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A billion dollar class action lawsuit has been filed against Texas wholesale electricity retailer Griddy Energy for allegedly charging exorbitant prices during last week’s historic storm that left millions of people helpless in the glacial cold.
The lawsuit was filed Monday on behalf of Lisa Khoury, a resident of Chambers County, Harris County, who claimed her electric bill climbed to $ 9,340 in the week of the storm. Depending on the lawsuit, her average monthly bills typically range from $ 200 to $ 250.
She said Griddy automatically withdrew $ 1,200 from her bank account Feb.13-18 and her overall bill Feb.1-19 was $ 9,546. The lawsuit says some customers had bills as high as $ 17,000.
The complaint accused the company of “overcharging” some 29,000 customers “knowing consumers would be harmed.”
Khoury said she was hit by the charges even as she and her husband suffered “mostly without electricity” in their home from February 17-18, when they welcomed her elderly parents and in-laws 80 years old during the storm.
She claimed that despite her concerns about withdrawals and subsequent rejection of checks, she never heard from Griddy. She finally placed a stop payment in her bank account on February 18.
In Texas, residents can choose between two electric bill options: a fixed plan, where their price stays at a rate regardless of market conditions, or a market tariff plan, which can fluctuate based on the amount of electricity used and the market price of electricity. Griddy offers this last plan.
“We charge (customers) the real-time wholesale price for energy, which changes every 5 minutes. You are effectively paying the same price as a retail energy supplier or utility, “Griddyy said in a statement. Griddy brags on his website that this strategy ends up being cheaper for most customers.
Last week’s storm hit the state’s power grid and led to blackouts. It also drove Griddy’s wholesale rate to $ 9,000 per megawatt hour due to a supply shortage and increased demand for electricity. Before the storm, the rate was $ 50 per megawatt hour, the lawsuit says.
In the run-up to the storm, Griddy advised his clients to switch to another provider with a fixed rate and told clients through his website that he “was looking to get relief from utility regulators.” But many could not change due to the looming weather.
The lawsuit calls for $ 1 billion in monetary relief for Khoury and “on behalf of everyone else in a similar situation.”
He also accuses Griddy of violating the Texas Deceptive Trade Practices Act and seeks an injunction to prevent the company from collecting payments for “excessive prices.”
Khoury’s attorney, Derek Potts, of the Houston-based law firm Potts, told ABC News Griddy has 29,000 clients in Texas the lawsuit could have an impact.
“What happened financially to all of Griddy’s customers both in terms of the sky-high prices charged and the way they were collected from people’s bank accounts and credit cards literally in the middle of a disaster as many were without electricity, heat, and water, clearly against Texas laws in place to protect consumers, ”Potts said.
Griddy did not immediately respond to ABC News’ request for comment, but dismissed the lawsuit as “baseless” to Reuters.
Griddy blamed the Utilities Board for raising the wholesale market price of electricity during the crisis, saying the company failed to take advantage of the price hike.
“We intend to fight this for and alongside our customers for fairness and accountability – to reveal why such price increases were allowed as millions of Texans were left without power,” said Griddy said in a blog post.
Texas’ beleaguered power grid operator, the Electric Reliability Council of Texas (ERCOT), also faces legal action after more than 4 million customers lost power in the storm.
Top executives on ERCOT’s board said on Tuesday they would step down amid outrage over the company’s handling of the storm. Four directors, including the president and vice-president, tendered their resignations, which took effect Wednesday. A director candidate also said he was removing his name from the exam. All five live outside of Texas, which has only intensified ERCOT’s scrutiny.
Morgan Winsor of ABC News contributed to this report.
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