The Kansas Corporation Commission has approved a settlement agreement with Kansas Gas Service on the recovery of costs from skyrocketing gas prices during bitter cold temperatures in February of 2021.    The agreement allows KGS to recover costs from third-party marketers and certain large transportation customers.

The agreement deals with recovery of costs in meeting the demand of KGS transportation customers during the cold snap.  Transportation customers include some municipal utilities, businesses, schools and churches.

Under the agreement, KGS will recover about $52 million of the $58 million in calculated supply shortfalls from the cold snap.   Some gas marketers did not provide adequate natural gas to KGS to ensure uninterrupted service to transportation customers.   The KCC adopted an emergency order calling on KGS to make up the difference to ensure that gas was available to all customers.

KGS also asked for a waiver that would have allowed a multiplier penalty to be applied to the amount owed, and that could have resulted in penalties up to $888 million.  That could have sent a number of entities into bankruptcy and causing great harm to the Kansas economy.    If KGS had not been able to recover costs from marketers and transportation customers, the costs would have fallen to residential and small commercial customers.