Two Vistra Corp. subsidiaries asked the Texas Railroad Commission to prevent Energy Transfer LP from cutting off gas supply to their power plants over $21.6 million the pipeline giant charged for the February 2021 winter storm.
Luminant Energy Co. LLC and Dynegy Marketing and Trade LLC told the commission Jan. 19 that Luminant has paid Energy Transfer Fuel LP and Oasis Pipeline LP over $600 million for fuel costs during the Arctic freeze, accounting for more than 96% of the invoiced amounts, but the companies claim the Vistra units owe an extra payment for operational flow order penalties.
Luminant, whose gas-fueled electric generation facilities total roughly 2,000 MW of capacity and serve about 400,000 customers in Texas, told the regulatory body that Energy Transfer's threats to discontinue service after Jan. 23 are "a form of commercial extortion."
"Respondents' threat to terminate service in the middle of winter is illegal and grossly irresponsible," the Vistra subsidiaries wrote. "... Substantial power-generating capacity for the state will be taken offline and made unavailable in ... a time when a lack of power-generating capacity can have serious collateral consequences for the state and its citizens."
Energy Transfer Fuel and Oasis said Luminant owed $21.6 million for "over-supplying natural gas during a period their systems were threatened by scarcity." But Luminant and Dynegy argued that setting "a maximum and a minimum amount of gas that shippers could take without incurring penalties" during the storm was inappropriate.
"Setting a minimum amount of gas that Luminant could take was not 'necessary' to maintain the overall operational balance of respondents' system or to enable them to comply with contractual obligations," the Vistra subsidiaries said. "... Respondents are attempting to penalize Luminant for failing to take and use a mandatory minimum volume while it also asked all shippers to reduce their demand or usage."
Energy Transfer in May 2021 reported a $2.4 billion windfall following the deadly polar vortex that caused millions of customer outages in the Electric Reliability Council of Texas Inc.'s market.
Co-CEO Thomas Long attributed the outperformance to maintenance capital spent on weatherization and injecting additional gas into pipelines. Co-CEO Marshall McCrea told investors and analysts that "we couldn't be more pleased with our results and what those assets did."
The Federal Energy Regulatory Commission in October 2021 concluded that Energy Transfer's Panhandle Eastern Pipe Line Co. LP provided reasonable justification for refusing to waive $71 million in penalties against natural gas shippers ConocoPhillips, Direct Energy Business Marketing LLC, Exelon Corp. and NextEra Energy Power Marketing LLC.
The commission found that Panhandle waived penalties during an operational flow period in a manner that was "not unduly discriminatory" and was consistent with the pipeline's tariff.
"We recognize that Panhandle and its shippers faced the unprecedented impact of the extreme winter weather event in February 2021," the order said. "However, compliance with [operational flow orders] may be most necessary during unprecedented times to ensure system reliability."