Sunday Morning Hot Tea - No. 11
Welcome to Sunday Morning Hot Tea where I write about a little something personal up top then answer a legal question for you down below.
In this edition
Topic of the Week – Won’t You Be My Helper?
Legal Question – The Nitty Griddy Truth
TOPIC THIS WEEK: Won’t You Be My Helper?
This week, amidst the Texas freeze, I found myself crouched in front of my house in the snow with my brother-in-law, Aaron, absolutely vexed by my water meter cover. It’s a circle of metal, about the size of a personal pan pizza, and can be removed with an aptly named “water meter box key” which I do not own. Aaron, unsurprisingly, does own one of these. This is because he can make/fix/build/do anything and already has all the tools to do it with.
We ended up out in the cold yard that day because of Pete Delkus, the local weatherman who my Uncle Jerry says “stands too close to the TV camera which makes his head look enormous.” I’ve never met Pete Delkus in real life, but I’m sure he has an average size head and that’s just an optical illusion. Pete fancies himself as THE weatherman of DFW. He tweets “I told you so” when his predictions come true, like some vindictive meteorological Nostradamus. Weary of disregarding his advice and finding myself on the business end of one of his tweets, I panicked, and for good reason. Pete called the upcoming winter storm “PIPE BUSTINGLY COLD.” That’s pretty specific.
Once I heard that, I realized if I did have a pipe bust, I would not know how to turn off the main water supply to my house. I imagined water flowing from my walls like blood from the elevators in “The Shining.”
So I FaceTimed Aaron earlier in the day, scheming in the living room, as my boyfriend, Paris, worked, unaware, on the other side of the house. I asked Aaron how to open the box. He told me I needed a key. Having no such key, I checked online at Home Depot, Lowe’s, and Ace Hardware for any available. The nearest one was at a store in East Texas, over 50 miles away.
I’m an excessive prepper, but not drive-50-miles-for-a-tool excessive. More like a buy-a-weather-radio-for-COVID-quarantine excessive. To quell my fears, Aaron offered to drive over and use his key to open the lid. Once he got here, we ran into one tiny problem: his key didn’t fit. Well, it fit, it just wouldn’t turn.
“You should ask your neighbors for help,” he said, as if this were some easy task.
I surveyed the surrounding houses, looking for candidates I could approach.
“Well that one called the cops on Paris because they thought he was stealing a package from our porch,” I said pointing to one house. “Those people got mad because Buffy ate their kid’s football when it flew into our back yard,” I continued, pointing to another. “Found out online that guy is a registered sex offender for trading in child pornography, but we’ve never spoken. The woman in that house over there sits on her porch when the weather is nice and screams at her bird.”
“Damn, well, ok,” he said. Then we spotted him. Down the street, a neighbor who I have waved at on prior occasions, was de-icing his car.
“How about him?” Aaron asked. I had no clue of his name, but at least I had not overtly offended him (that I know of). We walked down and asked, but the man said sorry, he had no key.
“You really need to make friends with your neighbors,” Aaron said.
This is true. I moved into the house in December 2018 when I was working full time at a big law firm, performing comedy multiple times a week, and doing the podcast. I was barely ever home, much less free to mix and mingle with the people who live around me.
Then the pandemic started and, though I am now home all the time, I have no clue who anyone is. It’s not like I “just moved in,” so I no longer have any excuse to introduce myself. Now any effort to make connections makes me look like I am hunting for a handout.
With no help from my residential proximity associates (“neighbor” just seems too familiar at this point), Aaron tried determining how the locking mechanism functioned. I, on the other hand, kept jamming things down into the key hole. I tried his key, a piece of rebar, pliers, a wrench, fingers, kitchen spoon, old bowling trophies, etc. Nothing worked. The metal personal pan pizza just spun, stubborn in its place.
Suddenly, a man appeared on the street before us, crunching in the snow as he dragged his young son on a makeshift sled down the street.
“How’s it going?” Aaron said easily. The man smiled and waved. Aaron went for it.
“You ever opened one of these?” he asked.
The man walked over to take a look, hands on his hips, in a familiar “figuring it out” stance.
“Oh sure,” he said. “But you need a key.” We showed him what we had, and he tried it himself, to no avail. “The edge here is too big,” he said. “I’ve got one at home, though, let me grab it. One sec.”
He walked off, dragging his son behind him. The boy let out a “weee” as they got smaller in the distance.
Holy shit. Neighbors are bad ass.
The man returned key-in-hand and, with one strong twist, removed the meter cover. I thanked him and introduced myself.
