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

Andrew Bahl
Topeka Capital-Journal
Downtown Eskridge sits quietly on Friday afternoon. The city recently had a plan approved to allow it to repay a state loan designed to offset sky-high gas prices from February.

ESKRIDGE — For officials in Eskridge, the eye-popping prices from February's Winter Storm Uri never cease to amaze, even though it almost six months since the bitter cold spell ripped through the Great Plains.

It is one of 50-plus cities with municipal gas agencies, leaving them more at the whims of the wildly fluctuating markets than most. Eskridge's total bill from the Kansas Municipal Gas Agency was $1.1 million — 10 times more than its entire gas costs for all of 2020.

Relief came in the nick of time, however, as Kansas lawmakers approved a loan program for cities staring down those eye-popping bills, allowing them to pay off their sky-high costs without burdening residents with dramatic rate increases — or having to disband their city all together.

"It was near-imperative that we had that funding facility available," said Justin Rush, president of Eskridge's city council. "It was either that or stick our customers with multi-thousand dollar bills, and we just knew we couldn't do that. When that solution came about, it was immediately a no-brainer for us to take that."

A dramatic uptick in demand for energy throughout the Midwest and South saw utility companies institute rolling blackouts, with thousands of Kansans affected. 

But months later and cities and utility companies alike are starting to figure out how best to pay the piper.

In the case of Eskridge and scores of other local governments, that means coming up with a plan for repaying the state loan. In other instances, utility companies are submitting proposals — subject to review by the Kansas Corporation Commission — that could cause ratepayers' bills to increase for years to come.

More:Rolling blackouts in Kansas restart renewable energy debate among state lawmakers

Cities chart way forward to pay back loans — or take gas bills to court

Eskridge is one of several towns trying to figure out a way to repay the loans. 

Their plan required approval by state regulators due to the town's population, even though municipal utilities generally aren't covered in the KCC's jurisdiction.

It dictates a $2.54 increase per thousand cubic foot of natural gas. The goal is to space the loan repayment out over the course of a year, with the possibility of re-evaluating the increase at the end of the calendar year and potentially even spreading it out over a longer period of time, further keeping the cost for residents down.

Eskridge's municipal gas company will charge residents an extra $2.54 per one thousand cubic feet of gas usage in an effort to pay back costs from February's historic cold front.

Rush said the hope was this would disrupt residents and businesses in the town as little as possible.

"That was our main goal, to try and stretch (repayment) out as long as possible," he said.

Municipalities that took advantage of the low-interest loans are taking different approaches. Some are aiming to get it paid off as quickly as possible. Others are opting to stretch the process out into the future, using the 10-year window they have to pay back the loan.

Whether the charge comes as part of a monthly increase to a consumer's gas bills or a one-time, flat-rate fee also differs from municipality to municipality.

More:Kansas lawmakers rush to help cities slammed by sky-high energy bills

But at least one city has opted for a more aggressive route: suing.

In March, the town of Mulberry in Crawford County, as well as many of its 500 residents, filed suit against British Petroleum, arguing the multinational energy company engaged in price gouging during the winter storms.

The lawsuit alleges prices increased from a little over $2 per unit to more than $300 per unit. The city ultimately opted against participating in the state's low-interest loan program, arguing it would be tantamount to rewarding the high prices.

"It is ridiculous," James Zakoura, the attorney for Mulberry in the case, said in an interview last month.

The case is currently in a holding pattern as the two parties tussle over whether the matter should be handled in Crawford County District court or the federal system.

Evergy, gas utilities outline plans to recoup costs

Similarly, utilities, both electric and gas, have begun outlining how they plan on recouping their own costs from the winter storm blast, with varying effects on ratepayers' bills.

Not all utilities have filed with regulators as of yet. Kansas Gas Service, the largest gas provider in the state, remains the most notable holdout, although experts expect them to outline their plans in the weeks to come.

But customers for Evergy, the electric provider for much of eastern and central Kansas, could see a rise in their bills for the next two years, according to documents filed with the KCC earlier this month.

More:Natural gas prices went through the roof. Now a Kansas town may have to disband.

The increase would be relatively modest — $4.69 per month for that timeframe — in a bid to make up for the $153 million in extraordinary costs incurred by the company. The KCC has already given Evergy flexibility to defer the costs, but the agency is reviewing the exact plan and gathering public comment.

Similarly, the KCC is weighing a plan from Black Hills Energy, a natural gas provider primarily serving south central Kansas.

Their proposal would have a slightly larger impact on customers' bills: an additional $12.23 per month for the next five years, with the revenue being passed on to the wholesale suppliers who sell gas to companies like Black Hills.

The Citizens Utility Ratepayer Board, the state's consumer advocacy arm for ratepayers, is also reviewing what these proposals, as well as other filings from smaller utilities, would mean for customers, said David Nickel, consumer counselor at CURB.

"Our viewpoint is is that the sooner that we can resolve these in in a fair and thorough manner, the better everybody is going to be because these costs are hanging," Nickel said.

Utility work was covered in snow in February amid a record cold snap that resulted in sub-zero temperatures and rolling blackouts, both in Topeka and across Kansas

Bigger questions on price gouging remain unanswered

Bigger picture questions as to the winter freeze, including how and why prices surged and whether resellers took advantage of the historic low temperatures to increase their profit margins.

Attorneys general in Midwest states, including Kansas, have launched investigations into whether price gouging played a role in the crisis and the Federal Energy Regulatory Commission is also probing whether market manipulation occurred. 

The KCC also continues to look into how to improve the reliability of the electric grid and whether there were any larger improvements that need to be made in the event of another serious winter storm.

More:'Extreme stress': 270,000 Evergy customers were affected by rolling blackouts Tuesday

While Kansas did implement rolling blackouts as part of an effort to reduce strain on the regional grid, the problems were not as severe as what was experienced in Texas, where millions were without power and hundreds died.

The outcome of those investigations is unclear, as is a timeframe for when they might be complete. In the meantime, Nickel said, the debate over how to settle up the eye-popping energy bills would continue.

"We have every faith to believe that that these these investigatory efforts are going to be successful and determine whether or not there was any profiteering," he said. "It's just it's a very long and laborious process."