Paxton sues Griddy

Bandwagon time.

Texas Attorney General Ken Paxton filed a lawsuit Monday against electricity retailer Griddy, claiming it misled customers using deceptive business practices after some customers reported bills costing tens of thousands of dollars.

These charges were incurred during Texas’ devastating winter storm that nearly shut down Texas’ electrical grid and sent energy demand skyrocketing. The lawsuit targets Griddy’s auto-billing system, which began drafting money out of customer’s accounts as the bills rolled in.

“Griddy misled Texans and signed them up for services which, in a time of crisis, resulted in individual Texans each losing thousands of dollars,” Paxton said in a statement. “As Texans struggled to survive this winter storm, Griddy made the suffering even worse as it debited outrageous amounts each day.”

Paxton noted this is the first lawsuit his office has filed against power companies after the widespread outages two weeks ago. A Houston-based law firm accused the company of price gouging and filed a separate class-action lawsuit last week.


Griddy customers paid a $10 monthly membership and in turn were passed wholesale power prices. These prices fluctuate but usually are cheaper than retail prices. However, unlike fixed-rate electricity plan users, Griddy customers are susceptible to market changes due to increased demand or reduced supply.

Paxton’s lawsuit claims the company understood the risk this posed to customers but misled them through its marketing.

Some customers have reported bills costing thousands of dollars, some surpassing $15,000. The retailer places the blame for the exorbitant prices on Texas’ Public Utility Commission, saying they were due to the commission jacking up wholesale prices.

See here for more on the previous lawsuit. I think that actin has some merit, but Paxton jumping in at this point has definite Claude Rains being shocked to discover gambling at the casino vibes to it. I mean, it’s not as if that risk hasn’t been there for customers since Griddy’s inception. It’s well within the power of the AG to sue over false or misleading advertising even before any actual harm is inflicted. This is what I meant when I said that the real problem here was that the system worked as designed.

Also, too: How do you think the cross-examination will go after Griddy’s lawyers call Dan Patrick to the stand to testify about his assertion that people should have read the fine print in their contracts?

Not sure what effect this will have on the proceedings, but we technically don’t have Griddy to kick around any more.

The state’s grid manager effectively shut Griddy down after the retail power company failed to make a required payment.

Griddy, which offers customers access to wholesale prices, gained notoriety for billing customers in the thousands of dollars when wholesale prices skyrocketed during the recent weather-driven power crisis. The Electric Reliability Council of Texas, or ERCOT, barred the company, headquartered in California, from participating in the state’s power markets.

Griddy said Monday that it asked the Electric Reliability Council of Texas, or ERCOT, for emergency help on Feb. 16 after the Public Utility Commission mandated that wholesale prices rise to the state maximum of $9,000 per kilowatt hour, where they stayed for days.

That cost, which passed through to Griddy customers, is equivalent to $9 per kilowatt hour on residential bills, compared to a typical 9 cents to 10 cents per kilowatt hour in fixed retail plans.

Griddy said ERCOT did respond to its plea for help. ERCOT “ decided to take this action against only one company that represents a tiny fraction of the market,” Griddy said.

A spokeswoman for ERCOT said the grid manager did work with Griddy, but could not discuss details because of confidentiality rules.

What do you suppose are the odds that Griddy will file its own lawsuit against ERCOT?

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11 Responses to Paxton sues Griddy

  1. Bill Daniels says:

    I just want to know when the auction will be to auction off the Griddy assets. I didn’t go to the Enron auction, but maybe I can get a Griddy sign for my garage.

  2. Manny says:

    Wonder why the indicted Trump lover won’t sue the owner of the Dallas Cowboys or the Australian bank that actually made money. Griddy was only trying to recover what he was owed by the people that had electricity through their company. Griddy was and is not making outrageous profits like the two above that did.

  3. David Fagan says:

    Sounds like this little cold storm just blew the house of cards that is Texas deregulation down. Everyone has someone to blame and no one gets responsibility. I think only the lawyers are going to win, again

  4. Lobo says:


    “Griddy said Monday that it asked the Electric Reliability Council of Texas, or ERCOT, for emergency help on Feb. 16 after the Public Utility Commission mandated that wholesale prices rise to the state maximum of $9,000 per kilowatt hour, where they stayed for days.”

