Power company price-gouging adds to Texans' pain in wake of storms

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Some Texas customers on variable-rates plans will be facing as much as $17,000 in electric bills.

Winter storms slammed the state of Texas this week, causing power and water outages for some 4 million Texans amid snowfall and freezing temperatures — and it's working-class Texans who are left to foot sky-high electric bills after state power grid failures.

While customers on a fixed-rate electric plan may not see price increases from their power companies in the aftermath of the crisis, customers with variable- or indexed-rate contracts, which charge the customer the wholesale price of power based on supply and demand, could be facing hefty bills.

Reports out of Houston and other major cities indicate customers with variable-rate plans are receiving bills up to $17,000. Houston resident Ty Williams spoke to a local outlet, sharing that he had been billed by the company Griddy on a variable-rate plan and received a $17,000 bill after the Texas weather emergency.

"How in the world can anyone pay that?" he said to the outlet. "I mean you go from a couple hundred dollars a month — there's absolutely no way, it makes no sense."

He added that Griddy had notified Texas customers during the crisis that they could switch to a fixed-rate plan to avoid the steep post-storm bills, but that he was unable to find a fixed-rate provider who would sign him up until Feb. 26. "Pretty much you are being held hostage and there isn't anything you can do about it," Williams told the outlet.

Fort Worth, Texas, resident Jennifer Evans told a local news station that she was paying $9 per kilowatt-hour during the crisis. "Our bill is up to $5,600," she said.

"I just want to be clear that we knew what we were getting into [with a variable-rate plan]," she told the outlet. "Everybody should understand what they're getting into, and nothing Griddy has done is illegal. It's just a little unethical."

Griddy did not respond immediately to a request for comment from the American Independent Foundation.

Fred Anders, who helms texaspowerguide.com, explained to a Houston outlet that variable-rate power plans are a lot "like shorts and puts in the stock market," with increased demand coupled with reduced supply from generators during the Texas storms resulting in power price hikes. "For the average home in Texas, it translates to roughly $450 a day if they didn't curtail their usage at all," Anders added.

The Electric Reliability Council of Texas (ERCOT), which manages 90% of the state's electric load and has drawn ire from Texas legislators for failing to provide reliable power during the storms, was also ordered by the Public Utility Commission to take action to reduce statewide power demand — also effectively increasing energy prices during the disaster.

ERCOT did not immediately respond to a request for comment by the American Independent Foundation.

Questions have been raised as to whether such price hikes amount to price gouging, defined in Texas' Consumer Protection Act as "demanding an exorbitant or excessive price in connection with the sale or lease of fuel, food, medicine, lodging, building materials, construction tools, or another necessity."

The website of Texas Attorney General Ken Paxton states that price gouging is taking place "if a disaster has been declared by the Governor of Texas or the President, and businesses raise the price of their products to exorbitant or excessive rates to take advantage of the disaster declaration."

President Joe Biden declared a state of emergency in Texas on Sunday and directed funding and assistance from the Federal Emergency Management Agency (FEMA) to the state. He has also stated his intention to visit Texas and declare a state of disaster, which will make more funding available to the state.

Marissa Padden, who lives in Pflugerville, just outside of Austin, told the American Independent Foundation that her home lost power during the emergency for 43 hours, and that temperatures quickly dropped to the frigid 30s.

Padden is on a variable-rate power plan because she has been struggling to find work during the pandemic and is cautious about "not keeping lights on, letting things run" and "about keeping bills as low as possible."

In a normal week, she spends about $25 on electricity. "This week, despite no power at all for close to 48 hours, I am being charged $120, almost five times what I'd spend in a normal week." She added that she's seen many others locally with much higher bills even than hers.

"So many working-class Texans are already struggling with unemployment due to COVID," Padden said. "It's outrageous to me that once again, the burden of failure in our policies, preparation, and leadership falls on the shoulders of those who are not only already struggling, but are victims of that failure."

Padden added that she understands the disaster was financially costly for power companies, but, she said, "It is wrong for them to try to recoup those losses through price-gouging the people that were relying on them not to fail.

"I say to the electric companies, ERCOT, and our elected officials: Please, we have already been through so much," Padden said. "Loss of homes, loss of lives. Don't place the financial burden of this disaster on us, too. Be accountable. Do the right thing. Find a different way."

Published with permission of The American Independent Foundation.