Investigation underway into allegations of market abuse by Evers - WFSB 3 Connecticut

Investigation underway into allegations of market abuse by Eversource, Avangrid

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Eversource  (WFSB file photo) Eversource (WFSB file photo)
BERLIN, CT (WFSB) -

An investigation being conducted by PURA (Public Utilities Regulatory Authority) is looking into allegations of market power abuse by Eversource and Avangrid.

According to a press release by the Office of Consumer Counsel (OCC), a recent investigation was initiated in response to a recent report that was conducted by various university researchers who were working with the Environmental Defense Fund.

PURA says local gas distribution companies run by Eversource and Avangrid (Yankee, CNG, and SCG) deliberately created shortages so they could charge more.

A report from researchers working with the Environmental Defense Fund alleges the companies drove up electric and natural gas rates, costing utility customers around New England billions of extra dollars in higher prices.

If the allegations are true, then some of the state's largest utility companies could owe hundreds of thousands of customers an apology and maybe much more.

"If they contributed or caused the shortage conditions and these exorbitantly high gas prices, that's a big problem, we already have some of the highest rates in the country," said Consumer Counsel Elin Katz. 

Increasing natural gas prices also directly impact electricity prices.

OCC, which is the state’s statutory advocate for utility customers, said it plans to participate in this investigation. PURA will likely call for an initial hearing within the next several weeks.

Katz said the public should know that regardless of the outcome, there are agencies working to protect them.

Now one important thing to point out is that utilities don't actually make more money when prices surge however this report alleges the companies’ leaders knew increasing gas and electricity prices would help some of their other outside business interests. 

To read the full report, click here.

In the press release, Consumer Counsel Elin Swanson Katz said “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.”   

Eversource is the operator of The Connecticut Light and Power Company and Yankee Gas, and Avangrid is the operator of the United Illuminating Company, Southern Connecticut Gas (SCG), and Connecticut Natural Gas (CNG)).

On Tuesday, Eversource Media Relations Manager Tricia Taskey Modifica responded, saying "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."

Taskey Modifica added that the Northeast Gas Association has weighed in on this report, calling it a “profoundly misleading and inaccurate analysis.”  

To read the Association's full response, click here.

Avangrid's Vice President of Corporate Communications Michael West Jr. also responded saying "AVANGRID is always willing to consider proposals, including those proposals made in regulatory proceedings, that could reduce energy costs while not reducing our ability to maintain our important public service commitments to our customers. Any such changes would be the result of a careful analysis of the risks and supported through established regulatory processes."

To read more of their response, click here.

Senator Richard Blumenthal called on the Federal Energy Regulatory Commission for an investigation into the allegations. He said "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."

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