Woman who received $9,300 electric bill sues wholesale electric provider
texastribune.org
texastribune.org
As a Griddy customer I wanted to share some additional perspective:
Griddy’s app provides real-time prices as well as the projected prices for the next couple days.
During the past week i was getting notifications every five minutes on the current price.
Their interface shows your daily energy usage in terms of kwh as well as price.
The whole point of being a customer at griddy is to reduce power use during spikes. They do a great job providing data on when you need to reduce usage. It’s in their interest for customers to have this data. As far as i can tell they only make their money from the $10 monthly fee. High prices don’t help them.
In the end we essentially unpowered everything. We charged phones, left our modem/router on and kept our gas furnace set to 59. With blankets it was fine for us and we knew this was a possibility going into this plan (minus the extra difficulty of covid)
I think it’s disingenuous to have these articles about high bills without providing how much energy they were consuming and what they were using it on. Even at $9/kwh a $9000 bill would more energy usage in a couple days than we have in a month or more (we live in 4 bed house)
1,000 kWh seems like plenty for a few days though.
It will be interesting to see how the courts treat this. She’s suing over price gouging, which is a grey area anyway, but seems very difficult to prove when the grid was on the verge of collapse. Power prices are volatile because it’s (for all intents and purposes) an immediately perishable good.
Even if it puts her in the red, I hope the courts don’t succumb to the populism.
I agree on a whole, but this doesn't align with the day to day reality for many people with these huge bills. With a large percent of the country unable to pay an unexpected $400 bill and living paycheck to paycheck, they won't have the long-term net savings there ready for a time like this. Instead they're in a sudden financial bind roughly equivalent to crashing a car and having it not covered by insurance.
People are really bad at understanding low probability events. People had never seen prices in that realm before. Multiply the two, and here we are.
I understand the red scare left people thinking that any kind of socialism will instantly turn into bread lines but I think that allowing more government oversight to make sure those who are left shafted by the tribulations of life get some assistance is the only real ethical choice.
they claim an average savings of around $600 per year. So if this is a once-every-16-years event then she'll come out on top, on average.
Please have compassion. I need to take a break from this site, these comments make me sick sometimes
She was happy to take lower rates 99.9% of the time. She can’t cry foul the 0.1% of the time when the trade goes against her.
If you're a person completely devoid of empathy, yes that is a fine perspective.
We all know what happened here is that Texas politicians deregulated the power system in a way that allowed for people to be taken advantage of. Your ire shouldn't go towards this woman who is probably doing this as a last resort, but to the politicians who sold out a public utility and any investment in the electric grid for the public good so a few people could profit.
This is not about deregulation. This is about someone taking a risk that didn’t work out, and trying to get a court to fix it for her.
The word "risk" does not appear on the front page.
There's a hidden tab where they downplay the risk of spikes by saying $1 happens less than < 0.1% of the time and there's no bucket near the $9 that it cost last week.
It seems people have seen the "Socialize the losses" that the government has been doing in many industries and instead of recognizing it as corruptions and advocating its elimination they say "I gotta get me some of that"
Of course that is a game of musical chairs and when the music stops the dollar will be worth less than toilet paper but.....
how is it any different than being overleveraged in the stock market, and when the crash comes you end up losing your life savings and your job?
She wasn't running a bitcoin farm out of her house or anything, she was just doing normal day-to-day living.
In the default state (regular electricity provider, no investments), you're relatively insulated from price fluctuations. You can make the choice to gain exposure to various markets by various ways, buying stocks, buying futures, buying/writing options, etc. By doing so, you can earn some profit, but you're also exposed to risk. What I'm arguing is that there's nothing fundamentally different between the two because in both cases you're making the decision to be exposed to a market in exchange for profits.
Signing a contract for a utility shouldn't be equivalent to investing in a high risk financial instrument.
