In total, that amounted to $29.1 million in utility bills after the blackouts.
“[The February blackouts] devastated the lives of many Texans, and my office engaged in good faith negotiations with Griddy Energy, LLC to provide some relief after they filed for bankruptcy,” said Attorney General Ken Paxton in a statement.
“I am pleased with the result of those negotiations, and I will continue to fight to protect the livelihoods of all who live in this great state.”
Texas has an electricity market in which generators are only paid for how much electricity they provide, rather than negotiating price and generation upfront. With that, the price for electricity on the Electric Reliability Council of Texas (ERCOT) market fluctuates based on demand and available capacity.
Griddy’s business model, unlike most other Retail Electric Providers (REPs), offers ratepayers electricity indexed at the wholesale cost plus a small fee. During normal times, or so the theory goes, this generally allows those customers to save some money compared with the more standard flat rate or flat monthly charge.
But it also poses risk being tied to the market’s fluctuations.
And so when electricity prices jumped into the thousands of dollars, and eventually the $9,000 per megawatt-hour (MWh) cap, Griddy customers’ bills followed.
Griddy was then sued by the Office of the Attorney General (OAG) for “false advertising” about potential savings and the implied risks.
“Griddy’s marketing persistently misled its customers about the nature and extent of this risk and the costs customers could expect when utilizing Griddy’s services,” the OAG lawsuit claimed.
Shortly after the announcement of the suit and its Chapter 11 bankruptcy filing, Griddy buckled under the lawsuit’s weight and announced it’d forgive the utility bills incurred during the February blackouts.
Now finalized in the settlement’s terms, that forgiveness is official and former Griddy customers who already paid parts or all of their utility bills stemming from the winter storm-caused scarcity pricing may seek legal claim in bankruptcy court to regain those monies.
Additionally, the court’s injunction prohibits Griddy from “making any false or misleading statements in the advertising of retail electricity.”
Griddy advertised its product by saying its customers’ electricity costs were “20 percent less” than the state average. But when compared with numbers from the Energy Information Agency (EIA), Griddy’s cost is $0.25 higher than the state average.
In the suit, the State of Texas identified this as one of multiple “false or misleading statements” by the wholesale electricity provider.
The financial fallout from the February blackouts will take years to iron out, and Griddy’s corner of it pales in comparison to the broader billions-of-dollars repricing fight that has enveloped the Texas legislature.
Griddy’s website is no longer operational. Its Twitter account, that’s been inactive since March, says in its bio, “At Griddy, transparency has always been our goal. We know you are angry and so are we. Pissed, in fact.”
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Brad Johnson is an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad quoting Monty Python productions and trying to calculate the airspeed velocity of an unladen swallow.