As some Texans see electric bills skyrocket, most Central Texans should be spared pricing spikes
As some Texans report sky-high bills, customers of the area's three largest electricity providers — Austin Energy, Bluebonnet Electric Cooperative and the Pedernales Electric Cooperative — should see no such spike, officials said.
The utilities do not engage in the kind of variable rate pricing that allowed some energy retailers to jack up rates as demand soared and the wholesale energy market went haywire.
In a statement to customers, Austin Energy explained that those affected by major bill spikes are seeing electric rates controlled by variable price billing and are therefore vulnerable to sudden price swings from the wholesale energy market.
"In contrast, Austin Energy’s base rates are fixed and any changes must be authorized by Austin City Council, our governing body, after a thorough rate review process," Austin Energy said.
Residential customers are billed for their actual energy use, measured in kilowatt-hours recorded from their electric meter, Austin Energy said.
"Anyone without power during this time period had no electric use recorded from meters during these outage events. Austin Energy customers are charged only for the power consumed and will be charged at the existing rates," the statement said.
Bluebonnet, PEC customers will also avoid huge spikes
Bluebonnet and the PEC provided similar messages to their customers.
"Bluebonnet Electric Cooperative’s electric rates will not increase as a result of February’s extreme weather in the same way that some Texans will experience according to media reports," the electric service provider said. "Bluebonnet has power supply contracts in place that are meant to protect our members from price volatility in the ERCOT wholesale power market."
However, Bluebonnet added that extremely cold temperatures during February's historic cold spell caused members to use more electricity than they would during a normal February.
"Therefore, members should expect to see electric bills similar to ones they normally see during hot summer months, like July and August," Bluebonnet said.
The PEC said that although the rate for base power during the recent storm will not change, rates could still increase due to the amount of energy consumed.
"Keep in mind, heating your home during cold weather can cause higher than normal energy consumption," the PEC said.
Why some in Texas are seeing huge bills
Some Texas consumers, however, are facing massive increases in their bills as the result of variable pricing offered by some electric service providers.
Houston resident David Astrein, a human resources director at a manufacturing company, said he’s been charged $2,738.66 so far this month versus $129.85 in January for a three-bedroom home with a detached garage. He and his wife stopped using their dishwasher, washer and dryer and turned on as few lights as possible at night. They kept the heat on for their 5-month-old son.
Astrein is among those facing skyrocketing payments in the aftermath of the storm. Many took to social media to show electricity bills ranging as high as $8,000. According to their screenshots, most are customers of Griddy Energy, a power supplier with a unique business model.
Griddy charges for electricity based on real-time prices in wholesale power markets, therefore exposing consumers to the full swings. Griddy saw the problem developing and even urged its retail customers last weekend to switch to another provider. By Sunday, 20% had managed to do so. But not Astrein.
“We were stuck with Griddy and those astronomical prices,” Astrein told Bloomberg News Service. “The failure in Texas as a whole to plan for this adequately is now a financial emergency for all of these customers on a program like Griddy.”
For Griddy, that business model meant it got only a very small cut of Astrein’s bill.
“I want to highlight that on the $2,738.66 total bill, Griddy only made $6.48,” CEO Michael Fallquist told Bloomberg. “We only make $9.99 per month; all other charges are a pass-through.”
Variable pricing makes sense for some customers
University of Texas energy expert and research fellow Dave Tuttle said that most customers who have an option for variable pricing select stable plans.
"That is part of what retail customers pay utilities to do — be the intermediary and manage the risks," Tuttle said. "And a vast majority of the retail choice customers select more stable plans. But about 29,000 people in the competitive retail areas of ERCOT chose Griddy out of over 25 million customers in ERCOT."
Variable pricing does make sense for some customers, Tuttle said: "Say you're a rancher and have a lot of water to pump into stock tanks. You can simply turn it off when the price goes up. You have to monitor to shut off your load."
That's why the solution is not to eliminate the option of variable pricing, he said. "The answer isn't a mandate that says, ‘We're going to come in and nanny state you and you can't have this choice.’ You don't want to throw the baby out with the bathwater."
Gov. Greg Abbott has vowed to rein in price gouging. On Saturday, he met with Lt. Gov. Dan Patrick, House Speaker Dade Phelan and members of the Legislature to discuss the skyrocketing electric bills that some Texans are beginning to see.
"We have a responsibility to protect Texans from spikes in their energy bills that are a result of the severe winter weather and power outages," Abbott said in a statement.
"We are moving quickly to alleviate this problem and will continue to work collaboratively throughout this week on solutions to help Texas families and ensure they do not get stuck with skyrocketing energy bills."
This report contains material from Bloomberg News Service.