would see a higher, $17-per-month charge, assessed to ratepayers. 

More:Kansas utilities and municipalities have plans to recoup record energy bills. Here's what they're proposing.

‘This is such an extraordinary case’

The Natural Gas Transportation Customer Coalition said in an amended KCC filing Monday that the total cost to Kansas ratepayers across all utilities would be upwards of $1 billion. James Zakoura, an Overland Park attorney who represents the NGTCC, called the winter storm fallout "the biggest economic story of the last 50 years in Kansas."

"The part that is most tragic about this is that customers and ratepayers are going to pay $1 billion and they don't get anything for it — it is seven days of gas," Zakoura said. "If we paid $1 billion for a wind farm or a nuclear facility or a natural gas facility, it lasts 40 years. Or if we took $1 billion and replaced all the pipelines in gas service we would have newer, safer pipelines."

Zakoura also called for more transparency in the KGS case, noting that none of the invoices, purchase plans or other source documents have been made public so consumers can confirm the extent of the costs.

An initial attempt to force the documents to be publicly released failed but Zakoura said he was optimistic of his odds of prevailing in light of the payment plan submitted by KGS.

"This is a billion dollars," he said. "This is such an extraordinary case that the balance needs to be on disclosure for the ratepayers."

More:Kansas will help school districts pay winter heat bills that were 10-15 times higher than normal

Utilities increasingly seeking to recover costs after winter storms

KGS isn't the only utility seeking to recover costs from the storms. Municipalities are seeking to pay back state loans for publicly-owned utilities, which also saw sky high energy bills. 

Moreover, 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.

The KCC has already given Evergy flexibility to defer the costs, but the agency is reviewing the exact plan and gathering public comment.

Similarly, the KCC is weighing a plan from Black Hills Energy, a natural gas provider primarily serving south central Kansas, that could see customers pay an extra $12.23 per month for the next five years.

Utility work in Topeka during sub-zero temperatures in February. Companies, including the state's largest natural gas utility, are proposing plans to pay back energy costs incurred during the winter storms.

Price gouging investigations at the state and federal level are still ongoing and are unlikely to be completed imminently. Any relief from those probes will result in a credit for KGS customers, the company said.

KGS said in its filings that it maintained service to 99.9% of all customers during Winter Storm Uri, which plunged the state into a record cold snap that saw periodic rolling blackouts, as the regional grid attempted to prevent widespread outages.

The lone prolonged outage was in Topeka, affecting 82 residential customers, and came due to higher-than-expected usage from a commercial customer in the area.