Kansas judge OKs lawsuit that claims gas price gouging by energy titan BP last winter
Residents of the tiny southeast Kansas town of Mulberry have won the first round in a lawsuit claiming energy giant BP gouged them on natural gas prices during the freeze emergency last February.
A Crawford County judge dismissed a motion by BP to shut down the lawsuit and ruled Wednesday that several Mulberry townspeople have the right to sue the mega-corporation, formerly known as British Petroleum.
“The big issue here is the Kansas Consumer Protection Act and the right of individuals to file a claim,” said James Zakoura, a lawyer representing Mulberry and its municipal gas consumers. “The judge said yes, we have that right under the law.”
The amount at issue is a little over $51,000, a drop in the ocean compared to BP’s 2021 profit of $12.8 billion, announced Wednesday.
But what’s happening in Crawford County’s courthouse could be an important test case that eventually affects whether everyone in the state has to pay off hundreds of millions of dollars in extraordinarily high gas prices that were charged during the February freeze last year.
The court decision comes the day after the Kansas Corporation Commission approved Kansas Gas Service moving forward to collect $366 million of winter storm costs from its 640,000 customers, which could add $5 to $7 to customers’ bills for the next five to 10 years.
While Mulberry residents buy their gas through their city utility and aren’t part of the KGS case, Wednesday’s ruling could clear the way for customers of any utility, including KGS, to sue for relief under the Consumer Protection Act, Zakoura said.
The Mulberry residents allege that BP violated the anti-profiteering section of the act that limits price increases on consumer goods to 25% during periods of emergency.
The city government and four named residents alleged that BP gouged them by hiking natural gas to more than 100 times the normal price during an arctic blast that began Feb. 10 and persisted for about the next 10 days.
BP officials did not immediately comment on Wednesday’s decision.
In court, they had sought to have the individual plaintiffs dismissed, arguing that BP sold gas to the city, not the individual consumers.
The residents argued that the gas merely passed through the city’s hands and they were the actual consumers.
Judge Lori Bolton Fleming, the chief judge for Crawford, Cherokee and Labette counties, sided with the residents on the issue.
“It is important to note that if the Court required a direct contract between BP and the Individual Plaintiffs to find standing under the KCPA, that finding would create a legal situation where BP, or any supplier who uses a distributor rather than directly supplying to the ultimate consumer, could avoid liability to consumers under the KCPA,” Fleming wrote. “Such an interpretation is simply not consistent with the stated policy of the KCPA.”
BP did succeed in getting the city government dismissed as a plaintiff under KCPA, which only allows lawsuits by “an individual, husband and wife, sole proprietor, or family partnership.”
But that’s not the end of that.
Lee Smithyman, Zakoura’s law partner, said the judges’ ruling leaves the door open to try to add the city back as a plaintiff under the Uniform Commercial Code, a different section of law that bans “unconscionable” business practices.
“We’ll probably file an amended petition for the city of Mulberry to allege unconscionability,” Smithyman said.
Allowing the suit to proceed also allows the plaintiffs to begin discovery, a fact-finding process giving them access to documents that could lift the veil on why natural gas prices went up as much as they did a year ago, Smithyman said.
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 rose to $329.60 per mmBTU from Feb. 13 to Feb. 16, when the city stopped buying gas.
It would have been nearly double that on Feb. 17, when the price hit $622.79 on the spot market.
In addition to challenging whether the plaintiffs have standing to sue, BP also has argued that it couldn’t have been in violation of the Consumer Protection Act because Gov. Laura Kelly didn’t declare a statewide disaster emergency until Feb. 14, the day after prices reached $329.60.
This story was originally published February 10, 2022 at 4:19 AM.
