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Texas electricity retailer Griddy hit with $1 billion lawsuit for ‘price gouging’

Texas power retailer Griddy is the target of a class-action lawsuit filed in Houston Monday that alleges the company price gouged customers after winter storm Uri cut power to millions across the state.

The lawsuit’s lead plaintiff is Chambers County resident Lisa Khoury, whose electricity bill from the week of the storm totaled $9,340, according to the suit. Khoury’s normal monthly bill averages $200 to $250.

Khoury’s claim seeks to include all Texans who “used electricity services from Griddy and were hit with excessive charges resulting from the storm,” according to Houston-based Potts Law Firm. Her lawsuit seeks more than $1 billion in financial relief for affected customers as well as an injunction to prevent Griddy from collecting payment for “excessive” bills.

“At this point, we don’t know how many people might be affected, but there are likely thousands of customers who’ve received these outrageous bills,” said attorney Derek Potts, who represents Khoury. “A class action will be the most efficient and effective way for Griddy’s customers to come together and fight this predatory pricing.”

Griddy representatives couldn’t be immediately reached for comment.

The suit alleges Griddy violated Texas’ Deceptive Trade Practices Act when it “allowed their customers to be charged such exorbitant amounts for electricity.”

The act states that false, misleading, or deceptive business practices “taking advantage of a disaster declared by the governor” are unlawful. President Joe Biden approved a Federal Emergency Declaration request from Gov. Greg Abbott on Feb. 14.

In Texas’ deregulated energy market, Griddy and a handful of other electricity suppliers charge customers wholesale variable rates for power. Those plans are relatively new and have frustrated customers now dealing with expensive bills for a week where power was intermittent for many.

Griddy made an unusual plea last week when it told all 29,000 of its customers to switch to another provider as spot electricity prices soared to as high as $9,000 a megawatt-hour. Its customers are fully exposed to the real-time swings in wholesale power markets, resulting in electricity bills as high as $16,000 last week.

By Friday, the Houston-based company said it was seeking relief from electrical grid operator ERCOT and the state’s public utilities commission for its customers exposed to high bills.

Khoury attempted to switch power providers Feb. 16 but was unable to change to a new one until three days later after “persistent” outreach, according to the lawsuit.

Around 25% to 30% of Texans are on a variable rate plan with their energy provider, according to Houston Public Media, which cited plan comparison website ElectricityPlans.com.

Texas’ blackouts and increased cost of power were horrifying for customers left to foot the bills, but some companies are seeing a financial windfall.

Australian investment banking company Macquarie Group, which last year pumped an undisclosed amount of investment capital into Griddy, said it expects to net after-tax profits of $215 million, according to The Wall Street Journal.

Dallas billionaire Jerry Jones’ natural gas company Comstock Resources Inc. also cashed in on a surge in prices. Comstock CFO Roland Burns said on an earnings call last week that “this week is like hitting the jackpot with some of these incredible prices.”

Read More: Texas electricity retailer Griddy hit with $1 billion lawsuit for ‘price gouging’

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