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WASHINGTON (AP) – A Democratic senator calls for federal inquiries into a possible rise in natural gas prices in the Midwest and other areas following severe winter storms that have 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 prices for natural gas have reached 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 would not only hurt consumers, but could “threaten the financial stability of some utilities that do not have sufficient cash reserves to cover their short-term costs. term in this extraordinary event ”. The letter was sent to the Department of Energy, the Federal Energy Regulatory Commission and the Commodities Futures Trading Commission. A copy of the letter was obtained by The Associated Press.
Extreme weather prompted residents of Mississippi, Minnesota to turn up electric heaters and pushed demand for electricity beyond the worst-case scenarios predicted by network operators. At the same time, many gas-fired power plants in Texas and other states were taken offline due to the frigid conditions, and some factories appeared to be suffering from fuel shortages as demand for natural gas increased across the board. national.
More than 70 deaths across the United States have been blamed on the storms.
In Winfield, Kansas, the city manager reported that a unit of natural gas that sold for about $ 3 earlier this month sold for over $ 400 on Thursday. City manager Taggart Wall told KWCH-TV in Wichita that Winfield, which has a budget of around $ 1.5 million a year for natural gas, expects to pay around $ 10 million. for the last week only. Residential customers could see bills as high as $ 2,500 this month, he said.
In Morton, Ill., Officials reported that gas normally sold for around $ 3 a unit cost nearly $ 225 this week, with demand skyrocketing due to the freeze.
While officials do not know all the details of what happened, or precisely how it will affect utility prices, “we do know that this situation could represent a significant financial burden on utilities and their customers.” especially as families in Minnesota and across the country battling the coronavirus pandemic and the economic downturn, Smith said.
The Minnesota Utilities Commission called a special meeting on Tuesday to investigate the causes of 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 February 14 and 15 set a record for the largest natural gas demand in U.S. history on a two day period.
As natural gas utilities faced “unprecedented challenges” and “spot prices soared in some areas due to spikes in demand, families and businesses that use natural gas have been protected. of rising prices through careful planning of their utilities, ”said Jake Rubin, a spokesperson. for the gas association. Most natural gas utilities use long-term contracts that aim to ensure sufficient supply to meet demand and set 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 Gov. Mike Parson said he asked the state attorney general to investigate natural gas price complaints in that state.
Smith, in his letter to regulators, urged them to investigate natural gas market conditions over the past week, including any price increases by natural gas producers and suppliers.
“A public report should detail what happened, make recommendations to avoid such problems in the future and determine whether laws have been broken,” she said. Smith also urged officials to invoke 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 administration and Congress should consider financial support for utilities and customers “who may be facing a cash flow crunch or tariff increases due to soaring natural gas prices,” Smith said.
The White House announced on Saturday that the president has declared a major disaster in Texas, and he called on federal agencies to identify additional resources to deal with the suffering.
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