Electricity retailer Griddy's unusual plea to Texas customers: Leave now before you get a big bill

[UpInArms]

Source: Dallas Morning News

Some retail power companies in Texas are making an unusual plea to their customers amid a deep freeze that has sent electricity prices skyrocketing: Please, leave us.

Power supplier, Griddy, told all 29,000 of its customers that they should switch to another provider as spot electricity prices soared to as high as $9,000 a megawatt-hour. Griddy’s customers are fully exposed to the real-time swings in wholesale power markets, so those who don’t leave soon will face extraordinarily high electricity bills.

... snip ...

Texas is home to the most competitive electricity market in America. Homeowners and businesses churn power providers there like credit cards. In the face of such cutthroat competition, retail power providers in the region have grown accustomed to offering new customers incredibly low rates, incentives and, at least in Griddy’s case, unusual plans that allow customers to pay wholesale power prices as opposed to fixed ones.

The ruthless nature of the business has power traders speculating over which firms might have been caught short this week in the most dramatic run-up in spot power prices they’ve ever seen.

Read more: https://www.dallasnews.com/business/energy/2021/02/16/electricity-retailer-griddys-unusual-plea-to-texas-customers-leave-now-before-you-get-a-big-bill/

[hlthe2b]

1. So apparently Texas doesn't regulate utilities? What other state allows for "spot" increases?

That is NUTS!

Republican government spotlighted. Good Gawd!

[UpInArms]

3. The Wild West

Enron redux

Remember california in 2001?

Subsequent Events California's Energy Crisis

Three Major Problems

California's energy crisis can be grouped broadly into three interrelated problems including (1) precipitous increase in wholesale electricity prices, (2) intermittent power shortages during peak demand periods, and (3) the deterioration of the financial stability of California's three major investor-owned utilities (IOUs)—Pacific Gas and Electric (PG&E), Southern California Edison (SCE), and San Diego Gas and Electric (SDG&E).

High Wholesale Electricity Prices: The price of wholesale electricity sold on California's newly created California Power Exchange (CalPX) starting escalating around June 2000, reaching unprecedented levels over the remainder of the year. From June 2000 through July 2000 wholesale electricity prices increased on average 270 percent over the same period in 1999.(1) By December 2000 wholesale prices on the CalPX cleared at $376.99 per megawatthour (MWh), over 11 times higher than the average clearing price of $29.71 per mwh in December 1999.(2)


High wholesale prices resulted in a steep, but temporary increase in retail electricity prices in southern California in the summer of 2000. This is what happened. In July 1999, SDG&E's retail price freeze was eliminated as called for in California's industry deregulation plan, and SDG&E customers were exposed to unregulated retail electricity prices (PG&E and SCE's retail customers were, at that time, still protected from high retail prices by rate freezes imposed by the restructuring plan). SDG&E could now pass through the high wholesale prices to retail customers, and by July 2000 residential electricity rates had increased to approximately 16 cents per kilowatthour, up from about 11 cents per kilowatthour in July 1999.(3) To stop the increase in retail prices, the California legislature established a ceiling of 6.5 cents per kilowatthour on the energy component of electric bills for residential, small commercial, and lighting customers of SDG&E.


Intermittent Power Shortages: Since 1999, California has experienced a significant increase in emergency conditions that in some instances have necessitated rotating blackouts (a rotating blackout is an involuntary curtailment of electricity usage). Stage 3 emergency notifications, which may necessitate rotating blackouts, have increased from 1 in 2000 to 38 through May 22, 2001 (see graph). Stages 1 and 2 notifications have increased from 91 in 2000 to 127 through May 22, 2001. In some instances Stage 2 requires voluntary curtailment of power usage.

... more ..

[hlthe2b]

5. Thank the Goddess I live in Colorado. Shit happens, surely, but at least they try to regulate this

[AllaN01Bear]

13. i remember it quite well thank you .

eggscllent research by the way. thank you .

[central scrutinizer]

15. Laughing their asses off

[link:http://

|

[UpInArms]

16. Skilling made a joke about it

“The difference between the Titanic and California? The Titanic had its lights on when it sank.”

