Standing up to an energy giant: Kansas town claims BP gouged on gas in Feb. freeze
This tiny and hard-to-find Kansas town is taking on one of the biggest energy companies on the planet, over February natural gas bills they say would bankrupt the city, the residents, or both.
Mulberry, a city of about 500 folks, is suing the mega-corporation BP — formerly British Petroleum — alleging that the company gouged them by raising the price of natural gas to more than 100 times the regular price during an arctic blast that began Feb. 10 and persisted for about the next 10 days.
“We feel like it’s a David and Goliath, basically,” said Amy Tucker, the assistant city clerk and one of only two administrative employees at City Hall. “With a big corporation like that, you know, we’re just a blip on their radar.”
It hardly seems a fair fight: a city with total budget of about $1.3 million a year against a multinational corporation with 2020 revenues of $183 billion.
BP ranks No. 8 on the most recent Fortune 500 list of the world’s biggest companies and No. 2 among private-sector oil and gas firms.
But the people of Mulberry, in Crawford County, don’t feel like they have any choice but to fight.
The city can’t afford BP’s bill and if it passes the cost through to residents, they can’t afford it either, Tucker said.
“The bill we received was a little over $53,000 and we budgeted, I believe, $81,000 to buy gas for the entire year,” Tucker said “Being the small town that we are, with a lot of low-income families, elderly on fixed incomes, it would just be devastating to them.”
The town does have an experienced ally, lawyer James Zakoura, a utility law specialist who usually represents major corporations via Kansas Industrial Consumers, a coalition of some of the state’s biggest gas and electric customers.
He’s confident the law is on the side of Mulberry and about 140 residents who have so far signed on as co-plaintiffs.
“We have a statute in the state of Kansas that is particularly designed for this,” Zakoura said. “It’s the anti-profiteering statute as part of our Consumer Protection Act. And it specifically says in the time of a disaster, you may not engage in, as a supplier, profiteering and price gouging.”
That law basically limits price increases during a disaster to no more than 25% of the price before the emergency.
In Mulberry’s case, the price of gas went up nearly 11,000% over four days in February.
Zakoura said the statewide price increases from the February freeze are benefiting a handful of major suppliers, including BP, at the expense of everybody else.
“This is just outrageous,” Zakoura said. “It’s probably almost a $2 billion wealth transfer out of Kansas (overall).”
A win in Mulberry could have ripples for beleaguered cities and utility customers across the state.
“The answer is not simply paying their bill,” Zakoura said. “The answer is to fight them every step of the way, which is what we’re doing.”
Costly gas
In Mulberry, the Feb. 9 cost of gas to the city was $2.98 per million British Thermal Units — mmBTU — a standard unit of gas measurement.
The price peaked at $329.61 per mmBTU from Feb. 13 to Feb. 16. It would have been nearly double that on Feb 17, when the price hit $622 on the spot market.
At that point, Mulberry stopped buying gas, running the risk that they could get by with what they had on hand until the price came back down to a more reasonable level.
“Luckily, our stored gas and conservation saved us, or it could have been even worse,” Tucker said.
Lawyers representing BP in the case did not return phone calls seeking comment.
The company’s media office, which can only be reached by e-mail, sent an unsigned statement in response to an Eagle request for an interview.
“We recognize the impact of the recent winter storm caused hardship for millions of people in the U.S.,” the statement said. “These recent extreme weather conditions and historic freezing temperatures caused significant disruption to natural gas and power markets.
“Throughout this period, bp has sought to honor existing contractual arrangements and respond to customer needs, while complying with all laws and regulations governing the relevant markets.”
People in Mulberry feel they’ve been let down by their state government and have no choice but to go it alone.
Gov. Laura Kelly declared a state of emergency on Feb. 14, four days into the crisis when the trading price of gas was $329.
A day later, asked about the skyrocketing energy prices at a news conference, she deferred to Andrew French, chairman of the Kansas Corporation Commission.
He said the commission would be taking action to “smooth out those costs over time.”
The commission has since announced an investigation into the cause of the price spike and how to handle it.
But that’s not helping Mulberry, because municipal utilities aren’t under commission jurisdiction.
With cities across the state facing the same kind of ruinous gas rates as Mulberry, the Legislature moved quickly to create a $100 million fund to allow cities to pay the big bills to their gas suppliers and spread the cost to their customers over as much as 10 years.
Mulberry says that’s not good enough.
”I’m very, very, very disappointed with our politicians,” said Patrick Walden, 72.
He’s a member of the class of 1964, the last graduating class of Mulberry High School, a retired miner, utility and construction worker and a lifelong resident who was one of the first people to sign on as co-plaintiff in the city’s lawsuit.
“We cannot stand it,” he said. “I’m retired and there’s no way I can pay a couple thousand dollar gas bill. All they’ve done is somebody’s got rich and no one’s to protect the little guy in southeast Kansas.”
His disappointment with government stems from what he sees as a lack of will to fight the gas bills.
“From what I gather they (legislators) have come up with a $100 million emergency loan,” he said. “That does us ratepayers no good, we still have to pay that back.”
“Yeah, plus interest,” interjected his wife, Becky.
Patrick Walden continues: “There’s not a politician’s got the guts enough to stand up against these energy companies.”
