Texas Lt. Gov. says that people getting huge energy bills 'gambled on a very, very low rate'

[TomCADem]

Source: Business Insider

Patrick commented Wednesday on the large charges facing some in the wake of the devastating winter storms in his state. He suggested that those in trouble would likely get help, but said that in the future customers should "read the fine print" of such deals.

"I saw the story about the high bills," Patrick said in the Fox News interview Wednesday. "Let me explain that. We have in Texas, you can choose your energy plan and most people have a fixed rate. If they had a fixed rate per kilowatt hour, their rates aren't going up."

"But the people who are getting those big bills are people who gambled on a very, very low rate," Patrick continued. "But I've told those folks, do not panic. We are going to figure that out."

"But going forward, people need to read the fine print in those kinds of bills and we may even end that type of variable plan because people were surprised."

Read more: https://www.msn.com/en-us/money/markets/texas-lt-gov-says-that-people-getting-huge-energy-bills-gambled-on-a-very-very-low-rate-but-suggests-they-won-t-have-to-pay-the-full-amount/ar-BB1e0k2o

---

Mr. Grandma-Should-Die-For-The-Stock Market is telling Texans who got hit with huge energy bills to suck it up and read the fine print.

[calimary]

1. Yeah they're gonna "figure that out." And how long will that take?

Meanwhile the bills will keep coming, only compounding the problem, while republi-CONS in the state legislature fuss and fret about not wanting to hurt big business.

[Sucha NastyWoman]

64. "Figure that out" probably means

A low/no interest payment plan.

[ProfessorGAC]

65. It Probably Means Begging For Federal $

That way the people get out of the hole & the speculators don't have to eat the loss.
You just know these "Texas can go it alone" types are going to demand federal money now.

[Corgigal]

2. Wasn't this guy

gonna go and die for his grandchildren? Guess, it didn’t happen yet.

[dchill]

28. Same guy. He's dead - just doesn't know it yet.

[Sanity Claws]

3. How is hooking up to the local utility gambling?

Gambling means taking a chance by taking one path rather than another. What other choices did these folks have? Generally a utility company is the only game in town.
I hope that this guy will look back with hindsight that he gambled and lost when he made that statement.

[ret5hd]

8. In texas you can choose...

Reliant
TXU
Green Mountain
etc
etc
etc
Giddy (the one they are talking about here, that bases your rate on the spot market for electricity)

[cstanleytech]

35. From what I gather they actually had other options as for who provided them their electricity.

If they lived in such an area then it was gambling in that they they signed up with those utilities like Griddy or Giddy (however you spell it) knowing that the rate they paid could and would fluctuate.
Do I think it is fair? No.
Do I think such a thing a basic and needed utility such as electricity or water should be allowed to do this to the average consumer? No.

[Dustlawyer]

4. Says the guy who helped build the energy casino.

[usaf-vet]

29. Where the house NEVER loses!

It is obvious that there are dozens of people and reasons to blame BUT no one at the top of the stack will ever take responsibility.

[Dustlawyer]

60. Republicans at the state and national level have all single-mindedly pushed to de-regulate

everything. All for the benefit of their corporate donors/overlords. I blame them all!

[Sucha NastyWoman]

61. They made $10 (or less) per customer per month

They had approximately 29,000 customers and they sent out warnings about what was about to happen, and encouraged their customers to switch companies before the price skyrocketed.

As far as I know, they never charged more than $9.00/ kWh. My highest bill per day was $172 for approximately 19 kwh. I can’t really understand how their bills were that high unless they are using a ton kWh/ day. In all, 8 days cost me just under $600.00’, and we had no electricity for 42 hrs of that time. I did finally switch, but I had to wait 5 days to get switched, and by then prices had gone back to a very low rate (in fact a negative rate some of the time. My cost for the last two days before they actually switched me totalled 13 cents.

Last year my total bills were about $1350. With other companies the bill could run 300-400 a month in the summer.

I’ll probably go back to Griddy if they still exist. But they did say they were working on a new plan that would offer some price protection. Probably a bit more expensive overall, to be able to provide this.

[mwooldri]

68. Compared to most Americans, 900 cents a kwh is extortionate.

North Carolina it's generally fixed around 10-12 cents a kwh. IMO providers like Griddy should have future contracts with generators to provide some price stability and ensure a stable supply. Spot markets IMO offer too much volatility for consumer energy markets

It's one reason why I like the NC electric company model - one company, one rate, and equal payment plan so one has predictable bills.