[Bengus81]

20. It was soooo tragic when Skilling dropped DEAD......NOT!

[Upthevibe]

52. Bengus81....

My brother worked for Enron for most of his adult career. He had nothing to do with any of the malfeasance. He passed away in 2015 at the age of 69.

Skilling didn't drop dead - That was Ken Lay (and my sister and I theorize that he stopped taking his heart medication for a kind of suicide by default).

Skilling was in prison from 2006 until 2018.

Andrew Fastow served six years in prison. His wife served one year in prison. Because they had young children, she was able to serve her sentence first, was released, then he served his sentence (and I'm sure that consideration would be given to anyone of color.... ).

Cliff Baxter Committed suicide shortly after the scandal was exposed (2002).

[dalton99a]

38. +1

[Gregory Peccary]

44. Nice find!

[UpInArms]

48. Those guys are despicable

Made me mad all over again.

[BigmanPigman]

33. I remember that.

My friend's bill was $1,000 a month.

[modrepub]

6. Unregulated Markets Are Cheaper Overall

In PA the deregulated market has forced lots of coal plants to shut down. They are too expensive to run compared to more efficient and less emitting natural gas power plants and renewables. Over the long term, using the market to get rid of inefficient/more expensive power providers saves consumers money and helps the environment. Market competition drives innovation and over the long term increases efficiency and knocks out the folks who waste money and resources.

What's going on now may or may not have happened in a regulated market, where the producers pass their costs directly onto the consumers. There's more demand then supply so spot market prices over a short period of time skyrocket and those who haven't locked in their prices before hand get a painful lesson in economics.

A similar situation happened on the PJM grid about a decade ago. The grid provider has enhanced interconnectivity so electricity flows better between subareas and also instituted demand response where when the spot price goes too high, people who volunteer ahead of time can have their power cut or reduced to help with load demand. Seems to be working for the most part.

[UpInArms]

7. Related:Natural gas prices soar amid freezing U.S. temperatures, while oil hovers at Jan. 2020 highs

Natural gas futures were leading a surge in energy prices across the board on Tuesday, as large swaths of the U.S. struggled with subzero temperatures and rolling blackouts hit several states.

March natural gas futures HOH21, 2.76% climbed 5.5% to $3.073 per million British thermal units, while March gasoline RBH21, 4.17% climbed 5.3% to $1.7813 a gallon. And March heating oil RBH21, 4.17% was up nearly 3% to $1.8235 a gallon.

The surge in prices came as the Southwest Power Pool, a group of utilities covering 14 states, ordered utilities to start rolling blackouts to cope with an exhausted supply of reserve energy. That is as a winter storm swept from the Ohio Valley to the Gulf Coast of the U.S., bringing freezing temperatures as far south as San Antonio, Texas.

More at:

https://www.marketwatch.com/story/natural-gas-prices-soar-amid-freezing-u-s-temperatures-while-oil-hovers-at-jan-2020-highs-11613468256?mod=home-page

[hlthe2b]

8. Maybe in some settings, but a deregulated market equates to NO Consumer Protection

Is that REALLY what you want to support? Unbelievable! Much like those who defend selling local water systems to Coca Cola, Nestlé Group, others. The disaster that awaits will not take long.

[modrepub]

22. OK So Your Alternative Is To Have A Public Utility Board

pass on the costs of whatever the electric provider decides to charge you? What is the incentive for the power producers to reduce costs when they can just go to a board and get a rubber stamp to approve a rate increase? Over the long term, regulated electric markets keep dirty inefficient energy sources operating and charge customers more than what they would have gotten under a market-based approach.

You're claiming a monopoly is better than a competitive market. Like Ma Bell before the breakup. Yea, there will be some growing pains as people learn to lock in their electric prices before hand. Similar to what some folk do whey they they buy their fuel oil ahead of winter at a guaranteed price at the start of the season (which almost always is more than you could buy on the spot market). Smart folks plan ahead and should be rewarded with making sound decisions.

This whole incident is due to an unexpected weather event squeezing supply. Going back to a monopolistic based system wouldn't necessarily solve this problem. Maybe the suppliers wouldn't gouge as much, but they would definitely make it up by charging more in the long term (because they can, all they do is go to the overseeing board with their costs and they're passed on to consumers). In the long run, a market-based system is more cost effective and efficient with a side benefit of less pollution.

