Griddy argues it was, in fact, a champion of consumers

Not long before Valentine’s Day, Pat Wood III got a text message from Griddy Energy, his electric provider, warning that extremely cold weather was about to wreak havoc on the electricity market in Texas. “Prices are looking to stay at record rates over the next couple of days due to the polar vortex,” the notice read. “Unless you are a Griddy energy-saving expert, we recommend you immediately switch to another provider.” Wood followed the company’s advice, even though almost no Texan could be considered more of an “energy-saving expert.” The former chairman of the state’s Public Utility Commission, appointed by Governor George W. Bush in 1995, Wood helped set up Texas’s deregulated market. He later followed Bush to Washington and ran the Federal Energy Regulatory Commission, where he dealt with the California power crisis in 2001 and a blackout in the Northeast—one of the largest in U.S. history—two years later. Wood’s Houston home is built to maximize energy efficiency—solar panels on the roof, storage batteries in the garage, an electric vehicle that he charges at night when prices are cheaper, and a smart thermostat that receives electricity price updates in real time and adjusts the temperature accordingly.

In other words, he was the ideal Griddy customer. Griddy charged its 29,000 Texas customers about $10 a month to help them buy electricity wholesale. Most days that meant lower prices than other consumers could get, about 13 percent less per kilowatt-hour, on average. Griddy says that difference saved its customers $17 million between the company’s spring 2017 launch and last February. Those savings came with risks, however. Wholesale prices fluctuate constantly, so Griddy customers lacked certainty in their electricity costs from day to day, or even hour to hour. By contrast, those who have fixed-rate plans through most other electric retailers usually pay more, but they enjoy predictable bills. The price volatility built into Griddy’s business model left its residential customers financially vulnerable during the severe winter storm in mid-February. Power plants and natural-gas providers in Texas—who are not required to winterize their facilities, as are their counterparts in neighboring states that weathered the storm with little disruption—froze and tripped offline, cutting electricity to more than four million homes as temperatures stayed below freezing for days. The desperate need for heat statewide caused wholesale prices to spike. Some Griddy customers’ bills ran as high as $17,000 for that month. The company became a target for lawsuits, fodder for unflattering stories about Texas in the national media, and an easy scapegoat for public officials looking for someone to blame. Just weeks after the crisis, Griddy found itself sued by the state and forced into bankruptcy. In late May, the Legislature outlawed wholesale plans like Griddy’s altogether.