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Texas Utility Sues Suppliers for Price-Gouging After February Storm

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These translations are done via Google Translate
(Bloomberg) The first lawsuits protesting exorbitant gas prices during February’s historic deep freeze have begun.

CPS Energy, a Texas utility, is suing energy giants including BP Energy Co., Chevron Corp. and Energy Transfer. CPS supplies over 1.1 million customers in the San Antonio area with power and gas, and is disputing charges amounting to hundreds of millions of dollars at a minimum in 13 lawsuits.

“The aftermath of a declared statewide disaster should not be a ‘jackpot’ for gas sellers,” CPS said in a lawsuit against Energy Transfer obtained by Bloomberg.

The deadly cold that battered parts of the U.S. and roiled energy markets last month is expected to result in waves of litigation involving producers and traders of power and natural gas. At the time, ice on wind turbines and frozen pipelines led to sweeping blackouts, and oil and gas wells shut down. Traders and power suppliers struggled to find fuel to meet obligations, causing gas to trade at hundreds of times normal levels. Electricity in Texas surged to $9,000 per megawatt-hour.

There have been similar lawsuits filed involving power prices, though not gas. Earlier this month, a unit of Exxon Mobil Corp. sued Macquarie Energy LLC after having a declaration of force majeure rejected by the energy trader. On Monday, Spire Missouri Inc., a utility company, filed a lawsuit against Symmetry Energy Solutions LLC over failed natural gas deliveries that allegedly caused over $100 million in losses. Symmetry is also being targeted by CPS.

Power suppliers including Vistra Corp., NRG Energy Inc. and Exelon Corp. have disclosed billions in losses associated with the freeze.

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CPS Energy said in the Energy Transfer lawsuit that subsidiaries Houston Pipe Line Co. and Oasis Pipeline LP charged a price for natural gas that was more than 15,000% higher than normal during the climate disaster. That’s like paying more than $7,000 to fill a tank with gas that usually costs less than $50, the company said.

The utility argues that state laws protect the people of Texas from “unconscionable behavior and price gouging” during a declared state of natural disaster. The allegedly inflated costs total almost $257 million out of about $309 million in charges associated with gas purchases from Energy Transfer units in February, according to the lawsuit.

The utility asked Bexar County District Court for a temporary restraining order to prevent Energy Transfer units from declaring CPS Energy in default or taking any action for non-payment of unlawful prices.

Energy Transfer Co-Chief Executive Officer Marshall McCrea said during a conference call last month that the company did “exceptionally well” during the Texas crisis as gas shortages spurred demand for supplies from the company’s storage facilities.

The pipeline operator declined to comment.

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