WASHINGTON (AP) – Democratic senator calls for federal investigations into possible natural gas price scam in the Midwest and other regions after severe winter storms plunged Texas and other states into a deep freeze that caused power outages in millions of homes and companies. .
Minnesota Sen. Tina Smith says spot natural gas prices rose to 100 times typical levels, forcing utilities and other natural gas users to incur exorbitant costs, many of which were transfer to customers.
In a letter sent to federal regulators Saturday, Smith said price hikes would not only affect consumers, but could “threaten the financial stability of some utilities that do not have enough cash reserves to cover their costs.” in the short term in this extraordinary event “. The letter was sent to the Department of Energy, the Federal Energy Regulatory Commission and the Commodity Futures Trading Commission. The Associated Press obtained a copy of the letter.
Extreme weather it spurred Mississippi residents in Minnesota to provoke electric heaters and boosted electricity demand beyond the worst-case scenarios predicted by grid operators. At the same time, many gas power plants in Texas and other states went offline due to ice conditions, and some plants appeared to suffer from fuel shortages as natural gas demand increased nationwide.
More than 70 deaths in the United States have been blamed for the storms.
In Winfield, Kansas, the city manager reported that a natural gas unit that sold for about $ 3 earlier this month sold for more than $ 400 on Thursday. City Manager Taggart Wall told KWCH-TV in Wichita that Winfield, which estimates about $ 1.5 million a year for natural gas, expects to pay about $ 10 million just last week. Residential customers could see bills of up to $ 2,500 this month, he said.
In Morton, Illinois, officials reported that gas that was normally sold for about $ 3 per unit cost nearly $ 225 this week as demand increased due to the freeze.
While officials do not know all the details of what happened or exactly how it will affect utility tariffs, “we know that this situation can place a significant financial burden on utility companies and their customers.” especially to families in Minnesota and across the country. fighting the coronavirus pandemic and the economic recession, Smith said.
The Minnesota Public Utilities Commission convened a special meeting 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 will review Smith’s letter and “respond in due course.”
A spokesman for the American Gas Association, which represents more than 200 local energy companies, said February 14 and 15 set the record for the highest demand for natural gas in U.S. history in a period of two days.
Although natural gas service companies faced “unprecedented challenges” and “spot prices rose in some regions due to rising demand, households and companies using natural gas went up. protect from higher prices by careful planning of their utility companies, ”said Jake Rubin, a spokesman for the gas association. Most natural gas utilities use long-term contracts that seek to ensure sufficient supply to meet demand and block affordable prices, he said.
However, there were exorbitant price increases in the spot market. Natural gas hit a record $ 600 per million British thermal units in Oklahoma, while Missouri Gov. Mike Parson said he had asked the state attorney general to investigate allegations of exploitation of Oklahoma. natural gas prices in this state.
Smith, in his letter to regulators, urged them to investigate natural gas market conditions over the past week, including price reductions by natural gas producers and suppliers.
“A public report should detail what happened, make recommendations to prevent these problems in the future, and determine whether the laws have been breached,” he said. Smith also urged officials to invoke emergency authorities, including 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 administration and Congress should consider financial support for utility companies and customers “who may face a cash crisis or a rate hike as a result of rising natural gas prices.” said Smith.
The White House announced Saturday that the president had declared a major disaster in Texas, and has called on federal agencies to identify additional resources to deal with the suffering.