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Suing Griddy

This is going to be interesting.

A Chambers County resident filed a class-action lawsuit against electricity retailer Griddy on Monday, accusing the provider of price gouging customers during last week’s freeze. She is seeking $1 billion in relief for affected customers.

Attorneys for Lisa Khoury said in the lawsuit that her bill spiked to $9,340 the week of the storm, compared to her average monthly bills that range from $200 to $250. Griddy drafted payments from Khoury’s bank account several times, according to the lawsuit, pulling $1,200 before she blocked further charges from her bank. She still owes thousands.

Griddy passes wholesale electricity rates directly to customers, who in turn pay the company $10 a month. This differs from fixed-rate electricity plans which offer a consistent rate regardless of market conditions.

But because of a price hike fueled by a shortage of supply and skyrocketing demand, some customers were faced with bills charging tens of thousands of dollars. While electricity bills are likely to rise across the board, Texans on variable rate plans faced immediate and alarmingly high prices.

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.

“Energy prices should reflect scarcity of the supply,” the order stated.

Representatives for Griddy could not immediately be reached for comment. The electricity retailer addressed concerns of price gouging on its website and firmly placed the blame on the Public Utility Commission. The company states that it did not profit from raised prices.

A quick perusal of Griddy’s Twitter shows that they are blaming the PUC, and that they did suggest alternate electricity providers for their customers to switch to during freeze days; there are several news stories, including this one that ran in the Chron, about that as well.

This is one of those situations where the system is working exactly as designed – here are a couple of stories that explain the mechanics of this. I guess the courts could rule that what the PUC did violated the state’s laws on price gouging, but that seems like a stretch to me. I Am Not A Lawyer, so if you know better than me, please speak up.

More likely, there will be some kind of legislative solution to this. This Trib story goes into that option.

Gov. Greg Abbott and Texas lawmakers are promising relief for Texans hit with massive electric bills after a winter storm bludgeoned the state’s power grid, leaving millions of residents freezing without electricity.

But how they’ll accomplish that remains unclear. The state’s deregulated electricity market not only allows for staggering price spikes, but effectively compels them for some customers.

While many Texans are on “fixed rate” electricity plans that insulate them from market swings, others pay rates tied to the spot price of wholesale electricity, which skyrocketed during the storm.

As the bad weather bore down, it froze natural gas production and wind turbines, choking off the supply of electricity as demand skyrocketed. In response, the Public Utility Commission, appointed by Abbott, let the wholesale market price of electricity rise to $9 per kilo-watt hour, a 7,400% increase over the average 12 cents per kilo-watt hour.

The rate hike was supposed to entice power generators to get more juice into the grid, but the astounding costs were also passed directly on to some customers, who were suddenly being billed more for electricity each day than they normally pay in a month.

[…]

Kaiba White, an energy policy specialist with consumer advocacy group Public Citizen, said the costs would be passed on to customers one way or another.

“If they [the electric provider] don’t have a mechanism that allows them to do that in the immediate — like on the next bill or the next several bills — it’ll end up getting rolled into the overall cost of service,” she said. “It’s just a matter of whether it’s going to get passed on in an immediate way, in a shocking way … or spread out over time.”

Tim Morstad, associate state director with the Texas AARP, said “prices are going to rise” but with a delay for those not on variable rate plans.

“Forgive me for stepping back to say — this system is truly designed to have high prices and huge fluctuations. And putting consumers through that by design is a bad process. It’s setting people up for pain,” he said.

Texas has an unusually deregulated electricity market that’s touted for offering customers the ability to pick from hundreds of plans offered by dozens of electric providers. Parts of the state are carved out, including cities like Austin, that get energy from a municipally owned utility, or people served by cooperatives. Those too could see cost increases down the line.

Lawmakers and Abbott have pledged to protect consumers from the big bills, and excoriated the Electric Reliability Council of Texas for the outages last week. The reliability council, which operates the power grid that covers most of the state, is overseen by a Public Utility Commission.

Abbott’s office did not respond to a question about what options were on the table.

Lawmakers have demanded that the utility commission roll back its decision to allow the huge rate increases, or suggested cobbling together some package of emergency waivers or relief money to buffer Texans’ from the high bills.

“We cannot allow someone to exploit a market when they were the ones responsible for the dire consequences in the first place,” said state Rep. Brooks Landgraf, R-Odessa.

I have no idea what Abbott will suggest. He’s nobody’s picture of a creative thinker, and “solving problems” is not in his skill set. I’m hardly an expert either, but it seems to me that the first order of business is to prevent people from getting multi-thousand-dollar electric bills, and the simplest way to do that is probably just to order everyone’s bill capped at some value that relates to their usual experience, and have the state pick up the difference since the providers do in fact have the legal right to charge these amounts. That’s the easy part. The much harder question, at least for the leadership we are stuck with, is what to do about it for the future. That either involves some form of re-regulation that puts limits on how “free” the electricity market is, or ignoring it and hoping you survive electorally. I know what I’d do, but I’m not a Republican. Good luck with that.

