Eversource Energy and Avangrid, Inc. are energy suppliers in New England. The complaint for this class action alleges that the two companies engaged in a conspiracy to raise the price of electricity for wholesale buyers—interestingly, by manipulating the price of natural gas.
The Federal Injunctive Class and the Federal Damages Class for this action both consist of all persons and entities in ISO-NE electricity market who bought wholesale electricity in the day-ahead and real-time energy markets, from December 1, 2012 through the present. Also proposed are statewide and state-specific classes for Massachusetts and New Hampshire.
Eversource is made up of interrelated companies, including six wholly-owned subsidiaries. Similarly, Avangrid is made up of interrelated companies, including seven subsidiary and affiliate companies. The complaint claims that both entities coordinated the activities of their companies to restrict the supply of natural gas.
How does that affect the electricity market? Electricity generators, like Eversource and Avangrid don’t just supply power to retail consumers; they also sell electricity at wholesale to other energy suppliers, like PNE Energy Supply, Inc., the plaintiff in this case. These wholesale sales are done by auctions, run by Independent System Operator—New England (ISO-NE). In the auctions, electricity generators submit bids that are the prices at which they will sell electricity.
A big component of these bids are the fuel costs for generating the electricity. According to the complaint, for gas-fired generators, the fuel price used in making bids is normally the Algonquin Citygate Price, which indicates the price for natural gas on the unregulated spot market. In this case, the complaint says that Eversource and Avangrid were able to manipulate the price of electricity by driving up the price of gas.
How did they do this? The complaint claims that Eversource and Avangrid have long-term contracts guaranteeing them transport capacity on the Algonquin Gas Pipeline, which is in demand. They could have sold their excess capacity on the pipeline on days when demand was low, but the complaint says that it was more profitable for them to forego that income, limit gas supplies, and drive up the price of gas, including the Algonquin Citygate Price. They therefore did not release excess capacity, the complaint says, or they released it late in the day when it was too late to be resold.
According to the complaint, this did not affect their bottom lines because most of the profits gained through sales of excess capacity must be returned to consumers. What did affect their income was their earnings on wholesale electricity rates. The complaint estimates that electricity prices for New England were driven up by an average of 20 percent, overcharging customers by more than $3 billion.
The complaint claims that Eversource and Avangrid have violated federal and state antitrust laws.