A Texas woman who received an electricity bill of more than $ 9,000 this month is suing her electricity supplier for refusing prices. It is the first such demand after a hard week of snow and freezing temperatures that caused energy prices to skyrocket for thousands of customers in the state and blackouts for millions of others.
Consumer law experts say more such lawsuits are likely to arrive. But Texas ’deregulated electricity market, complemented by so-called variable rate pricing, means many of these plaintiffs will have an upward battle to collect their bills.
Lisa Khoury, a resident of Chambers County in Houston, filed a class action lawsuit Monday against her electricity supplier, Griddy Energy. According to the lawsuit, Khoury was charged $ 9,546 between Feb. 1 and 19, an amount hundreds of times higher than his typical $ 200-250 range.
Khoury said Griddy withdrew $ 1,200 from his bank account using an automatic payment system before stopping payment through his bank, but still owed more than $ 8,000 for intermittent power, according to the complaint. Khoury and other members of the class demand a monetary relief of $ 1 billion.
“Griddy charged against Khoury in the midst of a disaster. She and her husband were mostly without electricity in their home from Wednesday, February 17, 2021 until Thursday, February 18, 2021. At the same time, Khoury hosted the his parents and the laws, which reach the age of eighty, during the storm.Even then, he continued to minimize any energy consumption due to high prices, “the complaint says.
Khoury’s attorney, Derek Potts, a national administrative partner at the Potts law firm, said Griddy’s billing affects Texas consumer protection laws and thousands of electricity users are likely to be affected.
Unpredictable prices
Griddy said the lawsuit had no “merit” in a statement to the Dallas Morning News. The electricity provider did not immediately respond to a request for comment from CBS News. On its website, the company claims it does not benefit from high energy prices and blamed the Texas Public Utilities Commission for last weekend’s astronomical hikes.
“You actually pay the same price as a public retail energy supplier or service,” Griddy says instead, noting that those prices change every five minutes.
“The PUCT changed the rules Monday” when it directed the Texas network 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 the largely deregulated Texas energy market. Most Texans, according to utility commission spokesman Andrew Barlow, participate in 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 their bills are low in times of low demand, but they can rise rapidly during times of crisis. Some energy industry experts have called these plans predatory.
Some energy experts have compared variable-rate utility contracts to adjustable-rate mortgages that were popular during the real estate boom of the early 2000s. Under these mortgages, a homeowner could get one type of mortgage. slightly lower interest, but was hooked on road interest rate hikes.
“Surely it looks like consumers were drawn to the promise of a slightly cheaper electricity, with the small print,‘ Oh, if there’s an emergency on the grid, you can get a $ 5,000 bill, ’” he said Costa Samaras, associate professor at Carnegie Mellon and associate analyst at RAND, “It may be legal, but can’t it?”
Deceived “to a severely unfair extent”
“There’s a decent claim that these contracts are unconscious,” said Richard Alderman, director of the University of Houston’s Consumer Law Center and professor emeritus at the university.
Texas law protects consumers who are taken advantage of “to a very unfair extent,” Alderman said, adding that energy price hikes in the thousands of dollars should be described as very unfair law.
“Someone in their right mind would sign a contract knowing that this would happen? In my mind, no,” he said.
However, these demands face several obstacles. Many contracts oblige consumers to private arbitration, a non-sworn system that tends to favor companies. Even when a consumer goes to court, the judge is often not on their side.
“Texas courts in general are very conservative and often tell consumers,‘ You signed this contract, you should have read it and understood what it said, ’Alderman noted.
For now, Texas Gov. Greg Abbott has called for energy bills a “top priority” for lawmakers. Utilities are prohibited from disconnecting customers for non-payment and have been instructed to pause billing.
Energy suppliers were left careless
Residents weren’t the only ones facing $ 1 billion in electric bills. Some municipalities and alternative energy suppliers were also taken aback. The city of Denton spent $ 207 million on electricity during the outages, close to its annual electricity budget. Energy provider Just Energy said it lost $ 250 million during the episode and will stop working.
When several power sources failed over the weekend, the commission and Texas grid operator ERCOT allowed wholesale energy prices to rise to 300 times their normal level by such as to encourage it to reach the network. At the time, Griddy took the unprecedented step of asking its customers to switch to other vendors. However, many vendors were unable to log in with new customers during the freeze. People like Lisa Khoury said she was forced to wait.
According to Bloomberg, about a dozen domain names have been registered that are potentially looking for customers for class action lawsuits, including TexasPowerLawsuit.com, TexasPowerFailureLawsuit.org and ClassActionTexasPower.org.
Consumer advocates hope federal funds or the Texas legislature can help customers caught up with astronomical bills and prevent peaks like these in the future.
“The money has to come from somewhere,” Samaras said. “The question is, is Texas rescuing these customers or are there regulations?”