A group of New England residents has filed a class-action lawsuit accusing Eversource Energy and Avangrid Inc. of artificially increasing natural gas spot market prices to benefit their electric generating assets between 2013 and 2016.
In a complaint filed last week with the U.S. District Court for the District of Massachusetts, lawyers with Hagens Berman Sobol Shapiro LLP accused the utilities of using their "substantial market power" to carry out "covert interference with the natural operation of competitive forces in the interdependent natural gas and electricity markets," resulting in New England customers being "overcharged by billions of dollars on their electric bills.”
The plaintiffs equated the utilities with Enron Corp., the poster child of gas-power market manipulation.
"Not since Enron's greedy heyday during the California energy crisis, nearly two decades ago, have American energy markets been manipulated for private profit at such expense to everyday electricity consumers," the complaint stated.
According to the lawsuit, local distribution companies (LDC) owned by Eversource and Avangrid used their priority capacity contracts on Algonquin Gas Transmission (AGT) to artificially reduce regional gas supply and increase regional spot market prices in the constrained New England market by releasing unused capacity too late in the day for it to be picked up on the secondary market. The parent companies allegedly directly profited from those higher prices "in the form of increased use of and higher prices paid to their non-gas-fired electric power plants."
The lawsuit alleges Eversource and Avangrid violated federal and state antitrust laws. The complaint is seeking relief in the form of damages, restitution or disgorgement of profits and recovery of legal costs.
Eversource spokesman Al Lara said the company "is aware of the lawsuit and [we] are reviewing it. However, the facts remain unchanged. The allegations underlying this lawsuit are untrue and baseless. The expenditure of resources to further these false claims is regrettable for all parties involved."
Avangrid spokesman Michael West said the utility "will vigorously defend against these claims." Avangrid's affiliated gas utilities Southern Connecticut Gas and Connecticut Natural Gas "are obligated to provide safe and reliable natural gas service to their customers" and thus "reserve and nominate/schedule pipeline capacity to help protect customers from interruptions -- including during unpredictable, extreme weather conditions.
"These companies operate in Connecticut, where they are required to serve as the 'supplier of last resort' for retail, commercial and industrial natural gas customers interconnected to the gas distribution companies," West said. "In providing service to customers, Avangrid seeks to comply with all state and federal regulatory requirements."
The claims in the lawsuit appear to borrow heavily from researchpublished recently by the Environmental Defense Fund (EDF). The EDF researchers found that from 2013 to 2016 utilities owned by Eversource and Avangrid regularly "scheduled far more pipeline capacity" on AGT "than they ended up using the next gas day. Repeatedly, these companies down-scheduled their orders at the end of the gas delivery day -- too late for that unused capacity to be made available to the secondary market," resulting in higher spot market prices.
Utilities owned by Eversource made down-scheduling changes on 434 days during the EDF study period that were more than two standard deviations more than the system average and on 351 days there were down-scheduling changes three standard deviations larger. For Avangrid, it occurred on 1,043 days and 1,031 days, respectively, according to EDF.
EDF concluded that the practices, which it estimated cost customers $3.6 billion during the period, were within the utilities' contractual rights but pointed to the need to improve market design in New England.