Natural gas companies respond to AG’s lawsuit

Pipeline and marketing companies targeted by Oklahoma’s attorney general for their role in the run-up in natural gas prices from a winter storm in 2021 said they did nothing wrong and want the cases dismissed or moved from Osage County.

Attorney General Gentner Drummond and outside attorneys filed separate cases in April against Energy Transfer and Symmetry Energy Solutions on behalf of the Grand River Dam Authority. Drummond allegedly the companies unduly profited by bidding up the price of natural gas before and during the winter storm to record levels.

Oklahoma utility companies paid billions of dollars to buy natural gas for heating and electricity generation during a winter storm in February 2021. Their customers are repaying those costs, plus billions in interest, in monthly installations to bondholders.

In his lawsuits, Drummond said the pipeline companies and fuel marketers manipulated their parts of the intrastate pipeline system to bid up natural gas prices during the winter storm. The Oklahoma trading hub had the highest prices in the country, with natural gas prices hitting more than $1,200 per unit at times, up from about $3 per unit in the days before the storm.

In the weeks after the storm, and with consumers and utilities increasingly worried about huge bills, the Legislature quickly pushed through a law allowing ratepayer-backed bonds to pay for the natural gas bought on the pricey spot market. The Oklahoma Corporation Commission later approved separate utility applications allowing about $3 billion in bonds to pay back the fuel costs.

In separate court filings last month, Energy Transfer and Symmetry Energy offered similar reasons for Osage County District Judge Stuart Tate to either dismiss the cases or move them from Osage County.

Symmetry, a natural gas marketer, said the GRDA had no problems with its ongoing contract to supply natural gas to the public utility’s generation units before, during and after the storm. GRDA provides electricity to 24 counties, as well as several municipalities and electric cooperatives.

“Instead, the Attorney General of Oklahoma invoked his statutory power to file suit on behalf of a state agency that does not appear to share his concerns,” Symmetry’s attorneys said in a June 14 filing.

Drummond, who announced possible lawsuits from high natural gas prices last summer, has said repeatedly that Oklahoma utilities or state-based oil and gas companies were not to blame for the historic prices in February 2021. Symmetry’s filing called that a bogus distinction that ignores the realities of the energy industry. It asked the court to dismiss the case or at least move the dispute to the district court in either Mayes or Tulsa County.

“Though Symmetry serves the GRDA from its Tulsa office, it fell outside the Attorney General’s blanket absolution of Oklahoma companies because it is headquartered in Houston, Texas,” the filing said.

Symmetry said it turned over documents to former Attorney General Mike Hunter in 2021 after he announced an investigation into natural gas prices. His governor-appointed successor, John O’Connor, then said in early 2022 that he was dropping an investigation into possible price gouging. Symmetry said the statute of limitations has expired for now-Attorney General Drummond to bring complaints over natural gas prices.

“The public record leaves no doubt that the Attorney General actually investigated the allegations of this case, and obtained evidence from Symmetry in particular but chose not to file a timely lawsuit,” Symmetry’s attorneys said in their motion to dismiss.

In its response, Energy Transfer said Drummond was looking for a scapegoat after Oklahoma regulators, the state Supreme Court and the state’s former attorney general all blamed the record prices on extreme cold weather and the resulting shortage in natural gas supplies.

“Importantly, nowhere in any of the comprehensive findings of facts affirmed by the Oklahoma Supreme Court is ‘market manipulation’ by defendants identified as a cause of the increase in natural gas prices,” Energy Transfer attorneys said in a June 3 filing.

The attorney general’s office represented consumers in the securitization cases at the Corporation Commission and agreed to their resolution. O’Connor, who Drummond defeated in the GOP primary in 2022, was the attorney general at that time. In a rare rebuke, two Supreme Court justices criticized O’Connor for his lack of response to objections to the winter storm bonds when they were before the court for final approval.

Energy Transfer, in its filing, said the attorney general’s office could not now challenge the findings of the Corporation Commission or the Supreme Court regarding the causes of the natural gas price spike. The three-member commission approved the utility storm costs and ratepayer-backed bonds in 2-1 decisions, with Corporation Commissioner Bob Anthony voting against approval and repeatedly calling them bad deals for ratepayers.

“The state’s assertions that increased natural gas prices resulted from defendants’ conspiracy to exploit their alleged monopoly power, or from defendant’s alleged negligence in preparing for the storm, should be dismissed as inconsistent with binding prior determinations by the Commission and the Oklahoma Supreme Court that the extreme cold weather during Winter Storm Uri caused statewide supply issues and surging demand for natural gas, which were responsible for the increased prices,” the filing said.

Energy Transfer said its companies fulfilled their contractual obligations to transport and deliver natural gas to GRDA during the winter storm. Both GRDA and Energy Transfer understood the contract to be outside the jurisdiction of the Federal Energy Regulatory Commission. Energy Transfer said the contract calls for any dispute to be heard in Oklahoma County district court.

“In sum, GRDA voluntarily agreed to the terms that the state now alleges made it so ‘especially vulnerable,’” the filing said.

The Federal Energy Regulatory Commission has investigated possible price manipulation on interstate pipelines during the winter storm but so far has not requested any federal prosecutions. Oklahoma’s winter storm bonds include clawback provisions that benefit ratepayers if resolutions are reached in lawsuits or investigations about possible natural gas price manipulation.

A handful of other lawsuits related to the winter storm have been resolved. Oklahoma Natural Gas sued one of its gas suppliers, NextEra Energy Marketing LLC, in April 2021 over $6.9 million in disputed natural gas bills. The companies reached a settlement in early 2022 before going to trial.

A smaller regulated utility, Arkansas Oklahoma Gas Corp., won an $18 million judgment in May 2023 against global energy company BP over winter storm costs. The utility, which has 58,000 customers in eastern Oklahoma and Arkansas, said BP failed to provide the full amount of gas it had under contract during the storm. BP did not appeal the ruling in federal court.

Oklahoma Watch, at oklahomawatch.org, is a nonprofit, nonpartisan news organization that covers public-policy issues facing the state.