Senator seeks investigation of natural gas price spikes during storm

WASHINGTON (AP) – A Democratic senator calls for federal investigations into possible skyrocketing natural gas prices in the Midwest and other regions following severe winter storms that plunged Texas and other states into a deep freeze that caused power outages. in millions of homes and businesses. .

Minnesota Sen. Tina Smith says that spot prices for natural gas soared up to 100 times typical levels, forcing utilities and other natural gas users to incur exorbitant costs, many of which were incurred. transferred to clients.

In a letter sent to federal regulators on Saturday, Smith said price spikes will not only hurt consumers, but could “threaten the financial stability of some utilities that do not have enough cash reserves to cover their costs. 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 residents from Mississippi to Minnesota to turn on electric heaters and pushed demand for electricity beyond the worst-case scenarios envisioned 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 be facing fuel shortages as demand for natural gas soared across the country.

More than 70 deaths in the US have been attributed to 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 budgets about $ 1.5 million a year for natural gas, expects to pay about $ 10 million in the last week alone. Residential customers could see bills of up to $ 2,500 this month, he said.

In Morton, Illinois, officials reported that gas that normally sells for around $ 3 per unit costs nearly $ 225 this week as demand skyrocketed due to the freeze.

While officials don’t know all the details of what happened, or precisely how it will affect utility rates, “we know that this situation could be a significant financial burden for utilities and their customers,” especially as families in Minnesota. and throughout the country. fighting in the coronavirus pandemic and economic recession, Smith said.

The Minnesota Public Utilities Commission called a special meeting Tuesday to investigate what caused the dramatic increases 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 that on February 14 and 15 they set a record for the highest demand for natural gas in US history in a two-day period. .

While natural gas utilities faced “unprecedented challenges” and “spot prices rose in some regions due to spikes in demand, families and businesses using natural gas were shielded from higher prices through careful planning of their services, “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 set affordable prices, he said.

Still, exorbitant price spikes were recorded 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 excessive natural gas price increases in that state.

Smith, in his letter to regulators, urged them to investigate conditions in the natural gas market over the past week, including any price increases from natural gas producers and suppliers.

“A public report should detail what happened, make recommendations to prevent such problems in the future, and determine if laws have been violated,” he said. Smith also urged officials 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 administration and Congress should consider financial support to utilities and customers “who may be facing a cash crisis or rate hikes as a result of rising natural gas prices,” Smith said.

The White House announced Saturday that the president had declared a major disaster in Texas.and has asked federal agencies to identify additional resources to address suffering.


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