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Texas freeze raises concerns about 'ridiculous' variable rate bills

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Stephanie Kelly and Peter Szekely and Jennifer Hiller
·4 min read
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By Stephanie Kelly, Peter Szekely and Jennifer Hiller

HOUSTON, Feb 23 (Reuters) - In Spring, Texas, about 20 miles(32 km) north of Houston, Akilah Scott-Amos is staring down amore than $11,000 electric bill for this month, a far cry fromher $34 bill at this time last year.

"What am I going to do?" Scott-Amos, 43, said. She was amongthe millions of Texas residents who lost power during severaldays of bitter cold that caused the state's electrical grid,operated by the Electric Reliability Council of Texas, to breakdown. "I guess the option is, what, I'll pay it? I just don'tfeel like we should have to."

Scott-Amos's electric provider was Griddy, a Houston-basedcompany that provides wholesale electricity at variable ratesfor a monthly $9.99 fee. She and many others who signed up forvariable-rate plans are facing skyrocketing utility bills asnatural gas spot prices rose by several thousand percent in amatter of days during the unexpected cold.

More than a dozen states currently allow customers to signup with variably-priced suppliers other than their powerdistribution companies. As climate change causes moreunpredictable weather events, those who participate in suchplans face the possibility of wild swings in their monthly costsin parts of the United States that rarely experience bigtemperature changes.

The number of U.S. customers that pay variable rates is notclear, but as of 2019 about 11 million homes and businesses wereenrolled in so-called dynamic pricing programs, according to theU.S. Energy Information Administration. Those plans vary, butinclude peak-of-use options as well as variable-rate plans.

Last week's rolling blackouts in Texas and the skyrocketingbills are likely to dampen efforts in other states to introducemore competitive utility pricing structures, said John Howat, asenior energy analyst with National Consumer Law Center, aconsumer advocacy group.

Until this week, in some states, electric suppliers werepushing "to just have it be a free-for-all, the way it is inTexas," he said, referring to variable-rate style plans.

Some states affected by the storms have announced probesinto skyrocketing utility bills. Oklahoma Attorney General MikeHunter said during a Monday press conference that he will belooking at whether companies violated Oklahoma laws thatprohibit companies from increasing prices by more than 10% forgoods or services after an emergency is declared.

"The goal there is to, in as substantive and productive away as possible, figure out ways to mitigate the impact of thisutility bill phenomenon we're expecting to see in the nextcouple of months," he said.

UTILITY BILL 'TSUNAMI'

"I definitely will fight this bill as much as I can," saidformer Griddy customer Lorna Rose, a 33-year-old administrativeassistant in Dallas, who racked up about $900 in charges beforemanaging to jump to a different power provider. Her usualmonthly bill is less than $100 per month.

"The last thing I'm going to do is stress myself with payingoff this ridiculous bill. It should never have happened in thefirst place," she said.

Texas utility regulators will temporarily ban powercompanies from billing customers or disconnecting them fornon-payment, Governor Greg Abbott said on Sunday.

The Texas market has close to 7 million residentialcustomers, and most people do not have variable-rate plans, saidCatherine Webking, a partner at Austin-based law firm ScottDouglass & McConnico.

Griddy, which has 29,000 customers, according to local mediareports, would account for 0.4% of the state's total residentialcustomers.

"It's important to understand that is such a small, smallsliver," Webking said.

However, some customers of utilities with fixed rate planscould get higher bills, too.

San Antonio's CPS Energy, the nation's largest municipallyowned gas and electric utility with over 840,000 customers,typically passes fuel charges to customers for generating orpurchasing power.

On Friday, it said on Twitter that it would considerspreading out customers' utility bills over 10 years. That tweetdrew a firestorm of criticism, with numerous commenterscomparing such a bill to a mortgage.

"We are going to have a tsunami across the state associatedwith customer affordability," Chief Executive PaulaGold-Williams said in a briefing on Monday, adding that CPSwould not add those costs to bills while it sought state relief.

Natural gas prices surged by as much as 16,000% during thestorm, and CPS didn't have enough supply, nor had it hedgedenough against price spikes, Gold-Williams said. The utility didnot yet know the full cost of the winter storm, she added.

As consumers struggle with sudden surges in bills, somecompanies profited handsomely. "This week is like hitting thejackpot," said Roland Burns, president and chief financialofficer at Comstock Resources, a natural gas provider.

Griddy said in an auto-reply email to Reuters that it was intalks with ERCOT to get relief for customers exposed to"non-market pricing." It added that it had a deferred paymentplan for customers with a negative balance.

That may not help customers like Scott-Amos.

"I'm not exactly sure what I'm supposed to do," she said."Should I take from my 401K? Should I get a loan?"(Reporting by Stephanie Kelly, Peter Szekely, and JenniferHiller; additional reporting by Jessica Resnick-Ault and BradBrooks; editing by Richard Pullin)