Two major Texas energy companies are currently engaged in litigation. The legal dispute regards an unpaid $21.6 million in fees stemming from the February 2021 winter storm. The electricity that powers approximately 400,000 homes is being leveraged in the fight.
On January 19, Irving-based power company Luminant Corporation, a subsidiary of Vistra Corporation, filed a 149-page complaint with the Texas Railroad Commission. The complaint states that Dallas-based pipeline company, Energy Transfer, threatened to cut its natural gas services to Luminant power plants by January 24 over the payment dispute.
The filing includes a letter received on January 13 from Energy Transfer. The letter warns that if payment of $21.6 million in fees is “not received within ten days,” it would not continue to “deliver gas” to Luminant gas-fired power plants.
According to the filing, Luminant power plants operate “400,000 Texas homes, businesses, and critical infrastructures such as hospitals and schools.”
Luminant alleges that the fee is illegal and would not stand if the Commission investigates. According to the filing, the justification that Energy Transfer provides (for the amount in fees) is securing power generators and delivering gas to systems during the February storm.
The freezing temperatures brought on by the storm knocked out gas supplies and were the catalyst for widespread blackouts.
The “threat to terminate service in the middle of winter is illegal and grossly irresponsible, and should be prohibited by this commission,” Luminant says in the complaint.
Just hours after Luminant filed the complaint, Energy Transfer responded to the Railroad Commission, saying that it does intend to continue supplying Luminant with gas while the fees are being disputed, and asked the Railroad Commission to delay making any rulings for now.
Energy Transfer “will continue to sell them [Luminant] gas pursuant to the same process, terms and conditions that have been in place since December 1, 2021,” their response to the Commission read.
The two power companies had a contract for natural gas that ended on the last day of November, 2021. Since then, Luminant has bought natural gas from Energy Transfer without a contract.
Luminant controls five power plants in Texas. Two of which–one in Graham and another in Trinidad–receive one-hundred percent of their natural gas from Energy Transfer. The other three plants receive only part of their natural gas from Energy Transfer; however, they would likely not be able to operate as usual if Energy Transfer “discontinued service.”
Luminant claims that it spent approximately $1.5 billion for natural gas during the February winter storm, twice as much as its planned natural gas costs for the entire year. Of the total amount, more than $600 million were paid to Energy Transfer for natural gas during the winter storm, according to the complaint.
This dispute occurs as winter weather is expected to hit Texas over the next week.