‘I had to pay $500 a day’: freeze shows Texans true cost of unregulated power

Amid a deadly storm, Nathan Polk-Borgerding was terrified that Griddy, his electric company, would shut off his power in Abilene, Texas, if he and his roommates allowed their account balance to dip below $10.

So he transferred $50 from his bank – the only safety net he had – to try to keep up with the utility’s real-time charges as Texas’s grid collapsed and the spot price of wholesale electricity surged some 10,000%.

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Griddy, which offers electricity at wholesale rates, sent Polk-Borgerding a text warning that customers should switch utilities when extreme winter weather started to affect Texas. But by the time he got the message, he had already missed the cutoff to change companies over the weekend.

Meanwhile, his power bill was soaring.

“I just had to sit there and pay the $400, $500 a day to run the electricity,” he said.

As millions of Texans went without power and potable water last week, many simultaneously worried, helpless, about the catastrophically high energy prices they were suddenly being charged and couldn’t afford. While frigid conditions knocked power offline and freezing Texans tried to heat their homes, demand for energy far outstripped supply, causing wholesale energy prices to soar.

From a recent widow who let her home temperature drop to 43F, trying to preserve power, to an army veteran who is spending his life’s savings paying off his utility, the state’s residents are now bearing the brunt of a crisis within a crisis, fielding thousands of dollars worth of energy bills overnight.

The outsized financial hit is a symptom of Texas’s largely deregulated energy market, which gives customers some semblance of choice between providers, including high-risk plans linked to the volatility of the spot price for wholesale electricity.

But whether Texans are already dealing with sticker shock or have fixed-rate plans that have temporarily shielded them from those untenable costs, consumers will eventually pay the price for the state’s vulnerable power infrastructure after it collapsed under the pressure of this month’s natural disaster.

“It’s just a matter of whether it’s going to get passed on in an immediate way, in a shocking way … or spread out over time,” Kaiba White, an energy policy specialist at Public Citizen, told the Texas Tribune.

After bungling emergency management of the winter storm, Texas’s Republican leadership is now vowing to mitigate the impact of exponentially higher electricity prices, in part by issuing a moratorium on power disconnections because of non-payment.

Governor Greg Abbott called addressing consumers’ bills a “top priority”, and he has also charged lawmakers and power companies with “winterizing” infrastructure to avoid future calamities, though some experts warn that retrofitting plants for low temperatures will be difficult.

“Texans who suffered through days of freezing cold without power should not be subjected to skyrocketing energy bills due to a spike in the energy market,” Abbott said on Sunday.

Senator Ted Cruz – who along with the state attorney general, Ken Paxton, and state representative Gary Gates skipped town last week, even as their constituents shivered, went hungry and died from hypothermia and carbon monoxide poisoning – has also decried the energy crisis.

“This is WRONG. No power company should get a windfall because of a natural disaster, and Texans shouldn’t get hammered by ridiculous rate increases for last week’s energy debacle,” Cruz tweeted. “State and local regulators should act swiftly to prevent this injustice.”

Polk-Borgerding and his roommates work retail jobs where their hours have been cut because of the coronavirus pandemic. The $334 they and his parents scrounged together just to keep the lights on this month was “food money”, he said.

By the time they switched utilities midway through the storm, they owed an untenable $1,757.43 to Griddy, which Polk-Borgerding doubts they will ever be able to pay.

“Life is still moving,” he said. “I have a new electricity bill, right, that I have to start paying now. And, you know, all my other bills.”