After the unusual icy weather has left millions of Texans without power, some are facing a new crisis: skyrocketing electricity bills.
The price increase affects people who have chosen to pay wholesale prices for their power, which is usually cheaper than paying flat rates in good weather, but can spike when there is high demand for electricity. Many of those who have reported receiving high bills are customers of electricity supplier Griddy, which operates only in Texas.
Among them is Susan Hosford from Denison, Texas. On a typical February day, she pays Griddy less than $ 2.50 for power. But the costs for one day rose to hundreds of dollars after the storm. In total, she was automatically charged $ 1,346.17 during the first two weeks of February, which was more than she had in her checking account, causing her bank to charge her debit fees and affect other accounts.
“This whole thing has been a nightmare,” she said.
Here’s more on the rising electricity bills:
WHAT ARE WHOLESALE ELECTRICITY PRICES?
Wholesale electricity prices fluctuate based on demand. Because natural gas pipelines and wind turbines in Texas were frozen, less power was available, but there was a high demand for electricity, driving wholesale prices skyrocketing, said Joshua Rhodes, an energy research associate at the University of Texas.
Wholesale prices are typically as low as a few cents per kilowatt hour, but peaked to $ 9 per kilowatt hour after the storm. Fixed-rate customers pay a fixed amount that does not increase that much. They usually pay about 12 cents per kilowatt hour. But Rhodes said fixed-rate customers could see their price hike a few cents later this year, as companies hit by the icy conditions want to recoup their costs – but their bills won’t number in the thousands.
People can pay wholesale prices in Texas because it’s one of the few states where people can choose which company to buy power from, Rhodes said.
WHAT IS GRIDDY?
Launched in 2017, Griddy charges $ 10 a month to give people a way to pay wholesale electricity prices instead of a flat rate. It warned customers about price increases and urged them to change providers. The company said wholesale prices have returned to normal since February 20.
HOW MANY PEOPLE ARE AFFECTED?
Griddy said it has 29,000 members. It is unclear how many other Texans also pay wholesale prices from other companies.
“We won’t get a full picture of the financial devastation for maybe 30 to 90 days,” said Ed Hirs, an energy fellow at the University of Houston.
WILL THOSE WHO HAVE LARGE ACCOUNTS RECEIVE FINANCIAL HELP?
That is unclear. Texas Governor Greg Abbott said on Sunday that he is working with members of the legislature to tackle skyrocketing energy bills and “find ways the state can help reduce this burden.” But he did not give details of what that could be. For now, the state has prevented companies from turning off the power because they don’t pay.
Rhodes said rescuing customers is a hard sell because they have chosen to pay wholesale prices and may have paid a much lower price than others for a while.