[catbyte]

5. Ah, I see that "Compassionate Conservatism" is on full display with this cretin.

[BeyondGeography]

6. Git yer utility contract fine print readers out, people!

Because, next time, no bailouts for you losers. We could not care less if the contracting parties are on unequal footing. We work for the winners!

Signed, The Department of Tough Darts.

ps: Ain’t Texas grand?

[Paladin]

7. Fuck you DEAD, Dan Patrick. (nt)

[DBoon]

9. It burns me that people want to recall Governor Newsom

When red state officials get away with crap like this.

[KPN]

10. No surprise there. Would we have pay-day lenders were it not

for the GOP? How about 29% interest credit cards? The customer is always the guilty party with these Shylocks.

[Major Nikon]

11. He is full of shit

Lots of folks and almost certainly the majority of Texas don't have a contract at all and are just charged the default rate from their provider which is variable. Just another instance of a Texas GOPher who is manufacturing their own reality.

[Lonestarblue]

12. I live in Austin and we have a flat rate per kilowatt hour.

So do many people, especially in the larger cities where the city can exert some control—versus the state that has chosen to exert no control. One of the low-cost companies cited is Griddy, which has only been in the market for 2-3 years, so I don’t think they have a majority of customers. I don’t have stats, but I suspect a majority of Texans are on a flat rate plan.

[Major Nikon]

14. I've spoken to quite a few Texans on the subject

With few exceptions most aren't on a plan and don't even know they have the option of signing up for one.

Austin is more progressive so perhaps there's more who actively seek out their options. Most I run into are pretty apathetic about it and are willing to accept whatever they are charged, which is why there was such a big problem in the past month.

[efhmc]

15. I am in a very small town and have know about the rates for years.

If fact I get lots of advertisements saying I can change every year. Many of those people are in apartments or are new to Texas. All our Tx GQP rulers are selfish creeps.

[IronLionZion]

48. I've mostly thrown those in the recycling

so I bet a lot of consumers don't even think about it. Up until I got a hard sell at an airport from a salesperson promising lots of free miles on Southwest if I sign up. So I looked into it and compared rates but there just isn't much savings to be had. Most of the time, the standard service is cheaper than the various other providers.

This site was useful to compare rates https://www.electricrate.com/

[efhmc]

49. I have local service here and TXU at the ranch. They sent an email saying their

rates would not/did not change.

[TwilightZone]

21. "I've spoken to"

Personal anecdotes are not data.

[Major Nikon]

47. I didn't offer them as data

If you have more reliable evidence it might be worthwhile presenting. Otherwise you're just stating the obvious.

[TwilightZone]

19. False.

Most people have a contract here in Texas and most of the contracts are at a fixed rate. The standard is usually 12 months.

"The majority of Texas residents are on a fixed-rate plan, where the price per kilowatt hour (kWh) is locked in, and the bill is based on usage."

https://www.houstonpublicmedia.org/articles/news/energy-environment/2021/02/22/391956/heres-what-to-expect-for-your-next-electricity-bill/

There are 26 electricity million customers in Texas. 29,000 of them were with Griddy. Their experience is not even remotely indicative of the norm.

[cstanleytech]

36. Just wondering roughly how many companies operated like Griddy with a rate that could fluctuate?

Also if any other such companies exist what are the total number if we include those companies?

[efhmc]

50. Fixed for a year and I am contacted every year to ask if I want to change.

TXU sends me a gift card every year with about $70 (based on usage) on it to use wherever they take credit cards. Actually had forgotten I got it so will use it now.

[Major Nikon]

54. So you think Dan Fucking Patrick is telling the truth?

[LanternWaste]

69. Maybe the authors of the source material cited do.

Or (and I find this more likely) you've simply and accurately exampled the concept of "spurious correlation" with of without meaning to.

[Major Nikon]

71. He is claiming those who got screwed chose to do so

Do you think that’s within a cab ride of the truth?

[whopis01]

67. 25-30% are on variable rate plans according to the article you posted.

While that is not the majority, it is a large amount of people. Between 6.5 and 7.8 million of them (based on your number of 26 million electricity customers in Texas.

And, also according to the article you posted, "if a customer doesn't actively renew their fixed-rate contract — or switch to a new provider at the end of that contract — they are often automatically placed on a variable-rate plan".

[bucolic_frolic]

13. Oh. Was it part of the lottery? Or is there an illegal lottery operating in Texas?

One or the other, based on that idea.

