Oklahoma’s attorney general is pursuing potential legal action against parties that may have illegally profited off of huge demand for electricity and natural gas during 2021’s Winter Storm Uri, which led to nearly $2.9 billion of bonds being sold last year to cover extraordinary costs incurred by four utility companies.
AG Gentner Drummond announced Tuesday he may take legal action against various entities believed to be responsible “for market manipulation and other potentially unlawful conduct” related to the storm.
“As a result of the careful and diligent review of conduct during Winter Storm Uri, I discovered that several companies reaped billions of dollars at the expense of businesses and individuals who were suffering from the crippling effects of the storm,” he said in a statement. “Oklahomans can rest assured that I will do everything in my power as attorney general to return what was taken and hold accountable those responsible.”
The storm pummeled the Southwest with snow, ice, and high winds amid record low temperatures in February 2021. Public and private utilities were forced to pay sky-high prices for their natural gas and power purchases. In 2022, the Oklahoma Development Finance Authority sold four issues of taxable ratepayer-backed bonds for gas and electric utilities to cushion the blow to customers by spreading the costs over time.
A monetary recovery through successful litigation could ease the sting of higher charges on utility customers’ monthly bills to pay off those bonds, which are not callable and cannot be prepaid.
“The financing orders dictate that if there are any funds received or recovered from outside sources that those be allocated to the purchased gas clauses for each utility thereby reducing a customer’s bill,” Michael Davis, the Oklahoma Development Finance Authority’s president and CEO, said in an email.
In its Winter Storm Uri-related debt issue that priced in March, the Texas Natural Gas Securitization Finance Corporation included an optional limited make-whole redemption over the next three years to the $3.5 billion of taxable bonds for natural gas utilities. The call provision was added after Texas lawmakers signaled their intent to tap the state’s huge budget surplus to pay off all or some of the debt.
A supplemental appropriations bill passed by the legislature in May earmarked no money for the move.
Drummond told reporters he did not find any evidence Oklahoma utility companies benefited inappropriately during the storm.
“They simply bought at the market because they had a duty to buy at the market,” he said.
Drummond also said he plans to solicit proposals from outside law firms to pursue litigation.