Griddy (company)

Last updated

Griddy
Company typePrivate
IndustryEnergy
Website griddy.com

Griddy was an American power retailer that formerly sold energy to people in the state of Texas at wholesale prices for a $10 monthly membership fee [1] and had approximately 29,000 members. [2] The company itself was based in California. [3]

Contents

History

Griddy LLC was incorporated in 2016 in Delaware, but physically located in Playa Vista, California. [4] Some investment was taken from EDF Trading in 2019. [5]

In December 2020, new leadership was appointed. Michael Fallquist (Chief Executive Officer), Christian McArthur (Chief Operating Officer), and Roop Bhullar (Chief Financial Officer) were appointed and an agreement with Macquarie Energy was entered. [6] All three new appointments had previously worked at Crius Energy (acquired by TXU Energy in 2019).

2021 Texas power crisis

During the February 2021 Texas power crisis, some Griddy customers who signed up for wholesale variable rate plans allowed by the Texas deregulated electricity market found themselves facing over $5,000 bills for five days of service during the storm. [7] Griddy received media attention for urging its customers to leave the company. [8]

The Electric Reliability Council of Texas (ERCOT) caps the wholesale price of electricity at $9,000 per megawatt-hour, which translates to $9 per kilowatt-hour. [7] Customers had seen the wholesale rates hit that high previously in August 2019, but only for a 90 minute period, which the company then noted was an unprecedented long time at that price. [9] [10] During the February 2021 storm wholesale rates, and therefore Griddy's rates, were at the maximum for about four days. [7] Griddy advised customers to remove themselves from the Griddy system during the storm, and says that over 9,700 accounts did by February 15. On February 17, they asked for PUC approval to switch the remaining customers to a traditional energy provider, but the PUC (which was overwhelmed by the situation) was unable to discuss the matter. [11] Griddy's 29,000 customers were charged $29 million during the storm. [12] On February 15, during the power crisis, the state's Public Utility Commission required ERCOT to set the price to the $9,000 maximum. The commission reasoned that the trading prices for energy (as low as $1,200) were inconsistent with the supply scarcity. [13] [14]

The week after the storm one Chambers County customer filed a proposed class action lawsuit against Griddy alleging price gouging and seeking $1 billion in relief. [15] [16]

Griddy's billing practice was to withdraw money from linked customer financial accounts as charges accrued. Nevertheless many customers owed money. After the storm, Griddy offered five month payment plans to customers who owed outstanding balances, but also prohibited customers with outstanding balances from switching to another provider. [17]

On February 26, ERCOT ejected Griddy from the Texas market for nonpayment. Griddy's approximately 10,100 customers were switched to other electricity providers. [17] [18]

The Texas Attorney General filed suit on March 1, charging Griddy with false and misleading practices. [19] The company filed for Chapter 11 bankruptcy (debt restructuring) on March 15, 2021. [20] [21]

In August, 2021, Griddy settled the false and misleading practices suit filed the state of Texas, agreeing to wipe out the debts still owed by its customers. Customers who had paid Griddy could file for refunds. [22] [23]

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References

  1. ↑ "'People Are Greedy': The Absurd Electric Bills Slamming Texans". Daily Beast . February 17, 2021. Archived from the original on February 18, 2021.
  2. ↑ "Why some Texans are getting sky-high energy bills". The Independent. February 22, 2021. Retrieved February 23, 2021.
  3. ↑ Sixel, L. M. (December 14, 2020). "Griddy takes disruption to another 'multilevel'". Houston Chronicle. Retrieved February 19, 2021.
  4. ↑ "Form D Notice of Exempt Offering of Securities: Griddy LLC". EDGAR . Securities and Exchange Commission. July 18, 2017. Retrieved July 1, 2021.
  5. ↑ "Griddy Energy Signs Partnership with EDF Trading" (Press release). May 14, 2019. Retrieved July 1, 2021.
  6. ↑ "Griddy Announces New Leadership And Financing Agreement With Macquarie Energy" (Press release). Griddy. December 7, 2020. Retrieved July 1, 2021.
  7. 1 2 3 Maria Halkias (February 19, 2021). "Griddy customers face $5,000 electric bills for 5 freezing days in Texas". Dallas Morning News . Retrieved February 20, 2021.
  8. ↑ Malik, Naureen S. (February 16, 2021). "Power retailer Griddy to customers in face of freeze: Please, leave us". Houston Chronicle. Retrieved February 18, 2021.
  9. ↑ KHOU Staff (August 16, 2019). "Why are Griddy customers getting charged so much to power their homes right now?". KHOU-11. Retrieved February 20, 2021.
  10. ↑ Sixel, L. M. (December 13, 2019). "Griddy CEO Greg Craig rewinds the price spikes of August". Houston Chronicle. Retrieved July 1, 2021.
  11. ↑ Steffy, Loren (June 9, 2021). "Griddy Argues It Was, in Fact, a Champion of Consumers". Texas Monthly. Retrieved August 24, 2021.
  12. ↑ Ferman, Mitchell (May 13, 2021). "Texas Legislature approves bill to ban residential wholesale electricity plans — the first major winter storm bill sent to the governor". The Texas Tribune . Archived from the original on May 14, 2021.
  13. ↑ Watson, Mark (February 16, 2021). "Texas regulators keep prices near $9,000/MWh cap during rotating outages". S&P Global Platts. Retrieved February 21, 2021.
  14. ↑ Botkin, Shelly. "Second Order Directing ERCOT to Take Action and Granting Exception to Commission Rules" (PDF). Public Utility Commission of Texas.
  15. ↑ Carballo, Rebecca (February 23, 2021). "Texas electricity retailer Griddy hit with $1 billion lawsuit that claims price gouging". MSN News. Retrieved February 23, 2021.
  16. ↑ Sternitzky-Di Napoli, Daniela (February 23, 2021). "Chambers County woman files class-action suit against Griddy, claims company was price gouging during storm". KPRC TV. Retrieved February 23, 2021.
  17. 1 2 Steele, Tom; Halkias, Maria (February 27, 2021). "ERCOT pulls the plug on electricity retailer Griddy's ability to operate in Texas". Dallas News. Retrieved March 1, 2021.
  18. ↑ McWilliams, Gary (February 26, 2021). "Texas electric firm Griddy loses access to Texas grid, customers turned over to rivals". Reuters . Retrieved February 26, 2021.
  19. ↑ "AG Paxton Sues Griddy, LLC Energy Company: Customers Hit with Exorbitant Energy Bills" (Press release). Texas Attorney General. March 1, 2021. Retrieved April 11, 2022.
  20. ↑ Thorbecke, Catherine (March 16, 2021). "Griddy files for Chapter 11 bankruptcy in the wake of Texas power crisis". ABC News. Retrieved March 16, 2021.
  21. ↑ John Bowden (March 16, 2021). "Texas energy provider Griddy files for bankruptcy after sending massive bills to customers". The Hill . Retrieved March 16, 2021.
  22. ↑ "Griddy Energy settles with Texas, releasing customers from $9,000 power bills during freeze". CBS News. August 31, 2021. Retrieved April 11, 2022.
  23. ↑ "Paxton Announces Finalized Settlement with Griddy Energy, LLC" (Press release). Texas Attorney General. August 30, 2021. Retrieved April 11, 2022.
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