The sun came out, ice began to thaw, and thoughts turned to utility bills. No sooner had the subzero temperatures subsided and the house felt livable again, before horror stories circulated about kilowatt-induced sticker shock.
Russell Devorsky, executive director at the Heart of Texas Council of Governments, stunningly watched his electric rate move from pennies per kilowatt-hour to $9 per kWh. His electricity provider, Griddy Energy, billed him $6,200 for four days’ service. Another Griddy customer blew a fuse and filed a $1 billion class-action suit against the company, alleging “price gouging.” By the weekend, Devorsky had joined other Griddy customers receiving notice that they were no longer Griddy customers. State officials revoked the company’s status as a retail electricity provider and automatically moved customers to other providers.
Devorsky said he hopes investigations underway will shed light on Griddy’s conduct, and that corrective action will rule the day.
But that $6,200 is gone, for now at least, drafted from his account per pre-payment arrangements with Griddy. It had about 29,000 customers statewide, and its variable rates allowed customers often to enjoy bills lower than those with locked-in rates. Other providers also offer variable rates, and customers booted from Griddy retain the same ability to switch retail providers that they had before, albeit with Griddy off the table.
But the generational frost that engulfed Texas bit variable-rate Griddy customers, causing demand to skyrocket and triggering billing thresholds that pushed per-kWh charges through the roof.
Devorsky, for one, is not complaining. He said he knew what he was getting into. But he harbors suspicions about how the process played out during the storm. He fears that progressions relating to supply and demand “were manipulated,” noting that his charges leapt from 2 cents per kWh to $9 per kWh, then drastically reversed course and bottomed out at negative 6-cents per kWh.
For a time, he was getting a 6-cent per kWh credit to his bill.
“It’s supposed to be like a roller-coaster, with gradual ups and downs, not like a light switch that can be turned on and off,” Devorsky said.
In an announcement of its removal as an electricity provider, Griddy wrote that it would be suspending further billing activity because the storm “resulted in uncertainty regarding the reliability of data received from meter reads and ERCOT concerning electricity actually used by customers.” Bills are expected to be resolved within 60 days, and any balances owed to customers will be paid within a week of being posted, according to the announcement.
Subzero temperatures and icy conditions resulted in rolling, controlled power shutoffs statewide as the Energy Reliability Council of Texas played a high-tech game of tic-tac-toe. ERCOT attempted to counter skyrocketing demand on the grid by instructing distribution utilities to temporarily suspend service to selected areas until the crisis passed.
The action narrowly prevented power demand from outstripping available power generation, a situation that could have caused uncontrolled blackouts and severe equipment damage needing months to repair. While ERCOT’s actions in the moment averted a potentially much deeper crisis, the controlled outages, for a variety of reasons depending on region, left some neighborhoods without power for days, jeopardizing life and property. Residents who fortunately kept their power invited over friends and neighbors not so lucky.
“We had three different families come stay, 12 people and four dogs,” local real estate agent Pam Tucker-Hanson said. “I logged onto my (electricity) usage portal, which showed that my monthly bill through Feb. 25 was $736.12, about twice the usual. We’ve never had a bill anywhere close to that price. But I’m not mad about it. The heater ran 24/7. We kept our pool heated to keep it from freezing. It is what it is. I saw Facebook postings from people with bills of $4,000 or $5,000. They’d probably laugh at my $700.”
Tucker-Hanson said her provider, Express Energy, messaged her to say the bill in her usage portal was only an estimate subject to change.
Public outrage has called into question ERCOT’s actions in recent years and during the winter storm. Texas Gov. Greg Abbott has pledged a thorough review. Seven ERCOT board members have resigned. The Public Utility Commission issued orders not to disconnect electric service for nonpayment until further notice.
“Our absolute top priority as a commission and a state is protecting electricity customers from the devastating effects of a storm that already affected their delivery of power,” commission chair DeAnn Walker wrote in a press release announcing the order.
Waco-based economist Ray Perryman said most Texans will have higher bills this month “simply because we will use more power.”
He said the outsized spikes grabbing the most attention are being felt by those who chose flexible rates in a wholesale marketplace.
“During mild spring and fall days, wind power — which essentially has a marginal cost of zero — can supply all our needs,” Perryman said. “People who opt for prices tied to wholesale costs have very low bills during these times. The risk is that extreme conditions can cause huge spikes in power costs.”
Perryman said he expects the Texas Legislature to further act to prohibit power disconnects, and to provide relief to affected customers.
“It’s a difficult issue, however, to mandate that the providers absorb the cost because they were buying needed power at those extremely high wholesale rates and may not have the financial resources to do so,” he said.
Perryman said going forward, as a matter of consumer protection, it might be reasonable to place limits on plans tied to wholesale rates.
“One option would be to put in a ‘circuit breaker’ that sets an upper bound on how much prices could go up,” Perryman said. “With that in place, the companies providing these plans could adjust their standard pricing relationship to wholesale costs in order to manage the additional risk.”
TJ Ermoian, a Waco-based electricity aggregator and energy consultant, generally defended ERCOT and the power companies during this “once in a lifetime event that not everyone could have prepared for.”
“Griddy sent out a notice saying bad weather is coming, it’s about to get bad,” Ermoian said. “I never had a power company tell me I need to change carriers, but they did. I don’t believe they’re gouging any customers.”
The Texas Tribune reported that Griddy addressed concerns of price gouging on its website and firmly placed the blame on the governor-appointed Public Utility Commission. Griddy stated it did not profit from raised prices.
According to the Texas Tribune, the commission raised the wholesale market price of electricity to $9 per kWh from the average 12 cents per kWh as demand rose. It reportedly hoped to entice power companies to produce more electricity.
The Public Utility Commission directive, which the Texas Tribune quoted in part, said, “Energy prices should reflect scarcity of the supply.”
Ermoian, in a letter to the Tribune-Herald, offered a litany of factors causing the system to fail, including freezing rain in West Texas that iced wind generators; severe cold that hampered natural gas production and reduced pipeline pressure; frozen coal piles; plants not adequately winterized; solar power generation operating at 15% capacity, to name a few.
He said blaming anyone for this crisis is like blaming Hurricane Harvey on the city of Houston, “where it rained 60 inches over just a few days.” He said some always blame others or exploit natural disasters for political gain.
How Texas generates its electricity, and more trends in this week's data
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