A Texas woman who received a power bill of more than $ 9,000 this month is suing her electricity supplier for prize money. This is the first such case after a terrifying week of snow and freezing temperatures that is driving thousands of customers into the state, and millions of others are disappearing.
Consumer law experts are likely to say that such lawsuits are likely to come. But the deregulated electricity market in Texas, complete with the rates of variable rates, means that many of these claimants will have an uphill battle to drop their bills.
Lisa Khoury, a Chambers County resident in Houston, filed a class action lawsuit against her electricity supplier, Griddy Energy, on Monday. According to the case, Khoury was charged $ 9,546 between February 1 and 19, an amount hundreds of times higher than her usual range of $ 200 to $ 250.
According to Khoury, Griddy withdrew $ 1,200 from her bank account via an auto payment system before stopping the payment through her bank, but according to the complaint, she still owes more than $ 8,000 for power that was interrupted. Khoury and other class members of the case want to alleviate $ 1 billion in money.
‘Griddy charged Khoury in the midst of a disaster. She and her husband were mostly without power in their home from Wednesday, February 17, 2021, to Thursday, February 18, 2021. At the same time, Khoury housed her parents and laws, which were in the storm in the 1980s. Even then, she continued to keep power consumption to a minimum due to the high prices, ”the complaint reads.
Khoury lawyer Derek Potts, national managing partner of the Potts law firm, said Griddy’s bill was in conflict with Texas consumer protection legislation – and that thousands of electricity users were likely to be affected.
Unpredictable prices
Griddy said the lawsuit was “merciless” in a statement given 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 states that it does not benefit from high power prices, and blamed the Public Utility Commission of Texas for the astronomical increases of last weekend.
“You actually pay the same price as a retail energy supplier or utility industry,” Griddy says on his website, noting that prices change every five minutes.
“The PUCT changed the rules Monday” when it instructed Texas’ network provider to allow astronomically high power prices, Griddy said, adding that he was seeking “ERCOT” relief for affected customers.
Plans like Griddy’s are a relatively new feature in Texas’ largely deregulated energy market. According to Andrew Barlow, spokesman for the utility commission, most Texans are working on fixed tariff plans in which users pay a predetermined amount for every bit of electricity they use. In fluctuating plans like what Griddy offers, consumers pay wholesale prices, which means their bills are low in times of low demand, but that can rise rapidly during times of Christmas. Some experts in the power industry considered these plans predatory.
Utility contracts with variable rates have been compared by some energy experts to mortgage loans with adjustable rates that were popular in the early 2000s homes. Under such mortgages, a homeowner can get a slightly lower interest rate, but he was on the hook for interest rate hikes along the way.
“Consumers seem to have seduced the promise of a little cheaper electricity, with the fine print: ‘Oh, if there’s an emergency, you can get a $ 5,000 bill,'” Costa Samaras, associate professor at Carnegie , said. Mellon and deputy analyst at RAND. “It may be legal, but is it right?”
Misleading “to a very unfair degree”
“There is a decent demand that these contracts be unscrupulous,” said Richard Alderman, director of the University of Houston’s Center for Consumer Law and professor emeritus at the university.
Texas law protects consumers from being used “to a very unfair degree,” Alderman said. He added that the rise in power prices in the thousands of dollars should qualify as the unfair law.
“Would someone wisely sign a contract knowing it would happen? In my mind, no,” he said.
Yet such lawsuits stand for several obstacles. Many contracts force consumers to private arbitration, a system that is not registered by the company and that tends to benefit companies. Even if a consumer enters the court, the judge is often not on their side.
“Texas courts are generally very conservative and they often tell consumers, ‘You signed the contract, you should have read it and understood what it says,'” Alderman noted.
For now, Texas Gov. Greg Abbott has named power bills a “top priority” for legislators. Utilities are prohibited from disconnecting customers for non-payment, and they have been instructed to interrupt the invoice.
Energy suppliers caught off guard
Residents were not the only ones facing a thousand dollar power bills. Some municipalities and alternative power providers were also caught unawares. The city of Denton spent $ 207 million on power during the outages, close to its annual electricity budget. Power provider Just Energy said it lost $ 250 million during delivery and that it would no longer be valid.
When several power sources failed over the weekend, the commission and ERCOT, a grid company in Texas, allowed wholesale energy prices to be up to 300 times higher than their normal level to encourage more power to enter the grid. Griddy at the time took the unprecedented step of asking its customers to switch to other providers. However, many suppliers were unable to report new customers during the freeze. People like Lisa Khoury said they were forced to wait.
According to Bloomberg, nearly a dozen domain names have been registered that could potentially search customers for class actions, including the addresses TexasPowerLawsuit.com, TexasPowerFailureLawsuit.org and ClassActionTexasPower.org.
Consumer advocates hope that federal funds or the Texas legislature can help clients with astronomical bills – and in the future, prevent spikes like this.
“The money has to come from somewhere,” Samaras said. “The question is, is Texas releasing these customers, or are there regulations?”