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After unusual freezing weather that left millions of Texans without power, some are facing yet another crisis: extremely high electricity bills.
Soaring prices are hitting people who have chosen to pay wholesale prices for their electricity, which is usually cheaper than paying fixed rates in good weather, but can rise under high demand for electricity. Many of those who have reported receiving large bills are customers of utility company Griddy, which only operates in Texas.
Among them, Susan Hosford of Denison, Texas. On a typical February day, she pays Griddy less than $ 2.50 for electricity. But the cost of a day soared to hundreds of dollars after the storm. In all, she was automatically billed $ 1,346.17 for the first two weeks of February, which was more than she had in her checking account, forcing her bank to charge her overdraft fees and assign other invoices.
“It has all been a nightmare,” she says.
Learn more about soaring electricity bills:
WHAT ARE THE WHOLESALE ELECTRICITY PRICES?
Wholesale electricity prices fluctuate based on demand. Because gas pipelines and wind turbines froze in Texas, there was less electricity available but strong demand for electricity, which led to higher wholesale prices, said Joshua Rhodes, research associate on the energy at the University of Texas.
Wholesale prices are typically as low as a few cents per kilowatt hour, but soared to $ 9 per kilowatt hour after the storm. Fixed rate customers pay a fixed amount that does not increase as much. Typically, they pay around 12 cents per kilowatt hour. But Rhodes said fixed-rate customers could see their prices rise by pennies later this year as businesses hit by the freezing conditions seek to recoup their costs – but their bills won’t run into the thousands.
People can pay wholesale prices in Texas because it’s one of the only states that lets people choose which company to buy electricity from, Rhodes said.
WHAT IS GRIDDY?
Griddy, which launched in 2017, charges $ 10 per month to allow people to pay wholesale electricity prices instead of a fixed rate. He warned customers of the price hike and urged them to switch suppliers. The company said wholesale prices returned to normal on February 20.
HOW MANY PEOPLE ARE AFFECTED?
Griddy said it has 29,000 members. It’s unclear how many other Texans are also paying wholesale prices from other companies.
“We won’t get the full picture of the financial devastation for maybe 30 to 90 days,” said Ed Hirs, an energy researcher at the University of Houston.
THOSE WHO HAVE GOT BIG INVOICES WILL GET FINANCIAL ASSISTANCE?
It’s not clear. Texas Gov. Greg Abbott said on Sunday he was working with members of the legislature to tackle skyrocketing energy bills and “find ways the state can help reduce that burden.” . But he didn’t give details of what it might be. For now, the state has prevented companies from cutting off electricity so as not to pay.
Rhodes said bailing out clients could be a tough sell because they chose to pay wholesale prices and may have paid a much lower price than others for a while.
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