Power company Griddy will cancel $29.1 million in unpaid bills if Texans drop lawsuits
Griddy Energy, the wholesale electricity provider that came under fire for charging Texans enormous amounts during the February winter storm, will release 24,000 former customers from $29.1 million in unpaid bills if its bankruptcy plan is approved and customers agree not to sue for relief.
The embattled company filed for Chapter 11 bankruptcy on Monday, making it the third Texas energy provider to do so behind Brazos Electric Power Cooperative and Just Energy Group. Griddy was banned from the state’s power markets in February, and is already facing a $1 billion proposed class action lawsuit from a former customer in Harris County.
In its announcement, Griddy said it is seeking approval of its reorganization plan, including the millions in bill relief, within 80 days of filing. U.S. Bankruptcy Judge Marvin Isgur, who is overseeing the case in Houston, said Griddy officials must inform customers that the company wants to exchange bill cancellations in return for dropping lawsuits.
“This is a difficult case,” Isgur said during the company’s first day in court, according to Bloomberg. “I really am worried that we handle it properly.”
Michael Fallquist, Griddy’s chief executive officer, said in a statement that the company was a “thriving business” that saved customers money until the electricity crisis hit and the Electricity Reliability Council of Texas, which regulates the state’s electric grid, raised wholesale prices to the cap of $9 per kilowatt-hour on Feb. 15 — a more than 10,000% increase from the week before.
Those skyrocketing prices were passed down directly to Griddy customers, who represent the small fraction of Texans not signed up for fixed electricity rates. Griddy said it encouraged customers to leave its platform before the crisis began and did not profit from the storm, since its business model depended on a $9.99 monthly membership fee and customers paying the market rate for how much electricity they used.
“The actions of ERCOT destroyed our business and caused financial harm to our customers,” Fallquist said in a statement. “Our bankruptcy plan, if confirmed, provides relief for our former customers who were unable to pay their electricity bills resulting from the unprecedented prices.”
Attorney General Ken Paxton, who sued Griddy earlier this month for violations of the Texas Deceptive Trade Practices Act, said he “ensured” that the company’s plan included bill relief. Because Griddy agreed to forgive unpaid bills, Paxton will drop the lawsuit and investigative orders against the company, according to the attorney general’s office.
However, Paxton acknowledged that Griddy’s bankruptcy plan does not address the charges customers already paid for during the storm.
“Griddy and my office are engaged in ongoing good faith negotiations to attempt to address additional relief for those Griddy customers who have already paid their storm-related energy bills,” Paxton said in a statement.
Many Texans saw hundreds and even thousands of dollars automatically withdrawn from their bank accounts. To avoid the ongoing charges, some customers bought $100 Visa gift cards and added those card numbers to their Griddy accounts, according to several North Texans who spoke with the Star-Telegram in February.
Jim Lukehart has already paid about $4,000 to Griddy for electricity he used to power his “energy vampire” home in Whitewright, near Sherman. His final bill, before he switched to another provider on Feb. 19, came out to $12,873.06.
“I knew that there were too many people out there that were on their knees that they weren’t gonna force us to pay that,” Lukehart said of Griddy’s bankruptcy plan. “I didn’t like that $8,500 over my head, but I also sure hate to think of the idea of paying $4,000 for 19 days.”
He is optimistic that the state will find a way to refund customers like him, who signed up for wholesale pricing knowing there was a risk of paying higher costs during summer months but never expecting to be responsible for multi-thousand dollar bills.
“I think it’s easier to relieve the unpaid debt, and getting refunds is going to be a little bit harder,” Lukehart said. “With the type of aid we send to foreign countries, I would think they’d find something. But again, everybody’s got their hand out, waiting for their turn.”
