Attorney General’s office to monitor natural gas supply and market activity during cold weather

The Attorney General’s Office in Oklahoma City has declared their intent to closely scrutinize natural gas supply and market activities amid the recent cold spell. This careful monitoring aims to protect consumers from potential price manipulation or unfair practices. Five years ago during Winter Storm Uri, natural gas prices surged from $2.54 MMBtu to a staggering $1,230.65 MMBtu, marking a national record and sparking allegations of market manipulation. The term MMBtu denotes 1 million British Thermal Units, measuring the heat content of natural gas.

In response to the extraordinary energy expenses incurred by four public utility companies during the two-week winter storm of February 2021, the Oklahoma Supreme Court approved the issuance of $3.07 billion in ratepayer-backed bonds. Public Service Co. of Oklahoma received $725 million, Summit Utilities (formerly CenterPoint) $95 million, Oklahoma Natural Gas Co. $1.45 billion, and Oklahoma Gas & Electric Co. $800 million. The total costs ballooned to approximately $4.5 billion, encompassing carrying costs, interest, and other expenditures.

Public Service Co. of Oklahoma’s winter storm-related expenses amounted to $693 million, including natural gas expenditures and electricity purchases from external sources, according to parent company AEP’s filing with the U.S. Securities and Exchange Commission. By contrast, PSO’s annual fuel expenses typically range from $500 million to $600 million. The task of repaying PSO’s securitization bonds falls on residential customers, estimated to result in an additional cost of $4.06 per month over 15 years for a typical consumer using 1,100 kilowatt-hours monthly. PSO caters to over 580,000 customer accounts across 232 cities and towns in eastern and southwestern Oklahoma, including Lawton, Altus, and Duncan.

CenterPoint/Summit’s gas bill spiked to $79 million during the period of February 7-21, 2021, significantly surpassing the total gas costs for all of 2020. The company serves approximately 98,800 customers in 91 cities and towns spanning 36 counties, with Lawton and Duncan being the most prominent locales. Others served include Elgin, Fletcher, Sterling, and Geronimo.

A myriad of entities grappled with escalated natural gas expenses during the severe weather conditions. Comanche County Memorial Hospital in Lawton faced a gas bill of approximately $400,000 for February 2021, compared to $210,000 for the entire year of 2020. The Fort Cobb Fuel Authority encountered an extra $550,000 in gas purchase costs during the frigid period stretching from Valentine’s Day through February 19, 2021. This spike led to a 33-month bill surcharge for customers to alleviate the accrued debt.

The Attorney General’s Office remains steadfast in safeguarding ratepayers and preventing a recurrence of market abuses that precipitated high energy costs during Winter Storm Uri. Energy market fluctuations during severe cold weather do not excuse predatory behavior or violations of contractual obligations. The goal is to ensure fair and transparent costs aligned with legitimate market conditions. Public utilities are urged to promptly report any failures by natural gas marketers to fulfill contractual obligations or engage in questionable or illicit behavior. Ongoing litigation and investigations concerning excessive natural gas pricing during the 2021 winter storm underscore the office’s commitment to vigilance and readiness to counter similar misconduct in the current winter weather event.