Griddy files for bankruptcy, citing financial woes due to February’s power crisis
By Rebecca Carballo
Griddy Energy, a California-based retail power company, filed for bankruptcy protection Monday after losing customers who received bills in the thousands of dollars, incurring debts in the tens of millions dollars, and getting hit with a proposed class action lawsuit seeking more than $1 billion.
Griddy’s business model exposes consumers to the wholesale market, which in normal times could mean savings, but translated into massive bills for its customers when the grid crashed during the recent winter storm. Wholesale prices hit the state maximum of $9,000 a megawatt hour, about 300 times the average wholesale price.
Griddy said in the filing in federal bankruptcy court in Houston that it owes more than $33 million to creditors — with the bulk, about $29 million owed to Electric Reliability Council of Texas, or ERCOT, the state’s grid manager. Griddy also owes more than $1 million to the state’s largest electricity distribution utilities, CenterPoint Energy of Houston and Oncor Electric Delivery of Dallas.
Griddy is also facing lawsuits from Attorney General Ken Paxton, who contends the company violated state consumer protection laws, and a Chambers County woman who received a bill of $9,340 during the winter storm. She is the lead plaintiff in a proposed class action suit seeking more than $1 billion for Griddy customers.
Bankruptcy protects filers from certain types of litigation, and Griddy ask the bankruptcy court to remove the suit, now in state court, and move it to the bankruptcy court, according to court documents. Derek Potts of the Potts Law Firm in Houston, who is representing Griddy customers in the proposed class action, said he will continue to represent them throughout the bankruptcy proceeding.
“Griddy’s lawyers filed for bankruptcy in federal court in Houston today, minutes before our scheduled court hearing (in state court),” Potts said in a statement. “This action by no means ends our fight to recover the tens of millions of dollars debited from Texans’ financial accounts during the storm, and to erase the negative reports made to credit agencies.”