Sorry you disagree and I don't support small government without addressing big business interests. In a lot of circumstances, big business uses government regulation to stifle competition. Like the PUC board example I just discussed.

[hlthe2b]

28. It's worked since FDR's time in the majority of the states.Your anti-regulatory stance is what will

cause locales to lose control over water in the near future as they sell their municipal water supplies to the likes of Nestle' and others, retaining no control whatsoever--just as it has caused this utility crisis at the time people need stable source gas & electricity the most.

You need to read up on why most states DO regulate. And yes, I'm damned glad CO does!

I see from your screen name that you are apparently a "Moderate Republican." I truly hope your time here educates you. If you are here, I suspect you must be at least open to questioning the barrage of RW memes. Enjoy your time here. I know. I grew up in a family that pushed that crap 24/7, though they are no longer Republicans or at least not Trumpers today thankfully. It has been eye-opening to see their evolution.

[modrepub]

37. Water Issues Are Different In The West

I live in the NE (or eastern Midwest as some in PA would identify themselves). There are no water (availability) issues like they are in more arid climates in the western US.

But I'd kindly point out that under the regulated water systems you get situations like Las Vegas, which makes no sense whatsoever. A market-based water distribution system wouldn't reward folks for having grass lawns, golf courses and growing water intensive crops in the desert. My grand parents retired in southern Arizona from Maine. Even they commented negatively on people having grass lawns, planting oak trees in their yards and building homes perilously close to know washes when they were alive.

You are correct on my handle. I'm an old Northeast Republican (who's now a democrat). I believe in Joseph Shumpeter's creative destructive principles and entrepreneurship. I also like Nassim Taleb's black swan philosophy, which is a perfect description of markets blowing up (like what's happening in Texas). I despise Shumpeter's fellow Austrian free-market pushers like Hayek and Mises. As far as I'm concerned, that group is out to neuter government but leave big business untouched. By the way these Austrians are the darlings of the moneyed interests like Koch (see Mises Institute, which is similar to the John Birch society but for economics). You can't be opposed to big government without addressing the impacts of big business.

[hlthe2b]

41. No water issues, yet. There will be in future--even in some areas of the NE, SE (which had drougnt

severe enough to cause major restrictions a few years ago) and elsewhere.

With respect to "You can't be opposed to big government without addressing the impacts of big business"--absolutely. So, you can't be ANTI-REGULATION.

[modrepub]

51. Let's Say I Have a Healthy Mistrust of People In General

whether they be in government or business. Who do you think writes most of the regulations to begin with? Hint: its usually big business through proxies.

Just remember, regulations or lack of regulations can run both ways. No fault employment is the darling of big business. Tell that to the folks in private industry who lost their jobs after participating in the Jan 6th Capital riots. Contrast their treatment to government employees who participated and are governed by overseeing boards (like cops, teachers and fire fighters). They can't be dismissed outright and may only suffer minor inconveniences compared to those in the private sector.

Nothing is perfect, and people more so. Beware of fat tail distributions and gaussian thinking. Sometimes extremely rare events can lead to catastrophic outcomes.

[hlthe2b]

53. Oversight of Government is every bit as important. A well educated & engaged electorate is answer

not--as seems to be the current strategy of Republican politics--a suppression of votes to extreme levels and a systematic dismantling of our educational system EXCEPT for those at the very top of the SES stratum. The decades of anti-intellectualism promoted by the RW will the death knell for democracy, just as it nearly has been for our public health--if we allow it to continue.

[modrepub]

63. You Should Never Put Someone In Charge of Government

who is convinced that government doesn't work. It becomes a self for filling prophecy. Basically the Trump years or many Republicans at the state and local level.

That said, no person or institution if foolproof. You can't anticipate every problem ahead of time. People need some latitude to fail, because they will. Nobody's perfect.

The best designed systems protect themselves or become stronger under stress. Figure you're going to experience system failure at some point. If the system is developed with some forethought, failures won't ripple across the entire system or better yet will make they system more resilient. Hard concept to describe and understand.

Back to my point. You can put lots of measures and oversight into a system but it can still fail (and most certainly it will). You need to design systems with failure in mind. And lastly, expect failure when you put folks who in charge who are failures or desire failure for their own gratification.