One more thing, as long as we are talking about freeze/blackout-related lawsuits:

The family of an 11-year-old boy who died last week in Conroe during power outages while Texas endured a freezing winter storm is suing Entergy Texas and operator of the state’s power grid for a total of $100 million.

In the lawsuit filed Saturday, the family said Cristian Pineda died of hypothermia after the temperature in his house plunged due to the forced blackouts. Pineda’s family of five shared a single room for warmth, and Cristian shared a bed with his younger brother, the lawsuit states.

His family found Cristian unresponsive in the morning. The Houston Chronicle first reported news of the lawsuit.

The family is suing the Electric Reliability Council of Texas, which operates the decentralized electrical grid system. The Texas grid is not governed by federal regulations.

As the story notes, our old buddy Tony Buzbee is filing this lawsuit, along with at least seven others, against ERCOT. Whether or not he can do that is an open question.

ERCOT has sovereign immunity, a well-established legal principle that protects governmental agencies from lawsuits. ERCOT, a private nonprofit corporation overseen by the Texas Legislature and the Public Utility Commission, is the only grid manager in the country with such protections.

A pending decision by the Texas Supreme Court, however, could change that. Justices on the state’s highest court are expected to rule this year on a case between Dallas utility Panda Power and ERCOT that could strip the Texas grid operator of its sovereign immunity, leaving it open to lawsuits that ERCOT has said could cripple the agency.

The ruling by the high court will have widespread implications in the wake of last week’s blackouts. It would not only determine whether Texans can use the legal system to hold ERCOT accountable for power outages that led to more than 48 deaths and billions of dollars of property damage, but also the future of ERCOT and the state’s power markets if the court opens the door to the likely flood of lawsuits.

[…]

“The political rhetoric around ERCOT and the weather emergency has embraced transparency and accountability,” Rottinghaus said. “A ruling that holds ERCOT immune from such lawsuits may run against that. It could be a political liability.”

Panda Power filed suit in 2016 against ERCOT, alleging the grid operator issued “seriously flawed or rigged” energy demand projections that prompted the Dallas power company to invest $2.2 billion to build three power plants early last decade. The plants ended up losing billions of dollars, with one forced into bankruptcy.

ERCOT’s reports calling for more power generators came in the aftermath of a major ice storm in February 2011, which crippled Texas power plants and forced rolling blackouts across the state.

Panda Power’s case was halted in 2018 when an appeals court in Dallas asserted ERCOT was protected from lawsuits by sovereign immunity. The Texas Supreme Court in June 2020 said it would review the appellate court decision, heard the case in September 2020 and is expected to render a decision before it recesses in June.

We’ll see about that. There’s definitely some pressure, on the courts and on the Lege and on Greg Abbott, to Do Something about all this – and again, I remind you, that the “all this” in question is what was supposed to happen based on existing laws. How long that pressure lasts, and what happens if there are no legal or legislative outlets for it, that’s the big political question.

UPDATE: Multiple ERCOT board members have resigned. All are folks who did not live in Texas, which yes is one of the weirder things about ERCOT. Not directly related to this story, but this is as good a place as any to note it.

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26 Comments

  1. Bill Daniels says:

    Caveat emptor, anyone? These people knew exactly what they were signing up for. They were dazzled by the thought of getting cheaper electricity than their dullard neighbors who chose fixed rate plans, and now that they got caught holding the bag, someone needs to do something.

    Sounds a lot like the Wall Street bail out that I opposed, and I’m assuming, most here also opposed….privatize profits, publicly subsidize losses. I’m sorry, but these Griddy people gambled and lost, and now they should pay up, no different than if they shorted Gamestop stock, then were forced to buy GME at high prices. Them’s the breaks. Suck it up.

    No one gives a crap about me if I invest in a risky investment and lose my shirt. These people gambled and lost. Time to pay up, Lisa.

    I’d say it might be nice for Griddy to put these folks on some kind of payment plan, but shouldn’t be required. I also think this pretty much puts Griddy out of business. I’m assuming the vast majority of their customers are not going to pay their bills, but they will be expected to pay for the power they purchased FOR their customers. Unless they are very well capitalized, I can’t see how Griddy can survive that. I mean, who will loan them money to carry them at this point?

  2. Wade says:

    Those Griddy customers paid half what I did during the summer months, as that’s how the plan works. It’s a risk vs reward. They signed the contract and those risks were clearly explained; time to pay up. If Abbott wants to lower their bills, then the rest of us should also be in line with our summer bills requesting free handouts as well.

