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Less than a month ago, Texans with one electric provider saw their bills surge as a massive winter storm made the temperature and power supply plummet.
Now, a newly-filed lawsuit wants to make the company, Griddy, pay those customers back.
In the years and months ahead of Winter Storm Uri, the company allegedly employed misleading advertising that “failed to adequately disclose the risks of its pricing model to its customers,” according to the lawsuit filed by Texas Attorney General Ken Paxton.
The case, filed Monday in Harris County District Court, alleged that Griddy first promised that its “cheap ‘wholesale’ prices … would consistently beat traditional energy costs.”
Then, the company” blatantly contradicted these promotional representations as it auto-debited hundreds of dollars from Texans’ checking accounts daily. Griddy was fully aware of the reality of the risk in its pricing scheme — sky-high energy rates at a time when consumers are the most vulnerable,” the lawsuit said.
“We are aware of the lawsuit filed by the Texas Attorney General against Griddy. We do not agree with the claims alleged in the complaint, and plan to vigorously defend against it. Until then the company has no further comment,” a Griddy spokeswoman said.
The company has previously said it was following electric-price rates during the storm that were set by the Public Utility Commission of Texas and the Electric Reliability Council of Texas, which consists of municipal and retail-owned utilities.
As state lawmakers considered how to offer financial relief to people socked with massive bills, Griddy said it would pass along all the relief to its customers.
As the storm swept through Texas, Paxton’s lawsuit said his office received more than 400 consumer complaints from Griddy customers.
$4,677 for a week of electricity
These customers said Griddy’s auto-debits were flooring them with massive bills they had no way to stop. One woman who filed a complaint to the AG said she was now staring at a $4,677 credit-card charge for a week of electricity in her 800-square-foot Houston apartment.
“I do not have the money to pay this bill. We need help,” she said in her complaint, one of several consumer complaints quoted in the lawsuit.
A week before the lawsuit, MarketWatch heard from one Griddy customer who said it took days for her electric costs balloon to nearly triple what she paid all last year. Frisco resident Liz Guess also arranged an auto-debit on her Griddy account and the company charged her 15 times in a matter of days.
“I was just panicking, calling anybody and everybody to figure out how to stop the hemorrhaging of money,” Guess said at the time. She ended up with $1,125 in credit-card charges from Griddy and created a GoFundMe page to cover the costs. (She’s now at $930 in a $1,200 goal.)
Guess noted that Griddy did send her emails right ahead of the storm alerting her to potential price increases, but many of those ended in her spam folder.
Paxton’s lawsuit wants the company to pay back the accounts it automatically debited, as well as extra penalties and fees.
Utility-price experts have pointed out Texas’ energy regulations stand apart from many other states. It’s the closest to fully deregulated, they said.
Many consumers have fixed-rate plans, but others opt for variable rate plans, allured by the chance pay less for power. “Retail customers are lured by that, but they don’t realize there is a risk of sky-high prices,” Ken Rose, a senior fellow at the Institute of Public Utilities at Michigan State University, previously told MarketWatch.
The new lawsuit also seeks an injunction that would make sure the company clearly communicates the potential for price increases and the potential extent of those electricity price increases.
