Oklahoma Attorney General Gentner Drummond recently promised the “largest lawsuit in state history” if natural gas marketers manipulated the trading market during a massive winter storm that hit the central United States in February 2021.

Ratepayers of the state’s top investorowned utilities are paying billions of dollars in higher bill surcharges for decades stemming from natural gas purchased during Winter Storm Uri. Prices in the trading hub covering Oklahoma spiked from $2 a unit to almost $1,200 during the storm.

Drummond said his office plans to contract with outside law firms to help with a possible lawsuit against market manipulators. He said none of the blame for the higher natural gas prices lay at the feet of either Oklahoma’s oil and gas industry or the utilities buying the fuel for heating and electricity generation.

“Here in Oklahoma families and businesses suffered greatly and they are still suffering, paying the prices in the form of higher utility rates. It’s important to understand our oil and gas industry is not to blame. It is equally important to understand that our utility companies are not to blame,” Drummond said. “But make no mistake: There are indeed guilty parties who are to blame.”

The attorney general said he wants law firms to submit bids to the state by the end of the month for help in the investigation.

“After careful and diligent review of the conduct during Winter Storm Uri, It’s clear to me that several companies reaped billions of dollars at the expense of Oklahoma families and businesses,” Drummond said. “The magnitude of this scheme is staggering and unconscionable. The conduct in question is well outside the parameters and boundaries of ordinary capitalism.”

Mike Hunter, the attorney general during the 2021 storm, contracted with a Dallas law firm to look at allegations of price gouging in the weeks following the storm. But that investigation lost steam after he resigned from office amid revelations of an affair during his reelection campaign.

Hunter’s governorappointed successor, John O’Connor, did not pursue the matter any further. Drummond beat O’Connor in last year’s GOP primary and easily cruised to election in November against a Libertarian candidate.

Ratepayer-backed bonds

Rather than recover the cost of natural gas right away, Oklahoma’s biggest utilities settled on ratepayer-backed bonds to spread the enormous costs over several years. That involved selling bonds to private investors, with the proceeds going to the utilities to pay for the fuel costs. Bondholders are being paid back with monthly surcharges on customer bills for decades for not only the fuel costs, but interest payments.

AARP Oklahoma, which frequently intervenes in rate cases at the Oklahoma Corporation Commission on behalf of its members, said utility customers remain saddled with the costs for a generation.

“The companies who reaped billions of dollars on the backs of hardworking Oklahomans must be held accountable,” said Sean Voskuhl, AARP state director. “Oklahoma utility customers want action to be taken against the companies who bilked customers out of billions of dollars in a matter of days during Winter Storm Uri and further demand the recovered funds are returned to customers immediately.”

Oklahoma’s three elected corporation commissioners said Tuesday they welcomed a possible lawsuit by Drummond. But they remain split over whether the Corporation Commission should have done more as it reviewed fuel costs and the ratepayer-backed bonds when they came before the regulatory agency.

Longtime Commissioner Bob Anthony said the commission “refused to do its duty and protect ratepayers from fraud and market manipulation.”

Fellow Commissioners Todd Hiett and Kim David said investigations into possible market manipulation should be handled by the federal government or the attorney general.

“It is important to note that commission orders on fuel cost recovery from Uri require utilities to apply savings that result from future federal or legal actions to reduce customers’ bills,” said Chairman Todd Hiett.

Kansas is Suing Gas Trader

Drummond’s announcement comes several months after Kansas Attorney General Kris Kobach filed a lawsuit against a natural gas marketer, Macquarie Energy LLC over trades during the 2021 winter storm.

Macquarie, a subsidiary of an Australian bank, also sold $154 million in natural gas to Oklahoma Natural Gas, Oklahoma Gas & Electric Co. and Public Service Co. of Oklahoma during the storm. Those three utilities spent more than $2 billion on natural gas during the week-long storm, far outstripping their natural gas purchases for the entire previous year.

Drummond said he’s willing to work with attorneys general in other states but his focus remains on the fallout for Oklahoma consumers.

“We’ve done the initial investigation extensively, and now it’s time for research and gathering of evidence proposals from outside counsel,” Drummond said.

Oklahoma’s utilities have maintained that they were at the mercy of the market during the price spikes of February 2021. Since the storm, OG&E and PSO have upgraded some equipment, changed how they buy natural gas and put more gas into storage.

In a statement on Tuesday, OG&E said it welcomed Drummond’s investigation and any attempts to claw back costs on behalf of customers.

“Uri was a once-ina- generation winter storm, and we are proud that we preserved customer health and safety by keeping the heat and lights on,” OG&E said in the statement. “To protect our customers from natural gas price volatility to the extent we can, OG&E continues to source fuel at the lowest available cost for our customers.”

Chad Previch, public relations manager for Oklahoma Natural Gas, said the utility did everything it could to keep its customers warm and safe during Winter Storm Uri.

“Oklahoma Natural Gas secures the natural gas its customers need and delivers that gas to their homes and businesses,” Previch said. “We do not set the price of natural gas nor profit from it.”