In theory, this was a great idea, playing chancy electricity rate roulette with Griddy Energy. Before the winter storm of 2021 Karen was doing alright on the “wholesale electricity” plan. Taking advantage of lower wholesale electricity prices makes sense. I won’t go out on a ledge and say Griddy Energy is a scam, but it would make a nice Casino game.
In some manner of looking at it, Griddy did what they promised – sold electricity at a fluctuating wholesale rate.
A lady named Karen said, “We did have to cancel service today, because the pricing is just too high.”
There comes a time when a skyrocketing electric service price starts to not make sense or be sound financial decision making.
Back in the summer of 2021 Karen from Tyler could have locked into a fixed Tyler Texas residential electric rate in zipcode 75703 for around 7.3 cents per kilowatt hour.
Karen, saw a bill from Griddy that lasted for 17 days of electric usage during the months of June 2021 and July 2021 for 7.4 cents per kWh. This rate was not a hedged fixed electric rate but still barely higher than a fixed rate she could have signed up for.
The wholesale electricity price was not as wholesale as she was led to believe. Other electric companies were offering fixed retail electric plans cheaper than the Griddy plan that seemed too not be as competitive.
By the time August rolled around Karen was sending in a 1 month electric bill for $270 which was more than she had ever paid a Tyler electric company. Even during hotter Augusts in prior years in Tyler she never had to cough up anywhere near the $270 Griddy required of her.
She came to the conclusion, fairly easily, that her 2021 winter storm bill of plus $800 was not ever going to be able to be recovered. Staying with the electric company in hopes of savings that would offset this winter loss just wasn’t going to happen.
The U.S. Energy Information Administration calculated the average Griddy electric rate over the course of 2021 was 81 cents per kWh!
Karen, had to quit with this energy provider and cut her losses. Unfortunately, since Texas wholesale electricity prices spiking up in price is what caused Griddy Energy to charge her so much she was not able to find a competitive electric plan at the time.
She ordered a short term fixed plan until the energy market in Texas worked things out. In the mean time she kept a close eye on her thermostat and tried her best not to use too much energy.
Some People Saved Money with Griddy Energy’s Unique Energy Demand Data
James Nabors from Paris Texas disagreed that Griddy was to blame, and he definitely has a point.
Griddy Energy was a different animal in the residential electric service market. The people that knew how to use Griddy Energy remind me of people that drive their cars by coasting and letting off the gas to save miles per gallon.
If you coast in a suburban like some of these people, they get 60 miles per gallon and more. There is a trade off as these drivers are micro-managing their every peddle pump in their car.
Griddy allowed people to manage their electric usage with real time data to take advantage of very low rates certain times of the day. If you liked micro-managing your energy account, you could potentially average down your per kWh rate to 5 cents per kWh or less.
James mentioned that on the low end he paid 2 cents per kilowatt hour and on the high end he paid 17 cents per kWh. He took Griddy’s warning and switched off before the storm hit and of course it helped that he was moving at the time so his energy would not have been in use during the winter storm.
One had to keep up with what was going on and not just sign up and forget it. I was actually moving at the time and was able to shut down my house with the GRIDDY account (now in the other house I’m glad it was still on a fixed rate during the storm) if GRIDDY started back up tomorrow I’d do everything exactly the same except maybe I’d open a separate dedicated bank account. * Because one of the complaints was that GRIDDY drained so many bank accounts due to the excessive rates during the event— when the balance reached a certain point it would draft a payment as per the agreement, this would happen multiple times a day during that period instead of about once a month like most people were used to before the storm.James Nabors, Paris Texas
The PUCT and ERCOT Scapegoated Griddy Some Believe
I know Griddy’s management was doing something underneath the surface (as we found out) wrong but I thought they got a very raw deal and were made to be the tangible scapegoat for what ERCOT and PUCT did horrifically wrong to everybody…. hope we can make that understood and see another GRIDDYesque type of company come into being. In two short years I went from paying as low as 2 cents (and less) to @17 cents a KwH.James Nabors, paris texas
The Public Utility Commission of Texas and the Electric Reliability Council of Texas were responsible for the Texas electric grid. The winter of 2021 they were solely to blame for the electric grid almost going down and for prices going so high.
The Texas government did not properly winterize the generators that would be used to keep the power plants operating in a harsh winter.
When winter 2021 in Texas turned into a blizzard out of a place like Siberia the Texas power plants were not equipped to handle it and this caused a supply demand issue that caused Texas wholesale electricity to go up in price several hundred percent.
