Griddy came to Texas to disrupt the power market, but can it survive being shaken?
By Rebecca Carballo February 24, 2021
Griddy, a California-based startup, came to Texas about three years ago hoping to shake up the power market by offering wholesale electricity prices to consumers. But it appears that the market has shaken Griddy.
Griddy is facing harsh criticism from political leaders, lawsuits from angry consumers and an investigation by the Public Utility Commission after its customers were hit with electricity bills in the thousands of dollars as wholesale prices spiked during last week’s severe power shortages. It wasn’t the first time that Griddy’s model, which charges customers $10 a month for access to wholesale pricing, left customers with huge bills, dwindling bank accounts and rising credit card charges.
Electricity charges for its customers soared into hundreds of dollars in during a heat wave in August 2019, when wholesale prices rose because of tight power supplies.
Whether Griddy and its model can survive the backlash this time remains to be seen. The attention it has received, both in Texas and nationally, has battered its reputation and undermined Griddy’s basic premise: that consumers should have the same access to wholesale markets as companies and traders.
Buying wholesale could save individuals a great deal of money, said Joshua Rhodes, a research associate at the Webber Energy Group at the University of Texas at Austin, but they need a long-term outlook as well as the stomach and cash to weather price spikes, he said.
Customers have an app that allow them to monitor wholesale markets and shift power consumption depending on prices at any given time. If prices jumped on summer afternoons, they might turn down the air conditioning. Or they might run dishwashers and other appliances at night when power prices are particularly low.
For most months, wholesale prices are bargain at about 3 cents per kilowatt, compared to the nine or 10 cents you might pay for one-year retail contract, said Doug Lewin, an energy and climate consultant in Austin. But he also adds, “It’s not for everyone.”
The recent winter storm showed that — dramatically. Prices soared to and held at the state maximum of $9,000 per megawatt hour, meaning Griddy customers weren’t paying 3 cents or even 9 cents per kilowatt hour. They were paying $9.
That ran up the bill of Lisa Khoury, of Mont Belvieu, to more than $9,000 for three weeks, she said in a lawsuit filed against Griddy Tuesday.
Tim Morstad, associate state director of AARP Texas, which advocates for older Americans, said he’s skeptical that many of Griddy customers understood the risks of the wholesale market as they shopped for power and were enticed by low advertised rates.
He called for more regulation to protect consumers.
“I want people to know that it’s our state regulators at the Public Utility Commission, who have allowed creative marketing to ensnare customers through plans like these,” Morstad said.
The PUC launched an investigation on Tuesday into retail electric providers offering plans indexed to the wholesale electricity rate in Texas.