Lawsuit Alleges Energy Giants Manipulated Market, Causing Texas’ Deadly 2021 Blackouts

The deadly blackouts that Texas experienced after Winter Storm Uri in 2021 may have been caused by deliberate market manipulation by major energy companies, rather than simply poor insulation of gas pipelines, according to a new lawsuit.

A report by The Hill states that the lawsuit, filed by Houston-based CirclesX, argues that companies such as CenterPoint Energy, BP, Energy Transfer Partners, and Morgan Stanley manipulated the market during Winter Storm Uri in 2021 to increase profits. According to the plaintiff’s lawyer, Andrew Gould, the companies “diverted natural gas before winter to create artificial scarcity — thus driving up the price.”

The gas shortage in 2021 led to widespread blackouts across the state, also creating shortages of water, food, and heat. More than 4.5 million homes were left without power, and at least 246 people died directly or indirectly as a result.

CirclesX’s founder, Erik Simpson, a former Enron trader, claims that these practices resemble Enron’s market manipulations during California’s 2001 rolling blackouts. Simpson alleges that Texas pipeline companies have been manipulating gas markets for years, exploiting natural disasters like hurricanes and cold snaps to increase profits. The lawsuit contends that during Winter Storm Uri, these companies shifted gas from interstate pipelines, which are more tightly regulated, to intrastate pipelines with laxer oversight, enabling them to manipulate prices.

Some of the defendants have previously been fined for market manipulation. In 2007, Energy Transfer Partners had to pay $82 million after the Federal Energy Regulatory Commission (FERC) found it had engaged in market manipulation. FERC also fined BP $20 million and required them to repay $207 million for manipulating the gas market after Hurricane Ike.

There is already an existing case related to Winter Storm Uri. BP was found to have breached a contract to supply gas in Oklahoma, forcing the plaintiff to buy gas on the spot market at exorbitant prices.

CirclesX hopes to prove that these same manipulative practices were used across Texas, affecting millions of residents and businesses.

“If BP did it there, they did it everywhere,” Simpson said.

As the first step, CirclesX must establish the Harris County court’s jurisdiction before the lawsuit can proceed. If successful, the case could expose widespread collusion and market manipulation, potentially resulting in billions of dollars in damages being returned to Texans.