Conocophillips sues CPS over storm gas bill

After suing 16 natural gas suppliers this month, accusing them of price-gouging during February’s winter blast, CPS Energy is on the receiving end, facing a lawsuit by Conocophillips demanding the utility pay its storm-related gas bill.

Its lawsuit alleges that cityowned CPS knew how much the Houston-based energy company was charging for natural gas, agreed to pay it and is now breaking its contract.

“Rather than forego purchases, CPS Energy executed numerous purchases with full knowledge that it was agreeing to pay market prices,” Conocophillips said in its suit, filed Friday in Harris County District Court.

The multinational isn’t one of the gas suppliers that CPS has so far accused of price-gouging.

Houston Pipe Line Co., a subsidiary of the Dallas oil and gas midstream company Energy Transfer, is one of the defendants in the lawsuits brought by CPS. And on Monday, it counter

sued, also accusing the utility of violating its purchase agreement.

“CPS purchased this gas with eyes wide open, aware of the status and pricing of the gas markets,” HPL said in its lawsuit, filed in Bexar County District Court. “Now the bills have come due and CPS, as it seems to have intended from the start, wants to leave others holding the bag and shift the political and regulatory fallout away from itself.”

A CPS spokeswoman declined to comment on the litigation.

During the storm, CPS ran out of natural gas and was forced to buy the fossil fuel on the spot market to generate electricity and heat San Antonio-area residents’ homes.

But natural gas was scarce, its supply limited by frozen wells and pipelines and icy roads that hampered truck deliveries. Gas suppliers sold the fuel at sky-high prices as CPS and other utilities tried to outbid one another.

In its lawsuits against the 16 gas suppliers, CPS contends they gouged the utility by dramatically jacking up their prices. The price per unit of natural gas went from under $3 per unit before the storm up to several hundred dollars during the freeze.

One supplier’s prices surged by as much as 16,000 percent, CPS alleged.

CPS buys about 30 percent of its natural gas through multi-year contracts in which suppliers’ prices are locked in. But with energy demand higher than expected during the deep freeze, CPS needed more gas and went to the spot market.

In its price-gouging lawsuits, CPS argued that it had no option but to agree to pay the prices suppliers demanded.

“CPS Energy faced a Hobson’s choice: Pay an exorbitant price for gas or run out of the gas supply it needed to power critical infrastructure and serve its gas customers’ critical human needs,” the utility said.

Weeks after the storm, CPS said it determined that $38.83 was the maximum amount that it would pay suppliers per unit of gas. The utility deemed that price to be “the outer reaches of any commercially justified price for natural gas.”

Conocophillips charged CPS $28.6 million for natural gas during the winter storm. However, the oil giant alleged that CPS paid a little more than $9 million — the price CPS would owe if gas prices had been capped at the $38.83 price.

Conocophillips and HPL say the utility set its maximum price per unit arbitrarily and that it’s invalid. Both companies are seeking unspecified damages.

A hearing on the legal fight between CPS and HPL has been postponed until at least mid-april. HPL said it needed more time to “adequately prepare to defend against” CPS’ lawsuit.