ONG used securitization and a lawsuit to recover 2021 winter storm costs


When Fox 25 News in Oklahoma City reported this week about how the Arkansas Oklahoma Gas Company decided to withdraw its request for securitization to cover 2021 Winter storm gas costs, the news outlet also reported for the first time how one major Oklahoma utility filed suit against a natural gas provider following the storm.

OK Energy Today first reported how AOG received approval from Oklahoma Corporation Commissioners to withdraw its request after the firm won a major lawsuit against BP for breach of contract. Fox 25 picked up on the story and did its own and revealed for the first time how Oklahoma Natural Gas actually sued one of its natural gas suppliers following Winter Storm Uri.

The April 2021 suit, something not revealed to Corporation Commissioners when they approved ONG’s winter securitization of the storm costs, was filed in Oklahoma City Federal Court against NextEra Energy Marketing, LLC.

NextEra was one of the largest providers of natural gas in Oklahoma at the time of the storm….nearly $430 million in sales and most were made to ONG.


ONG challenged the force majeure claims made by NextEra Energy Marketing to justify the high gas costs, pointing out it started February 2021 with a natural gas cost of $2.63 per MMbtu but eventually was hit with a cost of $1,193.15 per MMbtu in the middle of the storm.

“Obviously, it was to NextEra’s economic advantage to prorate
its sales to ONG between the two confirms instead of first fulfilling the first-of-month priced contract before allocating sales to the spot-priced contract,” charged ONG in the lawsuit.

In its court filings, NextEra denied the claims made by ONG.

“NextEra’s performance under the Contract between the parties was proper and consistent with Contract terms, consistent with the course of dealings between the parties, and further, was commercially reasonable under accepted industry practice.”

The company also maintained, “In obtaining natural gas
for and delivering it to ONG in February 2021, NextEra relied on ONG’s promise to pay NextEra for such natural gas.”

NextEra counterclaimed that ONG had a breach of the contract when the utility failed to “make full payment to NextEra of the amount due.”

Indeed, ONG admitted it withheld some of the payment and stated so in its lawsuit.

“After receiving NextEra’s invoice, ONG timely notified NextEra that ONG was disputing NextEra’s February 2021 invoice, and that ONG was withholding $6,968,770.44 from its payment.”

It was in January of 2022 when the breach of contract suit involving $7 million was settled. While the amount of the settlement has not been officially revealed, it’s reported to be around $300,000.

The case was closed at the end of January 2022 on an order signed by U.S. District Court Judge Timothy DeGuisti.

ONG ended up obtaining securitization through the Corporation Commission and it totaled $1.354 billion. Its actual gas costs from the storm were $1.284 billion while financing and consulting costs along with the upfront costs of from the Oklahoma Development Finance Authority added to the total.