Kansas AG Says Macquarie Rigged Gas Market During 2021 Freeze
Kansas has become the first state to file a lawsuit alleging natural gas market manipulation during a 2021 winter storm that drove energy prices to record highs and left millions of people in the dark.
Kansas Attorney General Kris Kobach’s office is accusing Macquarie Energy LLC of manipulating the price of natural gas at a key hub along the Southern Star Gas Central Pipeline. According to the lawsuit, on Feb. 16, 2021, Macquarie purchased gas for next-day delivery “at the single highest price ever paid for Southern Star natural gas,” which Kobach’s office says had the effect of artificially increasing gas prices by “hundreds of dollars” per million British thermal units.
The lawsuit, filed Feb. 15, was first reported by The Topeka Capital-Journal. “Macquarie Group does not comment on active litigation,” spokeswoman Patricia Buchanan said in an email.
A handful of states, including Texas, announced investigations into potential market manipulation following Winter Storm Uri. But Kansas represents the first state whose attorney general has filed a lawsuit targeting a specific company and trading strategy. The Federal Energy Regulatory Commission also has said it’s probing market manipulation related to the storm.
S&P Global Platts uses natural gas physically traded at the Southern Star point to determine an average gas price, which then underpins financial contracts including futures. In the lawsuit, Kobach’s office says the Southern Star Gas Daily price “is highly susceptible to manipulation” because there are fewer trades and lower volume than other locations. According to the suit, qualifying trades at the Southern Star hub averaged fewer than 15 per day.
Kobach’s office calls Macquarie’s Feb. 16, 2021 trades at Southern Star “economically irrational and contrary to its self-interest as a natural gas marketer – unless intended all along to manipulate the February 17, 2021 Southern Star Gas Daily price.”
James Zakoura, a Kansas lawyer who’s bringing a separate case against BP Energy Co. alleging price gouging during Uri, said natural gas prices in the days leading up to the storm indicate the market wasn’t acting in a competitive manner. “Is there a shortage of gas? Is there cold weather?” he said. “Yes, but that’s not infrequent in the Midwest.”