As state creates loans and investigates, school districts sue over gas bills

Chad Frey
The Kansan
Sub zero temperatures and windchills lingered in the area as more snow fell — forcing schools to close for a day  this week  in Newton and rolling blackouts across the state.

David Decker had a question he wanted to ask of state legislators during a legislative update for the Newton USD 373 Board of Education. 

The director of business services wanted to know what help there might be for school districts paying massive natural gas bills resulting from a winter storm in February. 

He learned from Rep. Stephen Owens, R-Hesston, that there are loan funds, investigations ongoing and that the Kansas Corporation Commission worked with Kansas Gas Service to normalize bills. 

However, while bills for homeowners did not increase much in Kansas Gas territory, those bills were not normalized for the school district. 

"I do not know why they singled out businesses and schools for those huge bills, but there is a fund out there to help with that," Owens said. 

His timing was, in a word, fortuitous. The legislative update occurred on the same night that the board would vote — unanimously — to join a consortium of school districts in filing litigation against natural gas suppliers. 

"I honestly think that is a good approach," Owens said.  "It seems like to me, there is strength in numbers. ... There is value in that to me."

Newton USD 373 got that big bill in March, and officials thought they had weathered the storm after seeing the price tag. But then a bill for $160,000 — what is called a "pass through" for the price of gas — arrived in district offices April 6. On April 13, a bill for Walton Rural Life Center of nearly $30,000 arrived. 

The bill was nearly six times the size of a normal bill. 

The Kansas Association of School Board and Kansas Joint Utility Management Program, are recommending a joint engagement of representing attorney Jim Zakoura, from Smithyman & Zakoura Law Firm in Overland Park, who is investigating possible price gouging.

About 137 school districts could be involved in the litigation. 

Following approval by the board this week, Newton USD 373 will pay $650 into a trust account held by KASB for legal services provided by S&Z. Any remaining funds in the trust account at the conclusion  litigation  will be returned to the school districts on a pro rata basis.  Representation of S&Z is limited to the matters contained in the Agreement.

The Legislature responded to those big bills by creating a loan program — intially to help cities like Hesston where the gas bill skyrocketed into the millions. Halstead, Burrton and Walton were all hit with bills much larger than normal as the cost of gas increased as much more than 200 times normal. 

The loan fund was established for cities and local governments to spread the cost of gas out over a number of years — and a secondary loan fund was established that can be accessessed by corporations and school districts struggling to pay the bill. 

There is not aid that is not in loan form. 

"No unfortunately (there is not anything not in loan form). But even the loan is only at .25 percent.  Enough for the state treasurer to cover the paperwork and that kind of stuff," Owens said. 

The attorney general's office is investigating the price spikes — looking at possible price gouging. 

"We have to find out who was responsible for this and hold them accountable for this," Owens said. "We have to hold them accountable. ... That is the part of this that takes the longest."

That is also what will be investigated by a legal team retained by KASB — as will if districts actually received all the gas they were billed for. The legal team will also be preparing protest letters on behalf of districts.