WASHINGTON (AP) – Democratic senator calls for federal investigation into possible natural gas price spill in Midwest and other regions after severe winter storms plunge Texas and other states into deep frosts that have disrupted power outages in millions of homes and companies.
Minnesota Sen. Tina Smith says spot gas prices have risen up to 100 times regular levels, forcing utilities and other gas users to incur exorbitant costs, many of which have been passed on to customers.
In a letter to federal regulators on Saturday, Smith said price increases would not only affect consumers, but could “threaten the financial stability of utility companies that do not have enough cash reserves to cover their costs.” short in this extraordinary event ”. The letter was sent to the Department of Energy, the Federal Energy Regulatory Commission and the Commodity Futures Trading Commission. A copy of the letter was obtained by The Associated Press.
Extreme weather it spurred residents of Mississippi to Minnesota to turn on electric heaters and pushed electricity demand beyond the most unfavorable scenarios planned by network operators. At the same time, many gas-fired power plants in Texas and other states have been taken offline due to freezing conditions, and some plants appear to be short of fuel as natural gas demand has increased nationally.
More than 70 deaths in the United States have been blamed for storms.
In Winfield, Kansas, the city manager reported that a gas unit that sold for about $ 3 earlier this month sold for more than $ 400 on Thursday. Taggart Wall manager told KWCH-TV in Wichita that Winfield, which budgets about $ 1.5 million a year for natural gas, expects to pay about $ 10 million just last week. Residential customers could see bills of up to $ 2,500 this month, he said.
In Morton, Illinois, officials reported that gas sold for about $ 3 per unit normally cost nearly $ 225 this week as demand increased due to frost.
While officials do not know all the details of what happened or exactly how it will affect utility tariffs, “we know this could be a significant financial burden for utilities and their customers,” especially as families in Minnesota and The whole country is struggling with the coronavirus pandemic and the economic downturn, Smith said.
The Minnesota Public Utilities Commission convened a special meeting Tuesday to investigate what caused the dramatic rise in gas prices in that state.
A spokeswoman for the Federal Energy Regulatory Commission, known as FERC, said the agency would review Smith’s letter and “respond in a timely manner.”
A spokesman for the American Gas Association, which represents more than 200 local energy companies, said February 14 and 15 set a record for the highest demand for natural gas in U.S. history over a two-day period.
While gas utilities have faced “unprecedented challenges” and “spot prices have risen in some regions due to rising demand, households and businesses using natural gas have been protected from higher prices by carefully planning their utilities. “said Jake Rubin, a spokesman for the gas association. Most utilities in the gas sector use long-term contracts that aim to guarantee sufficient supply to meet demand and block affordable prices, he said.
However, exorbitant price increases were recorded on the spot market. Natural gas hit a record $ 600 per million British thermal units in Oklahoma, while Missouri Gov. Mike Parson said he had asked the state attorney general to investigate complaints about a reduction in the price of natural gas in that state.
Smith, in a letter to regulators, urged them to investigate gas market conditions over the past week, including any price spikes by gas producers and suppliers.
“A public report should detail what happened, make recommendations to prevent such problems in the future and determine whether the laws have been violated,” 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 drop in cash or rate hikes as a result of rising gas prices,” Smith said.
The White House announced Saturday that the president has declared a major disaster in Texasand called on federal agencies to identify additional resources to address the suffering.