State investigation into alleged natural gas price manipulation

NEW HAVEN, Conn. (WTNH)– The State is investigating serious allegations brought to light by the Environmental Defense Fund, alleging that Eversource and Avangrid reserved more natural gas for their home heating customers than they needed, and passed the costs onto customers.

Elin Katz with Consumer Counsel said, “The report alleges that because of this practice natural gas prices were unnecessarily high during this cold spell and because natural gas is the primary feed stock for electric generation that in turn raised electric prices.”

The report also alleges it had an impact of 3.6 billion dollars on electric customers over a three year period. Public Utilities Regulatory Authority, or PURA, opened the investigation, and the consumer counsel is looking into it.

Katz added, “It could be that this is a business practice that was recommended, required essentially that has an inadvertent effect, it could be a business practice that didn’t have any impact at all or was perfectly appropriate or this could be a business practice that perhaps as the report alleges was intentionally designed to raise gas prices.”

Web Extra: Read the full statement from Counsumer Counsel Katz on EDF report

A statement from Avangrid Inc. reads in part, “Our gas supply portfolios and our gas pipeline contracts are consistent with industry standards nationwide.”

Web Extra: Read the full statement from Avangrid in reaction to the EDF report

Eversource said the report is a “complete fabrication.” The company added, “We are confident that any review would demonstrate that we are always acting in the best interest of our customers and communities.” The Northeast Gas Association called the report a “profoundly misleading and inaccurate analysis.”

Mitch Gross, Eversource Media Spokesperson issued the following statement in reaction to the EDF report.

We are confident that any review would demonstrate that we are always acting in the best interest of our customers and communities. This “report” is a complete fabrication as evidenced by the lack of credibility it has received in the industry. The underlying concept is not only false and misleading, but concerningly irresponsible as it lacks any understanding of how gas procurement actually works. Our gas distribution business is carefully regulated and the gas supply we purchase for our customers is a strict pass through cost – meaning we don’t benefit from higher prices derived from withholding. This is well understood in the industry and is further evidence that the report is not credible. We do not engage in any behavior to ‘artificially constrain capacity.’ Our focus and actions are driven by our responsibility to ensure our customers have enough gas – we can’t run the risk that they are left in the cold.

Web Extra: Read the full statement from the Northeast Gas Association in reaction to the EDF report

People said they aren’t shocked about the alleged findings. Paul Cubeta said, “It’s real high. Everything is changing. It is outrageous but what can we really do about it.” Scott Roberts added, “We are just small people and these guys are the ones trying to make money and they are trying to get the lion share of the business.”

Senator Richard Blumenthal is urging the Federal Energy Regulatory Commission to investigate.

While the motive remains unclear, I urge FERC to immediately investigate allegations of over withholding of natural gas by these companies in Connecticut, and if it is found that market manipulation has occurred, FERC should expeditiously order a ban or other appropriate restriction on this practice and ensure that affected consumers are swiftly and fully compensated. Additionally, I request that you examine any specific pricing policies that may have encouraged such market behavior and recommend policy changes that can be enacted to prevent this occurrence from continuing in the future.”

The consumer counsel told News 8 the report is concerning. Katz added, “We are taking it very seriously. We are going to fully participate in the PURA docket but for now I think consumers should feel comfortable that there are lots of responsible parties that are looking into this who have been and will continue to monitor the gas markets.”

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