Sen. Jeff Longbine, an Emporia Republican, served on a conference committee with fellow Kansas legislators who proposed a loan fund for businesses hit with high natural gas bills following record cold temperatures. (Sherman Smith/Kansas Reflector)
TOPEKA — Chris Klimek had already started hearing about the exorbitant natural gas bills other businesses got after this winter’s historic cold snap before he found out what his company would owe.
At first, he thought he had been spared. The bill he received at the beginning of March looked normal: $6,763.73.
Last week, though, he got the next bill — this one covering a historic cold snap that caused natural gas prices to skyrocket.
It’s a big hit to the company’s bottom line, he said.
“I mean, that’s almost 10% of our annual net profit,” said Klimek, president of Central Bag Company, an employee-owned manufacturer in Leavenworth that provides packaging for agricultural and food businesses.
Once he picked himself up off the floor, Klimek said, he called Vlad Kaufman, who runs an Overland Park-based company that performs energy audits and advises businesses on efficiency. Kaufman was hearing from other clients who got bills between five and 50 times their normal price.
Clients with large manufacturing businesses, he said, got seven-figure natural gas bills. Other businesses were barely surviving the COVID-19 pandemic and ensuing economic crisis only to be hit with these exorbitant charges.
“And they’re in complete and utter shock and basically saying, ‘We can’t pay these bills,’ and they’re completely freaking out,” Kaufman said.
The bills come as the result of the cold snap so severe it caused Kansas Gov. Laura Kelly to declare a state of emergency. Supply shortages caused by the frigid temperatures, combined with high demand, sent natural gas prices through the roof. Across the region, hundreds of thousands lost power. In the Kansas City region, Evergy shut off power to more than 170,000 households to keep the grid from being overwhelmed.
The state moved in March to bail out municipal utilities, which received similarly high bills for the power they provide residents. But the natural gas used to heat Central Bag Company doesn’t come from a municipal utility.
Klimek and countless other large customers — from manufacturers to school districts — buy their natural gas from third-party wholesalers. Now, those customers might get relief from the state. Last week, the Kansas Legislature passed a bill that would create a loan fund much like that for municipal utilities. This one would be for customers of wholesale natural gas companies.
In Klimek’s case, that company is called Constellation.
Often, businesses can save money by buying natural gas from a wholesaler rather than a utility provider. Kaufman’s office itself is too small to buy his natural gas on the wholesale market, but he said the vast majority of businesses that can buy their gas that way do so.
Dave Snyder, a Constellation spokesman, said the company is “committed to offering deferred payment plans and other billing solutions” to its large-scale customers. The company also is working with municipalities where it provides natural gas.
Sen. Jeff Longbine, an Emporia Republican, said the huge bills could wipe out years of savings businesses have enjoyed from purchasing wholesale natural gas. But he said the spikes were likely a one-time incident, not a sign the state should reconsider deregulation.
“It’s a 500-year flood and an F-5 tornado at the same time,” Longbine said. “You never think it’ll happen again.”
The proposal made its way to the floor of the Kansas House and Senate late in the session. Legislators added it through a conference committee on Friday. Both chambers endorsed the proposal overwhelmingly later that day.
Now, it awaits the governor’s signature.
But some legislators questioned the idea of providing relief to the customers out of concern it would let the natural gas companies off the hook.
“I still have a problem with this bill,” Sen. Alicia Straub, an Ellinwood Republican, told the Senate Republican caucus last week.
Straub said she wasn’t sure the state would be helping the customer. She thought a better solution would be to more quickly investigate whether natural gas companies had charged unfair rates as a result of the winter weather.
One Kansas town is suing BP Energy, accusing the company of profiteering because its natural gas prices rose from $2.98 per mmbtu on Feb. 9 to $329.615 from Feb. 13-16.
Kansas Attorney General Derek Schmidt told The Kansas City Star his office was investigating whether natural gas companies had engaged in price gouging.
But Longbine said the process could take “years.”
“These customers can’t withhold payment for years,” he said. “They’ll eventually get cut off and not have gas, so they need immediate help.”
Rep. Rui Xu, a Westwood Democrat, agreed.
“Somebody made a lot of money” on the cold snap, he said, and that should be investigated.
“Meanwhile,” Xu said, “real people on the ground have bills that need to be paid, and we need to do whatever we can to help them.”
Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Please see our republishing guidelines for use of photos and graphics.