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CPS Energy says natural gas suppliers it sued over winter storm pricing now playing ‘hardball’

Companies being sued by CPS Energy over their charges for supplying natural gas during February’s winter storm are playing “hardball” and “don’t want to supply us,” the utility’s CEO said.

Paula Gold-Williams called Dallas-based pipeline company Energy Transfer the utility’s “biggest adversary” in its fight to pare down storm-related charges. City-owned CPS has alleged the company raised prices for gas supplied during the storm by 15,000 percent.

And since CPS filed suit, Gold-Williams said, Energy Transfer has canceled a contract for supply.

“The way that they’ve cut us off from certain opportunities, they’re probably our biggest challenge,” she said. “We want to continue to let this one issue be something we fight in court, but make sure that the supply (of gas) is not restricted, because that’s not good for Texas, and that’s not good for the end customer.”

Gold-Williams’ comments, made during a meeting this week with the San Antonio Express-News Editorial Board, ratcheted up tensions between CPS and one of its biggest natural gas suppliers.

“CPS is trying to play politics and place blame on others,” Energy Transfer co-CEOs Tom Long and Mackie McCrea said in a statement. “They are now diverting the spotlight from their reckless and incompetent actions to avoid paying their bills.”

In all, CPS has filed suit in state District Court in Bexar County against 17 energy companies for allegedly price gouging the utility for natural gas it received during the weeklong winter storm.

Other gas suppliers also are retaliating against the utility for its lawsuits, CPS officials said Thursday, but Energy Transfer has been the most aggressive by canceling the contract.

CPS said Energy Transfer terminated its contract shortly after the storm, saying it would not enter into additional contracts. The company is also declining to perform “related services” it typically offers, CPS said.

Energy Transfer declined to comment on “opportunities” the company may have cut CPS Energy out of. Neither did it address whether the company is refraining from selling natural gas to CPS because of the litigation.

Despite Energy Transfer allegedly declining to do business with CPS while the lawsuits are playing out, the utility’s officials said they are able to secure enough supply.

Natural gas was hard to come by statewide during February’s deep freeze as wellheads, pipelines and other natural gas equipment seized up. At the same time, utilities across the state were competing for gas to fuel their power plants and heat homes.

CPS has said natural gas traded in early February between $2.50 and $3 per unit of gas. But as the storm took hold in Texas, it said, companies such as Energy Transfer and others raised their prices by several thousand percent. Suppliers at times charged CPS more than $400 per unit of gas, the utility said in its complaints.

Two Energy Transfer subsidiaries, Oasis Pipeline and Houston Pipe Line Co., charged CPS a total of $308 million for natural gas the utility bought in mid-February. That is by far the largest charge from any one company being disputed by CPS in its lawsuits.

The utility’s second-highest bill for natural gas was from British Petroleum, which charged CPS $25 million.

Energy companies have argued that they don’t set the price for natural gas. Rather, it is set by what market participants such as CPS are willing to pay. And during the storm, gas suppliers have argued, CPS bid against other power companies for natural gas and helped drive up the price. The utility also fully knew the price it was agreeing to and still carried out the transactions, Energy Transfer said.

“They were not obligated to purchase any gas from us,” Long and McCrea said. “It now seems evident that CPS agreed to prices and received the gas with no intention of honoring the agreement.”

In its quarterly earnings report this month, Energy Transfer said it made $2.4 billion in profits during the storm.

The company said it spent $1.5 billion over the past three years preparing its gas delivery systems for spells of intense weather. The profits Energy Transfer reaped were a product of “a significant amount of both long- and short-term preparation,” Long said in the May 7 earnings call with analysts.

On CPS Energy lawsuits face slim chances of victory, raising specter of rate hike

Still, Gold-Williams said massive price increases for gas were “unconscionable” to impose amid an emergency.

However, experts have said the price gouging protection law that CPS invoked in its lawsuits is not applicable to natural gas sales, which aren’t governed by consumer protection laws.

CPS has tried to link a decision that the state’s electricity grid operator, the Electric Reliability Council of Texas, made during the storm to the rise in natural gas prices.

Read More: CPS Energy says natural gas suppliers it sued over winter storm pricing now playing ‘hardball’

2021-05-20 02:00:00

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