Vistra Accuses Energy Transfer of Price Gouging Before Storm

(Bloomberg) — Vistra Corp., one of the largest power generators in Texas, accused units of pipeline operator Energy Transfer LP of price gouging ahead of a looming winter storm that will raise demand for natural gas.

Two Vistra units filed a complaint Tuesday to the Texas Railroad Commission, which oversees the oil and gas industry, requesting action against the pipeline firm over a plan to charge a premium when electricity prices at certain hubs exceeds $500 a megawatt-hour.

“Our top priority is always to ensure the safe and reliable delivery of natural gas for all of our customers, including human needs customers,” Energy Transfer said in a statement.  “Any policies we put forth are to achieve that, including our No-Notice Gas Sales,” which take into account market, weather and operating conditions, the company added. 

Adding a premium to some gas supply prices, described in the complaint as an Ercot Price Adder, is “designed to capitalize on rising natural gas prices as Texans face the risk of freezing in the dark,” the Vistra units said in their complaint. The units asked the commission to order Energy Transfer to comply with an earlier pricing agreement and to launch enforcement action over alleged violations of price gouging rules. 

The Texas Railroad Commission, which regulates the gas industry, will hold a prehearing conference on Feb. 11 to discuss Vistra’s complaint and possible action, according to a filing Wednesday. Representatives from Energy Transfer are ordered to show that they haven’t violated any rules. The scope of the hearing, though, “is strictly limited to compliance and not the merits” of Energy Transfer’s new pricing terms or structure, the filing said. 

Plunging temperatures are poised to test the main Texas grid in coming days and expectations of record winter demand have already sent electricity prices for Friday surging. On-peak power for Ercot’s North hub closed at $800 for Feb. 4 on the Intercontinental Exchange, according to traders. 

Vistra and units of Energy Transfer had already been in a payment dispute over last year’s catastrophic Texas storm. The units last month threatened to cut service to Vistra over $21.6 million owed in fees from February 2021. Vistra has argued those fees are illegal.

©2022 Bloomberg L.P.

Bloomberg.com