“It will probably be the most significant lawsuit filed by the state of Oklahoma in its history.”
So proclaimed Oklahoma Attorney General Gentner Drummond Tuesday as he formally announced his intention to file suit against those he claimed “reaped billions of dollars at the expense of Oklahoma families and businesses” during the 2021 Winter Storm Uri.
His announcement came after several months of an investigation by his office and a private law firm that had been hired to assist.
“The magnitude of this scheme is staggering and unconscionable,” added Drummond as he vowed to do everything in his power to “return what was taken and to hold accountable those responsible.”
Drummond didn’t identify any one firm that might have been responsible for the market manipulation that led to historic prices of natural gas during the storm.
“I believe it is very likely at this point, significant legal action will be necessary to recover billions of dollars for Oklahoma ratepayers. And that is why today, I am announcing my office will solicit proposals to recover billions of dollars for Oklahoma ratepayers,” said the Attorney General.
He said he would hire only firms that he believes are the most qualified legal counsel. Drummond encouraged firms to file applications under a Request for Proposal listed on his office’s state website.
During the news conference, it was clear Drummond was disappointed and at the same tie, upset about the findings of his investigation.
“It is important to understand that our oil and gas industry is not to blame. It is equally important to understand that our utility companies are not to blame,” he said, explaining it was others, gas marketers, that made billions of dollars off the scheme to boost prices during the storm.
Answering questions from reporters, Drummond explained that natural gas prices during the storm soared from a low of $2 to $4 per Mcf or thousand cubic feet of gas to $1,200 per Mcf. It eventually led to a securitization law enacted the same year by the state legislature, resulting in an amortization of the costs to ratepayers for up to 28 years.
He called it the “short squeeze”, a move made by natural gas marketers to begin restricting natural gas supplies immediately prior to the winter storm two years ago and doing so even more during the storm, resulting in arbitrage and historic high natural gas prices.
Could it happen again? Drummond admitted the markets could do it again, but if they did, he will sue them.
Drummond said under a loose timeline, he expected within 10 days to receive inquiries from interested private law firms. Whether there was any criminal investigation under way, he would not say. He also said it was clear there was no wrongdoing on the part of the Oklahoma Corporation Commission during its handling of rate hike requests made by utilities wanting to recover costs of their extreme high natural gas prices.
Drummond also understood, in speaking to reporters, that the cost of filing any lawsuit and going to trial will be high. He expects the marketers who profited billions will try to protect it and spend unlimited resources to keep it.
“So, this will be a very expensive and challenging lawsuit,” he added.
Should the Attorney General be successful in recovering billions of dollars, he said the procedure would likely involve the legislature returning the funds to the Corporation Commission where the agency would renegotiate and re-amortize the bond and securitization originally approved for the utilities.
Kansas and Texas already filed legal actions against marketers over the storm and Drummond referred to their fights
“I am aware of what Texas and Kansas are doing. I think that we will do it better, and I will be happy to partner with the Attorneys General of Texas and Kansas to assist them and their ratepayers.”
“Now it’s time for research and gathering of evidence, proposals from outside counsel. I can’t promise you a timeline, but I can promise you this—you know by my actions over the last six months, that I am an Attorney General who acts….and I act affirmatively.”