Federal regulators are looking closely at the Texas energy market after natural gas prices soared during the deep freeze of last week. And they are warning that extreme weather conditions will continue to overload the grid.
“We are monitoring irregularities in the Texas energy markets after last week’s freeze,” said Rostin Behnam, acting president of the Commodity Futures Trading Commission, in a speech on Tuesday.
THE exceptionally low temperatures caused life-threatening blackouts that left millions of Texans without power for days. And although the residents of that state have suffered the greatest impact from the energy crisis, the repercussions have spread throughout the country.
Democratic Senator Tina Smith of Minnesota wrote a letter to regulators on Saturday urging them to investigate possible fraud in natural gas prices. She pointed out how natural gas prices have skyrocketed in some cases to almost 100 times normal levels.
“These dramatic price increases are forcing utilities and other natural gas users to incur exorbitant costs, many of which could be passed on to consumers in the form of higher electricity or natural gas bills next year,” wrote Smith .
Behnam said on Tuesday that the CFTC is “prepared to do whatever is necessary to protect the integrity of our markets”, noting that the agency is looking specifically at areas where there is a “federal link” to the CFTC’s regulated markets and futures contracts traded on exchanges.
Meanwhile, the Federal Energy Regulatory Commission announced Monday that it is investigating possible market manipulation in the natural gas and electricity sectors during last week’s energy crisis.
‘Weakness’ in exposed power systems
The deep freeze caused chaos in the Texas power system, derailing a wide variety of fuel sources, including natural gas, coal, nuclear and wind power. Although some politicians initially tried to blame frozen wind turbines, Department of Energy officials said the energy crisis was “largely driven” for coal, gas and nuclear installations that go offline.
“This explosion in the Arctic highlighted the weakness in our energy infrastructure that is likely to be challenged and stressed more often in the future as a result of more frequent extreme weather events,” said Behnam.
FERC also said it will open a new investigation to examine the “threat that climate change and extreme weather events pose to electrical reliability.”
“The effects of climate change are already apparent,” said FERC President Richard Glick on Monday, “and we must do everything we can within our statutory authority to ensure that the power grid is able to keep the lights on at extreme weather conditions. “