Attorney General Ken Paxton sued Griddy a few weeks ago for “misleading” market practices, namely that the provider’s service enables prices lower than the average retailer when really they’re slightly higher. Additionally, the suit alleged the utility company locked customers into services and then continued automatic withdrawals from bank accounts despite the exorbitant totals.
The winter storm’s cost shouldered by Griddy was too much for the company and Chapter 11 remained the only way past total insolvency.
“Prior to Winter Storm Uri, Griddy was a thriving business with more than 29,000 customers who saved more than $17 million dollars since 2017. The actions of ERCOT destroyed our business and caused financial harm to our customers,” said Griddy CEO Michael Fallquist of the bankruptcy filing.
The ERCOT action to which Griddy refers is the order hiking the day-ahead wholesale pricing up to its $9,000 megawatt-hour (MWh) cap, at which it remained from mid-Monday until Friday morning. There is currently a debate over the efficacy of that price order after the Energy Emergency Alert 3 was rescinded on Wednesday.
But Griddy insinuates that order’s existence in the first place was errant and caused prices to balloon far greater than they would have without bureaucratic intervention.
Customers of Griddy found themselves with massive bills, the most egregious of which was a $17,000 bill for a couple of days of service.
Paxton celebrated the news of bill forgiveness, stating, “I ensured that Griddy’s proposed bankruptcy plan takes an important step forward by offering releases to approximately 24,000 former customers who owe $29.1 million in unpaid electric bills.”
“My office sued Griddy Energy, under the Texas Deceptive Trade Practices Act, to hold them accountable for their escalation of last month’s winter storm disaster by debiting enormous amounts from customer accounts as Texans struggled to survive the storm,” he added.
In exchange for the outstanding debt release, Paxton said his office will disband the lawsuit, and that the two entities will “attempt to address additional relief for those Griddy customers who have already paid their storm-related energy bills.”
Griddy’s business plan stands in jeopardy as legislation to prohibit that kind of service for residential customers has been given high priority in the Texas House. They would still be able to offer service to industrial and commercial customers, but the innovation in their model was providing that to residential customers, too.
But legislators and other officials have criticized the model for not adequately representing the risk accompanying wholesale-indexed electricity retail.
The company concluded, “We built Griddy to improve an antiquated industry by giving our customers access to wholesale pricing, real-time data and the ability to help balance the grid while lowering their own bills.”
While one question in the post-blackout fallout has been answered, many more remain.
Disclosure: Unlike almost every other media outlet, The Texan is not beholden to any special interests, does not apply for any type of state or federal funding, and relies exclusively on its readers for financial support. If you’d like to become one of the people we’re financially accountable to, click here to subscribe.
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.