During very cold weather in Dallas, a $5,000 electricity bill from Texas power supplier Griddy was received for a 900 sq. foot apartment, some days back. The Griddy sells unusual plans with prices linked to the spot price of power on the Texas grid, but warned its customers that their bills could rise high during the storm and that consumer may switch power providers. Unusual icy weather hit millions of Texans, leaving them without power; some face another crisis: absurd electricity bills.
Why such High Bills?
Surging prices hit people who chose to pay wholesale power prices, which are cheaper than say, paying the fixed rates when there is good weather, but could spike with higher demand for electricity. Those reporting receipt of hefty bills are all customers of the electricity provider Griddy, that only provides electricity in Texas. Susan Hosford from Denison, Texas, generally pays Griddy less than $2.50 daily for power. But one-day costs spiked to hundreds of dollars after the storm. She was shocked to be automatically charged $1,346.17 for the first two weeks of February, which had exceeded the amount she had retained in her checking account; this triggered off her bank to charge overdraft fees and affected the payment of other bills. This whole episode turned into a terrible nightmare. There is however much more on the episode of sky-rocketing electricity bills.
Why Wholesale Electricity Prices?
Wholesale electricity prices fluctuate depending upon demand. Because the wind turbines and natural gas pipelines froze up in Texas, lesser power was available, but there was a abnormally high demand for electricity, caused the wholesale rates to shoot up exponentially, as per research findings. Wholesale prices are usually very low as it costs just some cents per kilowatt per hour but jumped to over $9 per kilowatt/hour following bad weather. Customers who pay fixed rates pay a set amount that does not rise too much. They typically pay about 12 cents per kilowatt per hour. But fixed rate payers could notice their prices shoot up by only few cents by the end of the year as companies weather more bad weather, and have to recoup costs but those bills will not be running into thousands of dollars. People are able to pay wholesale rates in Texas because it’s one of few states that permit people to choose from which company their power supply comes.
What’s Griddy and How Many People are Affected?
Griddy, which started its operations in 2017, charges around $10 a month to provide people options to pay the wholesale rate for electricity instead of fixed rates. It warned customers about raising prices, urging them to switch providers. The company confirmed that wholesale prices returned to normal levels within a week. Griddy has 29,000 subscribers but clarity about how other Texans paying wholesale prices from other companies, has yet to emerge and the extent of financial devastation caused within 2-3 months.
Will those with Huge Bills Get Some Financial Respite?
Texas Governor Greg Abbott is working with legislature members to address exorbitant energy bills and seek how the state can reduce this burden, without giving specifics on what is actually under consideration. For now the state has prevented power companies from cutting off power for consumers not paying their exorbitant bills. Bailing out customers may be difficult as they opted to pay wholesale prices and paid much lower prices than others for quite some time.