WASHINGTON – A Democratic senator is calling for federal investigations into possible fraud in natural gas prices in the Midwest and elsewhere after severe winter storms that plunged Texas and other states into a deep freeze that caused power cuts in millions of people. homes and businesses.
Minnesota Senator Tina Smith says spot prices for natural gas have reached 100 times normal levels, forcing utilities and other natural gas users to incur exorbitant costs, many of which have been passed on to customers.
In a letter sent to federal regulators on Saturday, Smith said that price increases will not only hurt consumers, but may “threaten the financial stability of some utilities that do not have enough cash reserves to cover their short-term costs in this extraordinary event. ”. The letter was sent to the Department of Energy, the Federal Energy Regulatory Commission and the Commodities Futures Trading Commission, and a copy of the letter was obtained by the Associated Press.
The extreme weather spurred residents of Mississippi to Minnesota to turn on electric heaters and pushed demand for electricity beyond the worst scenario planned by grid operators. At the same time, many gas-fired power plants in Texas and other states were shut down due to icy conditions, and some plants appeared to suffer from fuel shortages as demand for natural gas increased across the country.
More than 70 deaths in the United States have been attributed to storms.
In Winfield, Kansas, the city administrator reported that a natural gas unit sold for about $ 3 earlier this month was sold for more than $ 400 on Thursday. Municipal manager Taggart Wall told KWCH-TV in Wichita that Winfield, which has budgeted about $ 1.5 million a year for natural gas, expects to pay about $ 10 million just last week. Residential customers can receive bills of up to $ 2,500 this month, he said.
In Morton, Illinois, authorities reported that the gas normally sold for around $ 3 a unit cost almost $ 225 this week, as demand has skyrocketed due to the deep freeze.
While the authorities do not know all the details of what happened, nor precisely how it will affect utility tariffs, “we know that this situation can be a significant financial burden for public services and their customers”, especially for families in Minnesota and elsewhere. the entire country struggles in the coronavirus pandemic and economic crisis, said Smith.
The Minnesota Public Service Commission called a special meeting on Tuesday to investigate what caused the dramatic spikes in natural gas prices in that state.
A spokeswoman for the Federal Energy Regulatory Commission, known as FERC, said the agency would review Smith’s letter and “respond in due time”.
A spokesman for the American Gas Association, which represents more than 200 local energy companies, said February 14th and 15th set a record for the largest natural gas demand in the history of the United States in a two-day period.
While natural gas utilities faced “unprecedented challenges” and “spot prices have risen in some regions due to spikes in demand, families and companies using natural gas have been protected from higher prices by careful planning by their utilities,” said Jake Rubin, spokesman for the gas association Most natural gas concessionaires use long-term contracts that seek to ensure sufficient supply to meet demand and at affordable prices, he said.
Even so, exorbitant price spikes were registered in the spot market. Natural gas hit a record $ 600 per million British thermal units in Oklahoma, while Missouri Governor Mike Parson said he asked the state attorney general to investigate complaints of rising natural gas prices in that state .
Smith, in his letter to regulators, urged them to investigate natural gas market conditions over the past week, including any price increases by natural gas producers and suppliers.
“A public report should detail what happened, make recommendations to prevent such problems in the future and determine whether the laws have been violated,” she said. Smith also asked authorities to invoke emergency authorities, including under the Natural Gas Policy Act and the Defense Production Act, to ensure that natural gas is sold at fair prices during the current crisis.
The Biden government and Congress should consider financial support for public services and customers “who may be experiencing a cash crisis or rising rates as a result of rising natural gas prices,” said Smith.
The White House announced on Saturday that the president had declared a major disaster in Texas and asked federal agencies to identify additional resources to deal with the suffering.