Who wins in a predatory market? The wolves, naturally

No one forced these suppliers to charge $622.78 per unit for a product that sold for about $2.50 just 12 days earlier.



September 27, 2021 - 9:22 AM

A weeklong cold wave in February sparked an energy crisis which drove the price of natural gas to 200 times its price a few days before. (Max McCoy/Kansas Reflector)

The billion-dollar question of who got rich from the February cold wave has been answered, despite the best efforts of the state’s regulatory commission and our largest natural gas utility to keep that information secret.

Need a hint? Those who made bank were rich already.

It wasn’t scrappy small entrepreneurs who rolled up their sleeves and worked extra hard to make sure your house stayed warm. Your neighbors aren’t likely to be among the lucky few who, in a chaotic and unpredictable wholesale energy market, were able to keep the natural gas flowing at rates that peaked at 244 times normal. But your neighbors and you, as Kansas consumers, will be paying the heating bill for that unexpectedly cold week in February for years to come.

It’s like we all had one of those household catastrophes that sometimes comes along — the transmission in your car goes out, the sewer line in the back yard has to excavated, the roof starts leaking — and you’re short on cash, so you use plastic to keep things running at home. But imagine you had no choice of who to call for repairs, what they would do, or even what credit card to use. That’s what happened to all of us because the wholesale natural gas market is unregulated, with no circuit breakers to protect us from disaster pricing.

The winners are some of the largest natural gas marketing and trading companies that you’ve probably never heard of: Tenaska, an Omaha-based energy marketing firm, $133 million; Macquarie, an Australian “physical gas marketer,” $70 million; and Southwest Energy, a Texas limited partnership, $68 million. These three companies invoiced the lion’s share of billings to Kansas Gas Service, the state’s largest natural gas utility, according to documents held by the Kansas Corporation Commission.

Billings from the trio amount to 73% of the $371 million in additional gas purchases by KGS to maintain service to consumers in February. When other purchases by the state’s utilities are totaled, the bill comes to a cold $1 billion.

Miryea Gist and Mikaela Dudley wait in heavy snow to cross a street in Dallas during a February winter storm. Gist and Dudley were stranded at the airport when their flight home to Phoenix was canceled. The storm hit the entire Midwest. (TNS photo) Photo by (Smiley N. Pool/The Dallas Morning News/TNS)

How do we know the names of the companies and the amounts KGS was billed?

Thank Jim Zakoura, an Overland Park attorney and eagle-eyed consumer advocate, who found them, unredacted and in the public record, in “Exhibit MLR-3” in prefiled testimony submitted by KGS. The exhibit gives the total dollar amounts billed, but not the per unit rate for natural gas.

Zakoura, who represents the Natural Gas Customer Transportation Coalition, on Wednesday referenced the information in documents he filed asking the KCC to reconsider an earlier decision that deemed the identities of suppliers, and their invoices, confidential.

Zakoura told me he wasn’t trying to leak supplier data, he just wanted the commission to have all the necessary information. The identities and dollar amounts of February’s additional natural gas suppliers were already in the public record, he said, so he wasn’t risking being sanctioned for violating a non-disclosure agreement imposed by the KCC.

“All relevant information needs to be before the commission,” Zakoura said, “so they can make an informed decision. Their (previous) ruling centered around whether it was confidential information, and maintained as confidential. So the commission needs to have this information before it to reassess the order.”

Because KGS did not redact Exhibit MLR-3 in its prefiled testimony, the point is moot.

The testimony, by Matt L. Robbins, director of gas supply for KGS, was related to a requested rate plan that would pass along the wholesale costs, and interest, of February’s price hike to consumers over a period of up to 10 years. The plan would “securitize” the amount, which means that the costs would be bundled and sold to a third party as a bond. Consumers would see their monthly utility bill increase from $5 to $17, depending on the details of the plan ultimately approved.

The KCC hasn’t ruled yet on the rate request.

In addition to the three suppliers already mentioned, Exhibit MLR-3 also lists the following vendors: ETC, $40 million; Rockpoint,$20.5; Mieco, $11.6; BP, $8.7 million; and Koch, $5.3 million.