Why some Texans are getting sky-high energy bills

After the unusual icy weather has left millions of Texans without power, some are facing yet another crisis: high electricity bills.

The price increase is affecting people who have chosen to pay wholesale prices for their energy, which is usually cheaper than paying fixed tariffs for a long time, but can increase when there is a high demand for electricity. Many of those who reported having received high bills are customers of electricity supplier Griddy, which operates only in Texas.

Among them is Susan Hosford, from Denison, Texas. On a typical February day, she pays Griddy less than $ 2.50 for energy. But the cost of a day reached hundreds of dollars after the storm. In all, she was automatically charged $ 1,346.17 in the first two weeks of February, more than she had in her checking account, causing her bank to charge overdraft fees and affect other accounts.

“It was all a nightmare,” she said.

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WHAT ARE THE PRICES FOR WHOLESALE ELECTRICITY?

Wholesale electricity prices fluctuate based on demand. As natural gas pipelines and wind turbines froze in Texas, there was less energy available but high demand for electricity, causing wholesale prices to skyrocket, said Joshua Rhodes, an associate researcher at the University of Texas.

Wholesale prices are usually just a few cents per kilowatt hour, but have soared to $ 9 per kilowatt hour after the storm. Fixed rate customers pay a set amount that does not increase that much. Typically, they pay about 12 cents per kilowatt hour. But Rhodes said fixed-rate customers could see their prices rise by a few cents later this year as companies hit by icy conditions seek to recover their costs – but their bills will not reach thousands.

People can pay wholesale prices in Texas because it is one of the only states that allows people to choose which company to buy energy from, said Rhodes.

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WHAT IS GRIDDY?

Griddy, launched in 2017, charges $ 10 a month to give people a way to pay wholesale electricity prices, instead of a flat fee. He alerted customers to rising prices and urged them to switch providers. The company reported that wholesale prices returned to normal on February 20.

HOW MANY PEOPLE ARE AFFECTED?

Griddy said it has 29,000 members. It is unclear how many other Texans also pay wholesale prices from other companies.

“We will not have a complete picture of financial devastation for perhaps 30 to 90 days,” said Ed Hirs, an energy fellow at the University of Houston.

WILL THOSE WHO HAVE BIG FACTS GET FINANCIAL HELP?

This is not clear. Texas Governor Greg Abbott said on Sunday that he is working with members of the legislature to deal with skyrocketing energy bills and “find ways for the state to help reduce that burden”. But he did not give details about what it could be. For now, the state has prevented companies from cutting power for not paying.

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Rhodes said rescuing customers could be difficult, as they chose to pay wholesale prices and may have paid a much lower price than others for some time.