A Texas woman who received an electricity bill of more than $ 9,000 this month is suing her electricity supplier for a price increase. It is the first such lawsuit after a harrowing week of snow and freezing temperatures that have led to skyrocketing energy prices for thousands of customers in the state and power outages for millions of others.
Consumer law experts say there are likely to be more such lawsuits. But Texas’s deregulated electricity market, complete with so-called variable rates, means many of these plaintiffs will have a tough battle to get their bills paid.
Lisa Khoury, a resident of Chambers County in Houston, filed a class action lawsuit against her electricity provider, Griddy Energy, on Monday. According to the indictment, Khoury was charged $ 9,546 between February 1 and 19, an amount hundreds of times higher than her typical bill range of $ 200 to $ 250.
Khoury said that Griddy took out $ 1,200 from her bank account through an automatic payment system before stopping the payment through her bank, but that she still owes more than $ 8,000 for intermittent flow, according to the complaint. Khoury and other classmates in the lawsuit are seeking $ 1 billion in financial aid.
Griddy blamed 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 received her parents and laws, who are in their 80s, during the storm. then she kept minimizing power consumption due to high prices, “the complaint reads.
Khoury attorney Derek Potts, national managing partner of the Potts Law Firm, said Griddy’s billing violates Texas consumer protection laws – and thousands of electricity users are likely to be affected.
Unpredictable prices
Griddy said the lawsuit was “worthless” 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 power prices and blamed the Texas Public Utility Commission for last weekend’s astronomical hikes.
“You basically pay the same price as a private energy supplier or utility company,” Griddy says on his site, noting that those prices change every five minutes.
“The PUCT changed the rules on Monday,” when it ordered the Texas grid operator to allow astronomically high power prices, Griddy said, adding that it was “seeking help” from ERCOT for affected customers.
Plans like Griddy’s are a relatively new feature in Texas’s largely deregulated energy market. According to utility committee spokesman Andrew Barlow, most Texans have a flat rate, where users pay a predetermined amount for each bit of electricity they use. In variable plans like Griddy’s, consumers pay wholesale prices, meaning their bills are low during times of low demand, but can rise quickly during crunch times. Some experts in the energy sector have called these plans predatory.
Variable rate utility contracts have been likened by some energy experts to variable rate mortgages that were popular during the housing boom of the early 2000s. Under such mortgages, a homeowner might get a slightly lower interest rate, but he was on the hook for rate hikes down the road.
“It looks like consumers have been lured into the promise of a little cheaper electricity, with the fine print, ‘Oh, if there is an emergency on the grid, you might be billed for $ 5,000,’ says Costa Samaras. , associate professor at Carnegie. Mellon and assistant analyst at RAND. “It may be legal, but is it correct?”
Deceived “grossly unfairly”
“There is a fair claim that these contracts are unscrupulous,” said Richard Alderman, director of the University of Houston Consumer Law Center and professor emeritus at the university.
Texas law protects abused consumers “to a great extent unfairly,” the councilor said, adding that power price spikes in the thousands of dollars should qualify as extraordinarily unfair the law.
Would anyone in their right mind sign a contract knowing this would happen? In thought no, ”he said.
Yet such lawsuits face several hurdles. Many contracts force consumers into private arbitration, a system with no case law that tends to favor businesses. Even if a consumer does come to court, the judge is often not on their side.
“The Texas courts are generally very conservative, and they often tell consumers, ‘You signed that contract, you should have read it and understand what it says,” said councilor.
For now, Texas Governor Greg Abbott has called utility bills a “top priority” for legislatorsUtilities are not allowed to disconnect customers for non-payment and have been ordered to suspend billing.
Energy suppliers taken by surprise
Residents weren’t the only ones with a thousand dollar electricity bill. Some municipalities and alternative energy suppliers were also taken by surprise. The city of Denton spent $ 207 million on power during the outage, almost against its annual electricity budget. Power supplier Just Energy said it lost $ 250 million during the episode and would go out of business.
When multiple power sources went out over the weekend, the commission and Texas grid operator ERCOT raised wholesale energy prices to 300 times the normal level to encourage more power on the grid. At the time, Griddy took the unprecedented step to ask its customers to switch to other providers. However, many providers were unable to acquire new customers during the freezer. People like Lisa Khoury told them to wait.
According to Bloomberg, nearly a dozen domain names that may be seeking clients for class action litigation have been registered, including the addresses TexasPowerLawsuit.com, TexasPowerFailureLawsuit.org, and ClassActionTexasPower.org.
Consumer advocates hope that federal funds or the Texas legislature can help customers stick to astronomical bills – and avoid spikes like these in the future.
“The money has to come from somewhere,” said Samaras. “The question is, is Texas saving these customers or are there regulations?”