    There are 2 errors here:

    (1) The PUC order issued on Monday Feb 15, and was amended Feb 16. Only the Second order was until recently posted on the PUC website (through link from home page, which for a while was deactivated). Here are both orders in one file:

    (2) The unit associated with the $9,000.00 emergency pricing order is MWh (Megawatt Hour). Factor of 1,000.

    Kilo = 1,000
    Mega = 1,000,000 in the metric system

    “Mega is a unit prefix in metric systems of units denoting a factor of one million (10 [to the sixth power; I can’t show raised 6 in this space] or 1000000). It has the unit symbol M. It was confirmed for use in the International System of Units (SI) in 1960.” (Wiki)

    On a more substantive point: Griddy reportedly didn’t pay its bill to ERCOT for the energy its customers consumed during the crisis, or not the full amount, which is the reason for ERCOT to terminate it. This triggered a “Market Participant Mass Transition Event” (transfer of Griddy customers to competitors, ie providers of last resort). Note that Griddy’s business model was ostensibly acceptable to ERCOT. Otherwise the company would not have become a market participant.


    The way the wonderful “deregulated” Texas electricity “market” is set up, such a shortfall by defaulting buyers of electricity is then allocated proportionately to the other market participants (it’s called UPLIFT). In other words, the generator/sellers still get paid for the power billed at the outsized $9,000.00 per MWh market-cap rate imposed by PUC during the energy emergency while the pain is spread on the buyer/consumer side of the market. According to the rules and protocols at least that is what is supposed to happen. The shortfall is now so massive however that ERCOT no longer follows the existing rules and instead uses its “discretion” whatever that means. And ERCOT is not even a state agency.

    One city that runs its own municipal power company (Denton) sued ERCOT and its board last week, including DeAnn Walker as ex officio member, over this uplift dynamic, arguing that it is unconstitutional for the City to have to pay the debts of defaulting retail providers. Griddy isn’t the only one. For the Feb 26 invoice payout date, the shortfall was $2,116,581,108.43.

    Point here: it looks very much like the system is structured to allow for the “socialization” of the costs of the failure of retail providers while reducing the risk to the generating industry resulting from the default or illiquidity of buyers of their product.


    It would be interesting to know if Griddy held back the money it was able to collect from its outrageous bill or (short)paid what it could to ERCOT, and whether Griddy has enough assets so that it could be forced pay meaningful damages, not to mention civil fines to the State, and whether there is any liquidity available for a court to order a refund to customers (fancy term: disgorgement). If Griddy is not liquid and has minimal assets (and its corporate parent can’t be held liable), the AG’s DTPA suit may be “moot” in practice even if it has legal merit as to the deception claims. Note that the AG’s is not suing Griddy for price gouging as such. Note also that Griddy’s revenue stream was about $10 per customer per month. Not much. Small if not minute portion of the invoice amount for the surge pricing phase.

  5. Manny says:

    The people that hiked prices during the emergencies, the Jones and Australian banks engaged in price gouging, no if, and, or buts about that. If it was bottled watered and hiked the price by those amounts, they would be committing crimes. It seems that supply and demand only apply when the ma and pa stores hike prices.

  6. Bill Daniels says:

    “Point here: it looks very much like the system is structured to allow for the “socialization” of the costs of the failure of retail providers while reducing the risk to the generating industry resulting from the default or illiquidity of buyers of their product.”

    I agree with Wolf here. We’re supposed to be against privatizing profits, yet socializing losses. So Wolf and I agree on this issue, albeit for different reasons.

    If Griddy customers default on paying their power bills, Griddy then defaults on paying the power providers, which they did, and the power providers should be the ones left holding the bag, suing Griddy, which is no doubt broke and judgement proof at this point. The power providers should just sue to get Griddy to sign over the money owed by their customers to the power providers, so the power providers themselves can hound the deadbeat electric customers for their non payment, just like every other deadbeat who doesn’t pay their bills.


    You actually have a reasonable argument, re: price gouging, but it is moderated by the fact that it obviously cost energy providers much more to get natural gas and electricity to Texas in our hour (well, days) of need. It wasn’t like a retailer already had a jug of water on the shelf, and just marked up the price of that water. Energy companies had to scramble, paying lots of overtime, hiring private contractors, expediting parts and supplies, etc., to get natural gas and electricity flowing. So there were very legitimate reasons for higher prices. Was there gouging as well? Probably.

