In March, just after Texas’ devastating winter blackout that killed hundreds, Attorney General Ken Paxton sued a La Quinta in San Antonio for alleged price gouging, declaring that “gross exploitation of Texans” would not be tolerated.
“Companies looking to profit from this tragic event that left millions of Texans without power or water will be aggressively investigated and prosecuted,” Paxton said in a press release.
He accused the motel of taking advantage of surging demand for lodging by charging “exorbitant prices” for rooms. How exorbitant? Triple the normal rates, according to the release.
Just triple. If only Texans had been so lucky when it came to natural gas prices, which soared 100 times their regular level during the freeze.
So why aren’t Paxton and Gov. Greg Abbott decrying that exploitation? Why aren’t they firing off press releases and filing lawsuits against natural gas pipeline companies and traders who made billions profiting from Texans’ desperation after Winter Storm Uri?
Because unlike $199 motel rooms and $11 gallons of milk, wholesale electricity prices of $9,000 per megawatt hour were not a quirk of the system but a function.
The companies did exactly what Texas’ deregulated electricity market allows them to do: ramp up production to meet surging demand during a crisis situation and collect handsomely from sky-high emergency pricing.
Call it state-sanctioned exploitation. Call it price-gouging by design. Call it, as San Antonio Mayor Ron Nirenberg put it, “the most massive wealth transfer in Texas history.”
No matter what you call it, it’s a bad deal for Texans who will foot the bill for many years to come on the $3.6 billion in natural gas costs incurred by utilities for one week in February.
Windfall profits included $2.4 billion for Energy Transfer of Dallas, $1.1 billion for Kinder Morgan of Houston and more than $1 billion for BP from its natural-gas trading business, according to the Chronicle’s Paul Takahashi, citing company filings and analyst estimates.
So, other than the zeroes, how is Energy Transfer’s $2.4 billion so different from a motel’s inflated $199 room rate during peak demand?
Some litigants and energy experts claim it isn’t. They point to a section in Texas law that deals with deceptive trade practices which prohibits people during an official disaster from taking advantage of others by selling necessities — including food, lodging and yes, fuel — “at an exorbitant or excessive price.”
But it would seem that the spirit of the law was intended for those acting deceptively and it’s a stretch to argue that a company doing what the law allows, and in fact encourages it to do, is acting deceptively. Unless, of course, utility plaintiffs suing some of these gas companies can prove they purposely withheld gas supplies in order to artificially inflate prices.
There hasn’t been any compelling evidence of that thus far, and it’s important to note that companies such as Energy Transfer made the investments they should have to keep producing during the storm when others were sidelined by frozen facilities and equipment. We’ll leave it for the courts to hash out whether any wrongdoing took place.
But what is deceptive is the way in which Abbott and lawmakers pretend they’ve fixed an electric grid that’s still vulnerable to collapse and lacking an adequate cushion of supply during crisis.
What’s deceptive is our leaders crowing about new weatherization requirements to prevent facilities from freezing again — and then slyly carving out loopholes for a gas industry whose executives are generous campaign contributors to Abbott and other Republicans in control.
What’s deceptive is the idea that Texas’ independent electric grid, cut off from the rest of the country, is somehow saving Texas ratepayers money or providing us with more reliable energy than other states.
We are hypocrites if we ever cast another condescending glance over at California during a blackout there. The Texas grid during Winter Storm Uri came within minutes of total collapse. The widespread blackouts across the Lone Star State were 500 times worse than those affecting California during the 2020 wildfires, Bloomberg reported.
Another tragedy from the storm, besides the loss of life and economic losses, is that ordinary Texans, even those who couldn’t turn on the heat for days during the storm, must pay for the billions in profits to a rich industry only made richer by our misery.
In the Houston area, more than 1.8 million CenterPoint Energy ratepayers are responsible for the $1.14 billion natural gas bill the utility racked up when it was forced to buy energy at astronomical prices.
The average natural gas bill in the Houston area — about $30 — could go up by $2 to $5 a month starting next year if CenterPoint is allowed to use state-issued bonds to finance what it owes, Takahashi reported, noting that it could shake out to $60 more per year for each ratepayer over the next decade.
But if the Texas Railroad Commission rejects CenterPoint’s financing request, the utility could charge customers fees of between $15 and $40 per month over the next year, which could add $480 to Houstonians’ gas bills for the year.
That’s exploitation if we ever saw it — but mostly by state officials who are perfectly comfortable fleecing Texans’ pockets as long as they can line theirs with campaign contributions from a grateful industry.
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August 05, 2021 at 03:03PM
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Editorial: Bitter chill, bitter bill. Why are Texans paying for billions in industry profits from winter storm? - Houston Chronicle
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