  3. Lobo says:

    WHO PAYS AND WHO GETS PAID

    I disagree with Bill and Wade and here is why:

    Risky investment is not an appropriate analogy because electric power is a human needs commodity, and is essential to our way of life (even if not for the Amish who are set up to do without electric power on an ongoing basis). The cost savings on the utility bill are rather moderate (50% discount? a hundred dollars or even less per month?) and the wholesale surge prices are way out of proportion with what would reasonably be expected from wholesale price swings in the opposite (bad-for-the-consumer) direction.

    Sure, Griddy customers should pay more for their electricity usage in an energy crunch, but not *that* much more.

    CONSUMER CONDUCT AND INTELLIGENT CHOICE

    Also consider that it would have been cheaper for Griddy customers to drain their pipes and evacuate to Cancun like Ted Cruz (at a reported $309 a night) or take their chances with the roads and drive to a neighboring state (or El Paso, perhaps) to escape the PUC/ERCOT regime. Not to mention rushing to Academy to buy a bivy bag and hunker down in their pipes-drained Griddy house for the duration of the freeze and the contemporaneous price-spike crisis. Some may have preferred to hunker down in their cars, running the heater on regularly-priced gasoline.

    Shouldn’t these warm-body (non-biz-entity) customers have had those options, with *proper advance notice* of the astronomical rates to be charged to them if they failed to act appropriately so as to limit their exposure to impending financial harm? Did they have that pricing information and willingly incurred the charges, or where they stunned when thousands of dollars were siphoned out of their banking accounts all of a sudden?

    Indeed, it appears that the PUC raised the regulated wholesale price to the maximum (cap) to pay homage to scarcity and did so *retroactively*, at least in their original emergency order.

    https://www.puc.texas.gov/agency/resources/pubs/news/2021/PUCTX-REL-COLD21-021521-EMERGorder-FIN.pdf (with link to actual order in PDF).

    If rates are hiked up to match the $9.000 wholesale cap post facto (ie, after the energy has already been consumed), you can’t take evasive action to avoid the spike on the utility bill by personally curtailing usage.

    And even if the retroactive hike is not imposed or passed on to residential customers, how is it fair to the utilities/retail power providers that offer fixed rate plans? And how is it a good thing if they are bankrupted as a result?

    A SYSTEMIC STATE-ENDORSED PRICE GOUGING SCHEME

    Finally, ask the question of who comes out on top in this?

    The power generating industry that gets to charge and collect the obscene profits facilitated by Texas policymakers and PUC/ERCOT, even though they *failed* to winterize, not to mention that they were allowed to run “dirty” because of the crunch and got to charge top dollar ($9,000 per MWh) for the otherwise non-permitted generation under emergency conditions.

    I am not suggesting that the DOE should have denied the environmental waiver sought by ERCOT, but why should the generators be rewarded with a multiple of the floor price of $1,500 per MWh when they failed to properly prepare for freezing conditions? Same goes for the natural gas industry. Why should they be rewarded with top dollar when they created the conditions of scarcity by their failure to weatherize pumps, compressors, pipelines, and other gear?

    Let me reiterate: It looks much rather that the industry is being rewarded *for* their failure to winterize and otherwise prepare for the cold-spell emergency, rather than merely incidentally reaping an advantage from a natural disaster that resulted in a surge in consumer need for power to keep warm. The only exception would be the generators that came off the grid completely and were not in a position to generate (and therefore sell at grossly inflated prices) any electric power at all during for the duration of the energy emergency.

    For the natural gas and generating companies, it would appear that the winter storm provided the perfect windfall: An obscene opportunity to profiteer from the misery inflicted upon the masses. With the blessing of state policymakers and regulators.

    These market participants should pay, or have their ill-gotten receivables cancelled. Alas, that may be impossible if it was all “legal” because our state politicians set it up so that profits for entities would come before people.

  4. Flypusher says:

    “ Let me reiterate: It looks much rather that the industry is being rewarded *for* their failure to winterize and otherwise prepare for the cold-spell emergency, rather than merely incidentally reaping an advantage from a natural disaster that resulted in a surge in consumer need for power to keep warm. ”

    Well said. It’s a foul double standard to finger wag at the customers for not anticipating this, but not the providers. Let’s remember what we were told to expect around 2/13. If we were paying attention, we knew that the front was coming and that we could expect several days of sub freezing weather. We were told that we should plan to stay in place from Sunday night through at least Weds., because of icy roads. Those of us who are proactive covered the faucets, made the last grocery run, etc.

    IIRC it was 2/14 when we started hearing about concerns over power demand exceeding supply. So those of us who are also good citizens lowered the thermostats and unplugged anything we didn’t absolutely need at that moment.

    We were told to expect rolling blackouts, maybe up to 2 hours at a time. I cannot fault any customer for nor anticipating such rate hikes, because nobody could be reasonably expected to know that these blackouts wouldn’t roll, and that many lasted for days.