His wife is also retired, after a career as an office worker in a now-defunct coal mine, a stint as assistant city clerk and a job selling tombstones for use in the Rosebank Cemetery, a sprawling graveyard just east of downtown Mulberry.
She said she doesn’t expect to live long enough to finish paying for the gas crisis if the city loses its case. She also worries that a loss could mean bankruptcy and disincorporation for Mulberry.
“Seventy years I’ve given of my life, I did a lot of stuff for this town, and I’d just hate to see it fold up over this,” she said.
State help?
Last week, the Democratic governor Kelly requested that Attorney General Derek Schmidt open an investigation into whether energy companies had violated the Consumer Protection Act.
Schmidt, a Republican running for Kelly’s job, replied that he’s been investigating that since Feb. 18, but it will take time.
In the meantime, as Zakoura advised, the city of Mulberry is refusing to pay more than what it believes it owes.
Zakoura said Mulberry’s price for natural gas was $2.98 per mmBTU at the start of the crisis and the city’s paid BP that plus 25%, which works out to $3.73 per mmBTU.
People in the town say they can’t afford any more than that.
Jennifer Fullhart, a recently widowed mother of three, said she’s looking for work. But for now, her only source of ongoing income is the Mary Kay Cosmetics business she runs out of her home. Her oldest is a college student.
“So it’s college, or utilities,” she said. “You’re going to have to make choices, where you don’t want to have to make those hard choices.”
Lindy Rhodes is 73 and has lived in Mulberry since 1964. She said she barely gets by now on her $1,100 a month Social Security payment and if she has to pay what BP wants, it will probably drive her out of her home.
“My utility bills now are running about $300 a month and I live on a fixed income,” she said. “If the rates go up too much, I won’t be able to live in this house. I just won’t be able to afford it.”
Stories like that are why the city decided to sue when nobody else is, said Darvin Weaver, publisher of the Mulberry Advance and a member of the City Council.
“It’s not fair for us to pass that charge on to the customers,” he said. “They’re not at fault.”
Tough times
Mulberry hugs the Missouri border about 10 miles northeast of Pittsburg.
Founded in 1875 and named for a local grove of trees, Mulberry was once a thriving community with an economy powered by coal mining. Its population peaked around 2,700 in the 1920s.
But the mines played out over the years, the schools shut down, people and businesses left and recent decades haven’t been kind to the town.
Household income is about $32,000 a year, a little more than half the state average.
At City Hall, in a steel building donated from a resident’s estate, Tucker and the city clerk, Cherokee Pelican, collect utility payments and field the occasional calls of concern about a resident who has an eccentric habit of napping in the sun on the curb by his apartment.
Other than that, not much happens here.
Ask anyone what the most significant event was in town before the gas crisis and most will mention tornadoes that swept through in the 1980s and 1990s.
On Military Avenue, Mulberry’s main drag, there are only three businesses, including a car lot that doesn’t seem to have any cars and Weaver’s newspaper office, where he splits time with his larger paper in nearby Liberal, Mo.
The third business is a small convenience store that’s only open part of the year because it’s owned and operated by Mulberry native and state Rep. Ken Collins.
“He kind of put that in to kind of help the town because the town doesn’t really have any businesses to speak of,” Tucker said. “When he’s in Topeka with business there, he’s closed.”
Collins, a Republican and former City Council member, has signed on as a co-plaintiff against BP.
He said nobody ever expected the kind of devastating weather emergency the town suffered in February, when sub-freezing temperatures wrought havoc on energy generation from Texas to the Dakotas.
“This was the perfect storm, as far as everything that could happen bad did,” he said.
He sides with the town and its lawyers that the prices charged for gas during the polar vortex violated state law.
“It definitely was an increase of more than 25%,” he said. “If it is price gouging, I hope the people who did it are held responsible for it, the corporations or suppliers or whoever.”
But he said he would have taken the state’s loan money just in case.
“I would have taken that loan out and continued the lawsuit, because what if they don’t win the lawsuit?” he said. “I’m a third generation Mulberry resident . . . My family’s been here for a hundred years and I wouldn’t want to see the town fold up.”
The state law at issue has no penalties for price gouging, so the most the city can hope to win is a reprieve from the high bills and possible reimbursement for attorney fees, said Timothy Fielder, a local attorney who serves as city attorney for Mulberry and several other area towns.
For BP, “what is their risk?” he said. “There isn’t a single corporate officer in danger of going to prison.”
The money involved in Mulberry’s suit — $50,000 more or less — is pocket change to a company the size of BP, he said.
But he doesn’t expect the suit to settle, because that could set an expectation for all the other towns and utilities that bought gas at enormous prices during the February crisis.
He predicted the case will end up at the state Supreme Court before it’s done.
“Essentially, the defendant here is a multi-billion dollar company with the ability to hire an enormous amount of legal talent,” Fielder said.
Despite the apparent mismatch, Collins said he hasn’t encountered anyone who wants to pay BP.
And the lawsuit is a unifying force that’s energized Mulberry in a common cause.
“Like any small town, people kind of bicker among themselves, but once there’s an external force trying to do something, people do tend to stick together,” Collins said.
This story was originally published April 4, 2021 at 5:01 AM.
