Texas retail electric supplier Griddy Energy LLC misled its nearly 30,000 customers, engaged in false advertising and failed to disclose the risks associated with its business model, which resulted in skyrocketing electric bills as the Texas power system buckled under the weight of an Arctic blast in February, the state of Texas said Feb. 28 in a lawsuit against the California-based company and its corporate parent, Griddy Holdings LLC.
Filed by Texas Attorney General Ken Paxton in a district court in Harris County, Texas, the suit alleges that Griddy acted in violation of the Texas Deceptive Trade Practices Act and seeks civil penalties, various injunctive relief and refunds for customers.
"Griddy misled Texans and signed them up for services which, in a time of crisis, resulted in individual Texans each losing thousands of dollars," Paxton said in March 1 statement. "As the first lawsuit filed by my office to confront the outrageous failure of power companies, I will hold Griddy accountable for their escalation of this winter storm disaster."
In a March 1 email, a Griddy spokesperson disputed unspecified allegations in the suit and said the company would "vigorously defend against it" in court. "Until then the company has no further comment."
Griddy is backed by Macquarie Energy LLC, a subsidiary of Australian financial services firm Macquarie Group Ltd.
The complaint came after the state's primary wholesale grid operator, the Electric Reliability Council Of Texas Inc., or ERCOT, on Feb. 26 revoked Griddy's right to participate in its market due to a breach of payment and initiated a "mass transition process" to shift customers to larger power companies who volunteered as providers of last resort.
Customer complaints
Griddy's promised that directly passing through wholesale market prices to customers will give those customers below-average electricity bills. But Griddy customers' prices soared after the Public Utility Commission of Texas on Feb. 15 directed ERCOT to set a $9,000/MWh price cap as a penalty for storm-crippled generators.
"When combined with Griddy's auto-billing system, these vulnerable consumers who were promised savings were instead shocked by overdrawn accounts, overdraft fees, and an inability to pay their other bills, simply because they tried to protect their families from the bitter cold," according to the complaint.
The attorney general received more than 400 customer complaints against Griddy in the wake of the storm, most of which were in the Houston area. The suit cites a Houston resident who was charged $4,677 in one week to provide electricity to a small single-bedroom apartment and a disabled veteran on fixed income in Royse City, Texas, who was billed over $13,000 in six days as the customer sought a new power provider.
"Following the storm, rather than take responsibility for the harm it had caused Texans, Griddy brazenly pointed the blame elsewhere and claimed to share in consumers' anger at the situation," according to the lawsuit.
