Blumenthal Calls on FERC to Investigate Eversource Price Manipulation Allegations
(Washington, DC) – In a letter to the Federal Energy Regulatory Commission, U.S. Senator Richard Blumenthal (D-Conn.) today called for an investigation into allegations that Eversource and Avangrid may have withheld and underutilized gas pipeline capacity, costing New England consumers $3.6 billion in higher electricity prices.
“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,” Blumenthal states.
The Connecticut Public Utility Regulatory Agency has also opened a docket to look into the allegations.
Full text of the letter is copied below.
October 17, 2017
Chairman Neil Chatterjee
Federal Energy Regulatory Commission
888 First Street, Northeast
Washington, D.C. 20426
Dear Chairman Chatterjee:
I write to you with serious concern that utility companies are withholding and underutilizing gas pipeline capacity by scheduling deliveries, but not flowing gas on the coldest winter days, resulting in exorbitantly high, artificially inflated electric bills for New England consumers. I urge you to immediately investigate such allegations and determine if there is indeed price and supply manipulation at play, if not deliberate illegal manipulation, within the New England electricity market.
As you know, the Federal Energy Regulatory Commission (FERC) is charged with regulating the transmission of natural gas and electricity in interstate commerce, while working to help consumers obtain reliable energy services at a reasonable cost. Last week, a report[1] by the Environment Defense Fund (EDF) was released detailing that gas distribution utilities owned by Avangrid and Eversource artificially reduced available natural gas on the Algonquin Gas Transmission Pipeline. This natural gas shortage meant that electricity generators had to pay significantly higher prices for natural gas to operate their electricity power plants. As a result, over the course of the past three years, electricity and natural gas prices have skyrocketed during periods of natural gas shortages. It is estimated by the EDF that these price increases cost consumers in Connecticut and other New England states $3.6 billion in higher electricity prices.
In addition, EDF points out that Eversource and Avangrid did not have a financial incentive to resell the surplus natural gas on the secondary market that they had reserved, but ultimately didn’t need, because shareholders stood to reap few profits from any reselling due to a Connecticut requirement that 99% of any profits from such resale be returned to ratepayers.
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.
A safe, warm place to live is a basic necessity that should be affordable for every American during the cold winter months. Thank you for your attention to this critically important matter. I respectfully request that you respond by November 16, 2017.