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Senator Tina Smith calls for investigation into gas price hikes during Arctic freeze

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After the Polar Vortex descended on the U.S., natural gas customers began to see price hikes of up to 100 times normal rates. Senator Tina Smith of Minnesota joins CBSN to explain why she's calling for an investigation into possible price gouging.

Video Transcript

LANA ZAK: After that historic storm hit Texas last week, we're learning more about the toll that record low temperatures are taking on Americans in the South, and much of the Midwest as well. There are new allegations that electrical companies price gouged customers scrambling to keep warm and impacted areas. It's led to Democratic Senator Tina Smith of Minnesota to call for a federal investigation into the accusations and financial relief for potentially millions of families. In a letter sent to US regulators, Senator Smith says natural gas prices spiked, in some cases, to nearly 100 times their typical levels.

And Democratic Senator Tina Smith joins me now. Senator Smith, good to have you with us-- unfortunately, on an uncomfortable topic. The crisis in Texas is really having ripple effects on the natural gas market across the United States. How have your constituents in Minnesota been affected?

TINA SMITH: Well, Lana, thank you. And that's exactly right. We all watched this terrible situation unfold in Texas last week with people losing their power, then losing their water, and literally people losing their lives. It was a complete failure. But I don't think that my constituents in Minnesota really thought about how that could affect them until we started to see, in the midst of this crisis, these natural gas companies spiking up natural gas prices-- in some cases, 100 times what they would normally be.

Here's just one example. In Hibbing, Minnesota, up on Minnesota's Iron Range, the home of Bob Dylan-- it's a community of about 16,000 people-- they normally pay that local utility about $4 for a unit of natural gas. And in the midst of this crisis, the price is jacked up to over $260 a unit. So that is over a million dollars of cost that that community wasn't expecting. And somebody is paying for that. It is the utility rate payers in Minnesota. And what I'm concerned about is they're paying that when they can least afford it, and that money is going straight to these natural gas millionaires and billionaires who, I think, I'm very fearful have taken advantage of a terrible situation.

LANA ZAK: Well, I've been covering the situation in Texas and looking at some of those tremendous energy cost spikes-- in that case, electrical in the Lone Star State. It's very surprising, though, that folks in Minnesota and across the country, really, are bearing the brunt of this as well. So explain for our viewers what you're actually asking for in your letter to regulators.

TINA SMITH: Well, in the letter that I sent to the Department of Energy on Saturday, I asked them first to look into potential price gouging and how-- whether any laws were broken. I also asked them to take a look at what we could do to make sure that these kinds of spikes don't happen again, and whether there was any tools that the federal government has to mitigate the impacts of this on utility ratepayers.

One thing that I want to draw people's attention to is that the COVID relief package that will be voted on any minute, I think, in the US House and will come to the Senate next week, that package includes heating assistance for Americans. So that could be another tool to help people who have been hit by what could be hundreds of dollars of extra utility costs, and right at a moment when families, many families, can least afford it. Because they're already struggling with not being able to pay their utility bills because many people have lost their jobs because of COVID.

LANA ZAK: Yeah. Well, as you say, part of your effort is to investigate whether any laws have been broken. Is there a law against price gouging during disasters there in Minnesota? What about some of these other sites? If-- I guess part of what's interesting about this is if the natural disaster happens in another state, do Minnesota's laws still protect folks there?

TINA SMITH: Yeah. Well, it's a great question. And there are-- we're looking both at federal laws and also at state laws. Minnesota's attorney General, Keith Ellison, is also doing an investigation to understand what state laws might have been broken. And our Public Utilities Commission here in Minnesota is also looking at what's happening and getting all the data together to understand what can be done.

But price gouging basically means that when you have a shock to a system, either supply shock or a demand shock, if businesses in the midst of that crisis manipulate prices in order to drive them up, you can't do that. I mean, that's what happens when you have a disaster like a Hurricane Katrina and suddenly the price of water or extra blankets goes from just a few dollars to exorbitant price increases. It's really profiting on the misfortune of other people and it is just outrageous.

LANA ZAK: Well, a spokesperson for the American Gas Association, which represents more than 200 local energy companies, said, quote, "Spot prices climbed in some regions due to spikes in demand. Families and businesses that use natural gas were protected from higher prices by the careful planning of their utilities." What is your response to that?

TINA SMITH: Well, I've heard that response, and I have to say that to blame the families-- it sounds to me like they're blaming the families or the utilities for poor planning if they had to rely on the spot market, when in fact, they were the ones that allowed these prices to go up, as I said, sometimes 100 times the normal price. And understand what that means. It means that in Minnesota, utilities-- and ultimately, ratepayers-- saw, over a very short period of time, additional costs of over a billion dollars, we think. We are still gathering all the data. So I don't think it is reasonable to say, oh, that's just bad planning on the part of utilities who failed to hedge their natural gas prices well enough.

LANA ZAK: And 100 times the standard price. That's-- that's something more than just proper planning. All right, switching gears now. You are pushing for more financial relief to stabilize child care. You've also introduced a bill to help rural hospitals. Do you see your legislation passing as part of this larger COVID-19 relief package?

TINA SMITH: I'm very optimistic that those two provisions you mentioned supporting, child care providers and also helping rural hospitals, will pass in this COVID package. A lot of the challenges that we see were there before COVID, but now they've just been made so much worse. And that's definitely the case with rural hospitals who were struggling before, and now really have seen big challenges.

So I'm excited to see that get done. It is a bipartisan effort, and I think that is a sign of how important it is. And the child care provisions are also extremely important. Child care has really suffered during COVID, and child care is basic infrastructure for families. If you can't have a safe, affordable place for your child while you're working, you can't work. And this is one of the reasons I think we're seeing so many women drop out of the workforce right now, because of challenges with child care. So I'm optimistic we'll be able to get that done.

LANA ZAK: Before we go, you're coming to us from Minneapolis, and the federal grand jury trial looking into the death of George Floyd starts a little bit more than a week from now. Obviously, Mr Floyd was killed there in that city. What are you hoping that you will see come out of this?

TINA SMITH: Well, the trial for Derek Chauvin, who is accused of killing George Floyd, will begin in just a few days. I think, like many Minnesotans and people all over the country, we are looking for justice and for accountability in this murder that we all saw with our very eyes. This trial is going to be a moment-- I think a real reckoning-- for us here in Minnesota. George Floyd was murdered just a few miles from where I live, and having justice for his killing is extremely important.

But of course, the murder of George Floyd also raised so many issues about justice in our criminal justice system more broadly. And I hope that as we go through this trial, that we will also recommit ourselves to addressing the systemic injustice that we see every day in our judicial system that we can't fix with one trial, that we have to fix with changing policy.

LANA ZAK: Senator Tina Smith, thank you.

TINA SMITH: Thank you very much.