[hlthe2b]

64. Re: "You Should Never Put Someone In Charge of Government who is convinced that

who is convinced that government doesn't work"-- ABSOLUTELY. Agree.

Though that is not merely an issue with Trump as it has driven Republican administrations to one degree or another dating back at least to Reagan and encouraged by the "Club for Growth" led by Mercers and Stephen Moore contingent as well as "Drown Government in a Bathtub" advocate, Grover Norquist with his attempts to enact state government-starving TABOR amendments throughout the country.

[modrepub]

66. Astroturf

masquerading as populism. They are really disciples of Hayek and Mises who advocated for little government control aka Smith's "invisible hand" . It's big business either neutering "big government" or more likely commandeering it to suit their own purpose.

I share the skepticism of Hayek that government doesn't always know what's right. Hayek was the counter to Keynesian economic thought on government intervention in the market that's basically been in place since the Depression. Unfortunately for us, Hayek long outlived Keynes and was the impetus of the Republican business ideology that began in the late 70s and was championed by Reagan.

The real problem is politicians are apt to keep spiking the punch bowl (tax cuts or increased government spending) just to keep themselves in power. While I don't think it's true, Presidents get blamed or championed based on how the public perceives the current economy. Long-term debt incurred since Reagan will one day have to be reckoned with. Austerity under the Republican framework is going to cause a lot of issues if they hold power when the our debt hits the fan.

That's why I've advocated for tax collections to stay local. No more transfers from blue areas, which account for more GDP and thus taxes to their red area counterparts. I'm sorry if that leads to a lot of suffering for democrats in republican dominated areas. If your arm is gangrened you amputate it to keep the infection from spreading. Otherwise it spreads and kills the patient.

[Miguelito Loveless]

40. My solution is turn the utilities over to the state

Hell, California has had to bail out PG&E at least twice now. Why shouldn't they simply buy out the utility and eliminate the middle man who soaks up huge sums of money while refusing to make needed repairs/upgrades, and while refusing to accommodate renewables because it hurts their "profits".

[SCantiGOP]

67. Public power and consumer-owned co-ops

Are the best and, in the long run, most efficient and low cost options.
I spent 30 years in the electric utility industry and that is my firm opinion.
Of course it depends on having responsible elected representatives appointing knowledgeable and honest officials to operate the companies, but if we can regulate the financial sector and control
a huge military with nuclear weapons, we should be able to run electric utilities.

[crud]

35. Energy consumers

don't have a choice. IMHO, It's not really a free market when folks are forced to choose between freezing to death or paying the utility bill. Utilities are necessary for survival, and should be owned and operated by the public/consumers.

[Sgent]

61. Texas separates

the transmission lines from the generation -- everyone pays for transmission, but you have smart meters and 20+ place you can choose to buy your power. So you can choose one with renewable only, or one with locked in rates, or prepay for so much / day, etc.

[gab13by13]

10. Way back in FDR times,

Texas formed its own grid that stayed within its state's boundaries because it didn't want to be regulated by the federal government, you know, secession and all. As long as Texas doesn't supply electricity outside the state it is free from Gummit regulation.

[OldBaldy1701E]

11. And

I hope they are enjoying it.

[COL Mustard]

27. This Is A Case Of "Be Careful What You Wish For. You Might Get It."

Or, you want it bad, you get it bad.

Take your pick!

[modrepub]

2. Texas Is The New California (Enron)?

Similar thing happened on the PJM grid during a Polar Vortex several years ago. The grid was at capacity when one of the large nuclear power plants near Pittsburgh went down (burst pipe due to cold). That took 2k megawatts off the grid and spot prices shot up into the thousands of dollars per megawatt. Normal prices during the winter are typically less than $100 per megawatt. If you're an electric producer or hold a futures contract (or are a consumer willing to forgo you electricity and sell to someone else), you rake in a lot of money over a short period of time. If you're buying on the spot market, you're screwed.

[UpInArms]

4. That what it looks like to me

[AllaN01Bear]

14. now because of them we have the cal independant system operator

run by the state .

[mdbl]

9. Enron immediately came to mind for me too

Unregulated power industries is a great get rich scheme for the traders. Not so good for the consumer or the grid operators.

