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Kansas regulators approve natural gas utility’s plan to recoup $366 million from customers

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The KCC estimates monthly bills could rise, on average, between $5 and $7.

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Customers of Kansas’ largest natural gas utility will see their bills go up in the wake of last winter’s deep freeze — but it’s still unclear by how much and for how long. 

Kansas regulators on Tuesday approved an agreement with the Kansas Gas Service to recoup $366 million in excess natural gas costs, incurred to keep residents’ heat on when temperatures last February plunged below freezing for days on end and natural gas prices rose by 200 times almost overnight.

During the freeze, which resulted in deaths and dayslong outages in Texas, the Kansas Corporation Commission ordered utilities to do everything they could to keep providing gas and electric service and defer the costs.

“A lesser response could have resulted in catastrophic property damage and serious public safety implications, including potential loss of life,” the commission said in a news release. “When extraordinary costs are unavoidable and necessary to benefit the public, it is in the public interest to allow recovery of such costs.”

The agreement represented a settlement in which KGS agreed to trim some of its carrying costs on the sum from the storm. It brought the total Kansans will pay down from $390 million.

But KGS customers won’t know how much more they’ll pay — or for how long — until the gas utility files for securitization and issues bonds to be repaid over five to 10 years. The KCC estimated monthly bills would rise, on average, between $5 and $7.

In a statement, KGS said it was pleased with the order.

“We prioritize keeping our customers safe and warm during these extreme weather events and aim to recover the unprecedented costs from the high natural gas prices due to the storm with fairness and minimal impact to customers,” the company said.

A separate settlement between KGS’ large customers, like school districts and manufacturers, is still to come and could reduce the burden on residential customers by as much as $50 million, said David Nickel, executive director of the Citizens’ Utility Ratepayer Board, which advocates for residential and small business customers of Kansas utilities. 

Nickel said CURB supported moving quickly to reach a deal for customers to repay the funds with the hopes of getting low interest rates. He acknowledged “it seems like a lot of money, and it is,” and said the board was concerned about potential manipulation or price-gouging in the natural gas market.

If ongoing investigations by Kansas Attorney General Derek Schmidt or federal regulators reveal manipulation, the settlement says any recouped funds need to go back to ratepayers, something Nickel emphasized is important to CURB.

Nickel said the negotiations also yielded a promise from KGS to develop a payment plan program for low-income customers by the end of this year.

Nickel said it’s significant that Kansans didn’t lose heat en masse or suffer deaths because of outages

“I can assure you that I would pay more than $600 over a period of 10 years to keep people that I know and I love safe and alive,” he said.

Kansas Reflector is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Kansas Reflector maintains editorial independence. Contact Editor Sherman Smith for questions: info@kansasreflector.com. Follow Kansas Reflector on Facebook and Twitter.

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Derek Nester
Derek Nesterhttps://sunflowerstateradio.com
Derek Nester was born and raised in Blue Rapids and graduated from Valley Heights High School in 2000. He attended Cowley College in Arkansas City and Johnson County Community College in Overland Park studying Journalism & Media Communications. In 2002 Derek joined Taylor Communications, Inc. in Salina, Kansas working in digital media for 550 AM KFRM and 100.9 FM KCLY. Following that stop, he joined Dierking Communications, Inc. stations KNDY AM & FM as a board operator and fill-in sports play-by-play announcer. Starting in 2005 Derek joined the Kansas City Chiefs Radio Network as a Studio Coordinator at 101 The Fox in Kansas City, a role he would serve for 15 years culminating in the Super Bowl LIV Championship game broadcast. In 2021 he moved to Audacy, formerly known as Entercom Communications, Inc. and 106.5 The Wolf and 610 Sports Radio, the new flagship stations of the Kansas City Chiefs Radio Network, the largest radio network in the NFL. Through all of this, Derek continues to serve as the Digital Media Director for Sunflower State Radio, the digital and social media operations of Dierking Communications, Inc. and the 6 radio stations it owns and operates across Kansas.

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