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I Have No Sympathy (Outrageous Texas Electric Bills)

bogey21

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I live in Texas and for years bought my power in Texas. I probably had 50 providers and 400 plans to choose from, some Fixed Rate, Some Variable Rate with terms from 30 to 360 days...

Those with the huge bills ($6,000 to $9,000) you read about in the press come from one company that offered a plan costing $9.99 per month and charged its cousomers the wholesale price for electricity. Those who chose this plan benefited mightily month after month after month. Most months they paid little or nothing. Some months they even got paid for their use of electricity. Basically they gambled and during the recent freeze they got nailed. Now they want the State (that is the rest of us) to bail them out. It is no different than someone going to Vegas putting all their money on Black, losing and wanting the rest of us to bail them out. I say No Way!!!

George
 

am1

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I have sympathy but as you stated they choose a company where they benefited from low but unstable rates. Hopefully they can work out a payment plan with the company and in the future pay more attention to these things. Hopefully switch providers.
I also feel the state of Texas failed them buy slowing so many companies into the market place.
 

DrQ

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It's not just individual's that bet wrong:
Thousands of Texas electric customers will be involuntarily switched to new providers, as companies fail

That's why when you shop for power, you don't just shop price. You also look for companies with proven records. You don't want to be switched to POLR (Provider of Last Resort)
 

Brett

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I live in Texas and for years bought my power in Texas. I probably had 50 providers and 400 plans to choose from, some Fixed Rate, Some Variable Rate with terms from 30 to 360 days...

Those with the huge bills ($6,000 to $9,000) you read about in the press come from one company that offered a plan costing $9.99 per month and charged its cousomers the wholesale price for electricity. Those who chose this plan benefited mightily month after month after month. Most months they paid little or nothing. Some months they even got paid for their use of electricity. Basically they gambled and during the recent freeze they got nailed. Now they want the State (that is the rest of us) to bail them out. It is no different than someone going to Vegas putting all their money on Black, losing and wanting the rest of us to bail them out. I say No Way!!!

George
Actually many Texas residents other than Griddy have high utility bills --- most blame the Texas Utility commission ERCOT

"Residents with variable-rate power plans are being hit the hardest. Such plans charge different prices for electricity depending on how much demand there is. The more demand, the higher the price. The steep electric bills in Texas are in part a result of the state’s uniquely unregulated energy market, which allows customers to pick their electricity providers among about 220 retailers in an entirely market-driven system.

............. But don't worry, Governor Abbott has "pledged to protect consumers from the big utility bills"
 
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davidvel

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I live in Texas and for years bought my power in Texas. I probably had 50 providers and 400 plans to choose from, some Fixed Rate, Some Variable Rate with terms from 30 to 360 days...

Those with the huge bills ($6,000 to $9,000) you read about in the press come from one company that offered a plan costing $9.99 per month and charged its cousomers the wholesale price for electricity. Those who chose this plan benefited mightily month after month after month. Most months they paid little or nothing. Some months they even got paid for their use of electricity. Basically they gambled and during the recent freeze they got nailed. Now they want the State (that is the rest of us) to bail them out. It is no different than someone going to Vegas putting all their money on Black, losing and wanting the rest of us to bail them out. I say No Way!!!

George
Odd this info hasn't accompanied the headlines decrying the power systems. Thanks for the perspective.
 

dioxide45

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Many people and companies over the years took big gambles. Think 2008, they got bailed out. Why not the little guy?
 

bogey21

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Residents with variable-rate power plans are being hit the hardest. Such plans charge different prices for electricity depending on how much demand there is. The more demand, the higher the price. The steep electric bills in Texas are in part a result of the state’s uniquely unregulated energy market, which allows customers to pick their electricity providers among about 220 retailers in an entirely market-driven system.
What you say is true. I worked within the system for well over 25 years. Every time I changed Providers I went with a Fixed Rate Plan and a Financially Sound Provider. The people who open themselves up to problems are those who ignore the risk and run to the lowest price (most often with a variable rate) and pay no attention to the financial stability of the Provider. I have no sympathy for them when things blow up and they turn to the Government (that's our taxes) to bail them out...

George
 

elaine

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We got an offer like this in VA a while ago. And the power cost was lower for off-time usages but more for prime time. We declined. I decided I’d stick with predictable regulated power rather than no name company.
 

Brett

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What you say is true. I worked within the system for well over 25 years. Every time I changed Providers I went with a Fixed Rate Plan and a Financially Sound Provider. The people who open themselves up to problems are those who ignore the risk and run to the lowest price (most often with a variable rate) and pay no attention to the financial stability of the Provider. I have no sympathy for them when things blow up and they turn to the Government (that's our taxes) to bail them out...

