A Texas woman who received an electric bill of more than $ 9,000 this month is suing her electric provider for price increases. It is the first lawsuit of its kind after a heartbreaking week of snow and freezing temperatures that led to skyrocketing energy prices for thousands of customers in the state and blackouts for millions of others.
Consumer law experts say more such lawsuits are likely to emerge. But Texas’s deregulated electricity market, with what’s called variable rate pricing, means that many of these claimants will have an uphill battle to get their bills discharged.
Lisa Khoury, a resident of Chambers County in Houston, filed a class action lawsuit Monday against her electricity provider, Griddy Energy. According to the lawsuit, Khoury was charged $ 9,546 between February 1 and February 19, an amount hundreds of times higher than his typical bill range of $ 200 to $ 250.
Khoury said Griddy withdrew $ 1,200 from his bank account through an automatic payment system before he stopped paying through his bank, but he still owes more than $ 8,000 for power that was intermittent, according to the complaint. Khoury and other members of the lawsuit class are seeking $ 1 billion in monetary aid.
“Griddy charged Khoury in the middle of a disaster. She and her husband were without power at their home from Wednesday, February 17, 2021 to Thursday, February 18, 2021. At the same time, Khoury welcomed her parents and laws, who are over 80 years old, during the storm. Even then, she continued to minimize energy use due to high prices, “the complaint read.
Khoury’s attorney Derek Potts, national managing partner at the Potts Law Firm, said Griddy’s billing violates Texas consumer protection laws and thousands of electricity users are likely to be affected.
Griddy said the lawsuit was “unfounded” in a statement delivered 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 claims that it is not benefiting from high energy prices and blamed the Texas Public Utilities Commission for the astronomical increases last weekend.
“Effectively, you pay the same price as a retail energy provider or utility company,” Griddy states on its site, noting that those prices change every five minutes.
“The PUCT changed the rules Monday” when it ordered the Texas grid provider to allow astronomically high energy prices, Griddy said, adding that it was “seeking relief” from ERCOT for affected customers.
Plans like Griddy’s are a relatively new feature in Texas’s largely deregulated energy market. Most Texans, according to utility commission spokesman Andrew Barlow, have flat rate plans in which users pay a predetermined amount for each bit of electricity they use. In variable plans like the one offered by Griddy, consumers pay wholesale prices, which means that their bills are low in times of low demand, but can rise quickly during times of crisis. Some experts in the energy industry have called these plans predators.
Some energy experts have compared variable-rate utility contracts to adjustable-rate mortgages that were popular during the housing boom of the early 2000s. With these mortgages, a homeowner could get a slightly lower interest rate. lower, but was hooked on future interest rate hikes.
“It sure looks like consumers were drawn in by the promise of slightly cheaper electricity, with the fine print: ‘Oh, if there’s a grid emergency, you might get a $ 5,000 bill,'” he said. Costa Samaras, an associate professor at Carnegie. Mellon and an associate analyst at RAND. “It may be legal, but is it correct?”
Deceived “to an extremely unfair degree”
“There is a decent claim that these contracts are inadmissible,” said Richard Alderman, director of the Center for Consumer Law at the University of Houston and a professor emeritus at the university.
Texas law protects consumers from being taken “to a grossly unfair degree,” Alderman said, adding that spikes in energy prices in the thousands of dollars should qualify as grossly unfair under the law.
“Would anyone in their right mind sign a contract knowing this would happen? In my opinion, no,” he said.
Still, such lawsuits face several obstacles. Many contracts force consumers to submit to private arbitration, a juryless system that tends to favor business. Even when a consumer comes to court, the judge is often not on their side.
“Texas courts are generally very conservative and often tell consumers, ‘You signed that contract, you should have read it and understood what it said,'” Alderman said.
For now, Texas Gov. Greg Abbott has called energy bills. Utilities are prohibited from disconnecting customers for non-payment and have been told to pause billing.
Surprised Power Suppliers
Residents weren’t the only ones facing energy bills in the thousands of dollars. Some municipalities and alternative energy providers were also caught off guard. The City of Denton spent $ 207 million on energy during the outages, close to its annual electricity budget. Energy provider Just Energy said it lost $ 250 million during the episode and is closing.
When multiple power sources failed over the weekend, the commission and Texas grid operator ERCOT allowed wholesale power prices to rise 300 times their typical level to encourage more power to flow into the utility. net. At that time, Griddy took the unprecedented step of asking its customers to switch to other providers. However, many providers were unable to recruit 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 potentially seek clients for class action lawsuits, including addresses TexasPowerLawsuit.com, TexasPowerFailureLawsuit.org, and ClassActionTexasPower.org.
Consumer advocates hope that federal funds or the Texas legislature can help customers with astronomical bills and prevent spikes like these in the future.
“The money has to come from somewhere,” Samaras said. “The question is, does Texas bail out these clients or are there regulations?”