“When did you move in here?” he asked. I told him 2018. “Whoa,” he said. “It’s been that long?” He told me his name was Brian, and I vowed to remember it.
“I live in the red house down the road,” he said. “Feel free to knock any time.”
“Thank you, ….?” I said, pausing for his name.
“Brian,” he repeated. Brian Brian Brian Brian Brian, I thought. I made a mental note: Send Brian a gift card. Bake Brian some cookies. At the very least, REMEMBER BRIAN’S NAME.
Getting the cover off was only half the problem. After that was accomplished, we (Aaron) had to dig out about six inches of dirt and locate the shut off valve. Once we did that, covered in mud, Aaron left to make it home before the melted snow refroze and turned to ice.
When we get a little chilly weather down here, we always hear things from smug folks who live in areas with a more consistent winter climate, like “LOL A LITTLE BIT OF SNOW? YOU IDIOTS!” It never fails.
If someone in a cold climate got 100 straight days of over 100-degree heat, I wouldn’t laugh at them for not having central air conditioning. Maybe they only have a window unit, not because they’re idiots, but because it makes sense for their climate. Similarly, here, we have nothing to prepare us for this kind of snowy madness because it rarely-to-never happens.
The storms this week were bad. People, including young children, lost their lives. It has been called “Katrina-like” in its devastation.
In the wake of this destruction, my biggest take away has been the helpers. There’s that Mr. Rogers quote about seeing scary things on the news. His mother told him, “Look for the helpers. You will always find people who are helping.”
Texans are helpers. Cars stuck in ditches were yanked out by strangers in trucks with tow ropes. Local Jeep club members mobilized to give rides to stranded first responders and healthcare workers. Folks with no power or water were taken in gladly by those who had warm, lit homes and flushing toilets. Texans have mobilized to provide mutual aid and resources to one another via crowd-sourced lists.
We lent a hand when we saw where one was needed, and we accepted help when we couldn’t tough it out on our own.
Seeing all these helpers makes me grateful. Grateful for friends, grateful for family, and especially grateful for neighbors. We can’t control when disasters like this happen, but we can control how we act in their wake. We could all do to be a little more kind like my neighbor, Brad.
Wait, no, it’s not Brad.
Brett? Bartholomew? Barnacle?
Shit, what was his name?
Kidding – it was Brian. Thanks again, buddy!
If you have the means and would like to help Texans hit hard by the winter storms, you can find a list of places to donate here or here.
***
QUESTIONS FROM YOU – The Nitty Griddy Truth
This week’s question comes from Katie M. via Instagram DMs.
“Griddy is charging customers several thousand dollars for a few days of electricity service – is that legal? I don’t understand how this happened.”
Excellent question, Katie! First of all, we need to clarify that Griddy, the Texas electricity company, is NOT the same as Gritty, the maniacal orange Philadelphia Flyers mascot and icon for freedom. Gritty would never do people like this. Gritty loves us.
This past week, winter storms ravaged Texas, took power generators offline, and left millions without power or running water. Adding insult to injury, members of one electricity wholesaler called Griddy have found themselves facing down enormous bills. One customer found himself on the hook for a $17,000 electric bill for the month of February so far. Another is poised to pay over $8,000. Stories are piling up with people paying hundreds of dollars per day for electricity.
So … is this legal and how did this happen? To answer this, we need to cover a few preliminaries.
[This is kinda long, but I broke it up with headings for you.]
What’s Up with the Texas Energy Market?
Texas deregulated its energy market beginning in 2002 with the hopes of “driving down consumer prices.” This hasn’t exactly happened, as reports indicate Texan consumers actually pay more than lots of other states who are connected to the federal grid. This energy historian explains it way better than me. But basically, in Texas, there are a handful of players in charge of doling out electricity, and none of them are the federal government.
Up near the top, you have the Electric Reliability Council of Texas (ERCOT). ERCOT is a non-profit corporation that “manages the flow” of electricity in Texas, which sounds like the stated benefit of a menstruation product. ERCOT is not a government agency, but it is under the oversight of the Texas legislature and a three-member panel of gubernatorial appointees called the Public Utility Commission of Texas (PUCT or PUC). The Austin-American Statesman published a great breakdown of ERCOT if you want more info on them. Just know they act as a self-described “air traffic controller” for our electricity in Texas.
As for how the juice gets from a windmill to my phone charger, there are a few more players.
