Texas Attorney General Ken Paxton sued electricity company Griddy for “false, misleading, and deceptive advertising and marketing practices” Monday after the company billed and auto-collected what the lawsuit describes as “astronomical” sums of money from vulnerable customers during the severe winter storm in February that almost crippled the state’s energy grid and left millions without power or water.
Unlike traditional power retailers, Griddy connects its customers to the wholesale electricity market and passes these costs directly on to the consumer.
“Griddy’s marketing persistently misled its customers about the nature and extent of” the risks and costs this system entails, the lawsuit said, emphasizing the savings during periods of stability and failing to prepare its customers for the possibility of “astronomical charges” at times of increased demand, which occurred during the winter storm
The lawsuit said Griddy, which “was fully aware of the reality of the risk in its pricing scheme” and also made use of an automatic billing system, “blatantly contradicted” the promises it made to customers at a time when they were most vulnerable.
Griddy has a history of deceptive advertising, the lawsuit alleged, pointing to similarly high charges during a 2019 heat wave that did not lead the company to change advertising practices.
“Griddy misled Texans and signed them up for services which, in a time of crisis, resulted in individual Texans each losing thousands of dollars,” Paxton said in a statement, adding that “Griddy made the suffering (of those in the storm) even worse as it debited outrageous amounts each day.”
Forbes has reached out to Griddy for comment; an earlier statement on its website asserts that “we have always been transparent and customer-centric at every step.”
Record-breaking cold in February brought Texas’ electrical grid to the brink of collapse, with rolling blackouts instituted to try and retain control. The surge in demand caused by these prolonged power outages precipitated a spike in prices that Giddy passed on to its consumers. The company has already been hit with a $1 billion class action from customers accusing it of price gouging and the company has been effectively powered down by the Electric Reliability Council of Texas (ERCOT) due to lack of payment. In a statement, Griddy highlighted that although ERCOT has predicted billions in shortfall, ”it decided to take this action against only one company that represents a tiny fraction of the market and that shortfall.”
What To Watch For
In a statement, Paxton indicated that more litigation was on the way, describing the action against Griddy as “the first lawsuit filed by my office to confront the outrageous failure of power companies.”
Texas’ largest and oldest electric power cooperative, Brazos Electric Power Cooperative, filed for bankruptcy Monday after being hit with a $1.8 billion bill from the state’s grid operator.