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Energy Reserves Group, Inc. v. Kansas Power & Light Co.

United States Supreme Court
459 U.S. 400 (1983)


In 1977, the Kansas Power & Light Co. (defendant) entered into long-term contracts to purchase natural gas from Energy Reserves Group (plaintiff). The contracts contained “price escalator” clauses which permitted the price of natural gas to rise if government regulators fixed a higher price than that specified in the contracts. Subsequently, the State of Kansas adopted a law that provided that the price to be paid for natural gas under a contract could not be increased because of prices set by federal authorities. Thus, when federal regulators increased the price of natural gas, the Kansas State law prevented Energy Reserves Group, Inc. from charging the higher prices it was entitled to under its contracts. Energy Reserves Group brought suit in Kansas state court against Kansas Power & Light Co. seeking to recover the higher price of natural gas under its contracts. The state court ruled for Kansas Power & Light Co., and Energy Reserves Group appealed, arguing that the Kansas state law interfered with its rights under the Contract Clause of the Constitution. The Kansas Supreme Court held that the law did not violate the Contract Clause, and Energy Reserves Group appealed to the United States Supreme Court.

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