Case Against Arkansas Western Pushes Forward

Fayetteville lawyer Dale Evans isn’t giving up. Twice, his clients’ case against Arkansas Western Gas Co. has been dismissed by the Public Service Commission, and twice Evans has appealed the case before the Arkansas Supreme Court of Appeals.

Originally filed in December 1993, the case seeks back pay for years of excessive gas payments made by AWG ratepayers.

Evans said his clients, AWG ratepayers Robert Brandon and Carl Brooks, could possibly wallop AWG with a judgment similar to the $109 million verdict in a royalty dispute that took the wind out of parent-company Southwestern Energy Co. last year.

SWN, now based in Houston after moving from Fayetteville in February, reported a $3.2 million gain from selling its Missouri utility properties. Still, the company recorded a net loss of $46.7 million for the year.

In 1992, the state attorney general’s office complained that AWG failed to buy and furnish gas “from the lowest or most advantageous market,” which is a PSC regulation for all gas companies. Three years later, AWG agreed to stop the practice, but the settlement between AWG and the attorney general’s office offered no refunds for customers who overpaid.

Before AWG agreed to adhere to the PSC rule, Brandon and Brooks filed a complaint in 1993 seeking refunds for some 87,000 residential customers. The complainants alleged in their original filing that SWN subsidiaries AWG and SEECO Inc., SWN’s exploration division, fixed prices of natural gas its customers.

Evans has worked on the case from the beginning.

According to the filing, in the late ’70s, AWG signed a contract to purchase gas from SEECO for $3.85 per thousand cubic feet. Although the market price for gas (MCF) dropped to around $2, AWG paid SEECO the contracted price and failed to give its customers the lowest market price.

According to the original docket, the repayment should total one of three options: at least $14 million per year since 1978, $210 million, or the amount by which the rates exceeded reasonable charges.

The case was once dismissed by the PSC because the agreement between the state attorney general and AWG didn’t request repayment of excess charges.

“I guess I’m a simple guy,” Evans said. “I think, if it’s wrong, it’s wrong … past or future.” So, he appealed the case, and in October 1999, the court of appeals sent it back to the PSC for rehearing.

Oral arguments ended Oct. 26, and Evans expects an opinion from the court soon.

Evans said Brandon and Brooks represent all AWG ratepayers from the time in question, and each customer would receive consolation for the excessive charges.

AWG administrators are headquartered in Fayetteville, and no one from the office returned the Business Journal’s calls.

SWN reported $5.02 million netted for the three months ended Sept. 30. For the nine months, Southwestern Energy netted $27.9 million.

AWG distributes natural gas to 136,000 customers in north Arkansas. After the Hales judgment was announced, SWN put AWG on the sale block, where it sat quietly for six months.

In its 2001 strategy meeting, administrators said positive exploration and production activities would allow the company to retain AWG until a formidable offer is made.

SWN trades on the NYSE, and closed at $11.30 per share on Dec. 4.