Generators generate the electricity using natural gas, nuclear, coal, wind, or solar power. They sell that energy to a retail provider. That retail provider then utilizes a distributor to distribute the electricity to customers. As an example, I am a customer of a retailer called Champion Energy. Champion gets its energy from generators. Then Champion uses a distributor called Oncor to deliver that energy to me.
I am under a contract to pay Champion a certain amount of pennies per kilowatt hour of energy. The amount Champion charges me is a little more than what they pay for it. They make money off the spread between those two numbers. Oncor also charges me a few cents per kilowatt hour for delivery. Everybody makes their margins, and I don’t have to worry because no matter what the price of energy is, I pay the same amount under my contract.
This can be good for me when energy prices are higher than what I am paying, like the summer, or not-as-good for me if energy prices are lower than what I am paying. But, like insurance, I pay a premium to ensure my bills won’t skyrocket. This is called a “fixed” product.
Enter Griddy.
Griddy considers itself a bit of a disruptor in this market, like the Uber or Netflix of energy in Texas. Griddy offers a “pay-as-you-go indexed product.” What is that exactly? Well, you pay a $9.99 per month membership fee, then you pay whatever retailers like Champion pay to get the electricity from the generators.
Members pay only the wholesale price of electricity as published by ERCOT. No retailer is standing between the consumer and the juice charging a premium, so in theory, Griddy members pay less. This sounds like a really good deal, right?
How Much Do People Usually Pay for Electricity?
According to Griddy’s website, its customers “usually” pay the following rates:
96.1% of the time, prices are lower than 6¢/kWh
3.3% of the time, prices are between 6¢/kWh – 30¢/kWh
0.5% of the time, prices are between 30¢/kWh - $1/kWh·
0.1% of the time, prices are above $1/kWh
As a comparison, on my fixed rate energy plan, I pay 6.3¢/kWh to Champion, the energy retailer, and an additional 3¢/kWh to Oncor who delivers the energy, for a total of 9.3¢/kWh.
Soooo…WTF Happened This Week?
This past week was one of those 0.1% times on Griddy’s list above. Generators failed to generate. This created a high demand and low supply of energy. On Monday, the PUC ordered ERCOT “to modify pricing models to more accurately reflect the scarcity conditions in the market” allowing generators to charge $9/kWh.
Yes, you are reading correctly. That is nine DOLLARS per kilowatt hour, when people were used to paying 6-10 cents retail, and even less if they were with Griddy.
Utilities Code § 39.151(d) gives the PUC “complete authority” over ERCOT, so when the PUC said jump, ERCOT had to say “How high?” $9/kWh was how high, as that is the maximum price allowed under the law.
This led to the rash of enormous and in some cases multi-thousand-dollar bills to users on Griddy’s indexed plan. In response, Griddy sent an alert to its members to ditch their service, as well as reduce energy usage if possible. In some cases, that effort was all for naught because other energy retailers either weren’t taking on new customers or were taking several days to process new customers, meaning by the time the switch was made, the damage was done.
When something like this previously happened in 2019, Griddy’s former CEO Greg Craig (no relation to Julia Gulia) insisted that despite the enormous spikes, customers were still saving in the long run. This is not necessarily true for everyone. One Redditor stated that over their time with Griddy from 2018 to January 2021, their total savings was $660. Their bill for one half of February? $2500.
On Friday, Feb. 19, prices plunged from $9/kWh to 5¢/kWh in a matter of hours once PUC ended its emergency energy declaration. Those who remained with Griddy saw their rates go back to normal, more palatable rates.
Is It Legal for Griddy to Do This?
Under current law, it seems to be. On the very first page of its website, Griddy explains its business model: “Get access to wholesale electricity for $9.99 a month. You’ll pay exactly the price we buy electricity at.” Griddy doesn’t make any more or less money if it sells you energy at $9/kWh or 5¢/kWh. Griddy makes money from that $9.99 membership fee. Their Facebook page’s tagline states customers will pay “Just the wholesale price!”
The problem with consumers paying “exactly” what retailers pay is that retailers have an advantage with buying wholesale. Large businesses can hedge their exposure to the market, which insulate them from major spikes. So even if retailers like NRG, for example, are “exposed” to the changes in energy prices, they have the money and ability to hedge themselves against those spikes. How? They won’t say. Their method is “proprietary and financially material.” Consumers, on the other hand, don’t have that capability.
So, yeah, Griddy members signed up to pay “exactly” what retailers pay, if those retailers weren’t hedged. Then, because of the PUC/ERCOT’s actions this past week, retailers were paying $9/kWh, and so were Griddy members.
Can the Impacted Customers Sue Griddy?
