It’s a tale of deregulation spinning out of control.
In Texas’ hypercharged market for electricity, a company called Griddy makes money by debiting its subscribers a flat $9.99 monthly fee—and then selling them raw power at its going wholesale value, effectively stripping out any insulation between consumers and the oscillations in supply and demand. Consumers pay the subscription fee plus the going wholesale rate.
Often this saves Griddy customers money. But the wild surge in costs due to failures across ERCOT’s grid has juiced bills up to astounding levels.
On Monday, as the wind turbines stopped turning and the gas and nuclear power plants ran out of water for steam, wholesale electric rates shot up 10,000%, from less than $50 per megawatt-hour to more than $9,000. With no company standing between Griddy clients and the wholesale market, some consumers are looking at electric bills of more than $5,000, and the weather storm isn’t over yet.
It got so bad that Griddy reached out to customers, telling them to switch to other providers.
Michael Fallquist, chief executive officer of Griddy, previously said in a statement:
“We made the unprecedented decision to tell our customers—whom we worked really hard to get—that they are better off in the near term with another provider. We want what’s right by our consumers, so we are encouraging them to leave.”
If only another provider would have them. In the current climate, few electricity resellers are accepting new clients.
Royce Pierce, a 38-year-old contractor, is one of those Griddy customers who received a notice from the power company to abandon his service—a message he admitted to The Daily Beast he thought was “overly precautionary” as the winter storm loomed.
Now, his bill has skyrocketed over $4,000 over the last two days, he said. As of Wednesday, Pierce owes Griddy $5,152.06 for the month of February—a shocking price considering his bill for his two-story house last month was $387.70. Last February, Pierce said he only paid $330.
Clients not with a provider like Griddy aren’t necessarily in the clear. If a reseller offered terms that are too generous and can’t afford to pay for wholesale power, the reseller will be shut down and its clients moved to the provider of last resort, which simply passes through the wholesale rate, just like Griddy.