  7. Lobo says:


    Upon rereading the Griddy story, I must say that I got it wrong with respect to Error 1 and that a correction is in order: Griddy is reported as having *asked for help* on Feb 16, rather than that date referring to the date of the PUC order.

    This correction does not affect my statement regarding the timing of the 2 PUC orders, which were both sent to “Central Records” yesterday, March 1. The file-stamped copies (behind transmittal memo) are now linked from PUC’s home page.

    Project 51811, Issues Related to the State of Disaster for the February 2021 Winter Weather Event , Commission orders directing action by ERCOT

    Order of February 15, 2021 directing ERCOT to take action and granting exceptions to commission rules originally filed in Project 51617 on February 16, 2021.

    Order of February 16, 2021 second directing ERCOT to take action and granting exceptions to commission rules originally filed in Project 51617on February 16, 2021.

    Note that neither description say anything about wholesale emergency pricing. You have to read the orders themselves to learn about the gist.
    URL here: (second item in PDF format)


    Also, Manny raises a good point: The price-gouging on the gigantic scale is apparently the way things are supposed to go under GOP one-party rule, and with respect to the so-called “deregulated” Texas electricity “market”, the $9,000.00 per MWh rate was actually state-sponsored. See orders referenced above.

    AG-sponsored DTPA enforcement for price gouging is for small players soaking the plebs.

    DeAnn Walker’s claim is to infamy, not fame: A massive transfer for wealth from buyers of electricity to sellers by fixing the wholesale price at $9,000.00 for the duration of a declared disaster. Normal non-disaster price: $20 to $35 or so.

    Also note the PUC’s watchwords:

    “We protect customers, foster competition, and promote high quality infrastructure.”

    Source: About the PUCT / Mission & History

  8. Manny says:

    It didn’t take that much, in cost, Bill, to get the gas to market. That is why they made hundreds of millions of dollars in profit for gas that normally sells for $10 to $30, which then commanded $9,000 plus dollars for the same volume.

    That is the definition of price gouging. Texas follows the suck it to the ma and pa stores but not to the billionaires or multi-national companies.

    There are indications that some of the loss of energy may have been intentional, there will be investigations. Any time some one stands to make millions of dollars very quickly there is a tendency to do thing that may be illegal or immoral. If someone did cut power on purpose they should face murder charges or at minimum negligent homicide charges.

  9. Bill Daniels says:


    You need to cut it out, because I can’t get used to you making fairly reasonable arguments here. I agree that if there was some intentional planning, taking plants offline to spike prices, a la Enron’s California strategy, then people should go to jail for that. If there is actually indications that this was planned, then yes, I support an investigation into it.

    It’s a bit unnerving that I somewhat agree with your argument here, that price gouging went on, despite the emergency order that should have brought on a statutory prohibition on such behavior.

  10. Bill Daniels says:

    This just in:

    Brazos Electric Power Cooperative files for bankruptcy. Wow! This is going to be a huge mess. Probably a great time to be a lawyer, though.

  11. Lobo says:

    Bill: NPR reported on this yesterday. Good news source and not paywalled. The Tribune covered it too (in the story on Paxton suing Griddy).

    Also see another presumptively reputable source here:

    “Brazos Electric Cooperative owes 25 creditors $1M or more.” DALLAS BUSINESS JOURNAL (March 1, 2021) (free read for the occasion)

    In court documents, Brazos lawyers say the Waco-based nonprofit was in solid financial condition in early February and that filing for bankruptcy at that time was “unfathomable.” … “The consequences of these prices were devastating,” Brazos states in its filing. Last week, ERCOT sent Brazos invoices for $2.1 billion in payments.


    So it appears that the Abbott/PUC-enabled wholesale price gouging of net consumers/buyers of electricity during a declared disaster wasn’t good for their cooperative balance sheet.

    Note that not all market participants are impacted equally because some both generate/sell and buy electricity (unlike Griddy). But why would the net beneficiaries be complaining, unless they don’t get paid for the electricity they sold to others at the $9,000.00 “spot” price above the volume they supplied to fulfill their own contractual commitments?

    Some both sold at that inflated price and had to buy it at that inflated price to make up generation shortfalls (at different times during the crisis period), so for those players it’s a question of how the two settlement types (obligations and receivables, which are apparently invoiced by ERCOT and paid separately) balance out on the books.

    Flypusher (and Socratic one): Thanx for the clarification. Shall try to mind the distinction.

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