Oklahoma Attorney General Gentner Drummond filed a pair of lawsuits Wednesday against natural gas pipeline firms, alleging the companies helped bid up the price of natural gas to the highest levels in history during a winter storm in February 2021.
Drummond filed the lawsuits in Osage County on behalf of the Grand River Dam Authority. The lawsuits, prepared with the help of Oklahoma City law firm Foshee & Yaffe, allege Enable subsidiaries and Symmetry Energy Solutions LLC separately manipulated their parts of the natural gas pipeline systems in the state to boost prices before and during the storm.
The lawsuits said the companies reaped billions of dollars in extra profit from their wrongful conduct and the resulting surge in prices during the storm. GRDA, a public power utility, provides electricity to 24 counties, as well as several municipalities and electric cooperatives. Its largest customer is a Google data center in Mayes County.
“I believe the level of fraud perpetrated on Oklahomans during Winter Storm Uri is both staggering and unconscionable,” Drummond said in a press release. “While many companies conducted themselves above board during that trying time, our analysis indicates that some bad actors reaped billions of dollars in ill-gotten gains. It is important that we do everything in our power to hold bad actors accountable for their actions.”
Drummond said he anticipates additional lawsuits being filed over alleged price manipulation during the storm. He reiterated his stance, first articulated last summer, that Oklahoma oil and gas producers or utilities were not to blame for the record-high prices.
Extreme storm, extreme prices
Natural gas prices rose as high as $1,200 per thousand cubic feet at the Oklahoma trading hub during the height of the storm, which blanketed the central part of the United States with snow, ice and extremely cold temperatures. Natural gas prices before the storm in Oklahoma were in the $3 range.
Most Oklahoma utility customers are paying back billions of dollars in natural gas costs, plus interest, for the next several decades as separate charges on their monthly electricity and natural gas bills.
The legal filings in Osage County are limited to natural gas pipelines serving GRDA’s electric generating plants and don’t mention natural gas sold statewide to Oklahoma Natural Gas, Oklahoma Gas & Electric Co. or Public Service Co. of Oklahoma. Combined, those regulated utilities spent more on natural gas during the storm than they did the entire previous year.
In the Osage County lawsuits, Drummond said the intrastate natural gas pipeline systems in Oklahoma are susceptible to market manipulation. That’s in contrast to the state-to-state natural gas pipeline networks, which are regulated by the Federal Energy Regulatory Commission.
“Many states have enacted laws mirroring those promulgated by FERC, subjecting intrastate gas pipelines and distribution companies to a legal framework aimed at preventing market manipulation and anti-competitive behavior,” the lawsuit against Enable said. “Oklahoma, however, does not have such a legal framework in place. As a result, Oklahoma’s intrastate natural gas market is especially vulnerable to manipulation.”
Drummond’s lawsuits said the companies counted on higher demand for natural gas during the storm for both heating and electricity generation and schemed to push prices higher.
“They knew it would bring sustained below-freezing temperatures, and that it would increase demand for natural gas,” Drummond said. “Armed with this knowledge, defendants used that time to prepare, but not in the way that was rightfully expected of them.”
In its 2021 annual report, GRDA said it spent $102.4 million on natural gas and purchased power during the February 2021 winter storm. That compared to average annual costs of $168 million for purchased power and natural gas. GRDA funded the additional storm costs using its cash reserves and is recovering those costs from customers over 10 years.
GRDA referred questions about the lawsuits to the attorney general.
In a statement, Symmetry said it is reviewing the lawsuit. The company was partly owned by CenterPoint Energy at the time of the February 2021 winter storm.
“Symmetry, like many others, suffered the adverse effects of Winter Storm Uri and adamantly denies the unfounded allegations in the lawsuit, which it will vigorously defend,” the company said in a statement Wednesday.
At the time of the storm, OG&E’s parent company, OGE Energy Corp., owned partnership stakes in Enable Midstream Partners. OG&E sold its stake in December 2021. The Enable group of companies are now owned and operated by ET Gathering & Processing LLC, which is part of Dallas-based Energy Transfer LP.
Energy Transfer did not respond to requests for comment on Wednesday.
OGE Energy said it wasn’t involved in Enable’s operations during the storm.
“The OGE Energy Corp. was not engaged in the day-to-day operations of Enable and, in fact, Oklahoma Gas and Electric Company was a customer of Enable,” OGE Energy said in a written statement to Oklahoma Watch.
Oklahoma regulators, consumer groups react
AARP Oklahoma State Director Sean Voskuhl said the lawsuits were welcome news. AARP participated in some of the ratepayer-backed bond cases involving natural gas costs at the Oklahoma Corporation Commission.
“Frustrated utility customers have been demanding to know why they are paying for a ‘once-in-a-generation’ storm for decades,” Voskuhl said. “Oklahomans are relieved action is being taken against the companies who bilked customers out of billions of dollars in a matter of days. They further demand the recovered funds are returned to the utility customers immediately.”
Corporation Commissioner Kim David said she hoped additional lawsuits will follow those filed on Wednesday. David called for the attorney general to investigate possible price manipulation shortly after taking office in January 2023.
“While these lawsuits were filed on behalf of the Grand River Dam Authority, I am hopeful that the attorney general will pursue additional litigation against other companies so that all determined overpayments may be returned to Oklahoma ratepayers,” David said in a written statement.
Corporation Commissioner Bob Anthony, who has been at odds with his fellow commissioners over how the natural gas costs were handled by regulators, said the lawsuits were a good start.
“Hopefully the beneficiaries of his next actions will include the residential retail customers of the state’s largest monopoly public utilities – customers victimized not only by market manipulation during the storm but by an unnecessary, ratepayer-backed, bond-financing scheme fraught with hiring irregularities, cost discrepancies, apparent overpayments and a billion-dollar cost overrun,” Anthony said.
Oklahoma’s lawsuits follow those filed in other states. Kansas Attorney General Kris Kobach last year filed a federal lawsuit against Macquarie Energy LLC. Macquarie Energy is among the five largest natural gas traders in the U.S. market. The company also sold $154 million in natural gas to Oklahoma electric and natural gas utilities during the winter storm, according to sales data from the Oklahoma Corporation Commission.
Kobach alleged Macquarie overpaid for natural gas by manipulating a daily spot price on a local natural gas trading hub in Kansas and resold gas at inflated prices to Kansas utility customers. That inflated price allowed the company to benefit from future average prices set on the trading hub, Kobach’s lawsuit said. Macquarie has denied wrongdoing.
Paul Monies has been a reporter with Oklahoma Watch since 2017 and covers state agencies and public health. Contact him at (571) 319-3289 or pmonies@oklahomawatch.org. Follow him on Twitter @pmonies.
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