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KN Energy, Nebraska Court Battle Set

KN Energy, Nebraska Court Battle Set

Later this month, a Nebraska district court will hear arguments from Kinder Morgan subsidiary KN Energy, which has charged several municipalities in the western part of the state with attempting to regulate the gas company's rates by requiring it to pay into a state loan fund, and when it refused to pay the charge, enacting ordinances to not allow a surcharge on gas purchases.

The Lakewood, CO-based company filed the lawsuit against the cities it serves after it refused to repay $390,000 into a loan fund that maintains the operation of Nebraska's gas regulatory system. The state's system is managed by municipalities instead of a state commission, and all gas providers are required under state law to pay into the loan fund.

When it refused to repay the loan fund, the municipalities served by KN enacted ordinances to prevent the company from levying a surcharge on gas charges that they said was inappropriate. The state also has sued to recover the loan fund amount.

In a 27-page decision handed down on last Monday by Nebraska District Judge Paul Merritt of Lancaster County, some of the claims made by KN and some of the claims of the municipalities were accepted. However, Merritt left other decisions, including whether KN should repay the loan fund, to the court in a trial now scheduled for Jan. 22.

Following a preliminary reading of Judge Merritt's decision, Nebraska Deputy Attorney General Steve Grasz was upbeat, saying he thought the state would recover its money.

Larry Pierce, a spokesman for KN, said the company is not attempting to avoid repaying into Nebraska's loan fund, but said that if it did repay the amount, it might help the municipalities pursue an "improper action" against it and other gas suppliers. KN also does not want to charge the ratepayers the cost of repaying into the fund, which is allowed under state law, because he said the state would then use the ratepayer funds to sue the company. Pierce said that KN would continue to argue its case in court.

KN began its Choice Gas program in Nebraska in 1999 (see NGI, June 7, 1999), serving about 180 communities in the state. It has been serving customers in Nebraska for more than 60 years.

Carolyn Davis, Houston

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