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At least 30 lawsuits potentially worth billions of dollars have been filed in four states disputing responsibility for the massive electricity bills many Texans were hit with amid the freezing weather in February that caused power outages and a natural gas shortage, the Wall Street Journal reports.
According to the report, some of the lawsuits accuse natural gas suppliers of price-gouging and overcharging utilities for the gas they supplied. One group of suits, filed by San Antonio-based utility CPS Energy, alleges that gas suppliers were “profiteering from scarcity during a declared disaster,” with some hiking their prices by a staggering 15,000 percent.
“What we believe is that this was a huge transfer of wealth at one of Texas’ worst points in our history,” the chief executive of CPS Energy, Paula Gold-Williams, told the WSJ in an interview. Amid a natural disaster, “the result can’t be that prices become unconscionable.”
In response, Energy Transfer Partners, one of the defendants in the case, said that the lawsuit was an attempt on CPS Energy’s part to “divert attention from its own poor risk management and failure to prepare for high natural-gas demand in a severe winter storm.”
Others, filed by gas suppliers including ConocoPhillips, accuse utilities of not paying their bills. Yet others allege gas suppliers need to be relieved of their responsibility to supply the commodity to utilities with a backdate for the period of the Texas Freeze, which paralyzed much of the Lone Star State’s energy infrastructure. According to experts who spoke to the WSJ, more lawsuits will be filed in the coming weeks.
The Polar Vortex that brought deep sub-zero temperatures to Texas in February led to a 45-percent drop in natural gas production, mostly because of frozen production facilities. It also caused a 40-percent drop in crude oil production, the largest-ever production decline in history.
Electricity consumption, meanwhile, hit a record high for the season, leading to massive withdrawals from natural gas storage facilities. Yet even with these withdrawals, prices skyrocketed, saddling some Texans who buy their power on the wholesale market with utility bills in the thousands.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com