    I consider the decision to shut off parts of the grid to be equivalent to the call to open the west side reservoirs during Harvey. It was a choice between some people taking the hit and almost everyone taking the hit, so I do not fault those who made that hard choice. But I will insist that the people who took all that damage so that someone like me was merely temporarily worried and inconvenienced be compensated for their losses. No fucking excuses. Do it.

    Also winterize the bloody grid and toughen up the building codes. The weather is only going to get freakier.

  5. C.L. says:

    Lobo, re: “These market participants should pay, or have their ill-gotten receivables cancelled. Alas, that may be impossible if it was all “legal” because our state politicians set it up so that profits for entities would come before people.”

    Why is ‘legal’ in quotation marks ? There was nothing illegal with what Giddy did, right ?

    Also, I haven’t seen any evidence Giddy, ERCOT, or the PUC were in cahoots with each other.

    I, personally, have chosen an energy provider that doesn’t charge me market price like a fish dish at Pappadeaux, with the cost fluctuating from day to day. I’m not sure how/why my finances should be affected by the bad financial decisions made by others, either previously or in the future.

  6. Flypusher says:

    “ Why is ‘legal’ in quotation marks ? There was nothing illegal with what Giddy did, right ?”

    Technically legal but not ethical. Kind of like how Rick Perry gets nailed for bribery if he were in office In a different state with higher ethics standards.

  7. Lobo says:

    “LEGAL” IS WHAT THE SUPREMES WILL SAY LATER

    Re: Why is ‘legal’ in quotation marks ? There was nothing illegal with what Giddy did, right ?

    We (collectively) don’t know until we have a court of appeals’ opinion (probably before a trial, whether to judge or jury, probably neither) in an appeal of a dismissal or denial of motion to dismiss, or motion for temporary relief, or class certification, or a summary judgment, or a mandamus, or some such.

    Also, it’s probably not so much a matter of legal qua legal as in the sense of law-breaking, but whether a statutory “laundry-list” violation has occurred (of the DTPA) to which civil liability may attach. That can get quite fact intensive. Equitable relief may also be an issue. There could conceivably be an argument that the contract was unconscionable and therefore unenforceable (We would have to have a look at the pleadings to see which causes of actions are being asserted).

    Typically, those types of claims on behalf of consumers don’t fare well in Texas because we are business-friendly and the GOP-run Supreme Court gets to make the law: common-law caselaw (e.g. contract law, including questions of formation and validity and enforceability) and caselaw that interprets enacted statutes (such as Deceptive Trade Practices Act, Declaratory Judgments Act, etc.).

    The COA opinion will likely not stand if not favorable to the defendant. It would surely be appealed to the SCOTX, which will then tell us why “the law” (in the form of some SCOTX-honed doctrines and/or ad-hoc statutory construction canon application cum dictionary consultation) commands that the company win and the consumers lose.

    Also, the SCOTX has a history of undoing or otherwise thwarting class actions. If I recall correctly, class action certification orders can be appealed immediately, which is also true of grants and denials of injunctive relief. Any such preliminary ruling at the trial-court level is bound to trigger an excursion into the appellate system in a high-profile case, meaning that the matter won’t go to trial for years, if ever. It might die an early death in an interlocutory appeal.

  8. C.L. says:

    Well, I’m just an Unfrozen Caveman Lawyer, but if my Client willingly, uncoerced, signed a contract that said he was going to get billed a fluctuating market rate for something…and he did…whether or not the practice is (socially) ethical or moral is a moot point.

    The Plaintiffs may well have a long row to hoe.

  9. mollusk says:

    The statute prohibiting price gouging during a disaster may well come into play here.

  10. Lobo says:

    Mollusk: Perhaps it could be an opportunity for Ken Paxton to redeem himself once he is back on the job from the Google anti-trust war-gaming session in Utah.

    What do you think?

    Meanwhile, some lessons on who to profit from the misery of others:

    COLD AND STIFFED UNDER DOGS HERE, SMILING CORPORATE PROFITEERS DOWN UNDER

    “Texas energy woes are windfall for Australian bank”

    https://www.banknewsnow.com/2021/02/22/texas-energy-woes-are-windfall-for-australian-bank/

    The deep freeze that plunged millions of Texans into darkness is rippling through energy markets in unexpected ways, producing a financial windfall for an Australian bank and severe pain for other companies caught up in the disruption. …
    The turbulence led to a bonanza for commodity traders at Australia’s Macquarie Group Ltd., whose ability to funnel gas and electricity around the country enabled them to capitalize on soaring demand and prices in states such as Texas. …
    Macquarie’s windfall shows how big profits can be made wagering on relative scarcity of natural gas in a country awash in the fuel.

    BOTTOM LINE: We the living and still-breathing frost-bitten Texans are the suckers while speculators make off with the spoils. Foreign speculators, no less, in the pipeline chapter of the temperature-induced Texas-sized saga of disaster.

