A former Enron trader is suing some of the nation’s largest energy and financial firms, claiming they diverted natural gas supplies and cut off production in a scheme to artificially drive up prices ahead of the 2021 winter storm that left about 200 dead and millions of Texans without power.
In a lawsuit filed in Harris County District Court last month, CirclesX Recovery, which represents thousands of Texas energy customers, claims firms including Energy Transfer, Kinder Morgan, BP, Conoco Phillips and CenterPoint Energy engaged in an Enron-style scheme to cut off gas production or divert supplies into storage days ahead of freezing temperatures that would eventually cripple the Texas power grid.
When gas prices then climbed to hundreds times normal levels, the complaint alleges, a number of companies informed clients with whom they had contracts to sell gas at a fixed price that they could not make delivery, allowing them to sell their gas into spot markets and reap billions of dollars in profits. The plaintiffs’ group is led by Erik K. Simpson, owner of the Houston data company Circles X and a former trading director at Enron.
“The impacts of the power outages caused by Winter Storm Uri are still being felt today,” Conlee Whiteley, one of the attorneys representing CirclesX, said in a statement. “Through litigation, CirclesX Recovery will be working on behalf of tens of thousands of Texas residents and businesses. We will have more to share in the coming weeks.”
Dozens of companies were named in the lawsuit, including financial firms JP Morgan and Goldman Sachs, which operate energy trading operations in Texas. The companies cited in this story mostly declined or did not respond to requests for comment, with exceptions of Kinder Morgan and EOG Resources, which denied the claims in the litigation.
“We believe this lawsuit is wholly without merit and intend to vigorously defend it,” a Kinder Morgan spokesman said in a statement.
The litigation is one of close to a hundred lawsuits already filed against energy companies for the events of February 2021, when a historic cold snap caused the Texas power grid to nearly collapse, leaving millions of Texans without power and heat and resulting in an estimated 200 deaths.
It comes as Kansas Attorney General Kris Kobach, a Republican, is suing the Australian energy firm Macquarie for manipulating that state’s gas market during the storm, claiming that by overpaying for gas, the company “goosed its net trading revenues profits by tens of millions of dollars.”
CirclesX is attempting to make the case that Texas’s intrastate pipeline system operates as a monopoly where a handful of large players control almost all the gas in the state, pointing to significantly lower gas prices in neighboring Louisiana during the storm.
In the filing, Simpson uses publicly available but hugely complex data showing the flow of natural gas through Texas’s pipeline system to try and prove that energy firms were working behind the scenes to manipulate prices, detailing specific instances where energy firms began reducing gas flows even as weather conditions in Texas remained relatively mild.
“Instead of ensuring adequate natural gas supplies, defendants spent the weeks and days before Winter Storm Uri’s arrival in Texas taking deliberate steps, which they continued after Winter Storm Uri’s arrival, to severely limit the availability of natural gas in the Texas,” the lawsuit reads. “They did so with the objective of driving natural gas prices — and their resulting profits — exponentially higher.”
The plaintiffs are represented by Allan Kanner and Conlee Whitely of the New Orleans law firm Kanner & Whitely. Other lawyers for the firm involved in the case include Cynthia St. Amant, Ryan Casey and Thuy N. Le.
The case is CirclesX Recovery v. BP Energy, et all.
For a longer version of this article, please visit HoustonChronicle.com.