WASHINGTON (AP) – A Democratic senator is calling for a federal investigation into possible natural gas price gushes in the Midwest and other regions after severe winter storms that plunged Texas and other states into a deep freeze that caused power outages in millions of homes and businesses.
Minnesota Senator Tina Smith says spot natural gas prices have risen up to 100 times normal levels, forcing utilities and other natural gas users to incur exorbitant costs, many of which have been passed on to customers.
In a letter sent to federal regulators on Saturday, Smith said the price spikes will not only hurt consumers, but could also “harm the financial stability of some utilities that do not have enough cash reserves to cover their short-term costs in this extraordinary event.” threaten. The letter has been sent to the Energy Department, the Federal Energy Regulatory Commission and the Commodities Futures Trading Commission. A copy of the letter was obtained by The Associated Press.
The extreme weather urged residents from Mississippi to Minnesota to turn on electric heaters and pushed electricity demand beyond the worst-case scenarios planned by the 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 seemed to suffer from fuel shortages as demand for natural gas increased across the country.
More than 70 deaths in the US are due to the storms.
In Winfield, Kansas, the city official reported that a unit of natural gas 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 puts out about $ 1.5 million a year for natural gas, expects to pay about $ 10 million in the past week alone. Retail customers could see bills go up to $ 2,500 this month, he said.
In Morton, Illinois, officials reported that gas that normally sells for about $ 3 per unit costs nearly $ 225 this week as demand spiked due to the freezer.
While officials do not know all the details of what happened, nor exactly how it will affect energy tariffs, “we do know that this situation can be a significant financial burden on utilities and their customers,” especially as families in Minnesota and it country-wide struggles in the coronavirus pandemic and economic downturn, Smith said.
The Minnesota Public Utilities Commission called a special meeting on Tuesday to investigate what was causing 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 spokesperson for the American Gas Association, which represents more than 200 local energy companies, said it set a record February 14-15 for the highest demand for natural gas in US history over a two-day period.
While natural gas companies faced “unprecedented challenges” and “spot prices rose in some regions due to spikes in demand, households and businesses using natural gas were protected from higher prices by the careful planning of their utilities,” said Jake Rubin, a spokesman. . for the gas association. Most natural gas companies use long-term contracts that try to guarantee enough supply to meet demand and to secure affordable prices, he said.
Yet 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 has asked the state attorney general to investigate complaints about natural gas price gouging in that state.
Smith, in her letter to regulators, urged regulators to investigate conditions in the natural gas market over the past week, including any price increases by natural gas producers and suppliers.
“A public report should detail what happened, make recommendations to prevent such problems in the future, and determine whether laws have been broken,” she said. Smith also urged officials to enlist 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 government and Congress should consider providing financial support to utilities and customers “who may be facing a cash crisis or tariff increases as a result of the spike in natural gas prices,” Smith said.
The White House announced on Saturday that the president had declared a major disaster in Texas, and he has asked federal agencies to identify additional resources to address the suffering.