Had Energy Transfer followed through, about a third of the plants owned by the state’s largest power generator, Luminant, could have suspended operations.


Energy Transfer — a major natural gas pipeline company with strong political connections in Texas — has backtracked on threats to cut natural gas supplies needed to support the state’s winter electricity service.

Had Energy Transfer followed through, about a third of the plants owned by the state’s largest power generator, Luminant, could have suspended operations. Those plants power about 400,000 Texas homes and businesses, according to a regulatory filing. Instead, Energy Transfer agreed to continue selling power to Luminant for another two months as it continues haggling over a financial dispute.

Energy Transfer claims that Irving-based Luminant Energy as well as the affiliated Dynegy Marketing and Trade owe it a $21.6 million penalty relating to last winter’s winter storm. The companies — both subsidiaries of Irving, Texas-based Vistra — dispute the charge and so far have refused to pay it. Energy Transfer only relented on its threat to cut off the companies’ gas after they complained to the state’s oil and gas regulator, the Texas Railroad Commission.


In a January 19 filing at that agency, Luminant and Dynegy characterized the $21.6 million charge as “illegal” and described Energy Transfer’s attempt to collect it as “a form of commercial extortion.” The “threat to terminate service in the middle of winter is … grossly irresponsible and should be prohibited,” the Vistra companies wrote. Luminant claimed it spent approximately $1.5 billion paying natural gas fuel costs from last February’s energy crisis — “twice its planned natural gas cost to fuel its entire Texas fleet for a full year” — and that $600 million of that money already went to Energy Transfer.

Energy Transfer, for its part, has insisted that Luminant and Dynegy must pay for services rendered under previous agreements, and it characterized the companies’ claims about the penalty charge as “disingenuous at best.” Energy Transfer has said it would continue selling natural gas to the companies on the higher-priced spot market until March 31. After weathering negative press coverage, Energy Transfer also published an open letter in major newspapers defending itself. “They can purchase gas from any number of third parties and we will reliably deliver the gas to their power plants,” the company wrote in its open letter.


Energy Transfer controls approximately 9,000 miles of pipeline across Texas including two of the state’s largest gas pipelines, Houston Pipeline and Oasis Pipeline. It also owns gas storage facilities. While many gas companies enjoyed big profits because gas prices skyrocketed during last February’s winter storm, Energy Transfer may have been the storm’s biggest winner — having reaped about $2.4 billion, according to an analysis by Bloomberg News.

Energy Transfer Partners chairman Kelcy Warren donated $1 million to Gov. Greg Abbott’s campaign in late June, according to reports. Kelcy also made $250,000 payments to Gov. Abbott’s campaign in both 2019 and 2020, according to reports.

You can read a copy of Luminant and Dynegy’s complaint on the Railroad Commission website, at this link. Energy Transfer’s response can be found here.

— R.A. Dyer