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Koch Energy sues Texas utility for $21 mln in unpaid deep freeze bills

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Workers install a utility pole to support power lines after an unprecedented winter storm in Houston, Texas, U.S., February 22, 2021. REUTERS/Adrees Latif

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  • Koch Industries subsidiary says a San Antonio utility won't respond to its request to discuss the issue further
  • Defendant Grey Forest Utilities says bill "excessive"

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(Reuters) - A subsidiary of Koch Industries Inc sued a Texas natural gas utility on Friday in San Antonio federal court, accusing it of failing to pay $21 million for natural gas it received from the company during Texas' severe February 2021 cold spell.

The deep freeze caught Texas' utilities off guard, killed more than 100 people and left 4.5 million without power. Demand for heat pushed wholesale power costs to 400 times the usual amount and propelled natural gas prices to record highs, forcing utilities and consumers to pay exorbitant bills.

Kansas-based Koch Energy Services sued Grey Forest Utilities, which serves customers in the San Antonio area, to seek full payment of a $23 million gas delivery invoice for which it says it was only paid about $1.8 million so far.

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Daniel Lanfear, an attorney representing Grey Forest Utilities, said the company "will vigorously defend the suit, and a counterclaim against Koch will be considered given what appear to be serious billing errors and overcharges."

The utility is owned by the city of Grey Forest, a suburb of San Antonio. It has taken out an 8-year, $22 million bond to secure what may be owed to Koch Energy Services, it says on its website. It normally pays about $540,000 for its February gas purchase from Koch Energy Services, it says.

Grey Forest Utilities has "disputed" the bill and says it is seeking a mediated or litigated resolution. It will refund its ratepayers for an additional monthly fee it currently charges them to repay the bond if the matter is resolved in its favor, it adds.

Koch Energy Services' complaint says that the utility "has refused to respond to Koch Energy's request to discuss the issue further."

A lawyer representing Koch Energy Services did not immediately respond to a request for comment.

The case is Koch Energy Services, LLC v. Grey Forest Utilities, U.S. District Court for the Western District of Texas, No. 5:22-cv-00032.

For Koch Energy Services, LLC: David McDowell of McDowell Hetherington

For Grey Forest Utilities: Daniel Lanfear of Lanfear Law Firm

Read more:Texas approves more power market rules to avoid another February freeze

Enterprise Products sues Texas municipal utility over $100 mln gas bill

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Sebastien Malo reports on environmental, climate and energy litigation. Reach him at sebastien.malo@thomsonreuters.com

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