A Texas woman who received an electricity bill of more than $ 9,000 this month is suing her electricity supplier for lowering the price. It is the first such process, after a terrible week of snow and freezing temperatures, which has led to rising energy prices for thousands of customers in the state and disruptions for millions of others.
Consumer experts say that more such processes may occur. But the deregulated electricity market in Texas, supplemented by so-called variable rate pricing, means that many of these applicants will have an upward struggle to lower their bills.
Lisa Khoury, a resident of Chambers County in Houston, filed a class action lawsuit against her electricity supplier, Griddy Energy, on Monday. According to the lawsuit, Khoury was charged $ 9,546 between February 1 and 19, an amount hundreds of times higher than the usual range of bills from $ 200 to $ 250.
Khoury said Griddy withdrew $ 1,200 from his bank account through an automatic payment system before stopping payment through his bank, but still owed more than $ 8,000 for intermittent energy, according to the complaint. Khoury and the other members of the process are demanding a $ 1 billion monetary exemption.
“Griddy accused Khoury in the midst of a disaster. She and her husband remained largely powerless in their home from Wednesday, February 17, 2021, until Thursday, February 18, 2021. At the same time, Khoury hosted her parents and “The laws, which are over 80 years old, during the storm. Even then, it continued to minimize any energy consumption due to high prices,” the complaint reads.
Khoury’s attorney, Derek Potts, a national administrative partner at law firm Potts, said Griddy’s billing applies to Texas consumer protection laws – and that thousands of electricity users are likely to be affected.
Unpredictable prices
Griddy said the lawsuit was “without merit” in a statement to the Dallas Morning News. The electricity supplier did not immediately respond to a request for comment from CBS News. On its website, the company says it is not taking advantage of high electricity prices and blamed the Texas Public Utilities Commission for last weekend’s astronomical hikes.
“You actually pay the same price as a retail energy provider or utility,” Griddy says on its website, noting that these prices change every five minutes.
“PUCT changed the rules on Monday,” when it directed the Texas grid provider to allow high astronomical energy prices, Griddy said, adding that it was “seeking help” from ERCOT for affected customers.
Plans like Griddy are a relatively new feature in the largely unregulated energy market in Texas. Most Texans, according to utilities commission spokesman Andrew Barlow, are part of fixed-rate plans in which users pay a predetermined amount for each bit of electricity they use. In variable plans such as the one offered by Griddy, consumers pay wholesale prices, which means that their bills are low in times of low demand, but can increase rapidly in times of crisis. Some energy industry experts have called these plans predatory.
Variable rate utility contracts have been likened by some energy experts to adjustable rate mortgages, which were popular during the early boom of the 2000s. According to such mortgages, a homeowner could get a rate slightly lower interest rate, but was in love with rising interest rates on the way.
“It seems that consumers have been lured by the promise of slightly cheaper electricity, with fine print: ‘Oh, if there is an emergency network, you might get a $ 5,000 bill,'” Costa Samaras said. , associate professor at Carnegie Mellon and deputy analyst at RAND. “It may be legal, but can’t it?”
Misleading “to an extremely unfair degree”
“There’s a decent claim that these contracts are irrecoverable,” said Richard Alderman, director of the University of Houston’s Center for Consumer Law and professor emeritus at the university.
Texas law protects consumers who are profiting from “an extremely unfair degree,” Alderman said, adding that raising electricity prices by the thousands of dollars should qualify as an extremely unfair law.
“Would someone with a right mind sign a contract knowing that this was going to happen? In my mind, no,” he said.
However, such processes face several obstacles. Many contracts force consumers to arbitrate privately, a nejury system that tends to favor companies. Even when a consumer goes to court, the judge is often not on their side.
“Texas courts are generally very conservative and often tell consumers, ‘You signed that contract, you should have read it and understood what it said,'” Alderman said.
For now, Texas Gov. Greg Abbott has turned to electricity bills a “top priority” for legislators. Utilities are prohibited from disconnecting customers for non-payment and have been told to stop billing.
Energy suppliers were surprised
Residents were not the only ones to face $ 1,000 in electricity bills. Some municipalities and alternative energy suppliers were also caught unawares. The city of Denton spent $ 207 million on electricity during the outages, close to the annual electricity budget. Energy provider Just Energy said it lost $ 250 million during the episode and will go out of business.
When more energy sources failed over the weekend, Texas commission and grid operator ERCOT allowed wholesale energy prices to rise up to 300 times their usual level to encourage more energy to enter the grid. . At the time, Griddy took the unprecedented step of asking its customers to switch to other suppliers. However, many vendors were unable to connect to new customers during the freeze. People like Lisa Khoury said they were forced to wait.
According to Bloomberg, there have been nearly a dozen domain names looking for potential customers for class actions, including TexasPowerLawsuit.com, TexasPowerFailureLawsuit.org and ClassActionTexasPower.org.
Consumer advocates hope that federal funds or the Texas legislature can help customers stuck with astronomical bills – and prevent increases like these in the future.
“The money has to come from somewhere,” Samaras said. “The question is: does Texas save these customers or are there regulations?”