Why not? You willingly chose to expose yourself to it. You wanted to pick up pennies in front of a steamroller and got burned. It's the same whether you're doing it with stocks or commodities. To modify my original analogy a bit, it's like someone who was overleveraged in commodity futures (think corn, hog, and oil futures, all essential to survival), and got wiped out in a recession.
Can you sue the avocado provider for these rates? To me, it doesn't seem like it's out of the realm of reasonable given the money you've saved in the past through this provider.
It doesn't seem that hard to make an IOT electricity price display.
text alerts would also work.
The price system could have actually led to a better outcome here. If all the electric customers in Texas knew about the huge price spike, and actionable information like "You have electric heat, so if you heat normally, it will cost you $3000/day", many would have turned down their thermostats to the absolute minimum tolerable level, some would have fired up generators, and some would have shut things down and stayed with someone else. If everyone had been faced with that choice, there probably would not have been a need for the blackouts at all, and the price would have come down to a high, but less outrageous level. As it was, the supply was constrained, and the demand was essentially inelastic, because people didn't have any real incentive to radically conserve, since they weren't paying the wholesale rates.
Now that said, I'm not sure this is really a good idea after all. There are so many things that I'm supposed to be optimizing these days, I just don't have the bandwidth to think about all of them. I really am not interested in planning when I do the laundry or set the thermostat based on what is happening with the electrical grid. I'd much rather just pay somewhat of a premium for the grid to be overprovisioned like it used to be and not have to worry about any of this crap.
My point was more that the $9 per kilowatt hour wasn't even set by extreme market conditions; rather, it was an arbitrary number that someone made up (if Griddy's take is accurate).
Individual people wouldn't participate in a power auction; that's supposedly what Griddy does on their customer's behalf and just sends them a bill for whatever the costs were.
> At various times today, energy prices across the system have been as low as approximately $1,200. The Commission believes this outcome is inconsistent with the fundamental design of the ERCOT market. Energy prices should reflect scarcity of the supply. If customer load is being shed, scarcity is at its maximum, and the market price for the energy needed to serve that load should also be at its highest.
[0] Actually, there are 2 maximum prices, and $9/PWh is supposed to be the greater of them. Due to the high price of natural gas, the "lower" maximum turned out to be more expensive, to the commission waved the rule that would have switch to using the other maximum.
> (B) The high system-wide offer cap (HCAP) will be $9,000 per MWh and $9,000 per MW per hour. [0]
Thanks to the article for linking the order [1] which in turn cited the specific law. Also, it points out that the law actually allowed for an even higher price, as the "low system-wide offer cap" turned out to be greater than the "high system-wide offer cap". The public utility commission therefore elected to grant an exemption to allow continued use of the (cheaper) high system-wide offer cap.
If you, somehow, get past the fact that this price is literally and explicitly anticipated, allowed, and set by Texas law; and you assume that someone is guilty of price gouging, then you have an interesting question of what liability Griddy has.
[0] http://txrules.elaws.us/rule/title16_chapter25_sec.25.505
But I agree with you. This is going to be interesting. It should get dismissed but I have a feeling it won’t and that an overzealous judge will want to make a point about ERCOT.
https://web.archive.org/web/20201201084406/https://www.gridd...
The "Price spike occurrence" section says that prices exceed $1/kWh 0.1% of the time, but it's really not clear what level of financial risk you're signing up for. Maybe even Griddy wasn't aware of the risks.
In hindsight, nobody should have signed up for this service unless they had a backup generator and a system to automatically disconnect based on price.
I wouldn't say I'm critical of those people, I'm critical of the extremist laissez faire policies in Texas that led to this disaster in general and electricity wholesalers in particular. I am, however, critical of folks who would bemoan medicaid and disaster relief funds until it hits them - in this particular case I don't know enough about the individuals to judge - but asking for 1 billion in damages is pretty extreme if they lost 9k and were one of just 29k customers.
The problem is that they sold it to people who didn't understand the risks, and if that weren't the case, they would probably have too few customers to support the business model.
There are plenty of fixed rate providers. She opted to take this risk to save a few cents/kwh the rest of the time. This is the trade off.
