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Griddy files for bankruptcy

Live by market disruption

Griddy Energy, a California-based retail power company, filed for bankruptcy on Monday citing financial woes brought on by the power crisis in February.

Griddy’s business model exposes consumers to the wholesale market, which in normal times could mean savings, but when the grid crashed many customers had exorbitantly high bills in the thousands.

The power company’s Chief Executive Officer Michael Fallquist said the bankruptcy plan would provide financial relief to it’s customers, and also took aim at The Electric Reliability Council of Texas, or ERCOT, the state’s grid manager.

“Prior to Winter Storm Uri, Griddy was a thriving business with more than 29,000 customers who saved more than $17 million dollars since 2017. The actions of ERCOT destroyed our business and caused financial harm to our customers,” Fallquist saod. “Our bankruptcy plan, if confirmed, provides relief for our former customers who were unable to pay their electricity bills resulting from the unprecedented prices.”

Two weeks ago, ERCOT barred Griddy from participating in the state’s wholesale power markets, effectively shutting down the company.

See here and here for some background. This doesn’t mean Griddy is going away, just that it’s working through some tough times. It also apparently means that may of their customers may be off the hook for the ridiculous prices they had been charged.

Griddy’s approximately 29,000 customers were charged $29 million for energy during the winter storm, according to court documents. The wholesale electricity retailer, which has recently been forced out of the market, charged a $9.99 monthly fee and, in turn, passed along wholesale prices to customers.

When wholesale energy bill prices skyrocketed during the storm as temperatures plunged below freezing, Griddy customers were subject to the same costs with no buffer. Some reported bills over $15,000. Most Texas customers were shielded from the rising prices because they pay a fixed rate for electricity, although they could see prices increase in the near future to offset the added costs incurred by the power companies.

Houston-based Griddy’s Chapter 11 filing outlines a plan to wipe out its former customers’ debt during the company’s liquidation if approved in bankruptcy court.

“Our bankruptcy plan, if confirmed, provides relief for our former customers who were unable to pay their electricity bills resulting from the unprecedented prices,” Griddy CEO Michael Fallquist said in a statement on its website. He emphasized Griddy did not profit from increased prices and only made money off of the fixed monthly membership fees.

However, thousands of dollars have already been automatically drained from customer’s bank accounts and charged to their credit cards.

Texas Attorney General Ken Paxton said in a statement that Griddy and his office are “engaged in ongoing good faith negotiations to attempt to address additional relief for those Griddy customers who have already paid their storm-related energy bills.”

Not perfect, but it’s a start. Here’s the longer version of the Chron story for more.

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