Later this month, a Nebraska district court will hear argumentsfrom Kinder Morgan subsidiary KN Energy, which has charged severalmunicipalities in the western part of the state with attempting toregulate the gas company’s rates by requiring it to pay into astate loan fund, and when it refused to pay the charge, enactingordinances to not allow a surcharge on gas purchases.
The Lakewood, CO-based company filed the lawsuit against thecities it serves after it refused to repay $390,000 into a loanfund that maintains the operation of Nebraska’s gas regulatorysystem. The state’s system is managed by municipalities instead ofa state commission, and all gas providers are required under statelaw to pay into the loan fund.
When it refused to repay the loan fund, the municipalitiesserved by KN enacted ordinances to prevent the company from levyinga surcharge on gas charges that they said was inappropriate. Thestate also has sued to recover the loan fund amount.
In a 27-page decision handed down on Monday by Nebraska DistrictJudge Paul Merritt of Lancaster County, some of the claims made byKN and some of the claims of the municipalities were accepted.However, Merritt left other decisions, including whether KN shouldrepay 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 hethought the state would recover its money.
Larry Pierce, a spokesman for KN, said the company is notattempting to avoid repaying into Nebraska’s loan fund, but saidthat if it did repay the amount, it might help the municipalitiespursue an “improper action” against it and other gas suppliers.
KN also does not want to charge the ratepayers the cost ofrepaying into the fund, which is allowed under state law, becausehe said the state would then use the ratepayer funds to sue thecompany. Pierce said that KN would continue to argue its case incourt.
KN began its Choice Gas program in Nebraska in 1999 (see Daily GPI,Jan. 26, 1999), serving about 180communities in the state. It has been serving customers in Nebraskafor more than 60 years.
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