Should we just force all poor people to pay the higher fixed rates that they supposedly can’t afford so that this never happens?
It’s completely irrelevant to the issue at hand.
There are no free lunches. You can’t just get the $600 in savings and complain about the risk.
The provider in question was providing a service at a variable rate. It had to have been clearly part of the terms.
Who to blame are the regulators. Variable rate loans shouldn’t be allowed and neither should this variable rate wholesale crap.
But suing someone over a bill in a class-action suit? Do you think the consumers will all get refunded fully? The law firm will get that money.
I'd consider myself a somewhat sophisticated financial trader and power derivatives are beyond me. I maintain calls on electricity generation by paying a fixed rate for power.
No brokerage firm would allow this person to basically gamble on spot electricity prices but somehow it's okay in the great state of texas.
Seems like this is just what the customer agreed to, if there isn't some price cap in their contract. Which isn't to say that the situation isn't awful or that I wouldn't investigate legal options if I were given a bill like that.
You could try to sue for negligence or not informing customers or whatever. But they simply are not gouging.
Edit: Also, I didn't appreciate that this wasn't even a market spike. The Texas government literally set a ludicrously high price, to try to boost supply:
> Texas’ Public Utility Commission, appointed by Abbott, raised the wholesale market price of electricity to $9 per kilo-watt hour — a 7,400% increase over the average 12 cents per kilo-watt hour — in response to rising demand. The hope was power generators would be enticed to produce more electricity.
So the charge is even more ridiculous that it first appears. Griddy is literally passing on the price set by the state government — and which they in turn were paying to suppliers.
On the other hand...
>Unlike many state price gouging statutes, [Texas’ Deceptive Trade Practices Act] does not contain an exception for increased costs
https://www.natlawreview.com/article/don-t-mess-texas-price-...
At a 10% markup it wouldn't matter, but when you're getting 70x the payout... you can make a lot of money from just a couple days of production.
Not to defend this lawsuit, but there may be some precedent. A lot of price-gouging laws seem to enforce the idea that it's better to shutter your business than to markup the costs of your goods.
The effects this has on exacerbating supply issues in disaster recovery is another matter entirely...
If a supplier was generating 1000kw for the last 12 hours, then if they increase that to 1100kw then that extra 100kw should have been at a higher rate.
All the PUC did here was give a tremendous amount of money to power suppliers that had already failed. I spent a lot of time watching the ERCOT real time system conditions page. Prior to the beginning of the blackouts, there was ~65GW of capacity. Within 6 hours of the rolling blackouts, capacity dropped to ~45GW and remained there for the duration of the crisis. The increase in rate did nothing to increase supply.
(not saying that effect would be big, just enumerating another aspect of it)
I’m surprised how much Griddy is in the news despite having so few customers.
2. It appears that Griddy bills pretty frequently so people could watch their accounts drop in real time
3. The numbers are REALLY dramatic. Even if people get their money back, losing $17,000 makes a huge impact
This seems to fall in the same category of AWS customers accidentally having bills enough to bankruptcy.
He's still looking at a colossal electricity bill this month, but thankfully nowhere near as much as this woman. The last minute escape plan worked out in the end. Not everyone in Texas had these options unfortunately.
My expectation is that consumers had nearly no power in this equation. I'm trying to think of some kind of circumstances that would make this system not arbitrary & predatory, and looking for some kind of tools or options to defend Griddy with, frankly. But I expect consumers got no visibility, no warnings, had no optional safeguards for themselves.
They also provided warnings to customers days before that spikes were coming.
I'm not sure what additional communication could be asked for. If losing power killed your internet then you really don't need to worry about power consumption anymore. If you lost it for another reason then it would make sense to assume energy was still expensive until you heard otherwise.
They provided daily update emails/tweets during the storm as well.
I imagine it's not legal to have a cut-off point where suddenly you have your power removed.
This criticism by the company is oddly funny given that it’s Texas, the ‘bastion’ of free market.