[AllaN01Bear]

12. taking advantage of an emergency, GOUGING..

[UpInArms]

17. Hopefully, the CTFC will get involved

Thankfully, we have Biden at the helm

[Maxheader]

18. Ah yes...

The other side of the american energy empire emerges....

Which is more painful..dealing with sub zero temperatures during the winter..

Or broiling temperatures during the summer. ? Hopefully the new administration

keeps their thumbs on these guys...

[Bengus81]

19. No regs on utility's RAPING their customers in Texas?? Don't want non of that Librul stuff down har!

OK...now your getting it up the ass,or freeze to death. Lots of option there eh??

[IronLionZion]

21. Freedom isn't free

The freedom that comes from deregulation screws consumers hard. They're all convinced that regulations are ruining their lives, killing jobs, and silencing their freedoms.

But many GOPers in Texas will understand this proves climate change isn't real.

[Raven123]

23. Private companies doing what they do. Maximize profits by maximum risk

When it collapses, leave the customers to bear the burden. Same stuff, different day. The reason utilities should be publicly owned and administered, with transparency and strict oversight.

[crud]

31. Seems like no risk at all

As long as you can jack up the prices. Nice of them to warn their "customers". (sarc)

[Mr. Evil]

24. Once again,

people are kept on the leash and suffer so that a handful of rich people can get richer off of them. This is just another example of not being able to do the right thing because it would make the liberals happy. And in Texas owning the libs is a top priority.

My idea would be to begin an initiative to rid ourselves (and Texas) of the antiquated energy supply system we have now and begin building more and more local solar and wind farms. Also add a main and strategically placed battery storage systems to help combat times like these. Create incentives for homeowners and property owners (landlords of renters) to install their own solar panels to further lighten the load on the 'grid.' We have the technology to do this but, those that can implement a plan of this nature drag their feet because that would mean that a small number of people would no longer be able to make shit-tons of money keeping people on the leash.

I don't expect this to happen anytime soon but, it would be a good start.

[Historic NY]

25. Maybe Texas can buy Peletons so its residents can pedal up

[usaf-vet]

26. Ya! BUT they are FREE from government regulation them there librules want to impose on our freedoms.

[Jay25]

29. That's ridiculous. They will definitely not get help from their republican leaders.

[sdfernando]

30. Images of California and Enron

When do we hear staff laughing that Grandma can't pay her bill???

[dlk]

32. Freedom...

Freedom to be victimized by price gouging.

[tinrobot]

34. Well, thank god they don't have those evil socialist public utilities

Capitalism to the rescue

[FakeNoose]

36. Didn't this happen in California when Schwarzenegger was governor?

There were some crazy market-driven sky-high pricing for electricity, wasn't there? I seem to recall the governor botched the whole thing and a lot of people received ridiculously high bills. I think people went bankrupt over it. I'm sketchy on details because I don't live in California.

[Liberty Belle]

43. It happened under Gray Davis, which is a reason why he was recalledand Schwarzenegger elected:

Energy costs soared 800% for several months and there were also blackouts, though thankfully not amid a blizzard:
https://en.wikipedia.org/wiki/2000%E2%80%9301_California_electricity_crisis

Of course it wasn't Davis' fault, ENRON was the culprit, but he was a convenient scapegoat.

This sort of gouging should be made illegal at a federal level. Hope the Biden admin will deal with it Bad enough for people to go broke but in sub-freezing weather, people can die.

[FakeNoose]

62. OK thanks for the reminder

I'm not sure if Biden can do anything about the Texas setup because it's separate from the national grid.

[SWBTATTReg]

39. Ah, the ol' Texas Sizzle! Screwing customers as much as one can do legally. Can't beat it,

but Texas consumers are going to the ones paying for it.

[Mawspam2]

42. Two weeks ago...

...Texas wanted to secede. Well, LEAVE!!

[aggiesal]

45. Before the utility company became profitization centers ...

they were a public utility, where the electricity, gas & water were controlled by the government because it was a public utility.
They were only allowed about 8% profit, basically to cover their costs of acquiring the utility and cost of living increases.
Where I grew up, one of our winters was so severely cold that our Gas&Electric company asked everyone to set their thermostat to 68 and wear sweats and sweaters in our homes.

