All ready at Griddy
Greg Craig has spent his career in the power industry tracking the price of power, but this spring he launched something new: a retail electric company with an app that allows residential customers to track the price of power.
A retail electric company’s app allows customers to track the price of power.
In April, Craig launched Griddy, a Los Angeles-based retail electric company that offers to cut out the middleman in a deregulated market and allow Texas residents to shop for power based on wholesale, not retail, prices. It’s a venture that critics say is best left to power professionals like Craig, who have spent their careers tracking power prices, and not the average Texas resident. But Craig is a firm believer that Griddy can make smarter power consumers of Texas residents, too. He says they can watch the real-time price of power fluctuate on the company’s app and adjust their power usage accordingly.
Q: To start, tell me a bit about where you’re from, where you grew up, and how you got into the power business.
A: Born and raised up in Alaska — I’m part Inupiat Eskimo — and I went to school at the University of Alaska until I left go to business school at University of California, Los Angeles. When I graduated from UCLA, I started a company called Cook Inlet Energy, a wholesale trading company in that sort of ’90s, early 2000s era where there was Enron and Dynegy and all the big traders. By 2005 we were at $3.2 billion in revenue. Fifth-largest by volume energy trader in North America. And I ended up selling Cook Inlet to Macquarie Bank. After that I was chairman and CEO of the largest publicly traded retail energy company at that time, called Commerce Energy. And so that’s where I kind of got my feet wet and got my eyes open to the retail sector. I had spent a lot of time in wholesale before that. … All of that led us to figure out why we should build Griddy.
Q: So what’s the premise of Griddy?
A: It’s actually more related to wholesale than traditional retail power. What we decided was that there was a huge hole in the marketplace. There were so many intermediaries between home and origin price — otherwise known as the grid price, or the wholesale price. Electricity prices are really inflated. You’ve heard, as most Texans have, that Powertochoose.org is confusing; it’s misleading, and it’s strewn with fees that are hidden. So our premise is really, really simple. The traditional incumbent retail power companies have feasted on consumers’ sort of inattention and inability to figure out what goes on between the home and the wholesale price. Every time a retail power company touches the electron, it adds a margin for hedging purposes, for a credit default swap purposes — you name it. None of which is leading to the low price. The low price comes if you can connect right to the wholesale price.
Q: Does everyone understand power enough to make Griddy work for them, or is Griddy really only something for power professionals who get how the market works? A: You don’t have to do anything — you don’t have to be an energy professional. We have a subscription-based model — which is $9.99 a month and everything gets passed through directly to the consumer. The wholesale price of power the transmission charges are passed through without a markup. And therein lies the sort of magic. You can’t get a lower price. (The mobile app shows) the price of power right now in Texas. Say, 5.3 cents a kilowatt-hour in Houston. It’s going to change in five minutes — most people don’t even know the price changes every five minutes. When you sign up for Griddy, you are a member, and this is the price you’re charged right now. So if you can see right now it’s 5.3 cents at 3 p.m., tomorrow it’s going to be 8.7 cents. There are plenty of times that we see 2.3 cents.
Q: So the idea is that I don’t want to plug my electric car in or run the dishwasher when the price of power is going to skyrocket? A: Right. The naysayers to this model will say, “Well, you don’t have time to manage your own energy all the time.” Wrong. Because you have to do a thing to save the first slug of money, which is just buy wholesale, and you’re saving 30 percent. The other thing that they will say is, “You will suffer the price spikes that will inevitably occur over the summer.” And we looked really carefully at the math behind this. For every time in 2016 that the price went more than the dollar per kilowatt-hour, it went below zero 37 times. There were 555 instances (or 439 hours) in 2016 in which the price went negative. And if you are a Griddy member, you can take advantage of that.