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Texas energy company Griddy has been stricken from participating in the Lone Star State’s power exchange in the wake of a payment breach, said a published report.
Bloomberg News reported that the Electric Reliability Council of Texas rescinded Griddy’s rights to engage in the Texas energy market on Friday.
Previously, Griddy said it would not challenge prices that ERCOT set during the recent weather-related energy crisis.
The company came under fire earlier this week as Texas power customers were hit with massive electric bills at the height of rolling blackouts reportedly caused by a failure of the state’s grid that began with power-generating windmills freezing and becoming non-functional.
Customers were charged as much as $17,000 within a few days’ time, even though many did not have power, as prices spiked from $50 per megawatt to $9,000.
The company is now at the center of a $1 billion class-action lawsuit accusing the firm of price-gouging during the unprecedented storm. The suit also accuses the company of not protecting customers from sky-high energy prices.
Several customers posted their bills to social media, many of which had ballooned to $1,500 or more in just a few days.
Customer bills skyrocketed during the storm because Texas is one of a handful of states with variable electric rate plans as a result of deregulating the industry in the state. The plans rely on market conditions, and while that scheme results in lower-than-average electric rates the vast majority of the time, the bitterly cold conditions combined with widespread outages to dramatically increase usage and per-megawatt prices.
“In an energy market where prices are falling, choosing a variable rate plan may end up saving you the most money. You’ll be able to take advantage of declining prices rather than being stuck in a higher-priced contract,” Smart Energy, an independent firm, notes on its website.
Variable-rate plans also come with no cancellation fee so customers aren’t financially penalized when they switch companies.
But many companies and experts most often recommend fixed-rate electricity plans in order to avoid the rare circumstances like those that occurred last week as the state’s grid, which is independent of all other grids in the country, failed, which in turn caused massive market fluctuations.
“One of the biggest benefits of fixed-rate plans is that they provide consistency and reliability. You’ll never be surprised by a sudden upswing in energy prices. This can be especially useful for those who want to avoid risk when it comes to their finances,” Smart Energy noted.
As customers reeled from their bills, NBC News reported that Griddy, in particular, automatically debited them as they used electricity. One family told the network they closed a debit card connected with their Griddy account because the billing firm wiped out their account as rates climbed.
That said, the company laid the blame for the excessive billing on state bureaucracy.
In a statement, Griddy said that the “Public Utility Commission of Texas (PUCT) cited its ‘complete authority over ERCOT’ to direct that ERCOT set pricing at $9/kWh until the grid could manage the outage situation after being ravaged by the freezing winter storm.”
That enforced change was apparently due to a dearth of power and a higher cost of delivering what power was available.
Griddy noted further that the PUCT left the price hike in place for days, even after 99 percent of the state had regained full power.
“For a home that uses 2,000 kWh per month, prices at $9/kWh work out to over $640 per day in energy charges. By comparison, that same household would typically pay $2 per day,” said the statement.
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Jon@bizpacreview.com
Jon is a staff writer for BizPac Review with 30 years' worth of reporting experience, as well as an author and U.S. Army veteran. He has a BA in political science from Ashford University and an MA in national security studies/intelligence analysis from American Military University.
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