Griddy declares bankruptcy
Electricity company is besieged by lawsuits after massive freeze bills
Griddy Energy, a Californiabased retail power company, filed for bankruptcy protection Monday after losing customers who received bills in the thousands of dollars, incurring debts in the tens of millions dollars, and getting hit with a proposed class action lawsuit seeking more than $1 billion.
Griddy’s business model exposes consumers to the wholesale market, which in normal times could mean savings, but translated into massive bills for its customers when the grid crashed during the recent winter storm. Wholesale prices hit the state maximum of $9,000 a megawatt hour, about 300 times the average wholesale price.
Griddy said in the filing in federal bankruptcy court in Houston that it owes more than $33 million to creditors — with the bulk, about $29 million owed to Electric Reliability Council of Texas, or ERCOT, the state’s grid manager. Griddy also owes more than $1 million to the state’s largest electricity distribution utilities, CenterPoint Energy of Houston and Oncor Electric Delivery of Dallas.
Griddy is also facing lawsuits from Attorney General Ken Paxton, who contends the company violated state consumer protection laws, and a Chambers County woman who received a bill of $9,340 during the winter storm. She is the lead plaintiff in a proposed class action suit seeking more than $1 billion for Griddy customers.
Bankruptcy protects filers from certain types of litigation, and Griddy ask the bankruptcy court to remove the suit, now in state court, and move it to the bankruptcy court, according to court documents. Derek Potts of the Potts Law Firm in Houston, who is representing Griddy customers in the proposed class action, said he will continue to represent them throughout the bankruptcy proceeding.
“Griddy’s lawyers filed for bankruptcy in federal court in Houston today, minutes before our scheduled court hearing (in state court),” Potts said in a statement. “This action by no means ends our fight to recover the tens of millions of dollars debited from Texans’ financial accounts during the storm, and to erase
the negative reports made to credit agencies.”
Griddy’s chief executive, Michael Fallquist, said is a statement that the company’s bankruptcy plan would provide financial relief to its customers. He also criticized ERCOT in his statement for actions Griddy claims contributed to its customers astronomical bills.
The state’s independent market monitor recently concluded that ERCOT kept emergency pricing — the state maximum of $9,000 — in place longer than necessary at the cost of billions of dollars to the market.
“Griddy was a thriving business with more than 29,000 customers who saved more than $17 million dollars since 2017. Fallquist said. “The actions of ERCOT destroyed our business and caused financial harm to our customers.”
Two weeks ago, ERCOT barred Griddy from participating in the state’s wholesale power markets for failing to make a payment, effectively shutting down the company.
Other power companies have also filed for chapter 11 after the freeze sent wholesale prices soaring. Just Energy Group recently filed for court protection in Canada and bankruptcy protection in the United States. Brazos Electric Power Cooperative, the state’s largest electric coop filed for bankruptcy protection after racking up an estimated $2.1 billion in charges during the blackouts.