Regulators tell Kansas senator they’ve found ‘anomalies’ in gas price-gouging probe
Two of the nation’s top energy regulators told a Kansas senator Tuesday that they’ve found “anomalies” in natural gas prices during a February freeze where those prices hit 200 times their normal level.
“We’ve entered into a number of inquiries with regard to alleged (price) manipulation that occurred,” Federal Energy Regulatory Commission Chairman Richard Glick said in response to questions from Kansas Sen. Roger Marshall during a Capitol hearing. “Several of them, we found a number of anomalies. Several of those particular anomalies, when we investigated them, we moved on to what we call our investigations office.”
Marshall repeatedly pressed Glick and fellow FERC Commissioner Mark C. Christie over who reaped the windfall from gas sales during the winter storm.
“Probably it will double the average Kansas family’s natural gas bill for the next 10 years,” Marshall said. “I hope that you can feel the same pain that we’re going to feel for a decade.”
In some plans being considered by state regulators, that’s how long it will take for Kansas gas customers to pay off the damage from a couple of weeks in February when temperatures dipped below zero and local gas companies scrambled to buy supplies on an out-of-control open market.
A finding of illegal price manipulation, if one ever comes, could save the average Kansan hundreds of dollars on future bills.
Marshall offered several examples of Kansas economic pain, including a Frontenac meat-packing plant that saw its February gas bill spike from a usual $24,000 a month to $600,000 — and the city of Winfield, which usually pays $123,000 a month to buy gas for its residents and got a February bill of $8 million.
“I think what the people of Kansas want to know is who made the money, who made all that money on that increase?” Marshall said. “What has FERC done about it? Is there an investigation underway and what would be a reasonable timeline for the people of Kansas to know the truth about this? Was there price gouging and who made the money?”
The two FERC officials at the meeting told the senator they’re doing what they can, but their power is limited.
“We don’t have jurisdiction over the price of the sale of natural gas; Congress deregulated that a number of years ago,” Glick said. “I believe it would be helpful if Congress would either get FERC or some other agency some sort of circuit breaker authority when there’s extreme prices to impose some sort of limitations at certain times.”
He and Christie told Marshall that the agency does have the authority to investigate whether prices were artificially inflated and they’re working on that.
Both officials kept the details of the investigation close.
“Your question about who makes the money; it could be traders, it could be suppliers,” Christie told Marshall. “It depends on the facts of the situation and what happened in Kansas and Oklahoma in this past February.”
How long it will take to unravel that is an open question.
“I’m hoping months,” rather than years, Glick told Marshall.
In the meantime, Kansas’ regulatory agency, the Kansas Corporation Commission, has decided it doesn’t have authority to investigate allegations of potential gouging and it’s moving forward with payment plans that will spread the extraordinary February cost over the next few years of bills to tamp down rate shock.
Wichita-area households are expected to pay between $600 and $750 of additional costs from the freeze, according to documents filed with the KCC.
For Kansas Gas Service customers, that could range from $17.51 a month extra on gas bills over three years, to $5.10-$6 a month spread over 10 years.
Black Hills Energy, the No. 2 gas company in Wichita, has proposed charging an extra $12.23 a month spread over five years.
In addition to the FERC investigation, Attorney General Derek Schmidt is looking into whether the spiraling gas prices violated the Kansas Consumer Protection Act, a law designed to limit price increases on necessities during periods of emergency.
That law is also being invoked in a civil court case by the tiny city of Mulberry in southeast Kansas. James Zakoura, a prominent Kansas energy lawyer, is representing Mulberry and argues that gas suppliers engaged in price gouging and piracy during the freeze emergency.
This story was originally published September 28, 2021 at 6:25 PM.
