The massive natural gas bills incurred during the Texas freeze have ignited a spate of lawsuits throughout 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 has sent power out for millions of Texans and knocked gas prices to their highest levels in years. Billions of dollars are collectively on the line; The lawsuits have laid bare the enormous pressure that financial fallout from the storm has put on natural gas suppliers and customers, including public utilities and others.
The majority of the suits are in Texas courts and involve some of the world's largest energy companies and traders, including Koch Industries Inc. BP PLC and Vitol. Some of the lawsuits allege that gas suppliers engaged in price gouging during the storm, overcharging utilities.
In turn, some suppliers such as ConocoPhillips are suing utilities and others for unpaid bills. Other lawsuits center on whether companies should be absolved of their contractual obligations to supply gas during parts of February when freezing temperatures close a large swath of Texas' energy infrastructure.
Legal analysts expect more suit filings 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 that caused a surge in demand for power and heat.
The freezed 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 have shot up almost 17,000% in some parts of the state. GET FOX BUSINESS ON THE GO BY CLICKING HERE.
Electricity prices also skyrocketed, and Texas electricity sales in a single week topped$ 46 billion, more than five times what the state spent in 2020.
This has led to huge bills for many 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 claimed more than a dozen gas suppliers were profiting from scarcity during a declared disaster.
Some were charging 15,000% more for natural gas than the prices of a prestorm, according to one of the lawsuits, which the CPS likened to paying$ 7,000 to refuel a car. CPS alleged that the charges, from vendors including affiliates of Chevron Corp. Vitol and Occidental Petroleum Corp., amounted to price gouging in violation of Texas law.
Of the roughly$ 670 million that CPS has spent on natural gas during the weather event, the utility is disputing roughly$ 527 million, said a CPS spokeswoman.
The bills in dispute are almost$ 257 million, which they were billed by two subsidiary of Pipeline Operator Energy Transfer LP. In a separate suit, ConocoPhillips alleged late last month that CPS still owes$ 19.6 million for gas after short paying invoices. What we believe is that this was one of Texas' worst points in history, as a transfer of wealth said Paula Gold-Williams in an interview.
When a natural disaster strikes, she said, the result ca n't be that prices become unconscionable. OPEC GOES UNCHECKED AS GAS PRICES GO USEAR$ 3 PER GALLON.
In a response filed in court last week, Energy Transfer said that CPS had sued gas suppliers in an attempt to divert attention from its own poor risk management and failure to prepare for high natural gas demand in a severe winter storm.
It said that CPS had exposed itself to the risk of volatile prices by choosing to buy natural gas on daily floating prices and had bid up prices for the supplies it needed alongside others in the market. Now that the bills are due, the CPS, as it seems to have been intended from the start, wants to shift the bag away and leave the political and regulatory fallout away from itself, the Energy Transfer units said in court papers.
Chevron said it correctly invoiced CPS, Vitol declined to comment and Occidental did not respond to request for comment.
Gas suppliers have also been hit with lawsuits for failing to deliver fuel during the storm. The utility Spire Missouri Inc. has filed lawsuits against three gas marketers and sought$ 135 million in damages for what it alleges were breaches of contract for failing to provide gas during the cold snap.
14 US states SUE BIDEN ADMINISTRATION OVER OIL AND GAS LEASING PAUSE. Another group of lawsuits relates to the declarations of force majeure in which companies cite a clause that absolves them of contractual commitments to supply gas due to unforeseen events.
Dozens of companies made similar declarations after the freeze.
A handful of suppliers to Koch Industries had force majeure following the storm, but say in separate lawsuits that the conglomerate has rejected those declarations. The suppliers say Koch is refusing to pay for the gas they do in some cases, and has argued that it is owed damages.
In five separate suits, EnLink Midstream and Chesapeake Energy Corp. have asked the Texas courts to certify their Force Majeure claims ARM Energy Management and Marketing Arms. CLICK HERE TO READ MORE ON FOX BUSINESS!
Koch, Chesapeake, Marathon, EnLink and ARM Energy Management declined to comment.
In another lawsuit, Macquarie Energy LLC told Exxon subsidiary XTO Energy Inc. that Targa refused to accept its notice of force majeure and Macquarie continued that it was owed$ 11.7 million to cover damages.
Macquarie said that due to the storm, XTO notified it of its own, separate force majeure on Texas gas supplies. Andrew Scurria and Alexander Gladstone declined to comment; Exxon and Macquarie added to this article.