The massive natural-gas bills incurred during the Texas freeze have kicked off a spate of lawsuits around the country as companies argue over who is responsible for the tab.
At least 30 lawsuits related to natural-gas contracts have been filed in four states since the February storm that knocked out power for millions of Texans and sent gas prices soaring to their highest levels in years. Billions of dollars are collectively on the line.
The lawsuits have laid bare the enormous pressure the financial fallout from the storm has put on natural-gas suppliers and customers, including public utilities and others. The bulk of the suits are in Texas courts and involve some of the world’s largest energy companies and traders, including Exxon Mobil Corp. , Koch Industries Inc., BP PLC and Vitol.
Some of the lawsuits allege that gas suppliers engaged in price gouging during the storm, overcharging utilities. Some suppliers such as ConocoPhillips, in turn, are suing utilities and others over unpaid bills. Other lawsuits center on whether companies should be absolved from their contractual obligations to supply gas during parts of February, when freezing temperatures shut down a vast swath of Texas’ energy infrastructure. Legal analysts expect more lawsuits to be filed in the weeks ahead.
Texas is the nation’s largest gas producer, but both production and power generation from gas dropped by about a third during the unusually strong winter storm, which caused a surge in demand for power and heat.
Freezing water and blackouts wreaked havoc on everything from wells to pipelines and regional storage facilities that feed power plants across the state. Amid the disruptions, natural-gas prices shot up nearly 17,000% in some parts of the state. Electricity prices also skyrocketed, and Texas power sales in a single week topped $46 billion, more than five times what the state spent in all of 2020. That has led to enormous bills for many residential and industrial power users, and triggered a continuing political debate in Texas over whether at least some of the charges should be reversed.
The largest group of gas suits so far was filed by CPS Energy, a San Antonio-owned utility company that alleged more than a dozen gas suppliers were “profiteering from scarcity during a declared disaster.” Some were charging 15,000% more for natural gas than prestorm prices, which CPS likened to paying $7,000 to refuel a car, according to one of the lawsuits.