Kansas AG Kobach Files Lawsuit Alleging Energy Market Manipulation After Winter Storm Uri

  • Kansas AG Kris Kobach filed a lawsuit against Macquarie Energy in Shawnee County District Court for allegedly engaging in price gouging and market manipulation in violation of the Commodity Exchange Act when supplying Kansas firms with natural gas during Winter Storm Uri in February 2021.
  • According to AG Kobach, Macquarie, the middleman to Kansas natural gas companies, purposely bought gas at inflated prices from Southern Star Central Gas Pipeline to supply Kansas energy firms, which costs were ultimately passed onto Kansas customers. Although some of the excess costs could be explained as the result of normal market forces given lower regional production caused by the storm, the lawsuit alleges that an identifiable subset of the excess costs are attributable to Macquarie’s attempts to manipulate the market. The artificially inflated prices allegedly warped key price benchmarks that ultimately helped the company’s bottom line.
  • The lawsuit seeks damages for Macquarie’s alleged market manipulation, which Kansas estimates led to more than $50 million in excess energy costs for customers, under the Commodity Exchange Act that governs federal regulation of all commodity trading in the country.
  • A handful of states have launched investigations into potential price gouging following storms, though actual lawsuits to date have been rare. We have previously covered AG actions related to the historic February 2021 winter storm, including Texas AG Ken Paxton’s settlement with an energy company over outrageously high electricity bills that were paid by auto-debiting customer’s accounts in the wake of the storm, and former Kansas AG Derek Schmidt’s intervention into the Kansas Corporation Commission’s investigation of Kansas energy companies related to the spike in natural gas prices following the storm.