OK AG announces potential legal action over alleged market manipulation during Feb. 2021 winter storm

OKLAHOMA CITY (KFOR) – Attorney General Gentner Drummond announced Tuesday that he may take legal action against various organizations he believes to be responsible for market manipulation and other potentially unlawful conduct related to the devastating 2021 winter storm.

Drummond said a review he ordered has found that many companies used Winter Storm Uri to rake in billions of dollars in ill-gotten gains.

“As a result of the careful and diligent review of conduct during Winter Storm Uri, I discovered that several companies reaped billions of dollars at the expense of businesses and individuals who were suffering from the crippling effects of the storm,” Drummond said. “The magnitude of this scheme is staggering and unconscionable. Oklahomans can rest assured that I will do everything in my power as Attorney General to return what was taken and hold accountable those responsible.”

Drummond says the Oklahoma oil and gas industry is not to blame.

“While we are not yet prepared to name potential defendants, it is important to understand that Oklahoma’s oil and gas industry is not the culprit,” Drummond said. “At the appropriate time, if we determine that litigation is in the best interests of Oklahoma ratepayers, our complaint will detail each company and individual we believe to be responsible. Until then, I want the People of Oklahoma to remain proud of our oil and gas producers, who are vital partners in the prosperity of our State.”

In mid-February of 2021, the ice, snow and record-breaking cold of Uri had a devastating impact across Oklahoma. Before it eventually exited the continental United States, the storm was responsible for hundreds of deaths and more than $200 billion in damages.

Drummond said he plans to solicit proposals from outside law firms to pursue litigation.

“I have been strongly critical of past attorneys general engaged in no-bid, no cap contingency fee arrangements,” Drummond said. “I plan to issue an RFP to seek the most qualified legal counsel that provides the best possible value to my client: the People of Oklahoma.”

Drummond said any law firm who may wish to submit a proposal should visit the Attorney General’s official website under Citizen Resources.

Two Corporation Commissioners released a statement following the announcement:

Although I greatly appreciate the Attorney General's willingness to investigate and perhaps even prosecute market manipulators who profited billions on the backs of Oklahoma utility customers, the A.G.'s efforts come two years late because the Oklahoma Corporation Commission refused to do its duty and protect ratepayers from fraud and market manipulation.  Worse, the OCC attempted to protect the wrongdoers by approving an unnecessary multi-billion-dollar utility bailout called "securitization," by obstructing my attempts to investigate fraud, market manipulation and other wrongdoing, and by covering up the mounting evidence of illegal conduct when it twice (by 2-1 votes) declared everything about the February 2021 Winter Storm costs "prudent" without lawfully investigating them.

The consequences of this delay may prove very costly to the Attorney General's pursuit of justice on behalf of ratepayers, especially if he is unable to clawback the $2.1 billion in utility bailout securitization interest and expenses that would never have been incurred if the fraud and market manipulation had been properly investigated by the OCC two years ago.  (Adding that $2.1 billion in securitization interest and expenses to the $2.7 billion in fuel costs brought the ratepayers' total price tag for the February 2021 Winter Storm to $4.8 billion.  See my Dissent, Part I, Attachment A for a table showing the utilities' 2021 fuel and securitization costs, including the winter storm, vs. 2020.)

The Oklahoma Corporation Commission should immediately try to vacate its April approval vote in those 2021 Fuel Cost and Prudence Review cases for OG&E, ONG and PSO.  Further, Commissioners Hiett, David and Murphy should apologize to the ratepayers of Oklahoma every time the parties the Attorney General accuses of wrongdoing try to use the OCC's absurdly broad 'prudent' declarations to defend themselves.

Commissioner Bob Anthony

Shortly after joining the OCC, I formally asked Attorney General Gentner Drummond to investigate possible market manipulation by natural gas marketers during Winter Storm Uri. I appreciate today’s announcement by the Attorney General concluding that market manipulation most likely occurred by certain natural gas marketers during Winter Storm Uri to artificially increase the price of natural gas. Additionally, I am thankful for confirmation that no wrong-doing was done by the Corporation Commission, Oklahoma’s regulated utilities, or the producers of oil and gas.

Importantly, the Attorney General confirmed what I have known all along, that the OCC lacks the authority to investigate these marketers and his office is capably handing this matter. While today’s announcement is only the first step towards holding these marketers accountable for their actions, it is my hope that all determined overpayments be returned to Oklahoma ratepayers.

Commissioner Kim David

OG&E also responded to Tuesday's announcement.

We appreciate Attorney General Drummond’s thorough review of possible market manipulation during Winter Storm Uri. We support any effort by the Attorney General to claw back costs charged to OG&E and its customers by any natural gas marketers who he finds exploited the situation and return those funds to customers. The Oklahoma Corporation Commission has found OG&E’s 2021 operations and costs from Winter Storm Uri to be reasonable and prudent. Uri was a once-in-a-generation winter storm, and we are proud that we preserved customer health and safety by keeping the heat and lights on. To protect our customers from natural gas price volatility to the extent we can, OG&E continues to source fuel at the lowest available cost for our customers.