Back then people complied and heating usage went so low that the Gas&Electric company couldn't cover their own costs.
So after the monthly bill went out, the Gas&Electric company to recoup their losses, announced that they have decided to raise the cost of heating.
At which point, everyone just turned up the heat to 72.
Why live in 68 deg. and still get charged the same amount with the raised rates?

But as (R)'s took over with Ronnie RayGun, their ideas that everything should come with a profit, the public utilities were sold off to for profit corporations.
So while everyone was living it up on borrowed money during the 80's, the government started selling off our public utilities out from right under our feet, while we got royally screwed (See Enron).

So, here we are. A company Griddy about to send out thousand dollar electricity bills.
We got what we wanted.

Next up? School vouchers

[UpInArms]

46. It has always been about

Privatizing the profits and socializing the risks

[aggiesal]

47. I say Privatizing the profits and Socializing the debt. ...

happens every time.

Now we are seeing the Idiot Senator Cruz (Q-Tx) asking for socialized money for his state.

[BobTheSubgenius]

54. Here, the govt. at the time did what today would be unthinkable.

They acquired BC Electric and turned it into a publicly-owned utility. Because of the treaty stipulations, the power we sell to CA on a pretty regular basis is priced at 1/3 of the consumer rate in CA.

Nice for the CA utilities, I think. Tripling the bulk cost, but being saddled with none of the generating costs.

[aggiesal]

55. Thanks for the info ...

Is there a link that supply the numbers you're referring to (1/3)?

[BobTheSubgenius]

49. We typically have electric surplus and often sell it to CA's spot markets.

I'm not sure of the switching mechanisms, but they clearly exist.

Anyway, it sounds pretty sweet, right? A surplus of a hot commodity in market that cannot do without it. Making tons on the sales, right. Wrong.

We are treaty-bound to sell it at the same price as the local market pays, which, at the consumer level, is 6.3 cents a Kwh. I don't know how the wholesale prices work.

Mind you, we also well fresh water to Nestle for something like 10 cents for 1000 liters. We have some master negotiators, clearly.

[BobTheSubgenius]

50. OK, looking up the price before posting would probably have been wise.

The actual rate Nestle pays is $2.50 for every 1,000,000 liters. The price I pulled out of the air "for effect" is actually 400 times more than the actual price.

Sweet.

[UpInArms]

58. That is awful, Bob

😱

[BobTheSubgenius]

60. To my mind, it is.

And Il Douche used to bluster about how badly Canada was treating the US on trade issues. Yeah, because with an economy about 5% of that of the US, we are the bullies.

The NAFTA negotiators even tried to get us to negotiate away our health care system, saying it was an unfair advantage for Cdn. companies.

"Well, if it's so damned good for business, why not ADOPT IT???"

BTW....our health care system is the 3rd rail of Canadian politics. Touch it and die. It may not be perfect, but the average Canadian loves it. If you're sick, go to the doctor. Get well.

It's nice to know you're not going to go bankrupt if your insurance provider finds some nasty loophole and excludes what you need from your coverage.

[Yo_Mama_Been_Loggin]

56. Isn't privatization great?

Just think Trump wanted to do the same with our freeways.

[bringthePaine]

57. surprise! TX loaded with Griddyots🤨

[Scruffy1]

59. Glad to be in El Paso.

Not only is it warmer here we are not part of ERCOT. Generally speaking, we have as little to do with the rest of Texas as possible. I see now the governor is making noises about ERCOT. Kind of like an arsonists showing up to watch the fire. "Private Opulence and Public Squalor" should be the Republican motto. Everything done on the cheap. No cold weather kits for wind turbines and the grid has been exposed as a rickety house of cards. Now ERCOT is complaining that the rates should be up about 20 times versus the 3 times normal they actually are. I do think this is going to drive a another nail in the Republican coffin. When people lose their heat and water they remember it at voting time. We are not immune to weather problems, either. About ten years ago the whole city froze up and was without water, but at least had heat. We never got below about 15 degrees in this one, but it could happen again.

[paleotn]

65. Market capitalism is like fire....

With controls it can keep you warm. Without controls it can kill you.