Energy Reserves Group, Inc. v. Kansas City Power & Light Company (1982)
- Docket
- 81-1370
- Decided
- 1982-01-01
Summary
Question: Did the Kansas Natural Gas Price Protection Act violate the Contract Clause by preventing federal price controls on natural gas from affecting price adjustments made under intrastate contracts? Conclusion: No. Justice Harry Blackmun delivered the opinion for a unanimous court. The Court determined that ERG did not have its contractual rights "substantially impaired" and found that the state of Kansas had "significant and legitimate public purpose[s]" for passing the Kansas Act. The contract between ERG and KPL facilitated changes in prices according to governmental price controls, and the new state price controls adhered to federal guidelines. In passing the Kansas Act, the state "exercised its police powers to protect consumers from the escalation of natural gas prices." The Natural Gas Policy Act set maximum price levels for natural gas but explicitly permitted states to lower these levels. Therefore "price escalator" clauses included in intrastate contracts would adhere to lawfully enacted state price levels.