Why some Texans are facing catastrophic electric bills after a winter storm

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Wholesale power plans left Texans on the hook for thousands of dollars after prices spiked.

n Texas this week, freezing temperatures overwhelmed the state’s power grid, triggering rolling blackoutsmulti-day power outages — and, catastrophic electric bills.

According to the Dallas Morning News, some Texans have been hit with power bills totaling as much as $17,000 for only a few days of electricity, many times more than the usual cost of power in Texas.

Specifically, it’s Texas residents who rely on a wholesale power plan, rather than a fixed-rate plan, who have seen their bills climb after the demand for power jumped dramatically across the state this week as Winter Storm Uri struck and temperatures plunged. Texas, which has a deregulated electricity market, has a number of providers, both wholesale and fixed rate.

Fixed-rate customers pay an agreed-upon rate for their power, but wholesale buyers pay a variable rate; whatever the current price per kilowatt-hour of electricity is. Wholesale power plans, such as those offered by Texas energy company Griddy, can be attractive because during good weather, a customer on a variable plan will pay less than one on a fixed-rate plan, according to Public Utility Commission of Texas spokesperson Andrew Barlow.

The problem is, weather isn’t always good — in Dallas on Tuesday, the low temperature was 4 degrees Fahrenheit, colder than in Anchorage, Alaska.

That freezing weather led to rolling blackouts throughout the state amid an increased demand for power; in turn, that demand caused prices to spike, with wholesale rates soaring to about $8,800 per megawatt-hour in the Dallas area on Wednesday.

According to Reuters, the wholesale rate before this week’s storm was only about $50 per megawatt-hour. On Wednesday, Texas’s Public Utility Commission moved to cap wholesale prices at $9,000 per megawatt-hour, or $9 per kilowatt-hour.

Griddy, the wholesale power company that has faced the most rancor from customers online, warned customers on Monday that their rates could climb precipitously with the onset of cold weather — but those warnings didn’t come in time for many Texans to change to a new service provider, the Dallas Morning News reported Friday, and people were still caught off guard by their power bills.

“$5,000 for five days is outrageous,” Dallas resident DeAndré Upshaw told Morning News reporter Maria Halkias Friday. “No one could have anticipated this except the people who manage the service and the power grid.”

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