As Texans were forced to huddle together for warmth and retreat to warming shelters, many residents were battered by monthly energy costs in the range of thousands of dollars. Behind one of these energy companies is Cornell alumnus Michael Fallquist MBA ’09.
Shortly after graduating from Cornell, Fallquist founded Viridian Energy, a wholesale energy supplier that amassed over 200,000 customers within three years. The company merged with Public Power in 2012, allowing Fallquist to become the CEO and founder of Crius Energy, which sold power in a similar manner. He took over as CEO of Houston-based Griddy energy, which markets access to wholesale power and an industry tracking app, in December 2020.
Selling wholesale energy is preferred since the price is decided based on how much energy is consumed, rather than on the fixed rate of 12 cents per kilowatt hour in Texas, encouraging the customer to use less energy.
Griddy Energy recently raised prices to exorbitant amounts as millions of Texans face deadly power outages.
Dallas resident and Griddy customer De’andré Upshaw told the New York Times that his normal bill of $80 a month was raised to more than $6,700.
“That’s not a cost that any reasonable person would have to pay for five days of intermittent electric service being used at the bare minimum,” Upshaw said.
Texas’ energy market, which is not actively regulated by the federal government, makes such price hikes possible. This system aims to encourage Texans to use less energy, opposed to the fixed price system of 12 cents per kilowatt hour.
On Feb. 14, Griddy emailed customers urging them to switch energy providers in the wake of the winter storms that shut down two-thirds of the Texas power grid. The company explained the importance of valuing their customer’s well-being — even if it means encouraging them to switch to their competitors.
The day after, the Public Utilities Commission ordered a market cap of $9,000 per megawatt hour — raising it from an original $1,200 per megawatt hour. The original wholesale prices shot from a few cents to $9 per kilowatt hour.
Because of this order, customers could face bills anywhere from 50 to 84 times their original price.
On Friday Feb. 26, Houston resident Lisa Khoury filed a $1 billion class action lawsuit against Griddy for price gouging. She claims that, while the company sent an email urging customers to switch, it was far too late for many customers.
With the storm’s inception, most Texas power companies refused to take new customers. As a result, Khoury amassed $9,546 in bills over five days — a startling price compared to her usual $200 to $250 — while she suffered days without power and heat.
The lawsuit further accuses Griddy of violating the Texas Deceptive Trade Practices Act, which prevents companies from charging exorbitant prices on necessary goods during a disaster.
Griddy asserts the PUC is at fault for the price surges, and has not commented on the lawsuit accusations.
On Feb. 18 Griddy released an announcement attributing its price jump to the decision of the PUC. It stated that “the market is meant to set the prices, not political appointees,” and that they would fight for equity and accountability for their customers at the statewide level.
After an emergency meeting on Feb. 20, Texas Gov. Greg Abbott released a statement addressing the skyrocketing bills where he announced legislature was moving quickly to resolve the problem, assuring constituents that they would work to find a solution.
Fallquist told the Wall Street Journal that Griddy lost about two-thirds of their 30,000 customers the week of Feb. 15, with remaining customers owing millions of dollars collectively. Fallquist maintains that the PUC’s order, not Griddy management, is primarily to blame.