On February 14, 2021, Texas saw historic snowfall and single-digit temperatures. As a result, electricity prices began to spike. Griddy Energy, which serviced about 24,000 Texans, warned its customers about the price increases and told them to switch to another provider. Unfortunately, Lisa Khoury was one of the customers who did not follow this advice and was very unhappy with the outcome.

In the proposed class-action suit, Ms. Khoury alleged that her bill between February 13, 2021, and February 19, 2021, rose to $9,340 as Griddy made daily withdrawals from her bank account. Typically, her bill is around $200 to $250 per month. However, Griddy does not charge customers fixed rates; it charges customers $10 per month and provides electricity at the wholesale rate. Thus, flooding and other storm-related conditions caused the wholesale rate to skyrocket. In a statement on the company’s website, Griddy stated that the Public Utility Commission of Texas (PUCT) directed ERCOT, the council that manages the flow of power to Texans, to set wholesale pricing at $9/kWh – roughly 300 times higher than the regular wholesale price. Many others received similar bills, so the class action suit asked for more than $1 billion from Griddy for allegedly violating the Texas Deceptive Trade Practices Act.

However, in a turn of events, Griddy filed for Chapter 11 Bankruptcy on March 15, 2021. This filing allowed the company to work out a liquidation plan that waives claims against its customers for charges incurred from February 15, 2021 to February 19, 2021, and those who already paid can apply for reimbursement.

So, it worked out for the Texas customers in this case. Nevertheless, the main point of this blog post is to shed light on the possible negatives of this type of wholesale electricity structure so that customers in the future are not surprised if they receive large bills or money drawn from their accounts in a time of emergency.