Griddy Energy settles with Texas, releasing customers from $9,000 power bills during freeze
Former customers of the electric utility Griddy Energy will not have to pay outstanding bills under a settlement announced Monday by Attorney General Ken Paxton.
Griddy Energy sold power to consumers at wholesale prices plus a $9.99 monthly fee. Its rates skyrocketed during the February freeze when the state grid operators raised wholesale prices to $9,000 per megawatt-hour, saddling some customers with thousands of dollars in bills.
The state sued Griddy, which filed for bankruptcy in March. The utility confirmed a liquidation plan that waives claims against customers for charges incurred from February 15 through 19, while the $9,000 per megawatt-hour price for wholesale power was in effect. Texas Attorney General Ken Paxton said his office then entered negotiations toward a settlement.
"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," Paxton said in a statement.
Texas was hit with historic snowfall and single-digit temperatures in an icy blast that cut across the Deep South for days starting February 14. At least 210 people died in the freeze, mostly from hypothermia after their electric service failed and they lost their heating.
Prices began to spike as the Arctic storm approached Texas, and many power generators shut down. Frozen natural gas wellheads stopped production and transportation of fuel; the cold also knocked out coal plants, a nuclear plant and temporarily froze over wind turbines.
Griddy warned customers they would face price increases and told them to attempt to switch to another provider. Those who didn't were hit with bills in the thousands of dollars.
About 24,000 Texans have outstanding bills from Griddy, according to the attorney general's office. Under the settlement, they won't have to pay those bills. Those who have already paid their Griddy bills will be able to apply to the bankruptcy court for reimbursement, the attorney general's office said. The company had 29,000 customers when the freeze hit, the Texas Monthly reports.
"Ordinarily, when a large number of consumers are ripped off, it's very difficult for them to receive even a small percentage of what they lost," Richard Alderman, director of the Center for Consumer Law at the University of Houston, told CBS MoneyWatch.
"For those who haven't paid, it's 100 cents on the dollar that they've saved," he added.
Former Griddy customers who paid inflated bills and want reimbursement should contact the bankruptcy court and ask for a proof of claim, or seek the help of a lawyer, Alderman said.
Texas Governor Greg Abbott, a Republican, blamed February's power failures on the Electric Reliability Council of Texas, which manages the grid entrusted with providing electricity to the bulk of the state. ERCOT's chief executive was fired and the three members of the Public Utility Commission that oversees the council resigned.
The governor appointed new commission members, and a new ERCOT CEO was appointed. The Legislature passed measures intended to strengthen electric service reliability, leading Abbott to declare the grid's shortcomings fixed. However, ERCOT appealed twice during the spring for electricity users to conserve power, prompting Abbott to demand aggressive action by the utility commission.
CBS News' Irina Ivanova contributed reporting.
