Some of the natural gas suppliers sued by Oklahoma Attorney General Gentner Drummond following the 2021 winter storm Uri that resulted in historic national high gas prices in Oklahoma, recently won a Federal Appeals Court challenge made by several Kansas residents who also experienced high gas prices during the storm.
The Tenth U.S. Circuit Court of Appeals threw out class-action lawsuits from Kansas residents over “exorbitant” price increases by natural gas suppliers during the storm. The court ruled their claims made under Kansas consumer protection laws were preempted by the federal Natural Gas Act.
The recent court ruling involved five class-action lawsuits against natural gas producers and suppliers. Regional distributors Kansas Gas Service, Kansas Municipal Gas Agency, Black Hills, Midwest Energy and Atmos Energy Corporation were not sued.
The lawsuits arose after natural gas prices in early February 2021 rose from$2.545 and $2.580 MMBtu to as high as $622.785 MMBtu or 20 times the 15-year peak. Oklahoma experienced even higher prices, according to a lawsuit filed in Oklahoma.
The Oklahoma filing continued, “On February 18, the Gas Daily ONEOK index stood at $1,193.16/MMBtu. One day later, it fell to approximately $13/MMBtu – a 99% drop overnight. The weather did not improve by 99% in one day. What changed was that the emergency ended, and when that window closed the prices collapsed to ordinary trading ranges.”
When the five distributors in Kansas deferred the costs for their natural gas purchases and shifted them to consumers, the Kansas Corporation Commission approved long-term payments, just as the Oklahoma Corporation Commission did. KGS and Atmos received KCC approval of a ten-year repayment window while Black Hills had a five-year term. Midwest Energy recovered its charges from consumers over a two-year period.
The Federal Energy Regulatory Commission’s Office of Enforcement investigated the wholesale transactions to determine if market manipulation or other misconduct occurred but its probe did not result in any enforcement action.
The appeals court in Denver determined that the improper conduct challenged by the consumer plaintiffs involved interstate wholesale transactions within the exclusive jurisdiction of FERC under the National Gas Act. The rates charged by the wholesalers are not regulated under the Kansas Consumer Protection Act but by “the Federal Energy Regulatory Commission (FERC) under the Natural Gas Act (NGA),” wrote the judges.
“Finally, we note that the field preemption of Plaintiffs’ suit does not suggest that the NGA preempts the KCPA—or any other generally applicable state statute— in its entirety. The problem for Plaintiffs is that the specific theory of their lawsuit improperly extends the KCPA into FERC’s jurisdiction,” ruled the court.
Below is the list of some of the firms named in the lawsuit.
BP CANADA ENERGY MARKETING
CORP.; BP ENERGY COMPANY;
MACQUARIE ENERGY, LLC;
TENASKA MARKETING VENTURES;
SOUTHWEST ENERGY, LP;
MERCURIA ENERGY AMERICA, INC.,
SOUTHWEST ENERGY, L.P.;
NEXTERA ENERGY MARKETING,
LLC; MACQUARIE ENERGY, LLC;
SPOTLIGHT ENERGY, LLC;
WILLIAMS ENERGY RESOURCES,
LLC; CIMA ENERGY, L.P.; TENASKA
MARKETING VENTURES; CONCORD
ENERGY, LLC,
In March of this year, Attorney General Drummond asked for summary judgment in the lawsuit he filed in Osage County District Court. His request came nearly three years after he accused energy companies of reaping billions of dollars illegally from the 2021 Winter Storm Uri.
Drummond said the facts are clear, NextEra Energy profited from the sale of natural gas during the 2021 Winter Storm Uri and did so in violation of Oklahoma state law.
When he eventually filed suit, many of the defendants were the same as in the Kansas lawsuit just thrown out by the 10th Circuit Court of Appeals.
BP ENERGY COMPANY, Defendant
CONSTELLATION NEWENERGY-GAS DIVISION, LLC, Defendant
SYMMETRY ENERGY SOLUTIONS, LLC,, Defendant
TENASKA MARKETING VENTURES, Defendant
MACQUARIE ENERGY L.L.C, Defendant
SWE MANAGEMENT, LLC, Defendant
CHEVRON U.S.A. INC., Defendant
SPIRE MARKETING, INC, Defendant
ETC MARKETING INC.’, Defendant
NEXTERA ENERGY MARKETING, LLC, Defendant
SEQUENT ENERGY MANAGEMENT, Defendant
SOUTHWEST ENERGY CORPORATION, Defendant
TENASKA GAS STORAGE, LLC, Defendant
TENASKA, INC., Defendant
ETC MARKETING LTD, Defendant
SOUTHWEST ENERGY, L.P., Defendant
CHEVRON NATURAL GAS SERVICES INC., Defendant
