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Economy

Why Some Texans Are Getting Sky-High Energy Bills

February 22, 2021

After unusual icy weather left millions of Texans without power, some are facing another crisis: Sky-high electricity bills.

The surge in pricing is hitting people who have chosen to pay wholesale prices for their power, which is typically cheaper than paying fixed rates during good weather, but can spike when there's high demand for electricity. Many of those who have reported receiving large bills are customers of electricity provider Griddy, which only operates in Texas. 

Among them is Susan Hosford of Denison, Texas. On a typical February day, she pays Griddy less than $2.50 for power. But the one-day cost spiked to hundreds of dollars after the storm. In all, she was automatically charged $1,346.17 for the first two weeks of February, which was more than she had in her checking account, causing her bank to charge her overdraft fees and affect other bills. 

"This whole thing has been a nightmare," she said. 

Here's more on the soaring electricity bills: 

WHAT ARE WHOLESALE ELECTRICITY PRICES?

Wholesale electricity prices fluctuate based on demand. Because natural gas pipelines and wind turbines froze up in Texas, there was less power available, but high demand for electricity, causing wholesale prices to shoot up, said Joshua Rhodes, an energy research associate at the University of Texas. 

Wholesale prices are typically as low as a couple of cents per kilowatt-hour but spiked to $9 per kilowatt-hour after the storm. Fixed rate customers pay a set amount that doesn't rise as much. Typically, they pay around 12 cents per kilowatt-hour. But Rhodes said fixed rate customers could see their price rise by a few cents later this year as companies hit by the icy conditions look to recoup their costs — but their bills won't be in the thousands.

People are able to pay wholesale prices in Texas because it's one of the only states that lets people pick which company it buys power from, Rhodes said. 

WHAT IS GRIDDY?

Griddy, which launched in 2017, charges $10 a month to give people a way to pay wholesale prices for electricity instead of a fixed rate. It warned customers of raising prices and urged them to switch providers. The company said wholesale prices returned to normal as of Feb. 20. 

HOW MANY PEOPLE ARE AFFECTED?

Griddy said it has 29,000 members. It's unclear how many other Texans also pay wholesale prices from other companies. 

"We won't get the full picture on the financial devastation for maybe 30 to 90 days," said Ed Hirs, an energy fellow at the University of Houston.

WILL THOSE WHO GOT LARGE BILLS GET FINANCIAL HELP?

That's unclear. Texas Governor Greg Abbott said Sunday that he is working with members of the legislature to address skyrocketing energy bills and "find ways that the state can help reduce this burden." But he didn't give specifics on what that may be. For the time being, the state has stopped companies from cutting off power for not paying. 

Rhodes said bailing out customers may be a hard sell since they opted to pay wholesale prices and may have paid a much lower price than others for some time. 

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