Texas electricity company Griddy declares bankruptcy as winter storm fallout continues
Griddy Energy, the Texas electricity provider accused of charging customers thousands of dollars during Winter Storm Uri, said Monday it has filed for bankruptcy.
Griddy was a "thriving business with more than 29,000 customers" before the winter storm struck, CEO Michael Fallquist said in a statement. The storm with record-low temperatures sparked a weeklong freeze and left millions of people without power across Texas, causing an estimated $195 billion to $295 billion in property and economic damage.
Griddy is the third Texas energy provider to file for bankruptcy since the storm. Brazos Electric Power Cooperative, which served more than 1.5 million Texans, filed for Chapter 11 after accumulating $2.1 billion in bills. Just Energy Group also filed for bankruptcy protection earlier this month.
Fallquist blamed Texas' energy grid operator for Griddy seeking Chapter 11 protection. The Electric Reliability Council of Texas, known as ERCOT, "made a bad situation worse for our customers by continuing to set prices at $9,000 per megawatt hour," he said.
"The actions of ERCOT destroyed our business and caused financial harm to our customers," Fallquist said.
Griddy is a defendant in a class-action lawsuit filed last month by customers who have accused the company of price gouging. One customer, Lisa Khoury, said Griddy charged her $9,546 between February 1 and 19. That amount is 40 times more than her typical bill, she said in court documents.
A Dallas resident told CNN his bill was $7,000, while another Texan reported a $6,225 tab. Khoury and other class members are seeking $1 billion in monetary relief. Sky-high bills prompted the Texas Attorney General's office earlier this month to sue Griddy, alleging "false, misleading and deceptive advertising and marketing practices."
Griddy executives maintain that ERCOT is to blame for excessive utility bills. During the storm, Griddy asked customers to switch to other providers in an attempt to avoid the high prices. However, many providers were unable to add new customers during the deep freeze.
Griddy said in a statement it did not profit from the February blackout and does not control changes in energy prices. Griddy said it only pocketed its usual $9.99 monthly fee from customers when electricity prices rose during the storm.
Texas Governor Greg Abbott also blamed ERCOT for the debacle. Four ERCOT board members resigned last month in the wake of the storm's damage. ERCOT supplies Texas with 90% of its power.
Griddy said its bankruptcy reorganization plan releases customers from their unpaid electricity bills. The reorganization plan, which has not been made public yet, must be approved by a bankruptcy judge in Houston. The company lists its debt as between $10 million and $50 million, according to court documents.
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Khristopher J. Brooks is a reporter for CBS MoneyWatch covering business, consumer and financial stories that range from economic inequality and housing issues to bankruptcies and the business of sports.
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