Texas Customer Files Lawsuit Against Retail Supplier Over Incremental Supply Costs Charged To Customer Due To February Winter Storm -- EnergyChoiceMatters.com

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Texas Customer Files Lawsuit Against Retail Supplier Over Incremental Supply Costs Charged To Customer Due To February Winter Storm

April 16, 2021

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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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Updated, 7pm ET, 4/16:

A spokesperson at Symmetry Energy provided an additional statement concerning the matter:

"While we generally do not comment on pending litigation, we believe this lawsuit is without merit and we look forward to vigorously defending Symmetry against these allegations.
"We are disappointed to see inaccurate and misleading statements about Symmetry, as well as other baseless claims in this lawsuit. We believe the plaintiff’s claims fundamentally mischaracterize our business, which is predicated on the principles of trust, integrity and putting customers first.
"Together with other natural gas marketers, Symmetry has an important role in the distribution of natural gas to end user customers. Throughout the well documented volatile and supply constrained period that resulted from Winter Storm Uri, which severely disrupted electricity and natural gas markets in large parts of the country for a sustained period, Symmetry worked tirelessly to secure replacement gas to meet the ongoing needs of our customers in real-time.
"Symmetry is proud of the consistent, high-quality service and value we provide to thousands of commercial, industrial and residential customers across the country. We remain fully committed to transparency and focused on providing our customers with innovative and reliable energy solutions and superior service."
--- Statement from a spokesperson at Symmetry Energy

Earlier:

Certified Roses, Inc. (Plaintiff), a harvester and wholesaler of roses with a facility in Tyler, Texas, filed in federal court a lawsuit, seeking class action status, against retail natural gas marketer Symmetry Energy Solutions, LLC, as Certified Roses alleged that Symmetry breached its contract with the Plaintiff, and alleged that Symmetry violated the Texas Deceptive Trade Practices Act in billing, to the Plaintiff, incremental supply costs from the February winter storm in Texas

A spokesperson at Symmetry Energy provided the following statement concerning the matter:

"While we generally do not comment on pending litigation, we believe this suit is entirely without merit and we look forward to vigorously defending Symmetry against these allegations."
--- Statement from a spokesperson at Symmetry Energy

In a communication to customers posted on its website, Symmetry stated, "As a retail natural gas marketer, Symmetry’s role is between suppliers and our end-user customers. Symmetry incurs supply costs largely at the time of purchases made to supply its customers and passes these costs on to customers in accordance with its contracts and rate agreements. This means that Symmetry does not produce gas and it does not set market prices; the price of natural gas is set by the market."

The suit alleges that Symmetry charged Certified Roses $248,943.48 for Plaintiff's gas use in February 2021, which is alleged to be an over 2,000% increase from its February 2020 bill.

Certified Roses contracted with Symmetry to provide natural gas for its business in Tyler, Texas, agreeing to an index price contract with Symmetry in 2015. The contract terms were automatically renewed yearly.

The suit alleges that the Inside FERC’s Gas Market Report was to be used to calculate the price for natural gas obtained by Certified Roses

The suit further alleges with respect to pricing, "Symmetry represented its natural gas service plan reflected its local market expertise. The plan would meet their customers’ budgetary needs, offer competitive pricing, and reflect a reasonable price and cost range, i.e., not be subject to severe fluctuations."

Notably, in continuing this description of pricing under the contract, Plaintiff states, "The services would entail index pricing based off the Inside FERC’s Gas Market Report and limited Utility Transportation pass-through costs and other fees and taxes, all of which would reflect a reasonable range of price and cost differences to customers from month to month."

The suit alleges that, "On March 15, 2021, a month after the winter storm ended, Symmetry said to its customers: 'The February invoice will, where applicable, include separate line items for the additional costs to supply your natural gas during Winter Storm Uri, including any applicable penalties assessed, to date, by the pipelines or LDCs [local distribution companies].'"

The suit alleges that, "On March 16, 2021, Certified Roses received its February 2021 invoice, which included a line-item amount for 'Incremental Supply Costs' of $233,494.59. Symmetry passed on the supply costs it incurred when purchasing natural gas to meet demand during the winter storm. Symmetry did not have adequate amount of natural gas on hand, so, to meet its customers’ needs, it secured gas, but incurred penalties associated with curtailment."

In a communication to customers posted on its website, Symmetry said that it received numerous force majeure notices and supply cuts from gas producers and other suppliers who were unable to deliver gas because of freeze offs caused by the severe weather

"On February 12th Symmetry issued a communication notifying its customers that the severe weather from what is now known as Winter Storm Uri was expected to cause significant supply disruption and substantial increases in market prices in many markets, including those served by Symmetry. Symmetry encouraged customers to speak with their Symmetry representative and also to mitigate their consumption of gas during this period. As Symmetry noted in its communication, customers who continued to consume gas in these markets would be exposed to the extremely high cost of natural gas and possible pipeline/LDC penalties, with a result that invoices could be appreciably higher than normal. Symmetry received numerous force majeure notices from gas producers and other suppliers who were unable to deliver gas because of freeze offs caused by the severe weather, which it appropriately passed onto customers," Symmetry said in the customer communication

More specifically, the suit alleges that, "Symmetry billed $3.07 per MMBtu for 3,849 MMBtus of natural gas used. Symmetry also charged Certified Roses $233,494.59 in 'Incremental Supply Costs.'"