Griddy Energy was a specialized type of retail electric provider that put all the power of controlling energy usage with the consumer. Texas electricity service that is not hedged or fixed will be cheap in price without insurance attached to it.
The trade off to no insurance on your electricity service is to watch the energy demand data very closely and to use your electricity based off of this information. Griddy informed customers regularly but they had to act on it.
Normally energy commodity traders would be managing energy purchases and hedging very closely for a retail electric provider to protect their customers. In a way Griddy provided the energy data to act on and let each residential electric service customer turn on or off or at least turn down their energy usage.
Texas wholesale electricity data that would normally be utilized by the retail electric provider was worded and delivered for the end user to utilize at their thermostat.
In theory, the idea would work if each individual user managed their account closely, but people are creatures of habit, and we forget. We just aren’t all made to be energy demand response automatons.
Using your residential electric service based on when the electric grid is in low demand times is a novel concept. People who save, budget, and know how to squeeze every dime took advantage of this. In the end the Attorney General of Texas sued Griddy Energy and their customers were given to a different electric company.
Donny has been writing about the deregulated energy markets since early 2007. His knowledge has helped consumers lower their electricity cost.
James Nabors says
Wasn’t Griddy shut down because of the winter storm.( I was a very happy customer of Griddy who due to their real time monitoring and warning system I was able to avoid the astronomical bills that were forced onto Griddy by ERCOT’s s.o.p.) I was forced to go with another provider immediately after the storm was passed. I still stand by GRIDDY. I monitored the rate daily and knew exactly what I was using/ spending per day, my providers ( went thru 3 before I settled on 1) now lags behind by nearly a week!. Yes there was another ” spike” a year and. Half prior to URI in August ’19 that caught us a bit short but GRIDDY immediately made changes to prevent that from happening again…however they couldn’t overcome what ERCOT allowed to happen to everybody during the winter storm nightmare. *** Electric co-ops we’re bankrupted and a few cities were way way way overcharged for power. So ,no GRIDDY was not the lone “scapegoat” in this fiasco!!!! No one ever even remotely thought power prices could ever get so astronomically high!!!!! So you can’t blame GRIDDY ( now I understand they weren’t making their payments to the state in a timely manner so there needed to be something done about that) But GRIDDY did not ” cause” the nightmare they just got victimized by it!!! For the record , just challenge everyone to estimate what their electric bills would run if nearly 90% of their total KwH’s in a year we’re only 4-5 cents!!; Like mine were!! #IwantmyGRIDDYback!!!
A whole article on Griddy, including a section on how they were the scapegoat for ercot/puct. However, you completely missed the true sin by ercot/puct – price fixing
I was a griddy customer for a few years and did fair on the whole. I would have been great except for a couple summer price spikes and uri (I paid over $1k that month) When you sign w griddy it is very clear how their pricing works, and you are a fool not to control your usage accordingly. I’m not aware of something they did wrong as suggested in one of the quotes. I don’t blame griddy for uri cost; I blame ercot/puct and they may yet be held accountable.
Griddy sold you power at the wholesale market rate which was designed to fluctuate by market forces (supply and demand). Ercot/Puct artificially inflated and lagged the price at $9000 per MW for over 3 days to encourage more production sticking it to Griddy and many more retail providers who needed to buy wholesale and their consumers. Windfall profits to some providers crushing debt to others and their customers. $10B+. Griddy was not the only provider to go bankrupt; and many others have long term debt. This may come back to bite ercot/puct in court (with no sovereign immunity). Unfortunately that means the taxpayer may get stung. Where did those windfall profits go – too late now.
Lesson – don’t interfere with the free market
Donny Eisenbach says
I agree that the politicians and bureaucrats should be held accountable. They threw a monkey wrench in the trader expectations as it related to supply from Texas power generation. Those providers would still be in business otherwise is true. Unforeseen spikes in the energy markets happen routinely for different reasons and there are always providers that hit the chopping block and their customers go to a provider that can handle taking them on. Those price shocks make some of the prepared providers very successful.
[email protected] says
Pay me now or pay me later. All those who think they dodged the $9.00 @kWh by being on a fixed rate need to reflect on it a little more. Someone has to pay the bill. Do you think the billionaires who control our energy are going give back those millions made in ransomed high prices due to negligence? Nope, we the consumers will pick up that tab. Griddy was just a conduit made into a scapegoat.
Scott Raschke says
The high price of electricity was mandated by the Federal government. It’s in the rules for operating generating units outside of their emissions limits. It is designed to reduce pollution, but the government should have declared force majeure because of the eminent threat to life and property.