As I’ve always said, you can sue anybody for any reason. The question is whether you’ll win.
Here, you likely won’t, for a couple of reasons.
On the super-secret Texas Lawyers Facebook group (yes, we have that. Actually we have a lot of groups. Arguably too many groups…) some lawyers were discussing what causes of action may be available to impacted consumers. Some floated the idea of suing Griddy under the Texas Deceptive Trade Practices, a consumer protection law.
Others countered that the problem is that Griddy isn’t the one who jacked up the price. Griddy told their members two things: (1) we will sell energy to you at market price set by ERCOT, whatever that price may be, and (2) oh shit, the price is about to spike, you should bail. Arguably, there was no deception in that behavior. Griddy delivered what it promised – energy at market price. The problem was the “market price” was increased by ERCOT at the direct request of the PUC.
A second hurdle is that Griddy’s members have waived their right to sue in court. Griddy has its members agree to a mandatory arbitration policy, which you’ll likely find in most “adhesion” contracts. Adhesion contracts are boilerplate, standard form contracts that consumers don’t have the opportunity to negotiate. For instance, you sign up for AT&T internet service, they provide you with a contract, and you agree to it. They don’t ask for your thoughts on the contract or negotiate with individual consumers.
Arbitration provisions are pretty common in these kinds of contracts. Arbitration is a way of settling disputes outside of court. You have seen arbitration in action if you have ever watched an episode of Judge Judy. Although she used to be a real judge, now Judge Judy is an arbitrator. Show participants sign a binding arbitration agreement in which they agree to abide by whatever Judge Judy decides. In that sense, the cases are actually real, and the rulings are final (except you can, in some cases, appeal an arbitration decision.)
So, what happens if you try to sue a company, but you have already agreed to arbitration? The company will likely file a motion to compel arbitration, citing the clause you “agreed” to when you signed up for the contract. The judge will bump your case to arbitration, and you have to abide by the decision of a private, neutral third party rather than a jury in a court of law. (There are some ways to get around this, but that is outside the scope of this answer.)
But what about a class action suit? Well, a 2011 U.S. Supreme Court decision in favor of AT&T allowed companies to force certain terms on customers in addition to mandatory arbitration provisions. One of those terms was waiving consumers’ rights to class action lawsuits.
It just so happens that Griddy’s mandatory arbitration policy includes such a class action waiver. They give you a 30-day opt-out period where you can email them to let them know you don’t want to be bound by that policy, but if you don’t email them in the first 30 days after you sign up, you’re bound. This means if consumers attempt to file a class action suit, Griddy can file a motion with the court citing the waiver in the policy in order to keep consumers from banding together.
If They Can’t Sue Griddy, Can They Sue Someone Else?
Other lawyers mentioned the possibility of going after the PUC or ERCOT for setting the price as they did. The roadblock there? The PUC is a state agency, and as such, enjoys sovereign immunity.
Sovereign immunity generally means you cannot sue the state/government without its consent. The state can consent to being sued in a statute, like the Texas Tort Claims Act (TTCA). The TTCA allows Texans to sue the government for certain incidents. For instance, if you are injured by a government employee operating a motor vehicle, you can sue for damages under the TTCA. Outside of exceptions listed in the TTCA, you cannot sue the government.
That means you can sue ERCOT since it’s not a government agency, right? Not so fast. The Texas Supreme Court is currently reviewing whether ERCOT is eligible for “sovereign immunity.”
On its website, ERCOT describes itself as “a membership-based 501(c)(4) nonprofit corporation” subject to oversight by the PUC and Texas legislature. So why would it ask for sovereign immunity if it is only a non-profit corporation, and not the government?
In a recent lawsuit brought by Panda Power, ERCOT argued, among other things, that money coming out of ERCOT’s pockets for lawsuits would be passed on to consumers in the form of higher energy prices. Plus, ERCOT operates under full government oversight, therefore it argued it should be eligible for sovereign immunity.
An appeals court agreed with ERCOT, reasoning that extending sovereign immunity to ERCOT “protects the public as a whole by preventing potential disruptions of key government services that could occur when government funds are unexpectedly and substantially diverted by litigation.” The Texas Supreme Court has agreed to review the case, and oral argument is currently set for September 15, 2021.
In the meantime, the first handful of lawsuits against ERCOT have already been filed for incidents and injuries related to the winter storm. One attorney filing on behalf of a client in Nueces county argues that ERCOT’s shutting off consumers’ power amounts to an unlawful taking without just compensation in violation of the Texas constitution. The argument follows that sovereign immunity does not extend a case where a plaintiff is claiming a violation of the state or federal constitution. Whether this argument will be successful remains to be seen.
