Texas Attorney General Sues Griddy for False Advertising in Wake of Winter Storm Price Hikes

Griddy, the Texas power supplier that’s made headlines recently for customers’ sky-high energy bills in the wake of widespread winter storm outages, has racked up another lawsuit. Texas Attorney General Ken Paxton is suing the company for “false, misleading, and deceptive advertising and marketing practices” that he claims deceived customers with promises of cheap, “wholesale” energy prices.

Griddy offers customers what it claims are “wholesale rates” for electricity with rates per kilowatt-hour tied to market prices, as opposed to the kind of fixed-rate plans provided by other retailers. The advantage is customers save a few extra bucks when energy is cheap. The disadvantage though, as many Texans are unfortunately finding out, is that these variable rates can skyrocket to as much as $9,000 per megawatt-hour when demand spikes because of, say, statewide power outages caused by a record cold snap like the one we saw last month. The fallout left customers stuck with bills of $5,000 or more for just five days of usage.

The state received more than 400 complaints from Griddy customers about the surge pricing in less than two weeks, the lawsuit claims.

“Griddy misled Texans and signed them up for services which, in a time of crisis, resulted in individual Texans each losing thousands of dollars,” said Paxton, a Republican, in a statement this week. “As Texans struggled to survive this winter storm, Griddy made the suffering even worse as it debited outrageous amounts each day.”

“As the first lawsuit filed by my office to confront the outrageous failure of power companies, I will hold Griddy accountable for their escalation of this winter storm disaster. My office will not allow Texans to be deceived or exploited by unlawful behavior and deceptive business practices,” he continued.

The lawsuit accuses Griddy of violating the Texas Deceptive Trade Practices-Consumer Protection Act because it “failed to adequately disclose the risks of its pricing model to its customers” and downplayed the potential consumer cost of fluctuating energy prices. The suit particularly calls out Griddy’s use of auto-billing to automatically withdraw these exorbitant sums from its customers’ checking accounts, which lead to overdrawn accounts and overdraft fees that left Texans incapable of paying their other bills.

Griddy is also facing a class-action lawsuit from pissed-off customers that are seeking $1 billion in damages. Earlier this week, the Electric Reliability Council of Texas effectively shut down Griddy by revoking the company’s access to the state’s electricity market. Paxton has also announced an investigation into ERCOT along with almost a dozen power companies in the wake of this scandal.

While fighting back against the big, bad electric companies profiting off Texans’ misfortune might gain Paxton a bit of goodwill, it should be noted that the attorney general is currently under investigation by the FBI for allegedly abusing his office to benefit a wealthy donor. But I guess even a broken clock is right twice a day.