Kinder Morgan Inc. (KMI) has strongly refuted claims in a lawsuit filed by two Colorado cities which accuse the company of overcharging customers located in high elevations by failing to adjust bills to reflect the effect of the higher altitude on the gas stream.

“Contrary to the inaccurate allegations made in the lawsuit, we do make adjustments for local atmospheric pressure to our natural gas bills for elevation differences among the Western Slope towns we serve in Colorado,” said Kinder Morgan Retail President Dan Watson. “We are perplexed by the actions of city leaders and feel they have been misled to file a lawsuit that is totally without merit.”

Responding to the lawsuits filed earlier this month by Aspen and Glenwood Springs against Kinder Morgan and its Rocky Mountain Natural Gas Division, Watson pointed out that KMI’s rates and billing practices are approved as just and reasonable by the Colorado Public Utility Commission (PUC).

“It is unfortunate [the cities] elected to take such action without contacting us first. I’m confident once they understand our rate methodology, which falls under the appropriate regulatory oversight of the PUC, city officials will realize that Kinder Morgan is already doing what the suit is asking us to do.”

Additionally, the company questioned the motivation of the non-profit organization that is representing the cities and reportedly paying for the legal costs associated with the lawsuit. Kinder Morgan said the Colorado Consumers Legal Foundation “is funded by and lists as its board members Jack Grynberg and two members of his family. Grynberg is a natural gas producer, who over many years has repeatedly sued natural gas pipeline and distribution companies across the United States.”

The lawsuit, which seeks refunds for so-called excess charges going back to 1980, claims Kinder Morgan does not have adequate metering equipment and has failed to account for the change in atmospheric pressure at higher elevations in billing its customers. Charging customers on a volumetric basis instead of a thermal basis adds an altitude premium of as much as 23% for customers on the western slope of the Rockies, the suit claims.

The lawsuit accuses the company of “deceptive trade practices in violation of the Colorado Consumer Protection Act and for negligent and intentional misrepresentation in their billing practices.”

Aspen City Attorney John Worcester, who filed the suit, said informal letters had been sent previously to the Colorado Public Utility Commission questioning the practice. A PUC spokesman, however, said the commission had no record of any formal complaint being filed and a quick search has not revealed that it was brought up in a Kinder Morgan rate case. He said the PUC is continuing to search their records.

Worcester said the two cities were filing as representatives of all similarly-situated customers — industrial, commercial and residential — on the Western Slope of the Colorado Rockies who receive gas from Kinder Morgan.

The issue of adjusting for altitude was brought up previously in a rate case for Xcel Energy several years ago. A settlement was reached under which Xcel now bills on a thermal basis.

Kinder Morgan’s Retail Natural Gas Division provides natural gas distribution and related services to more than 240,000 residential, commercial, agricultural and industrial customers in Colorado, Wyoming and Nebraska. Approximately 45,000 of those customers are located on the Western Slope.

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