Electricity wholesaler eyes residential consumers
Griddy, the wholesale electric power supplier for residential customers, has attracted 20,000 customers in Texas, impressive growth for a company in business for only a year. But the Los Angeles company has hit a wall of sorts.
“For those people who do the numbers, they jumped to Griddy.” Gregory L. Craig, Griddy CEO
Many electricity shoppers in Houston, Dallas and other deregulated power markets are nervous about signing up for an electricity plan that passes along the cost of wholesale power, along with transmission and distribution fees, to consumers.
Texans are used to buying fixed-price plans from retail electricity providers that charge a set price per kilowatt hour. So it’s a leap of faith for consumers to jump into the wholesale market, where prices change every 15 minutes and prices can spike as high as $9,000 per megawatt hour — or $9 per kilowatt hour — when temperatures turn especially hot or cold.
Griddy believes it has found a way around that hurdle by launching a shadow customer program it plans to roll out later this year. Customers interested in seeing how much their electricity would cost with Griddy can sign up as a Griddy guest. Users can get hourly updates of how many kilowatt hours they’re using, how much it’s costing and a running tab for the day, week or month. It will show skeptical consumers how much they’d be paying if Griddy were their electricity provider.
Griddy chief executive officer Gregory L. Craig said he understands the anxiety.
“For those people who do the numbers, they jumped to Griddy really fast,” he said. “They get it.”
But for others, Craig hopes the shadowing will give them confidence so when their next electricity contract expires, they’ll give the company a try.
Griddy customers pay an average of 8.6 cents per kilowatt hour, including the $9.99 monthly membership fee. The statewide average is 11.25 cents per kilowatt hour, according to the Energy Department.
Over coffee this week, Craig said his company wants to have a disruptive influence on the retail electricity business, comparing Griddy to Uber, which upended the taxi business, and Amazon.com, which redefined the shopping experience. The retail electricity business model that relies on gimmicks like free nights and weekends and customer confusion created by dozens of power plans is outdated, he said.
“Why do you have 20 plans?” he asked. “Why do you have 50 plans?”
Craig launched Griddy after a stint as chief executive of a retail electricity provider, an experience that exposed him to what he called the questionable sales practices of the retail power industry.
Craig laughed when asked if Griddy was making money. No, he said. But Craig, who, along with his business partner, has pumped millions of dollars into the venture, won’t be any more specific than that.
Other companies, such as Grid Plus, are beginning to offer wholesale power to residential customers. It’s a development that Craig said he could view with alarm but doesn’t. That’s because additional competition would likely create more credibility with consumers.
He’s betting that as consumers get more comfortable, they’ll go wholesale.