As Texas Blackout Gas Bills Come Due, States Consider Action

June 28, 2021

Texas’ famously “free Market” energy grid, ERCOT, may have failed to deliver light and heat during the historic Valentine’s Day freeze of 2021, but in terms of delivering billions of dollars of windfall profits to Gas Barons, it worked exactly as planned. Now, sadly, and, I’m sorry, a bit hilariously as well, reliably rock-ribbed Republicans in Kansas, Oklahoma, Missouri and Arkansas are saying “wait a minute..”.

Wall Street Journal:

An angry backlash is building across the middle of the U.S. as states step in to help their constituents pay billions of dollars in natural-gas bills racked up during February’s freeze.

While most escaped the blackouts that occurred in Texas, states from Minnesota to Kansas are having to help local utilities, businesses and homeowners cover February bills after natural-gas prices surged from around $2 per million British thermal units to as much as $1,200 in parts of the country.

Lawmakers and regulators in Minnesota, Oklahoma, Missouri, Arkansas and Kansas have called for investigations into market manipulation and are exploring regulatory changes. Republican and Democratic leaders in some of the states said it may be time to reconsider whether interstate gas markets, deregulated since the 1980s, need greater federal oversight to prevent a similar economic calamity from happening again.

The February storm caused wellheads and pipelines to freeze in Texas and other gas-producing states, crimping supplies just as millions of customers cranked up the heat. The effects were felt far from the Lone Star State, leaving many homeowners and businesses with monthly bills hundreds or even thousands of times as large as usual.

In Oklahoma City, the Villagio senior living center received a February gas bill of $44,527—about 50 times more than the month before—from its gas marketer, Constellation, a subsidiary of Chicago-based Exelon Corp. EXC 0.88%

“It was shocking, and it has an impact on residents, on things we were going to do,” said Tyler Gable, a representative of the assisted-living facility’s owner, Blackwood, which is contesting the bill. A Constellation spokesman said it was working with Villagio and similar business customers on deferred payment plans.

Oklahoma regulators said the weeklong freeze generated as much as $5 billion in gas bills there. That has left some lawmakers in the reliably Republican state to call for further regulation of natural-gas producers, one of the most influential industries in Oklahoma.

“I cannot for the life of me understand how we saw it go from $2 to $1,200 and back down to $2 in the span of the week; that’s not real,” said Garry Mize, a Republican who is chairman of the utilities committee in Oklahoma’s House of Representatives. referring to natural-gas prices. “It’s hard on a political level because you’d like to believe that free markets work all the time.”

Mr. Mize helped draft legislation signed into law in April that will allow utility companies to stretch the impact to customers over 10 years by securitizing rate payments and selling them as bonds. Without the measure, he estimated that ratepayers who normally pay an average bill of $100 a month would have seen bills for February reach around $1,900.

He said the U.S. Congress might need to consider additional changes to prevent runaway prices, such as setting a federal cap or creating a market circuit breaker, akin to what stock exchanges use to halt irregular trading.

The Federal Energy Regulatory Commission, which regulates the transmission and wholesale of natural gas in interstate commerce, has opened an investigation into potential market manipulation during the freeze. At least four state attorneys general are looking into the matter. FERC can punish companies for rate changes it determines weren’t just or reasonable.

A FERC spokeswoman declined to comment.

3 Responses to “As Texas Blackout Gas Bills Come Due, States Consider Action”

  1. Brent Jensen-Schmidt Says:

    This situation is, politely, unbelievable. Talk about oil BARONS. One could fill the page with other terms.

    • rhymeswithgoalie Says:

      It’s very believable to me. It takes a while after people move to Texas to realize just how much state government caters to the awl and gas bidniz.

      They refuse to rename The Railroad Commission to keep the apolitical from realizing that it primarily acts to buffer oil and gas companies from regulation.

  2. rhymeswithgoalie Says:

    “It’s hard on a political level because you’d like to believe that free markets work all the time.”

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