A Texas woman filed a class-action lawsuit seeking $1 billion in relief for customers of electricity retailer Griddy, which the suit says illegally engaged in price gouging amid widespread power outages across the state last week.
Lisa Khoury, who filed the lawsuit on behalf of all Griddy customers who were charged the high prices, faced a $9,546 electric bill from Feb. 1 through Feb. 19 as a result of the massive spike in wholesale electric prices in Texas amid a severe winter storm.
Griddy is a service that allows customers to pay variable rates on their electricity, being charged what wholesale customers would be charged, or "exactly the price we buy electricity at," the company says on its website, instead of a fixed price.
But last week, wholesale prices soared amid the outages that hit millions of Texans, spiking to $9,000 per megawatt hour compared with the typical rate of $50 per megawatt hour, the lawsuit says.
“At this point we don’t know how many people might be affected, but there are likely thousands of customers who’ve received these outrageous bills,” Derek Potts, an attorney representing Khoury, said in a statement. “A class action will be the most efficient and effective way for Griddy’s customers to come together and fight this predatory pricing.”
Griddy did not immediately respond to USA TODAY's request for comment on the litigation, but on a page of frequently asked-questions about the storm on its website, the company denies allegations of price gouging.
The lawsuit seeks to prevent Griddy from billing and collecting payments on the charges with excess prices during the storm and forgiveness for late or unpaid payments as well as the monetary relief.
Texas Gov. Greg Abbott said Wednesday that the state was investigating providers whose prices spiked, and the Public Utility Commission of Texas issued an order Sunday preventing providers until further notice from disconnecting customers who have not paid their bills.
Many customers use Griddy with the expectation of paying less, the lawsuit said. On its website in a video explaining how the service works, Griddy bills itself as a company that saves consumers money by not marking up prices as do "all those other guys, you know the ones who have been preying on you, your parents and your neighbors for the past 20 years."
While using the service is "a gamble," the lawsuit said, "Griddy knew it was overcharging consumers, that consumers would be harmed, and Griddy would be unjustly enriched by retaining customers' payments."
According to the lawsuit, Khoury's typical monthly electric bill is $200 to $250, so she allows the service to charge her bank account every time it reaches $150. From Feb. 15 to Feb. 19, Khoury had $1,200 automatically withdrawn from her bank account, the lawsuit says. She placed a stop payment on her account but still owed more than $8,000 to Griddy, according to court documents.
'Massive failure': Why millions of people in Texas were without power
For two days last week, Khoury was largely without power, and she had hosted her parents and in-laws, who are in their 80s, according to the lawsuit.
Before the high prices were charged, Griddy emailed its customers on Feb. 14 warning them that they should find a fixed-rate provider amid the potential for soaring prices, but the lawsuit says many could not find one because providers were not accepting new customers during the storm.
Khoury tried to change providers on Feb. 16, but she could not get a new provider until Feb. 19.
The lawsuit says Griddy took advantage of its customers "to a grossly unfair degree" and pointed to the fact that Griddy suggested customers find a new provider as evidence it knew prices would be grossly inflated.
It says Griddy's actions violated the Texas Deceptive Trade Practices Act, which prevents a company from charging an "exorbitant or excess price" on necessary goods during a disaster.
Abbott and President Joe Biden both declared emergencies in the state because of the winter storm. Historically low temperatures and unusual snow and ice knocked large supplies of electricity off Texas' power grid last week. The storm and the power outages have been blamed for numerous deaths.
In Texas, which largely has its own power grid, the Electric Reliability Council of Texas manages the flow of electricity for about 26 million people, or 90% of the state.
'An electrical island': Texas has dodged federal regulation for years by having its own power grid
According to Griddy, wholesale prices soared last week because the Public Utility Commission of Texas "cited its 'complete authority over ERCOT' to direct that ERCOT set pricing at $9/kWh."
Abbot and lawmakers in Texas have called for investigations into what went wrong with the state's electricity grid. Prosecutors have said they would look into any criminal wrongdoings, and other lawsuits have been filed by consumers.
A federal report in 2011 said calls for increased winterization of Texas' electric generators have long been unmet.
At least six board members at ERCOT resigned this week. Abbott welcomed their resignations but said in a television appearance Wednesday that "more must be done."
Contributing: The Associated Press
This article originally appeared on USA TODAY: Texas power outage: Lawsuit seeks $1 billion from Griddy over prices