Democratic senators called for a federal investigation into natural gas price fraud in the Midwest and other regions, after severe winter storms plunged Texas and other states into deep freezing, causing millions of homes and businesses to lose power.
Senator Tina Smith of Minnesota said that natural gas spot prices have soared to 100 times the typical level, forcing utilities and other natural gas users to bear high costs, many of which have been passed on to customers.
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Smith said in a letter to federal regulators on Saturday that price increases will not only harm consumers, but also “may undermine the financial stability of some utility companies that do not have sufficient cash reserves to cover their short-term costs.”
The extreme weather spurred residents from Mississippi to Minnesota to add electric heaters, causing electricity demand to exceed the worst-case scenario planned by the grid operator. At the same time, many natural gas power plants in Texas and other states were shut down due to icy conditions, and some power plants appeared to suffer from fuel shortages due to the surge in natural gas demand across the country.
More than 70 people died in the storm across the United States.
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In Winfield, Kansas, city managers reported that natural gas units sold for about $3 earlier this month were sold for more than $400 on Thursday. City manager Taggart Wall said on KWCH-TV in Wichita that Winfield has an annual budget of approximately US$1.5 million in natural gas costs, and he expects to pay approximately in the past week alone. 10 million US dollars. He said that the bill for residential customers this month could be as high as $2,500.
In Morton, Illinois, officials reported that due to a deep freeze and a surge in demand, the price of natural gas, which is usually sold at $3 per unit this week, is close to $225.
Although officials do not know all the details of what happened or how it will affect utility rates, “we do know that this situation may cause a huge financial burden on utilities and their customers”, especially in Family Smith in Minnesota and across the country said they are struggling with the coronavirus pandemic and economic downturn.
The Minnesota Public Utilities Commission held a special meeting on Tuesday to investigate the cause of the sharp increase in natural gas prices in the state.
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A spokesperson for the Federal Energy Regulatory Commission (FERC) said that the agency will review Smith’s letter and “respond in due course.”
A spokesperson for the American Natural Gas Association, which represents more than 200 local energy companies, said that February 14-15 set the record for the largest natural gas demand in two days in American history.
Jake Rubin said that although natural gas utilities are facing “unprecedented challenges” and “due to the surge in demand and spot prices in certain areas, households and businesses that use natural gas have been carefully planned by the utility. Protect from rising prices.” He said that most natural gas utility companies use long-term contracts that are designed to ensure that there is enough supply to meet demand and lock in affordable prices.
Despite this, the spot market still recorded excessive price increases. In Oklahoma, natural gas prices reached a record $600 per million British thermal units, and Missouri Governor Mike Parson said he has asked the state attorney general to investigate complaints of gas price fraud in the state .
In a letter to the regulator, Smith urged the regulator to investigate the state of the natural gas market in the past week, including any price fraud by natural gas producers and suppliers.
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She said: “Public reports should detail what happened, make recommendations to prevent such problems in the future, and determine whether the law has been violated.” Smith also urged officials to cite including the Natural Gas Policy Act and the National Defense Production Act. Emergency authorities within the country to ensure that natural gas is sold at a fair price during the current crisis.
Smith said that the Biden administration and Congress should consider providing financial support to utilities and customers, “due to the soaring natural gas prices, they may face a cash crunch or rising rates.”
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The White House announced on Saturday that the president declared a major disaster in Texas and he has asked federal agencies to look for more resources to solve this suffering.