Others still floated the idea of suing Oncor for the service interruptions. That option isn’t likely to be successful because of language in Oncor’s tariff (the agreement under which it delivers energy for retailers). A provision at section 4.2.4 states that Oncor is not “liable for damages” for “an act of God,” and goes further, stating it’s also not liable for a “breakdown or accident to machinery” or “good-faith compliance with a then valid curtailment, order, regulation or restriction imposed” by the government or ERCOT.
Short version: the tariff says Oncor is not liable for turning off your power if ERCOT told them to do it.
So WTF Are Griddy Customers Supposed to Do?
The good news is Griddy seems to be working on its customers’ behalf. This could be due to benevolence on Griddy’s part, or them just knowing that a huge swath of folks aren’t going to pay what the app says they owe.
They probably already know this. Griddy just failed to make a payment on a settlement invoice to ERCOT on February 18, meaning Griddy couldn’t make its financial obligation for the energy it passed on to its members. A company being unable to meet its financial obligations is not usually a good sign.
In a statement on Friday, February 19, Griddy stated that it had begun “engaging with ERCOT and the PUCT seeking customer relief. Griddy is continuing these efforts and is committed to crediting customers for any relief received, dollar-for-dollar.” Griddy argues that customers should have been on the hook for energy at much lower rates, as low as 3¢/kWh, rather than the $9/kWh called for by the PUC in the emergency order.
In a statement to NBC 5, the PUC appeared to indicate that it was the energy plans offered by Griddy that are risky, calling the plans “tantalizing to consumers when the sales emphasis is placed on the possibility of very low rates during times of pleasant weather.” The PUC also called the Griddy-type plans “financially devastating when harsh hot or cold weather creates scarcity in the wholesale energy market.” For that reason, the PUC “encourages fixed-rate plans” to moderate risk.
As for consumers hit with enormous bills, oil and gas attorney Chrysta Castañeda told ABC 8 that Griddy customers should turn off auto-pay on their accounts, contact the energy provider to clarify charges, and contact their elected representatives to take action on the issue.
Griddy’s website instructs impacted members to visit TexasRentRelief, the site where Texans can apply for COVID-19 funds available to pay past-due rent and utilities. Unfortunately, newly earmarked federal FEMA disaster funds do not currently apply to utility bills.
Governor Greg Abbott has already called for changes to the energy delivery market in Texas, including mandatory winterization. Failure to winterize equipment, which is not currently required under Texas law or regulations, is what many experts say led to the system failures. He also called an emergency meeting on February 20 with the Lieutenant Governor and key committee members of the Texas house and senate. In a statement afterwards, he called the meeting “productive.”
A readout of the meeting indicated the group discussed short-term relief to “ensure that Texans are not left with unreasonable utility bills they cannot afford because of the temporary massive spike in the energy market” as well as long-term solutions. Legislators will work on ways to “quickly calculate the total cost of these energy bills” and determine “how the state can help reduce this burden.”
TL; DR
Yes, what Griddy did is technically legal under the current rules. As promised, Griddy charged consumers “exactly” what retailers were paying in real time. However, Griddy is arguing those underlying wholesale prices were based on numbers artificially inflated by PUC and ERCOT.
In the end, what should be done? Texans facing multi-thousand-dollar bills, especially those Texans who were already devastated by the pandemic, are asking for some kind of relief. What form that relief will take is a question for the governor who appoints the members of the PUC, the legislative committees who oversee ERCOT, and other elected officials whose responsibility it is to serve their constituents’ interests.
Based on the Feb. 20 meeting, it sounds like they’re working on it. When consumers will see results is still TBD.
** UPDATE ** On February 21, Governor Abbott announced that the PUC will be issuing a moratorium on electricity disconnects due to nonpayment. It appears the moratorium will last through the end of February while the commission determines a long-term plan. The governor also promised that the legislative session will not end until “ERCOT is fully winterized so we do not go through this again,” according to the Dallas Morning News. Attorney General Ken Paxton has also begun an investigation into ERCOT and PUC regarding their role in the power outages and high electricity bills.
I hope that answers your question, Katie! Thanks for sending.
Got a question? Submit it here. They can be legal what-if questions, questions on current events, or questions about the legality of actions in TV shows or movies you’ve seen. I never ever want to answer your personal legal questions, so don't send those. Love you, but I don’t do that.
Until next week, that’s the tea. Here’s to better days for you, honeybee.
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