George
I just have the feeling that the individuals getting those $17,000 electric bills do not want to pay them. Maybe it will end up as a tax write off for Texas public utilities

https://www.wsj.com/articles/texas-grapples-with-crushing-power-bills-after-freeze-11614095953
 

dougp26364

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My dad use to always tell me, “You can’t have your cake and eat it too.”

The news media loves drama and will give you drama over ALL the facts every time. Once I learned how all this worked, I lost sympathy for those hit with the big bills. There’s a reason my investments are held in reasonably safe assets with less reward but lower risk. Some risks aren’t worth the reward. I think we’re looking at one of those situations we’re the reward wasn’t worth the risk. Its just to bad so many saw the benefit of cheap energy but didn’t understand the inherent risk assumed by the more traditional energy providers. A risk they assumed when they took the wholesale energy offer.
 

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What you say is true. I worked within the system for well over 25 years. Every time I changed Providers I went with a Fixed Rate Plan and a Financially Sound Provider. The people who open themselves up to problems are those who ignore the risk and run to the lowest price (most often with a variable rate) and pay no attention to the financial stability of the Provider. I have no sympathy for them when things blow up and they turn to the Government (that's our taxes) to bail them out...

George
I think it's a lot to ask of the average citizen. Clearly, George, you are above average.

Actually, I am shocked that this is the system in TX. I had no idea. I thought the state utility commission regulated the price of utilities; that the utility company had to appear and ask for price increases, or at least that's the way in some states.
 

Polly Metallic

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This information sheds new light on the problem. But, the price spike we saw during this storm was an anomaly so far outside the perceived realm of possibility that few people would factor it in. I’m not excusing them for gambling, just trying to follow their logic. Also, people on a tight budget (some through no fault of their own, others through poor financial management) might have signed with this electric provider as a cost cutting measure.
 

bluehende

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I have sympathy but that does not lead me to bailing them out.

I lean toward no bailout but do have two questions.

Wholesale prices went up 200 fold. Who exactly was supplying energy at that price. In a closed system like the Texas grid were the same people that made decisions that caused this then profiting off them? I honestly do not know.

Does Texas have anti-gouging laws? A 200 fold increase in a few days in the middle of a crisis seems to define what most of these laws prevent against.
 

Rolltydr

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Why does everyone keep comparing electricity to the stock market? Everyone who has a home/apartment needs electricity. A Gallup poll from 2020 shows that 55% of Americans are invested in the stock market. I think it is safe to say that many of the 45% that isn’t in the stock market are poor, living near or below the poverty line. Those people still need electricity and I suspect would jump at the opportunity to save $10-$20 or more a month on their power bill. That doesn’t sound like much to those of us who own 2nd homes and/or timeshares, but to someone living on a minimum wage, low income raising kids, or retired with only Social Security, that can buy some much needed groceries. My single mother worked minimum and low wage jobs until she had to retire due to disability in her late 50’s. She received no retirement income from any of her previous employers (cotton mills and sewing factories). She developed heart disease and had to survive on her SS income, which when I began helping to manage her finances in the 1990s, was about $750/month. With that, she had to buy her medicine, pay utilities, and buy groceries. She jumped at every chance she got to save a dollar here and a dollar there.

So, my point is, don’t be so judgmental about the people who jumped on the variable rate in order to save some money. Many of them may truly be living from paycheck to paycheck and could never foresee getting a power bill for thousands of dollars. They could easily foresee an extra $10 or $20 bucks buying a few more meals.
 

WVBaker

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Texas resident has nearly $17,000 deducted from bank account by energy company following winter storm

Griddy said in a statement on its website Thursday, "We know you are angry and so are we. P-----, in fact." The company explained wholesale prices shot up because the Public Utility Commission of Texas (PUCT) took control of the Electric Reliability Council of Texas, which operates the state’s power grid, Monday and raised the wholesale price to $9 per kilowatt-hour at least until the grid could manage the demand caused by the winter storm.

The company said that’s around 300 times higher than the normal wholesale price, and even though 99% of homes had electricity by Thursday evening, PUCT left the pricing in place.

"The market is supposed to set the prices, not political appointees," the company said. "We intend to fight this for, and alongside, our customers for equity and accountability – to reveal why such price increases were allowed to happen as millions of Texans went without power."