[dutch777]

16. The word "utility" is not really accurate in TX in the sense most of us understand it

Most places a utility like water, sewer and power is a sole source allowed monopoly heavily regulated by state government. In TX there are numerous power providers that do NOT have a monopoly and are NOT heavily regulated and you can choose. The distribution grid is held in common (that is the ERCOT part) and whose power comes to you, you choose. More like most people experience the internet than what most of us experience for power. It was a bold but seemingly failed experiment to allow competition and said competition would result in lower rates. I think it was WSJ yesterday that published an analysis that the change cost the collective power users of TX $28 BILLION more than had they stuck with a conventional utility set-up like the rest of the country. Ouch and ouch.

[greenjar_01]

17. They never apply this logic to student loan providers thooooooo

Shit heels.

[pnwmom]

18. The state as a whole didn't get a very low rate. During 10 years they spent $32 billion more than if

they had had a regulated system, according to a report I saw yesterday.

[Scalded Nun]

20. Remember,this asshole,who expects to 'inherit' the governorship when Abbott (another asshole) leaves

is the same asshole telling Texans last year they should be prepared to sacrifice grandma to the Covid gods for the greater good. He is more repugnant that even Ted Cruz, and that is quite a feat!

[Yeehah]

22. What these people need to read more carefully are BALLOTS!

And stop voting for asshole republicans.

[modrepub]

23. Buying On The Spot Market

I'll be in the minority here but this is just straight capitalism at work. Folks really need to pay attention to what they're signing and educate themselves on how markets work. Yea people are going to be taken advantage of but economic literacy in this county is entirely lacking and needs to be addressed.

Folks in the Northeast with oil heat know how this works. You can buy your oil as you need it through the winter or go to your supplier and pay a little more to lock in the same price over the entire winter. If prices are stable or fall then you loose on your purchase. If heating oil prices go up dramatically due to supply problems or over demand, then you save money because you locked in you price at the beginning of the season. Folks managing large fleets of vehicles do the same thing. It's a necessary way to mitigate risk.

What people fail to see on the risk side of this situation is risk is not equally distributed. Impacts from price spikes are almost always much larger than impacts from price declines. The price of a commodity will never be negative but it could spike 100 to 1000 times its starting price over short periods of time. So in my previous example, you can go several seasons with the spot price and save a little money each year only to have your entire savings wiped out over a week when prices spike. These are called fat tail distributions; the impact of an extremely unlikely event is totally out of proportion with the probability of the event happening.

Traveling by car is another example of non proportional impacts. Take your typical 1 hour drive. Do it one hundred times and there may be some instances you hit all your lights in light traffic and you get to your destination a few minutes early. But if you hit traffic, your car breaks down or you get detoured, your one hour drive could turn into a 10 hour odyssey. The best you'll do is a few minutes early but when things go wrong you'll loose hours.

[ret5hd]

26. I've been saying the same thing, but you did it better.

[Red State Prisoner]

38. This

You are quite correct. The devil is in the details. Too many people aren't able or willing to see beyond the promise of savings. This is the end result, unfortunately.

[rpannier]

70. Good explanation

When I lived in Korea (1998-2017), I almost always flew Korean Air. They have always been a bit more expensive but their service is great
In the 2000s when the price of oil shot up and American carriers were charging a lot more for tickets (and lousy service) nothing changed with KAL tickets (except in case of inflation). Our tickets to the US on Korean Air were cheaper than taking United, Northwest, whatever
Reason: KAL buys its oil in 5-7 year increments, so the price is locked in. Whether the price of oil skyrockets, tanks or stays stable, Korean Air (Asiana Air and JAL do this as well), their prices are unaffected
American carriers (apparently) buy yearly, so they are at the mercy of fluctuating prices

[mahatmakanejeeves]

24. He's right. NT

[Indykatie]

25. Folks Don't Put Much Thought into the Downside Risk Associated with Market Priced Services/Materials

There should have been some protection in the form of a Cap on how high rates could go in this contract model. No one would ever expect a rate per unit of energy to go from $50 to $9000. That's insane. The one company that has been highlighted only had 29,000 customers. I'm not sure how may other companies offered this market based pricing. Hopefully it's not that many.

[modrepub]

76. It's Not Insane For Spot Commodity Prices to Spike

when there are supply disruptions during high demand periods. Happened on the PJM electric grid in Jan 2014 during a polar vortex. Spot prices spiked to 10-100 times normal load hours. See page 10 (https://www.ferc.gov/sites/default/files/2020-05/Winter2013-2014OperationsandMarketPerformanceinRTOsandISOs.pdf). Report on what was done in response: https://cpowerenergymanagement.com/what-has-pjm-learned-from-the-polar-vortex/

So why the sudden spike in spot prices? Here's what I found out years after this happened. This was the first year that most of us in the Northeast experienced what is now called a Polar Vortex. That's when the cold core of air that normally resides in far northern Canada shifts south into the northern US. At that point, the electric grid was under huge strain as the managers added more generation to keep the electric grid functioning. Usually prices go up when this happens because the more expensive electricity producers are drawn in to meet demand. PJM typically calls the least expensive generators first to keep costs to a minimum. At the heigh of the cold event, the Beaver Valley nuclear station, a 2k+ megawatt generator, goes into safe-mode shut down. Non-emergency water pipes burst from the cold forcing the plant offline. When that plant shut down, there wasn't anything of that size available to take it's place. Spot prices shot up and a lot of folks, many residential, who were buying on the spot market to save money got a big surprise on their next bill.

