Texas Ensures Forgiveness of $29 Million in Unpaid Electric Bills After Griddy Files for Bankruptcy

Power lines are shown, in Houston, Texas, on Feb. 16, 2021. David J. Phillip/AP Photo

Texas Attorney General Ken Paxton said on Tuesday that about 24,000 former customers of Griddy Energy LLC will be released from paying $29.1 million in unpaid electric bills incurred during last month’s winter storm after the power retailer filed for bankruptcy.

Paxton said his office has been negotiating with Griddy after the state filed a lawsuit against the energy company for deceptive advertising. Griddy has since filed for Chapter 11 bankruptcy after the state grid operator cut off the company’s access to customers for unpaid bills.

The attorney general said that his office ensured that Griddy’s proposed bankruptcy plan would release all outstanding payment obligations for Texas residents who were unable to pay their energy bills due to the unexpected spike in prices during the storm. He said that his office and Griddy are also engaged “good faith” talks to also provide relief for Texans who have already paid their bills.

“I ensured that Griddy’s proposed bankruptcy plan takes an important step forward by offering releases to approximately 24,000 former customers who owe $29.1 million in unpaid electric bills. Griddy and my office are engaged in ongoing good faith negotiations to attempt to address additional relief for those Griddy customers who have already paid their storm-related energy bills,” Paxton said in a statement.

Paxton’s statement is the latest update in the dispute against the power company after hundreds of Texas residents complained about exorbitant bills following the deep freeze in February.

Texas’s brutal cold snap and frozen infrastructure brought days of power and water shortages for residents across the state. It triggered rolling blackouts across the state leaving more than 4 million Texans without power.

Paxton’s office said their lawsuit sought to prevent Griddy from further misrepresenting its energy prices and to recuperate costs for its customers who were billed hundreds of dollars, and in some cases thousands, for a few days of electricity during Texas’s winter storm.

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

People wait in line to fill propane tanks in Houston, Texas, on Feb. 17, 2021. David J. Phillip/AP Photo

A man walks to his friend's home in a neighborhood without electricity as snow covers the BlackHawk neighborhood in Pflugerville, Texas, on Feb. 15, 2021. Bronte Wittpenn/Austin American-Statesman/USA Today Network via Reuters

Griddy is a California-based based retail electric service provider that promotes itself as a more affordable alternative to traditional energy providers as it offers “wholesale” prices. It charges its customers a flat monthly rate of $9.99 and passes the price it purchased electricity onto the resident.

During times of low demand for power, the company is able to pass on savings to the customer. But during times of instability, customers face massive risks from the fluctuations in the market, the lawsuit said.

Paxton’s office alleged that Griddy has been persistently downplaying the nature and the extent of these risks.

During the February 2021 winter storm, Griddy’s customers were charged at “egregiously high price levels” and the company’s auto-billing system left many customer bank accounts overdrawn, many of whom were senior residents.

Griddy had previously told The Epoch Times in a statement that it did not agree with the claims in the lawsuit and planned to defend itself in court.

On Tuesday, Paxton’s office said it will now “abate the state court lawsuit and Civil Investigative Demand,” while it works with Griddy to resolve any ongoing issues.

The Electric Reliability Council of Texas (ERCOT) last month shut Griddy’s access to the state’s power network and shifted its 10,000 customers to other utilities.

Griddy said on Monday it is seeking court authority to release its former customers from outstanding bills.

“Prior to Winter Storm Uri, Griddy was a thriving business … The actions of ERCOT destroyed our business and caused financial harm to our customers,” Griddy Chief Executive Officer Michael Fallquist said in a statement.

High gas and power bills from the Texas freeze have already forced two other firms to seek bankruptcy protection—Just Energy Group Inc. and Brazos Electric Power Cooperative Inc.

Reuters contributed to this report.