Let the blame game begin.
 

joestein

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Texas resident has nearly $17,000 deducted from bank account by energy company following winter storm

Griddy said in a statement on its website Thursday, "We know you are angry and so are we. P-----, in fact." The company explained wholesale prices shot up because the Public Utility Commission of Texas (PUCT) took control of the Electric Reliability Council of Texas, which operates the state’s power grid, Monday and raised the wholesale price to $9 per kilowatt-hour at least until the grid could manage the demand caused by the winter storm.

The company said that’s around 300 times higher than the normal wholesale price, and even though 99% of homes had electricity by Thursday evening, PUCT left the pricing in place.

"The market is supposed to set the prices, not political appointees," the company said. "We intend to fight this for, and alongside, our customers for equity and accountability – to reveal why such price increases were allowed to happen as millions of Texans went without power."



Let the blame game begin.
Another reason I do not let companies debit my bank account.
 

BingoBangoBongo

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I find power plan marketing offers similar in nature to developer timeshare marketing offers. The last one I gave a few minutes to review was using outdated utility rates to appear lower, but actually was higher than what I was actually paying at the time.
 

klpca

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Why does everyone keep comparing electricity to the stock market? Everyone who has a home/apartment needs electricity. A Gallup poll from 2020 shows that 55% of Americans are invested in the stock market. I think it is safe to say that many of the 45% that isn’t in the stock market are poor, living near or below the poverty line. Those people still need electricity and I suspect would jump at the opportunity to save $10-$20 or more a month on their power bill. That doesn’t sound like much to those of us who own 2nd homes and/or timeshares, but to someone living on a minimum wage, low income raising kids, or retired with only Social Security, that can buy some much needed groceries. My single mother worked minimum and low wage jobs until she had to retire due to disability in her late 50’s. She received no retirement income from any of her previous employers (cotton mills and sewing factories). She developed heart disease and had to survive on her SS income, which when I began helping to manage her finances in the 1990s, was about $750/month. With that, she had to buy her medicine, pay utilities, and buy groceries. She jumped at every chance she got to save a dollar here and a dollar there.

So, my point is, don’t be so judgmental about the people who jumped on the variable rate in order to save some money. Many of them may truly be living from paycheck to paycheck and could never foresee getting a power bill for thousands of dollars. They could easily foresee an extra $10 or $20 bucks buying a few more meals.
I totally agree. I am sympathetic and empathetic - can you imagine seeing a bill like that land in your inbox? Sure some folks were just being cheap but others were trying to be prudent. I think if you grew up with enough to never worry about a meal you may have a hard time wrapping your head around making decisions like this, but if you grew up worrying about basics like food and power you recognize this decision. And before you judge me know that I am definitely a school of hard knocks kind of person, but jeez, what kind of system allows this? Someone, somewhere is at the other end making bank on these people because I doubt that the underlying costs to deliver the energy increased this much - just a supply/demand thing.
 

am1

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If an average person could not understand all this why would the State of Texas set up the system? Also what has been the energy savings and cost of capital savings for the people know faced with $17k bills? Probably not even but their true cost for going with the cheapest/risky company is less then 17k.
 

bizaro86

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I live in what I believe is the only other jurisdiction in North America with a fully deregulated power market where there is a fluctuating wholesale price. I have a variable rate plan (it's historically cheaper) so I looked into this issue with quite some interest. It turns out our wholesale market has a maximum price of $999.99 per MWh, which is $0.99 (CAD!) per kWh, or ~10X less than what the price went to in Texas. I wouldn't be happy if I got a $1000 electricity bill, but I'd be able to pay it and the savings over time would probably cancel it out, so I'm not switching. I think it makes sense to have a price cap, because even at that price cap there would still be a huge incentive for power generators to produce as much power as they possibly could. But it does prevent gouging of the highest degree like we saw in Texas.
 

A.Win

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Maybe this can be compared to buying insurance?
You can buy an expensive plan that covers everything with low deductibles.
Or you can buy a cheap plan that only covers one specific thing and has high deductibles.
 
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emeryjre

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Remember Economics 101. There are some services that will work better as a regulated monopoly. Electricity distribution was determined to be a service that would probably work best as a monopoly. No need to run multiple electrical lines to the same area. Blah, blah,blah. But a regulated monopoly provides no excitement and is very boring to investors.

a free market electrical service sounds exciting, provides investment opportunities, upside profit potential, tax subsidies, carbon credits, and other esoteric investments that can be used as alternative investments.

until it comes crashing down in a black swan weather event. California did the same thing and had the same results about 20 years ago

The least financially sophisticated are hurt the worst and suffer the most. Blame is thrown around, hands are wrung, and the people that set the whole thing up move on to the next “innovative” new idea.
 
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