The suit alleges that, "The contract between Certified Roses and Symmetry does not mention or define 'Incremental Supply Costs'. Symmetry could not provide further clarity to Certified Roses except for a breakdown of the 'Incremental Supply Costs' incurred from February 10 to 22, 2021."

The suit alleges that, "Symmetry has not offered an adequate explanation for any of the charges within the February 2021 invoice."

Plaintiff alleges breach of contract.

The Texas Deceptive Trade Practices Act (DTPA) prohibits, "false, misleading, or deceptive acts or practices in the conduct of any trade or commerce."

The suit alleges that, "DTPA §§ 17.46(b)(2), (5), (7), (9), and (12) prohibit Symmetry from: causing confusion as to the source of services; representing services have characteristics, uses, benefits or quantities that they do not have; representing services are of a particular standard if they are of another; advertising services with the intent not to sell as advertised; and representing an agreement confers rights, remedies, or obligation that it does not have."

In the communication to customers posted on its website, Symmetry states, "Throughout the volatile and supply constrained period, Symmetry worked tirelessly to secure replacement gas wherever possible to keep natural gas flowing and meet the needs of our customers in real-time. As a part of our commitment to transparency and keeping our customers informed, we also provided active and ongoing communication related to notices we received that would impact customers and we continue to work closely with our customers as they receive invoices for the gas supplied during this event, which we recognize are in many cases significantly higher than normal for the reasons described."

In the communication to customers posted on its website, Symmetry states , in discussing why prices were so high during the weather event, "Importantly, this was a market-wide event and virtually all industry participants were impacted – not just Symmetry."

The suit alleges that, "Symmetry represented and led Certified Roses and Class Members to believe its natural gas service plan reflected its local market expertise. The plan would meet their budgetary needs, offer competitive pricing, and reflect a reasonable price and cost range, i.e., not be subject to severe fluctuations. Symmetry, through its advertising and marketing, misled Certified Roses and Class Members when it failed to disclose the true risks of its plan that passed through excessive natural gas supply prices and costs. Instead, Symmetry charged its customers inflated and excessive prices and costs during and because of the winter storm."

The suit alleges, "Symmetry was well-aware the exposure of Certified Roses and Class Members could radically increase when the natural gas market faced inclement weather and curtailment. In such an event, Symmetry knew it would pass on the costs to its customers with no explanation. Rather than relay the truth and be transparent, Symmetry chose to downplay the plan’s risk at the expense of its customers. Ultimately, Certified Roses and Class Members were unable to ascertain the extent to which they would bear the brunt of the natural gas price and cost inflation."

The suit alleges, "To acquire customers, Symmetry advertised and marketed its natural gas service plan as offering competitive pricing to meet customers’ budgetary needs. Had they understood Symmetry’s pricing scheme and the possibility of inflated and excessive prices and costs, Certified Roses and Class Members would not have agreed to Symmetry’s services."

The suit alleges, "Symmetry’s charging of excessive natural gas prices and costs is unconscionable. An unconscionable act 'takes advantage of the lack of knowledge, ability, experience, or capacity of the consumer to a grossly unfair degree.' Tex. Bus. & Com. Code § 17.45(5). Symmetry engaged in a predatory tactic by passing on natural gas prices and costs to its customers. Certified Roses and Class Members could not appreciate the extent of Symmetry’s tactic and its impact on them. Symmetry took advantage of this lack of knowledge to a grossly unfair degree when offering and selling its plans to its customers. Symmetry’s unconscionable acts were a producing cause of damages."

"Symmetry failed to disclose the extent of risk associated with its plan. If its plan could result in over a 2,000% price increase from the previous year, Symmetry should have disclosed the possibility of such an outcome to Certified Roses and Class Members," the suit alleges

Plaintiff also alleges that natural gas is subject to Texas' anti-price gouging statute. While the term natural gas is not cited specifically in the statute, the statute does list "fuel" as a service subject to the anti-price gouging statute. The statute also states that its prohibition on "exorbitant or excessive price[s]" during a disaster applies to, "or another necessity," in addition to the specifically enumerated goods and services

Symmetry Energy Solutions is the entity which was formerly known as CenterPoint Energy Services. As a result of a previously reported transaction last year, Symmetry Energy Solutions is now owned by Energy Capital Partners. Symmetry Energy Solutions is no longer owned by CenterPoint Energy

The Plaintiff alleged that Symmetry provides natural gas to over 100,000 residential and commercial customers in over 30 states.

The suit is Certified Roses Inc. v. Symmetry Energy Solutions LLC, No. 2:21-cv-00133, filed in United States District Court for the Eastern District of Texas, Marshall Division

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