    — Any thoughts on the motherlode of an opportunity exploited by the Australian prospectors, Bill, America-First Libertarian?

  11. Bill Daniels says:

    Wolf,

    “Also consider that it would have been cheaper for Griddy customers to drain their pipes and evacuate to Cancun like Ted Cruz (at a reported $309 a night) or take their chances with the roads and drive to a neighboring state (or El Paso, perhaps) to escape the PUC/ERCOT regime.”

    So, just to recap…..

    ~customers willingly signed up for the plan knowing full well that they would be subject to market forces.

    ~customers weren’t forced to use the expensive, market price energy. They had options. No one put a gun to their head and forced them to turn on their heaters. They chose to willingly purchase the expensive electricity vs. their other options. Hey, some of us choose to go to the Taste of Texas for a steak, others chose to go to Steak and Shake for a steakburger.

    We expect the patrons of both restaurants to pay their bill.

    And Wolf, if we’re being consistent with our pro-socialism agenda, we should be happy that free market devotees like those that gambled on the retail energy market with Griddy, suffered negative consequences. (Financial) Death to the capitalist pigs, eh?

    I figure you and your fellow Che Guevara t-shirt wearing set down at the Starbucks would be celebrating this as a win, giving a black eye to capitalism. You’re being inconsistent, here, Wolf.

  12. Bill Daniels says:

    “— Any thoughts on the motherlode of an opportunity exploited by the Australian prospectors, Bill, America-First Libertarian?”

    Yes! Lots of thoughts. Good on the Australians! In our time of need, they figured out how to get usable natural gas to us! They were motivated, and they got us the gas we needed! Thank you, Australian energy traders!

    What’s your option, Wolf? Don’t get the natural gas we need, just so we can ensure that those enterprising Aussies don’t make a profit? I’m sure glad they came through for us.

  13. Bill Daniels says:

    Wolf,

    Found this golden nugget in your article:

    “Behind such instances of energy feast and famine is a gas infrastructure system that has failed to keep up with all the drilling. Pipelines laid decades before the shale boom are often in the wrong places, or too small to meet today’s demand.”

    Wait. Whut (sic)? We need MOAR (sic) pipelines to get energy where it needs to go around the country? Wow! Somebody ring up Joe Biden and tell him maybe axing the Keystone was a mistake! Of course, one way to handle this is to just stop drilling so we can become more dependent on OPEC again. Don’t need pipelines if no one is drilling for oil and gas, I guess. That worked out great for decades, eh Wolf?

  14. Lobo says:

    Respecting the Acumen of the Aussies & the Competence of the Canucks

    Bill: If our incentivized down-under trade-floor mates were so wondersome in saving our a** by moving our gas, why did millions of us sit in the dark and shiver for days in a row?

    As for the tar-sands dudes up North, I’ll grant you this: they could indeed have given our GOP-protected Lone Star operators some lessons on how to keep the pipe & line content in flow, and icing off the rotors.

  15. C.L. says:

    Who here thinks anything traveling in a Keystone XL pipeline (assuming it was fully functional) would have had, in any shape or form, an effect on our recent inclement weather event ?

  16. Bill Daniels says:

    Wolf,

    How much worse did the outages need to be, for your taste? Whatever the Aussies did, getting gas to us in our time of need, in addition to earning them huge profits, helped Texas generate more power. More power when there are blackouts is a good thing, no?

    C.L.,

    What did Wolf’s link say? We need MORE pipeline infrastructure to get energy where it needs to go, when it is needed. Sure, the Keystone wouldn’t have effected us one bit this time…..but what happens if there’s a problem in the future? What happens if the country suffers a gasoline shortage, for example? Uncle Sam could, in an emergency, commandeer that fuel that we here in Houston, and our neighbors in Port Arthur, were going to make with that Canadian oil….divert if from foreign sale to domestic use.

    Ever heard that old proverb “A society grows great when old men plant trees whose shade they know they shall never sit in.” Build the Keystone and other pipelines now so that future energy needs of the US will be met. It’s the same reason we build new roads, C.L.

  17. Manny says:

    No, Bill, that is not what Lobo’s link said, but I won’t say anything else as you have a habit of twisting everything to suit your thoughts.

