Macquarie asks court to dismiss Texas Attorney-General’s gas lawsuit

Australian investment powerhouse Macquarie Group is fighting a lawsuit brought by the Texas Attorney-General that it manipulated the gas market in the US.

Macquarie Bank chief financial officer Alex Harvey. Picture: AAP

Macquarie Group has sought to have a lawsuit in the US dismissed which claims traders in its global markets division took advantage of a disastrous winter storm in 2021 to push energy prices up in Texas by overbidding for gas contracts.

Speaking at the Australian Shareholders’ Association conference, Macquarie chief financial officer Alex Harvey said the investment giant had filed a motion to dismiss the lawsuit that had been filed in the District Court of Kansas.

Media outlets reported that the lawsuit claims Macquarie traders artificially pushed gas prices from $US2.50 per million British thermal units to over $US600 per million Btu at a time of high demand.

“We have launched a motion to dismiss the matter and we hope that motion is successful,” he said.

Mr Harvey said Macquarie “actually help service communities in which there is a desperate need at a time when they can’t get energy supplies into that market”.

He said the division’s business was diversified and its profits not only came from trading commodities, but it also financed clients and helped them hedge risks and manage physical assets.

“What we try to do in these markets, and particularly in markets where there’s extreme weather events, is actually use our capabilities and use our knowledge of the market to help move that product from where it is to where it needs to be.”

He said this was done in Texas “to relieve the pressures occurring in communities all over”.

Macquarie is among the largest US gas traders after its deal in 2017 to buy Cargill’s North American power and gas business – its profit surge a reminder of a polar vortex that hit New York and spiked power prices.

In 2021, the US’s biggest ­energy producing state was paralysed and without power for days as gas and power generators froze and tripped offline, leading to a grid meltdown.

With the Texas grid isolated from the rest of the country, Macquarie was able to profit by tapping its huge US gas and oil storage position as its clients clamoured to grab emergency volumes of both the fossil fuel and supplies of electricity.

According to the lawsuit, Macquarie was able to raise the price of gas contracts between February 13 and February 17, by overbidding on only eight contracts at a time when the storm raged.

Macquarie was reported to reap up to $270m in profits after gas briefly soared 300-fold to $US1250 per million British thermal units, while electricity in Texas hit a $US9000 per megawatt hour price cap.

The windfall was so large that it led to Macquarie upgrading its annual profit guidance to be between 5 per cent to 10 per cent higher than the 2020 result of $2.73bn.

The boss of Macquarie’s commodities and markets division, Nick O’Kane, raked in a bumper pay of $57.6m this ­financial year.

A spokeswoman for Macquarie said: “Macquarie believes the Kansas Attorney-General’s lawsuit is without merit.”

She said the motion to dismiss, filed in the United States District Court of Kansas, details “the A-G’s unfounded claims against Macquarie”.

“Macquarie Energy is just one of over a hundred US energy suppliers involved in ongoing litigation stemming from their role in maintaining critical energy supply during unprecedented freezing weather events across the United States in February 2021,” she said.

Macquarie’s net profit climbed 10 per cent in the 12 months ended March 31, compared with the previous year’s $4.7bn, and bettered analysts’ ­expectations of a full-year net profit of about $5bn.