Natural gas spikes during winter storm 'appear to violate Kansas law.' AG Derek Schmidt seeks expert help.

Jason Tidd
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.

Attorney General Derek Schmidt says 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.

Schmidt announced Monday that his office has submitted a request for proposals to retain a law firm with expertise in the natural gas marketplace. The law firm would assist with the ongoing investigation and any civil litigation enforcing state anti-profiteering law.

"State law prohibits 'unjustified' price increases for 'necessary' goods and services during a declared state of disaster emergency, and on their face these increases appear to violate Kansas law," Schmidt said in a statement. "Our investigation has reached a point where additional resources and expertise in the complicated natural gas marketplace are required."

Wholesale natural gas prices shot up during the extreme cold temperatures brought by Winter Storm Uri. Consumer protection advocates have said the inflation amounts to illegal price gouging.

Documents from the attorney general's request for proposals note that prices increased from $2.54 per million British thermal unit on Feb. 1 to $622.78 per MMBtu on Feb. 17. That's an increase of about 24,419% during the harsh winter storm.

The request for proposals is open until Oct. 28 and is available online at https://bit.ly/3E8Qtik. Legal contractors are asked, in part, to provide "an assessment of the potential for successful litigation."

The attorney general has authority under state law to enforce limits on profiteering during a declared disaster.

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

Derek Schmidt opened price investigation in February

Schmidt, a Republican who is running for governor, opened an investigation into the prices on Feb. 19. Democratic Gov. Laura Kelly, on March 30, asked Schmidt to investigate the legality of the price increases.

Schmidt said Monday that his office "will continue working to ensure the state’s overall response remains coordinated and the interests of consumers, ratepayers and taxpayers are fully represented at every stage of the various proceedings and investigations."

His announcement follows a Thursday decision by the Kansas Corporation Commission to deny two motions related to the gas price increases. KCC spokesperson Linda Berry said in a news release that KCC lacked jurisdiction and faced legal restrictions on the two motions, which were filed by the Natural Gas Transportation Customer Coalition.

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

Power lines connect houses in Topeka's Oakland neighborhood during the February winter storm.

The first motion had asked the commission to subpoena documents from S&P Global Platts Gas Daily relating to its daily price index. Kansas commissioners said the Federal Energy Regulatory Commission has jurisdiction to investigate wholesale market manipulation and has already opened an investigation.

The second motion requested that Kansas Gas Service publicly release invoices from its suppliers. The commission determined that supplier invoices are a "trade secret" under state statute and are protected from public access. Additionally, the documents are already available to KCC staff, the attorney general and the natural gas customer coalition.

KCC says price transparency is bad for customers

KCC commissioners said in a statement that more transparency would be bad for natural gas customers.

The commission said the consumer coalition "has not demonstrated that disclosure will benefit the public interest," and release of the proprietary information has "great potential to harm current and future Kansas natural gas customers through higher purchased gas costs. A general argument in favor of transparency cannot outweigh this very real harm to customers."

Commissioners said they expect the federal and state investigations would result in compensation for Kansas natural gas consumers "if price gouging or market manipulation is uncovered."