Eversource, Avangrid under investigation following price manipulation allegations

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HARTFORD — An investigation is underway by  the Public Utilities Regulatory Authority into allegations of market power abuse by Eversource and Avangrid, two of the state’s largest energy providers.

The Office of Consumer Counsel says the investigation began after university researchers claimed Eversource and Avangrid companies intentionally created natural gas shortages so they could drive up energy rates.

The report by university researchers estimates the practice cost utility customers billions of dollars over a three year period.

Eversource representative Tricia Taskey Modifica said Tuesday the report is a “complete fabrication.” She said the company is “always acting in the best interest of our customers.” Avangrid said their gas supply portfolios and gas pipeline contracts are consistent with industry standards.

The Public Utilities Regulatory Authority is expected to call for a hearing in the upcoming weeks.

Connecticut’s Public Utility Regulatory Authority announced Tuesday that they have opened its own investigation. PURA said local gas companies run by Eversource and Avangrid (Yankee, CNG, and SCG) engaged in gas scheduling practices that deliberately manipulated the market to create shortage conditions that raised energy prices.

Consumer Counsel Elin Swanson Katz announced Tuesday that the Office of Consumer Counsel (OCC), the state’s statutory advocate for utility customers, plans to participate actively in the investigation opened by the Public Utilities Regulatory Authority (PURA) into allegations of market power abuse.

PURA said their investigation was initiated in response to a recent report, conducted by various university researchers working with the Environmental Defense Fund, which alleges that the local gas distribution companies run by Eversource and Avangrid (Yankee, CNG, and SCG) deliberately created shortages so they could charge more.

Katz released the following statement:

“These are serious allegations that need to be thoroughly investigated, and I am appreciative that PURA responded promptly by opening this investigation.  We actively track the natural gas market and work with fellow state agencies, our utility companies, and other stakeholders to ensure that energy markets work in a fair and transparent manner.  While we are generally confident that our markets function as intended, claims of this magnitude must be thoroughly investigated to ensure consumer confidence in the bills they pay.  The Office of Consumer Counsel will provide an independent voice and perspective in this investigation as active participants in this docket.  I hope for a swift resolution of the concerns raised in this report as we head into the winter months ahead, so that consumers are assured that they are not paying exorbitant energy prices.”

Senator Richard Blumenthal has also called on the Federal Energy Regulatory Commission to investigate Eversource Energy.

Blumenthal wants regulators to look into allegations that Eversource withheld and underutilized natural gas pipeline capacity, inflating prices for consumers.

Blumenthal released the following statement:

“While the motive remains unclear, I urge FERC to immediately investigate allegations of over withholding of natural gas by these companies in Connecticut, and if it is found that market manipulation has occurred, FERC should expeditiously order a ban or other appropriate restriction on this practice and ensure that affected consumers are swiftly and fully compensated. Additionally, I request that you examine any specific pricing policies that may have encouraged such market behavior and recommend policy changes that can be enacted to prevent this occurrence from continuing in the future.”

Eversource Connecticut Media Relations spokesperson Mitch Gross, issued the following statement:

“We are confident that any review would demonstrate that we are always acting in the best interest of our customers and communities.  This “report” is a complete fabrication as evidenced by the lack of credibility it has received in the industry. The underlying concept is not only false and misleading, but concerningly irresponsible as it lacks any understanding of how gas procurement actually works.  Our gas distribution business is carefully regulated and the gas supply we purchase for our customers is a strict pass through cost – meaning we don’t benefit from higher prices derived from withholding. This is well understood in the industry and is further evidence that the report is not credible. We do not engage in any behavior to ‘artificially constrain capacity.’ Our focus and actions are driven by our responsibility to ensure our customers have enough gas – we can’t run the risk that they are left in the cold.”

Gross also said the Northeast Gas Association weighed in on this report calling it a “profoundly misleading and inaccurate analysis.”

You can find their full response here.