  18. Lobo says:

    LONE STAR SUCKERS

    Texas Electric Bills Were $28 Billion Higher Under Deregulation. Competition in the electricity-supply business promised reliable power at a more affordable cost

    SO SAYETH WHO? — The Wall Street Journal, Feb. 24, 2021

    https://www.wsj.com/articles/texas-electric-bills-were-28-billion-higher-under-deregulation-11614162780 (paywalled)
    https://thehill.com/homenews/state-watch/540271-texass-deregulated-electricity-market-raised-cost-to-consumers-by-28 (not paywalled)

  19. Lobo says:

    AMPLIFICATION AND ACKNOWLEDGEMENT OF POSSIBLE NEED FOR CORRECTION

    Bill: You were flat-out wrong about the environmental waiver by the DOE. Unlike you, Lobo and the NYT, and many other media, are prepared to acknowledge and correct errors when warranted. In that vein, I am updating my prior comment as follows:

    EMERGENCY PUKING – OOPS, ANOTHER TYPO

    The Public Utility Commission of Texas (known as PUC domestically and PUCT elsewhere) issued a press release on Monday, Feb. 15, 2021 [face date], titled “PUC ISSUES EMERGENCY ORDER ON ELECTRICITY PRICING”. The gist is as follows:

    “The decision was spurred by ERCOT’s discovery that energy prices across the system were clearing at less than the current system-wide offer cap of $9,000 established by Commission rule. When notified, the Commissioners agreed that energy prices across the system clearing as low as approximately $1,200 during the first day of the weather crisis was inconsistent with the fundamental design of the ERCOT market. Because energy prices should reflect scarcity of the supply, the market price for the energy needed to serve load being shed in the face of scarcity should also be at its highest.”

    The embedded hotlink to the actual PUC order, however, is a link to a superseding Order issued a day later, on Feb. 15, 2020. So, one may reasonably conclude that they subsequently replaced the original Feb 15 order with the second order, using the same URL.

    It’s not a minor detail because the modification affects the retroactivity of the price hike, a main point in the first Lobo comment above.

    QUOTE: “the Commission determines that its directive to ERCOT in its order dated February 15 to also correct any past prices to account for load shed in EEA3 should be and is hereby rescinded and directs ERCOT to not correct any such past practices.”

    Note that one of the three commissioners abstained on the relevant point in the second order and thereby in effect dissented. (“Commissioner Botkin abstains for the portion of this order that rescinds the Commission’s directive to ERCOT in its order dated February 15 to also correct any past prices to account for load shed in EEA3 and the portion that directs ERCOT to not correct any such past practices.”).

    The imposition of the $9,000 p/MWh scarcity price by PUC/ERCOT was the subject of the hearings in the Lege yesterday (2/25). This is quickly shaping up as the next crisis – the financial aftermath in the form of enormous bills run up during the crisis that some retail providers may not be able to pay. It’s going to rock the entire market, and not in a good way.

    HOW GRIDDY SAVES YOU MONEY (with apologize to Jim “Mattress Mack” McIngvale)

    I am not a customer of Griddy, and am therefore not personally familiar with how their customer interface via smartphone works I have since found a press release from last year in which they claim that customers are provided with timely pricing signals. That wouldn’t address the problem of PUC changing wholesale emergency pricing with retroactive effect (see above), but would provide Griddy customers with information allowing them to mitigate the size of the bill by immediately taking steps to reduce consumption when the wholesale price starts to surge.

    Here is the relevant excerpt from press release:

    About Griddy
    Griddy is the pioneer of direct-to-consumer wholesale electricity in Texas. Griddy eliminates the middleman and connects members directly to wholesale electricity rates via a smartphone app, which allows members to optimize their energy consumption and increase their savings and use of renewable energy. Griddy delivers real-time energy usage and price alerts directly through our app because better data means bigger savings for our members.

    https://www.prnewswire.com/news-releases/griddy-announces-new-leadership-and-financing-agreement-with-macquarie-energy-301187046.html

    The PUC has launched an investigation. Based on the testimony of the PUC head before the Lege committees yesterday (whose performance under tough questioning was pathetic) they are looking into whether proper disclosures were made to Griddy customers. The issue of price gouging in a declared disaster also came up.

    THE FIXED $9,000 p/MWh CARTEL PRICE IS NOT JUST A GRIDDY ISSUE

    Griddy customers are screwed because the agreed to pay the wholesale “market” price for energy. Note however, that during the crisis the grossly excessive price wasn’t a price set by the market in the conventional sense of the term, but imposed by the PUC: A massive market intervention by a government agency consisting of three Abbott appointees to allow power generators to make hay in the worst energy crisis in Texas history, and profit from the misery of the shivering masses.

    The PUC itself affirmatively went out of its way to jack up the price to $9,000 p/MWh market-wide on Monday 2/15 and left it at such a high level for days (even though producers were willing to run and sell at much lower prices), which resulted in astronomical bills for the power companies on the consumption/retail provider side and a windfall for producers whose equipment didn’t freeze or otherwise fail to generate (such as for lack of nature gas). Unlike Griddy, they don’t get to pass on the enormously bloated bill to their customers immediately because they sell to customers on fixed-rate contracts. They are on the hook themselves, including municipal power companies. Some market participants, however, are on both sides (generation and retail) and are in a much better position, if not net winners. Others will likely go bankrupt.

