Texas freeze raises concerns about 'ridiculous' variable rate bills
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[February 23, 2021]
By Stephanie Kelly, Peter Szekely and Jennifer Hiller
HOUSTON (Reuters) - In Spring, Texas, about
20 miles (32 km) north of Houston, Akilah Scott-Amos is staring down a
more than $11,000 electric bill for this month, a far cry from her $34
bill at this time last year.
"What am I going to do?" Scott-Amos, 43, said. She was among the
millions of Texas residents who lost power during several days of bitter
cold that caused the state's electrical grid, operated by the Electric
Reliability Council of Texas, to break down. "I guess the option is,
what, I'll pay it? I just don't feel like we should have to."
Scott-Amos's electric provider was Griddy, a Houston-based company that
provides wholesale electricity at variable rates for a monthly $9.99
fee. She and many others who signed up for variable-rate plans are
facing skyrocketing utility bills as natural gas spot prices rose by
several thousand percent in a matter of days during the unexpected cold.
More than a dozen states currently allow customers to sign up with
variably-priced suppliers other than their power distribution companies.
As climate change causes more unpredictable weather events, those who
participate in such plans face the possibility of wild swings in their
monthly costs in parts of the United States that rarely experience big
temperature changes.
The number of U.S. customers that pay variable rates is not clear, but
as of 2019 about 11 million homes and businesses were enrolled in
so-called dynamic pricing programs, according to the U.S. Energy
Information Administration. Those plans vary, but include peak-of-use
options as well as variable-rate plans.
Last week's rolling blackouts in Texas and the skyrocketing bills are
likely to dampen efforts in other states to introduce more competitive
utility pricing structures, said John Howat, a senior energy analyst
with National Consumer Law Center, a consumer advocacy group.
Until this week, in some states, electric suppliers were pushing "to
just have it be a free-for-all, the way it is in Texas," he said,
referring to variable-rate style plans.
Some states affected by the storms have announced probes into
skyrocketing utility bills. Oklahoma Attorney General Mike Hunter said
during a Monday press conference that he will be looking at whether
companies violated Oklahoma laws that prohibit companies from increasing
prices by more than 10% for goods or services after an emergency is
declared.
"The goal there is to, in as substantive and productive a way as
possible, figure out ways to mitigate the impact of this utility bill
phenomenon we're expecting to see in the next couple of months," he
said.
UTILITY BILL 'TSUNAMI'
"I definitely will fight this bill as much as I can," said former Griddy
customer Lorna Rose, a 33-year-old administrative assistant in Dallas,
who racked up about $900 in charges before managing to jump to a
different power provider. Her usual monthly bill is less than $100 per
month.
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An electrical substation is seen after winter weather caused
electricity blackouts in Houston, Texas, U.S. February 20, 2021.
REUTERS/Go Nakamura/File Photo
"The last thing I'm going to do is stress myself with paying off
this ridiculous bill. It should never have happened in the first
place," she said.
Texas utility regulators will temporarily ban power companies from
billing customers or disconnecting them for non-payment, Governor
Greg Abbott said on Sunday.
The Texas market has close to 7 million residential customers, and
most people do not have variable-rate plans, said Catherine Webking,
a partner at Austin-based law firm Scott Douglass & McConnico.
Griddy, which has 29,000 customers, according to local media
reports, would account for 0.4% of the state's total residential
customers.
"It's important to understand that is such a small, small sliver,"
Webking said.
However, some customers of utilities with fixed rate plans could get
higher bills, too.
San Antonio's CPS Energy, the nation's largest municipally owned gas
and electric utility with over 840,000 customers, typically passes
fuel charges to customers for generating or purchasing power.
On Friday, it said on Twitter that it would consider spreading out
customers' utility bills over 10 years. That tweet drew a firestorm
of criticism, with numerous commenters comparing such a bill to a
mortgage.
"We are going to have a tsunami across the state associated with
customer affordability," Chief Executive Paula Gold-Williams said in
a briefing on Monday, adding that CPS would not add those costs to
bills while it sought state relief.
Natural gas prices surged by as much as 16,000% during the storm,
and CPS didn't have enough supply, nor had it hedged enough against
price spikes, Gold-Williams said. The utility did not yet know the
full cost of the winter storm, she added.
As consumers struggle with sudden surges in bills, some companies
profited handsomely. "This week is like hitting the jackpot," said
Roland Burns, president and chief financial officer at Comstock
Resources, a natural gas provider.
Griddy said in an auto-reply email to Reuters that it was in talks
with ERCOT to get relief for customers exposed to "non-market
pricing." It added that it had a deferred payment plan 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 Jennifer Hiller;
additional reporting by Jessica Resnick-Ault and Brad Brooks;
editing by Richard Pullin)
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