Griddy Energy is accused of downplaying the inherent risks of variable rate electric plans that led to bills in the thousands of dollars during last month’s storm.
(CN) — Texas Attorney General Ken Paxton on Monday sued an electric company accused of blindsiding its customers with sky-high bills in the middle of last month’s deadly winter storm.
The company, Houston-based Griddy Energy, has come under fire for billing its customers who still had power during the storm thousands of dollars, a direct result of the “variable rate” pricing plans the company offers.
Under those kinds of plans, which are legal in Texas, customers pay a fluctuating monthly bill based on the ups and downs of wholesale electric prices as opposed to a fixed monthly rate. As many as 30% of Texas households are on some kind of variable power plan, according to Houston Public Media.
Such plans come with some inherent risk, as wholesale prices can skyrocket when demand is high just as they did during last month’s storm. But in Monday’s lawsuit, Paxton accuses Griddy of “consistently downplaying the risk to the consumer” through “confusing and contradictory statistics.”
“Griddy misled Texans and signed them up for services which, in a time of crisis, resulted in individual Texans each losing thousands of dollars,” Paxton, a Republican, said in a statement announcing the lawsuit. “My office will not allow Texans to be deceived or exploited by unlawful behavior and deceptive business practices.”
Much of the lawsuit centers on claims that Griddy continued automatically deducting bill payments from customers even as most of Texas remained essentially shut down from the storm.
Paxton’s office reported received more than 400 complaints from Griddy customers in the wake of the storm.
In one complaint, according to the lawsuit, an elderly woman in Arlington whose account was overdrawn because of a more than $1,000 Griddy bill said that she emailed the company for leniency because she was snowed in and couldn’t get to the bank.
“Please give me until Monday when I can safely go out and take care of my balance,” the woman allegedly asked the company. “If I can safely go out before then, I shall.”
Still, Paxton’s lawsuit claims, the woman’s plea went unanswered and the company continued withdrawing hundreds of dollars from her account a few days later.
The lawsuit comes just days after a woman in southeast Texas filed a $1 billion class action against Griddy.
Late Friday, the operator of the Texas electric grid revoked the company’s right to operate in the state. In a statement on its website, Griddy acknowledged the move essentially pushed it out of business.
“Today, ERCOT took our members and have effectively shut down Griddy,” the company wrote, referencing the state grid operator. “On the same day when ERCOT announced that it had a $2.1 billion shortfall, it decided to take this action against only one company that represents a tiny fraction of the market and that shortfall.”
In a statement, Griddy spokesperson Lauren Valdes said the company does not agree with the claims alleged in the complaint and plans to “vigorously defend against it.”
In earlier statements before Monday’s lawsuit, Griddy had suggested it was not the one to blame for its customers’ massive bills.
“We know you are angry and so are we,” the company wrote in a blog post on February 18. “Pissed, in fact.”
The company has instead blamed the Public Utility Commission of Texas for its decision during the storm to raise wholesale power prices to the maximum level allowed in Texas, a move meant to incentive power plants to ramp up as other plants froze and shut down.
“The market is supposed to set the prices, not political appointees,” Griddy’s unsigned blog post read.
On Monday, Texas Lieutenant Governor Dan Patrick called for the resignations of PUC Chair DeAnn Walker and ERCOT President and CEO Bill Magness, saying the two entities did not adequately prepare for the storm’s impact on the electric grid.
Hours later, Walker announced her immediate resignation in a letter to Governor Greg Abbott.
Still, in the letter, Walker pointed the finger at others over the crisis.
“I testified last Thursday in the [state] Senate and House and accepted my role in the situation,” she wrote. “I believe others should come forward in dignity and courage and acknowledge how their actions or inactions contributed to the situation.”
Ed Hirs, a University of Houston energy fellow who has long warned about problems with the Texas power sector, said he failed to see the merit in the lawsuit.
“Really, Griddy’s not responsible for the prices, under various constructions the state of Texas is,” he said. “The fact is that the Public Utility Commission let Griddy in.”
Moreover, Hirs said, Paxton’s lawsuit itself notes that similar wholesale price spikes have happened before during the state’s record summer heat waves.
“The attorney general, if he’s so worked up about it this time, could’ve well filed the suit in August…or the prior year when Griddy had a couple of spikes,” he said. “The horse was out of the barn more than a year ago.”
Griddy is not the only Texas power company facing an existential threat from the winter storm. On Monday, the Brazos Electric Power Cooperative – the nation’s oldest and largest electric co-op that serves more than 1.5 million Texans – filed for bankruptcy, according to the Associated Press.