PJM has been working on increasing efficiencies on transfers within its grid and most folks have learned the perils of the spot market. Hopefully the changes that were made will help alleviate the next crisis. This is an example of a functioning private market based system.

Here's another thing about commodities. As long as they are needed, there will always be an unequal price distribution. What I mean is the upside portion of its price distribution is vastly larger than its downside. Think about this. The price of said commodity has almost no limit on its upside but it can never fall to or below zero. In other words, a commodity price can go factors of 10 above its normal price range under the right conditions but it will never be negative to match the upside in its price distribution.

[Aussie105]

27. Hey! Isn't it great to be a Texan?

First the weather turns real bad. Bad enough to kill people.

Then the power goes down. Might come on for a bit, might stay off for days.

Then your pipes freeze. Water everywhere, well, icicles at least.

Then you get your utility bills.

Real problems, right?

Patrick: Well, we didn't know it was gonna get cold. Or that there would be a power shortage.
Anyway, your problem.
Shoulda read the fine print. Sucks to be you. Pay up.

Some might call that . . . Victim Blaming?

Great time to be a Texan! Right?

[DENVERPOPS]

62. It's not just Texans that will suffer.

Homeowner's Insurance Premiums across the entire U.S. are going to see humongous rate increases next year because of what the Home Insurance companies will have to pay out in the Southern states because of this storm.Tie those increases together with the other
increased payouts from the wildfires. And tie those increases together with the increased housing prices.

BTW, have you noticed all the tough talk the Texans were throwing around about succeeding from the U.S.A. has suddenly disappeared.
And all their WE HATE SOCIALISM shit has ceased, with them immediately screaming their heads off for major help from the U.S. Federal Gov't.

[Roc2020]

30. Texans did gamble

Many got torched some died. Will they gamble like that again for next year with climate change in full gear? hmmm

[C Moon]

31. GOP lies come to the surface eventually. And they just say, "Let somebody else clean that up."

and then add, "Hey! Look over there!"

[sarge43]

32. Ah yes, blame the victims. n/t

Last edited Thu Feb 25, 2021, 04:31 PM - Edit history (1)

[Evolve Dammit]

33. It's their own damn fault! (sarcasm). Just like Enron scammed everyone. Good old American greed.

[leighbythesea2]

34. The fact that a utility

Is couched like going to casino, is just beyond feeling like free market capitalism, even.
I've lived in 7 states and yes, do read the fine print.

Electric companies info were the hardest to understand. Especially once I was considering solar panels and how those went together. You could see the manipulation going on, but splintered langage, etc.
So while i get, the concept of "pay the rate, no matter the fluctuations" option, should be a huge red flag--I can see people still choosing wrong.

They probably dont give 30 to 90 days before shut off either. Hope im wrong.

[Augiedog]

37. Con artists always say 'you didn't read the fine print did you". Somehow that makes stealing ok.

[Stuart G]

39. Well said, I have studied "Con Artists" and that is ...EXACTLY WHAT THEY SAY...repeat...

......................."You didn't read the fine print did you?"

[samsingh]

40. he speaks the truth of supporting repugs. Vote for them and they'll never support you

[dsc]

41. He is actually correct here

but that is exactly and precisely why we have regulation, to prevent consumers from being taken advantage of in situations such as this. The galling this is, Texas will end up likely socializing the cost of this decision to the rest of the US while they pocketed the savings from this decision.

[Stuart G]

42. This is the .."Fuck You" attitude of ."No regulations" There were no limits on how much they charge

....It is not clear.... what the market will charge................................................................ No where does it say in the contract that they can charge the"highest rate possible"
..............The contract calls for the ..."market rate"...that is the con..........

....Often the "market rate" is very reasonable. Occasionally it is totally outrageous. (As it was in this case)
..The utility companies and the state know exactly what they are doing...

....Often the market rate is ...above the fixed rate, and well, people get screwed ..

