Some Texas homeowners this week were furious to learn that they had been billed as much as $17,000 for their electricity as power outages caused by two powerful winter storms caused rolling blackouts for days.
While most Texans are on a fixed rate plan on which they pay the same monthly amount throughout the duration of their contract, there are those who are on a variable or indexed plan whose rates vary based on the market.
One of those on the variable plan, Ty Williams, told WFAA-TV that his combined electric bill last month for his home, guest house, and office was $660.
As of this month, he owes more than $17,000.
‘How in the world can anyone pay that?’ Williams said.
People wait in line at an Austin, Texas brewery for potable water on Friday. Many homeowners in Texas this week were angered to learn that they were being charged thousands of dollars on their electric bill
Electricity bills for many homeowners in Texas skyrocketed this week, including one who had to pay $7,660.93 for the first three weeks of February
Subscribers with Griddy, the Houston-based wholesale energy company, reported that they were being billed thousands of dollars
One electricity customer was charged $5,665.81 so far this month
‘I mean you go from a couple hundred dollars a month…there’s absolutely no way…it makes no sense.’
Williams was a subscriber with Griddy, the Houston-based wholesale electricity company that charges customers a monthly fee to connect members to the wholesale energy market.
Unlike fixed-term pricing, Griddy charges customers based on fluctuations of the market, which could change minute to minute.
This week, Griddy took the unusual step of urging its customers to switch providers, knowing that the bills they would be charged would be exponentially higher than normal.
When Williams wanted to switch providers, he was told that he could only sign on as a new customer with a fixed-rate contract beginning next week.
‘Pretty much you are being held hostage and there isn’t anything you can do about it,’ he said.
Royce Pierce and his wife, Danielle, live in their three-bedroom home in the Willow Park section of Dallas.
In recent days, their electric bill surged by almost $10,000, according to NBC News.
When the electric grid was shut down earlier this week, it led to a surge in demand and a sharp drop in supply, causing the prices to skyrocket from $50 per Megawatt to $9,000 per Megawatt.
The surge reflects the real-time megawatt hour price of electricity and the cost of congestion and losses at different points across the grid.
Early on Monday, ERCOT said extreme weather conditions forced many power generating units off the grid, upending the supply of electricity.
ERCOT did not respond to an email message about the spike in wholesale electricity prices.
When the electric grid was shut down earlier this week, it led to a surge in demand and a sharp drop in supply, causing the prices to skyrocket from $50 per Megawatt to $9,000 per Megawatt. The image above shows electrical lines in Austin, Texas on Friday
On February 10, well before inclement weather hit Texas, spot wholesale prices on ERCOT settled around $30 per megawatt hour at the end of the day, ERCOT data show.
But on Sunday, the price per megawatt hour surged past $9,000 on the grid.
ERCOT can be more susceptible to wholesale price spikes because it does not have a capacity market, which pays power plants to be on standby during peak demand and weather emergencies, for example.
ERCOT’s model means consumers are not paying for generation that may never be called into action.
But early on Monday, ERCOT said extreme weather conditions caused many generating units – across all fuel types – to trip offline and become unavailable.
That forced more than 30,000 megawatts of power generation off the grid, ERCOT said in a news release.
Griddy released a statement on its web site saying the company was also ‘p****d’ about the price surge.
The company blamed the Public Utility Commission of Texas, the agency that regulates the nonprofit ERCOT.
Earlier this week the PUC issued an order mandating that ERCOT keep pricing at $9,000 per Megawatt.
Those who were lucky enough to still have power will see their bills dramatically increase.
‘Because energy prices should reflect scarcity of the supply, the market price for the energy needed to serve load being shed in the face of scarcity should also be at its highest,’ the PUC said in a news release.
‘The decision was spurred by ERCOT’s discovery that energy prices across the system were clearing at less than the current system-wide offer cap of $9,000 established by Commission rule.’