Texas PUC Staff File Petition To Revoke Retail Provider's Certificate, Alleging "Fraudulent" Practices, Switch Hold Violations

March 2, 2021

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Reporting by Paul Ring • ring@energychoicematters.com

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Staff of the Public Utility Commission of Texas filed a petition with the PUC to revoke the retail electric provider (REP) Certificate of Griddy Energy LLC

While such a petition would be expected in any involuntary POLR drop situation, notable is that Staff included additional allegations as grounds for certificate revocation other than financial issues.

Staff alleged that Griddy has, "Engag[ed] in fraudulent, unfair, misleading, deceptive, or anticompetitive practices, or unlawful discrimination."

Staff alleged that, "Griddy provided information in its advertising material that was misleading, outdated, and deceptive. 16 TAC § 25.475(c)(1)(A) requires that all written, electronic, and oral communications by a REP be clear and not misleading, fraudulent, unfair, deceptive, or anti-competitive. During its investigation, Commission Staff informed Griddy that Staff believed Griddy was providing misleading information related to transmission and distribution utility charges, advertisement of price comparisons, and the updating of advertised average rates. Although the investigation was not finalized before Griddy’s payment breach with ERCOT, Griddy was aware of Commission Staff’s concerns with Griddy’s advertising material as early as March 13, 2020."

In February, in response to a lawsuit filed by a customer seeking class action status, Griddy had said in a statement that, "We understand our customers’ frustration. However, Griddy passes through the wholesale electricity price to customers without mark-up. The prices charged are the direct result of the non-market prices ordered by the PUCT last week."

Griddy had also said in February that pricing at the cap was driven by PUC intervention

"[T]he PUCT implemented a non-market pricing mechanism for electricity mandating prices reaching as high as hundreds of times normal prices. Griddy’s customers, which pay pass-through wholesale electricity prices, were immediately negatively impacted by the non-market pricing and have incurred bills that they will need more time to pay," Griddy had said in February

In the revocation petition, Staff also alleged Griddy has, "Erroneously impos[ed] switch-holds or fail[ed] to remove switch-holds within the timeline described in 16 TAC § 25.480."

Staff alleged, "[P]rior to Griddy’s payment breach, Commission Staff was engaged in an investigation of Griddy regarding violations of rules related to switch-holds and the provision of misleading information."

Staff alleged, "During the period of July 1, 2018, through July 1, 2019, Griddy improperly applied switch-holds to 925 customer accounts without first placing the customers on deferred payment plans. The improper placement of switch-holds is a violation of 16 TAC § 25.480(l). Griddy personnel informed Commission Staff that Griddy was unaware of how the switch-hold rules worked."

Staff also alleged that Griddy had an inability to meet financial obligations on a reasonable and timely basis, and alleged that Griddy failed to timely remit payment for invoiced charges to an independent organization (ERCOT)

Staff said, "On Friday, February 26, 2021, the Electric Reliability Council of Texas (ERCOT) revoked all rights of Griddy to conduct activity under the ERCOT Protocols due to a Payment Breach. Under ERCOT Protocols § 15.1.3, ERCOT initiated a mass transition of Griddy’s customers to other REPs on February 26, 2021."

"Given these circumstances, Commission Staff believes that Griddy is no longer able to meet its financial obligations to ERCOT," Staff alleged

Concerning the POLR drop, Griddy had said on Feb. 26, "Today, ERCOT took our members and have effectively shut down Griddy. On the same day when ERCOT announced that it had a $2.1 billion shortfall, it decided to take this action against only one company that represents a tiny fraction of the market and that shortfall."

Griddy also said on Feb. 26, "On February 16th we asked ERCOT for emergency help when our members needed it the most and they did not take action. This is after the PUCT mandated the maximum price for days – a decision they made to take the price out of the hands of the market in a 6-minute meeting."

Commission Staff has initiated the petition to:

(1) revoke the REP certificate held by Griddy;

(2) identify claims against the financial resources relied upon by Griddy in obtaining its REP certificate; and

(3) proceed against any financial resources that Griddy relied on to obtain its REP certification pursuant to 16 TAC § 25.107(f) and (i)(7).

Docket 51859

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