  20. Lobo says:

    2/25/2021 Lege hearings update: Griddy declined (by email) to come and testify before the Senate Committee on Biz & Commerce after multiple invitations (12:57)

  21. Bill Daniels says:

    Wolf,

    “Bill: You were flat-out wrong about the environmental waiver by the DOE.”

    RONG! (sic)

    The waiver did two things….well, three things, actually. In fairness to you, yes, they agreed to some ‘dirty’ generation, but there were hoops and hurdles involved in that, such that what it really was, was ‘allowing’ Texas to kind of limp along, not go balls to the wall, which is what was needed. And finally, they set a floor for what Texas should pay for the power. The power doesn’t get cleaner just because we pay more for it. That begs the question, why even bother to dictate what minimum price Texas should pay for emergency electricity? Lets say a power generator wanted to just donate the power to needy Texans, as a charitable gesture? Nope! Biden won’t hear of that. They must charge us a MINIMUM exorbitant price!

    You’re here complaining because some Aussies made a lot of money figuring out how to get us natural gas when we needed it, but you’re just fine when Biden ORDERS us to pay colossally high rates for electricity, when we need it. If you were consistent, you’d be just as upset with your own government insisting that, not to be indelicate here, you got it broken off in your ass.

    Again, if Biden’s EO was as you say, a waiver of everything, then it wouldn’t have taken 4 pages of crap to say it. I can say it in once sentence, a skill developed during freshman English in college. My English prof’s favorite phrase was, “cut and tighten.”

    Here’s what waiving everything to help Texas would actually look like:

    “Your request to spool up any and all forms of electric generation, regardless of pollution, is approved.”

    I would personally add, “Good luck, and Godspeed, Texas,” but that would offend your people.

  22. Bill Daniels says:

    Thread Update:

    Ken Paxton’s AG office sues Griddy.

    https://www.msn.com/en-us/news/us/texas-attorney-general-sues-electric-company-griddy-that-sent-huge-bills-during-storm/ar-BB1e7Bmt?PC=EMMX20

    Talk about kicking a company when they are already down. Griddy did nothing wrong. They offered a risky product that their customers willingly purchased, and nobody was complaining when Griddy customers were saving money compared to their fixed price plan peers. Griddy didn’t breach contract, or gouge anyone….they meticulously lived up to the contract they signed with their customers.

    Paxton is wrong here, although it will be interesting to see how our Paxton hating members spin this.

  23. Lobo says:

    CONSUMER PROTECTION DIVISIONS OF OAG SUES GRIDDY

    Bill: I just read the complaint. This is a DTPA enforcement action seeking injunctive and relief and civil penalties. The AG’s press release links to a pre-file copy.

    The main thrust of the AG’s case against Griddy is that the company didn’t properly disclose the extreme risk to consumers, specifically that the maximum “offer-cap”, which currently is set at $9,000.00 per MWh or $9.00 per KWh (which is the more suitable measurement unit at the living-being consumer level). Note that this cap is set by the State of Texas through the PUC. It’s essentially arbitrary. Not a market price driven by supply and demand.

    See TAC §25.505 Reporting Requirements and the Scarcity Pricing Mechanism in the Electric Reliability Council of Texas Power Region
    https://texreg.sos.state.tx.us/public/readtac$ext.ViewTAC?tac_view=5&ti=16&pt=2&ch=25&sch=S&rl=Y

    HOW GRIDDY SAVES YOU MONEY – YAH RIGHT

    Instead, Griddy centered the promotion of its service on the savings to be achieved while downplaying the risks of price spike in times of high demand. Griddy knew full well that the price could surge to $9,000 p/MVh and had no hedge or buffering ability because it does not own its own generating capacity and — unlike other retail providers – had no long-term supply contracts for energy at reasonable rates. Its biz model was instead to pass on the “spot” price, whatever it would be. Just so happens the PUC determined that the “spot” price should be and stay at $9,000.00 for days because of the storm and its effect on the industry sector. The AG also complains that the concept of “wholesale” price was not properly explained to customers. Those sorts of things – failure to disclosure, misrepresentation — are the essence of actionable misdeeds under the DTPA. DTPA stands for Deceptive Trade Practices Act.

    The complaint is well done, with references to archived copies for Griddy’s website shots (since taken down) including misleading “savings” graphs that include what the Consumer Protection Provision characterizes as apples-and-oranges comparison. It also cites to the hearings last week in the Lege. Griddy chose not to accept the invitation to testify. Other industry people averred that these types of plans are unsuitable for (human) retail consumers and/or should not even be allowed. That, however, is a question of public policy. (ERCOT has since terminated Giddy as a retail provider, but that is because they didn’t pay their astronomical bill).

    WHOSE FAULT IS THE HIGH “WHOLESALE” PRICE?

