BP fights back: Energy giant tries again to shut down gas profiteering lawsuit in Kansas
Global energy titan BP plans to try again to shut down a tiny Kansas town’s lawsuit that claims the company profiteered from extraordinarily high natural gas prices during a 2021 winter freeze emergency.
BP has filed a request to appeal a decision by a Crawford County judge who recently ruled the lawsuit by residents of Mulberry can go to trial.
In the past week, BP has filed two new documents seeking to bolster its defense against townspeople who claim they were price-gouged during Winter Storm Uri in February of last year:
▪ BP is requesting permission to appeal a Feb . 8 ruling by Chief District Judge Lori A. Bolton Fleming before the case goes to trial. Fleming ruled that although Mulberry city government can’t sue BP, individual customers buying gas from the municipal utility can, under a Kansas law limiting price increases to a maximum of 25% during a period of emergency.
▪ BP’s answer to the original lawsuit by Mulberry and its residents. The document primarily outlines reasons why the company believes it can’t be sued by anybody in the situation.
The David and Goliath lawsuit pits residents of the southeast Kansas town of 500 against BP, formerly British Petroleum and one of the western world’s largest energy conglomerates.
The amount on the line is miniscule — less than $42,000 in disputed billings compared with BP’s 2021 profit of $12.8 billion.
But the lawsuit looms large because it could be a test case deciding whether hundreds of thousands of other Kansas ratepayers can challenge hundreds of millions of dollars in extra gas costs that are about to be spread over the next five to 10 years of utility bills.
If BP wins its appeal, the lawsuit would almost certainly be dismissed.
Essentially, BP’s argument is that Mulberry can’t sue because the city government doesn’t meet the definition of a “consumer” under the Kansas Consumer Protection Act.
The act defines consumers as “an individual, husband and wife, sole proprietor, or family partnership” and the judge agreed with BP that Mulberry city government doesn’t have standing to sue under the act.
But BP disagrees with a part of the judge’s ruling allowing the lawsuit to proceed for four named individual Mulberry residents, including their state representative, Ken Collins, a Republican who runs Mulberry’s only convenience store when he isn’t in Topeka making laws.
BP contends the judge erred in allowing those individual customers to sue, because they buy their gas through the city utility department, not straight from BP.
BP also claims that it didn’t set the price, the open market did, and the residents can’t show they’ve been harmed because they haven’t yet been charged for most of the high-cost gas that was purchased during the emergency.
On the advice of its attorney, longtime Kansas utility lawyer James Zakoura, Mulberry has paid only $9,479.59 of a $51,146.80 invoice from BP.
That amount was calculated as the city’s pre-disaster cost of gas, plus a 25% markup allowed under the Consumer Protection Act in times of emergency.
Zakoura said he’s confident the case will ultimately go to trial because many of BP’s arguments have already been raised and rejected.
“We’re anxious to go forward on the merits of the litigation and seek relief under the Kansas Consumer Protection Act for the individuals,” he said.
BP had no comment beyond its court filings.
According to court documents, Mulberry paid about $2.98 per million British thermal units worth of gas on Feb. 9.
Four days later, with temperatures plunging and gas wells freezing over from the Dakotas to Texas, supplies dropped and prices rose to $329.615 per million Btu and stayed there for four days.
Mulberry stopped buying gas on Feb. 17 when it peaked at $622.79.
The 100- to 200-fold price increase is unprecedented in Kansas history and was unimaginable before Winter Storm Uri.
Attorney General Derek Schmidt has announced an investigation of the reasons behind the extraordinary gas costs and whether there was any price-gouging, but has not taken any public action.
The Kansas Corporation Commission also started an investigation, which it later abandoned.
On Feb. 8, the commission green-lighted a settlement for the state’s primary gas company, Kansas Gas Service, to begin collecting $366 million in extra gas costs from its 640,000 customers.
The added charges are estimated to cost KGS consumers $5 to $9 a month for the next five to 10 years.
The settlement does provide for refunding those payments if legal action by the attorney general or a lawsuit succeeds in reducing the costs.
This story was originally published February 28, 2022 at 4:19 AM.