In this case...it was ....an outrageous screw!.........so then it becomes....Fuck You!!...
Keep in mind, there is no limit to the ....market rate so that is why the asshole Lt Governor
said....." people need to read the fine print".....That is the ....screw you/Fuck You approach.

.......and guess what????..........Everyone knows it!!!!

[not fooled]

73. And a lot of people probably bought into the "free market" propaganda,

believing that the noble, beneficent, much-touted "free market" would work to ensure a positive outcome.

Many more people probably have this half-baked idea--assiduously instilled by decades of propaganda--than really understood what the risks would be. Should they then be punished for buying into the bullshit? It's like blaming people for not reading the fine print when the contract has been drawn up to dissuade most people from understanding what they're signing. The deck is stacked against them. I have a hard time condemning people under these circumstances.

[Maurice Morizovich]

43. Looking through the Texas Constitution. . .

to find the requirement that governors and Lt Governors must be imbeciles!

[BobTheSubgenius]

44. Yeah. "We are going to figure that out."

Patrick: "I've figured it out. Pay your bill, deadbeat."

[IronLionZion]

45. Regulations don't kill jobs. Republicans kill jobs

I bet more than a few small businesses and large businesses that Republicans claim to support so much have gotten screwed with no power. Homeowners too.

Deregulation has not provided the efficiencies people think they were promised, just a lot of shortcuts to keep costs down for energy suppliers to max out profits. More than a few energy company douchebags were bragging about raking in profits since prices went sky high during this disaster.

[bluestarone]

46. The RETHUGS and QTHUGS in texas need to look at elections like BUYING ANY product.

If you buy one of 4 products, and choose the cheapest? Well then you get what you pay for!!! Same goes for your elected officials you choose! YOU GET WHAT YOU FUCKING VOTE FOR!!! WAKE THE FUCK UP!!!!

[Pepsidog]

51. I'm from NJ a high tax state but went to law school in Houston, Texas in the 80's.

So my wife and I rent a brand new house for cheap because oil was low and Houston was depressed. Every week I would put my trash out for pick up and every week it was left at the curb. I couldn’t understand why they would take my neighbors trash but not my trash. In NJ trash was picked up twice a week back then. So after about 3 weeks I asked a neighbor what’s up with the trash and was told I had to pay a separate fee for trash removal. I’m like wtf is that all about. So at night I would throw away my trash in my neighbors bins late at night. I really looked Houston but it was hard to live there. With NJ license plates got stopped at least once a month for BS.

[machoneman]

52. Compassionate Conservatism at work! My butt! TX officials are such blockheads.

These kinds of statements will haunt them for sure.

[Skittles]

53. yes, they did

but who REASONABLY thinks variable means, say 300 bucks a month or 17 thousand bucks?

[SpankMe]

55. And the gap between conservatives and compassion widens further. n/t

[DallasNE]

56. "May Even End" - Ya Think

Deregulation (read the fine print) strikes again.

[Lisa0825]

57. Griddy is one of those variable rate plans.

They charge like $10 a month or something and then the "wholesale rate" from the market. Under normal conditions, people get reasonable bills. But there were some huge spikes last summer that caused this same "surprise" only on a smaller scale.

I remember about a year and a half ago, the fb group for my local community in Galveston County was all buzzing about Griddy and recommending it to people. I read the details and said, NO fucking way! I do have some sympathy for folks who didn't realize what they were getting into, but this was a TERRIBLE decision on their part.

I think this type of plan should be illegal to protect stoopid people from themselves.

[DFW]

58. Most Texans voted for a Republican state government, gambling on the very, very low probablility....

.....that a crisis would arise that was so serious that their very survival depended on competent, benevolent honest leaders.

Oops. Fool me for the 47th time, and I'll end up regretting it at some point.

[mdbl]

59. I'll bet the majority of those high bill holders vote republican

idiots

[aeromanKC]

63. Ya, Gambled by living in Texas and their draconian GOP rule.

[colorado_ufo]

66. I believe the proper term for this is "blaming the victim."

It is also reminiscent of the housing crisis, when people were offered loans that were super attractive but put them at risk of losing their homes. How did that work out?

[rockfordfile]

72. A lesson learned. Don't vote gop.

The gop has turned Texas into a NK wannabe.

[Martin68]

74. So are Republicans suggesting that a power utility that allows speculation on lower prices

at expense of a reliable infrastructure and a stable power supply is a good thing? "You pays your money and you takes your chances" doesn't sound like good government to me.

[captain queeg]

75. That's probably a true statement and not many were that foolish

I’m sure none of them expected something this dramatic but it sounds like it was a choice. That being said there ought to be a catastrophic limit like with health insurance. At least some health insurances.