    That said, there is spin already in this complaint itself. The AG is taking umbrage at Griddy for being so “brazen” as to blame others: the PUC.

    Well hello!? – Its was the PUC that hiked the price to $9,000. That’s Abbott’s appointees.

    Based on its business model, Griddy simply passed the state-fixed price on to its customers. It’s still the state-imposed cap price that maximized the profits of the generators at the expense of the buyers/consumers in the midst of a disaster. Now the AG is suing Griddy on behalf of the state. — Chutzpah, you might say.

    As they say, everything is bigger in Texas: Even the State’s own chutzpah, delivered by a bevy of public attorneys in the AG’s Office to a court near you.

    And the PUC, of course, is SCOTX-endowed with sovereign immunity: Our contemporary Republican reincarnation of the doctrine that the King is sovereign and can do no wrong. So Griddy will likely be out of luck if it tries to bring in the PUC as a responsible third party, i.e. responsible for the outsized rate it had no choice but to pass on to its customers, since that was the essence of their business model.

    CASE INFO: STATE OF TEXAS (ACTING BY AND THROUGH THE ATTORNEY GENERAL) vs. GRIDDY ENERGY LLC, filed 3/1/2021 at 00:01 (actually filed on Sunday, but that’s not a biz day for the courts) and assigned to the 133rd District Court of Harris County (Civil Division).

    Litigation trivia: There are ten (10) OAG lawyers on the pleading in addition to Paxton himself! Including Grant Dorfman, now a Paxton lieutenant, previously a Harris County District Court Judge (R).

  24. Bill Daniels says:

    Nice analysis, Wolf, thanks. This part was interesting:

    “The complaint is well done, with references to archived copies for Griddy’s website shots (since taken down) including misleading “savings” graphs that include what the Consumer Protection Provision characterizes as apples-and-oranges comparison. It also cites to the hearings last week in the Lege. Griddy chose not to accept the invitation to testify.”

    Funny, I thought that everyone, even Griddy, had the constitutional 4th Amendment right to not be compelled to testify. Since corporations are considered “people,” then using the fact that they failed to show up and testify as de facto inference of guilt seems pretty un-American.

    The only part of that I see as maybe valid is that they didn’t appear to publish the $ 9/kWH price explicitly in their adverts, in their explanation of worst case risk potential. We’ll see if that’s enough to hurt them, although I think this is all moot anyway. The state has already put them out of business it seems. I guess Paxton wants to dance on their grave, too.

  25. Lobo says:

    GRIDDY EVIDENCE

    Re: “Griddy chose not to accept the invitation to testify.”

    Bill, I added that fact from my own recollection of watching several hours of the hearings. It’s not contained in the AG’s complaint, as far as I can tell.

    Also, it didn’t sound like a subpoena was issued by the Lege (assuming that’s an option), and the adverse inference thing (or appropriate sanction) is for court proceedings, as in when not producing properly requested discovery or destroying material evidence (fancy term: spoliation). The AG doesn’t allege criminal conduct, so natural person’s self-incrimination is not an issue. In any event, he is only naming entity defendants, not natural-person corporate officers/or members (although they would presumably be bound by any injunction, if granted, as agents).

    Regarding the latter (messing with or destroying evidence), Justice Devine, with nods of his colleagues, told us recently that destroying material evidence is (part of what) Texas lawyers do (for the benefit of defense counsel in a tort case; – what a coincidence!) and that such billable evidence tampering services are protected by SCOTX-bestowed “attorney immunity”. If that sounds strange, don’t take may word for it. See Bethel v. Quilling, Selander, Lownds, Winslett & Moser, P.C., 595 S.W.3d 651 (Tex. 2020). You can look it up on Google Scholar or the SCOTX website under Case No. 18-0595.

    The evidence relevant here – in the form of removed website content — can be recovered from the waybackmachine and/or similar functionality (Once it’s out on the web, it’s stored somewhere). So this shouldn’t be much of a problem, not to mention the availability of discovery (at Level 3, by the way). This is anything but a chicken-shit action, and also has an important political dimension: blame assignment for public consumption, by judicial means.

    Meanwhile, heads are starting to roll. The Trib. just reported that PUC Chair”man”
    DeAnn Walker resigned, which is what LG Patrick had called for.

    “Public Utility Commission chair resigns after Texas officials criticize management of power outages.” Texas Tribune (Mar 1, 2020, updated 3:53 PM).

    The Governor reportedly thanked her for her services for “the State”. It would have been more befitting to thank her on behave of the power industry: for jacking up the wholesale price to $9,000 per MWh for several days in a row, thereby delivering a motherlode of a bonanza for the power generation industry (and arguably indirectly to natural gas companies).

    Let’s have bets where she is going next, career-wise.

  26. […] here for more on the previous lawsuit. I think that actin has some merit, but Paxton jumping in at this […]