Macquarie-backed Texas power supplier Griddy shut down, facing legal action
Macquarie provided financing to Griddy, which left scores of customers with $US5000 electricity bills for five days of power.
The Macquarie Group-backed Texas power supplier Griddy has been shut down and faces legal action in a stark setback after the bank has earlier profited from a massive windfall following the state-wide blackout.
The Texas grid operator ERCOT “took our members and effectively shut down Griddy,” the electricity company said in a statement on its website.
“On the same day when ERCOT announced that it had a $US2.1bn ($2.7bn) shortfall, it decided to take this action against only one company that represents a tiny fraction of the market and that shortfall.”
Macquarie provided financing to Griddy which left scores of customers with $US5000 electricity bills for five days of power in mid February after customers were exposed to massive swings in wholesale prices.
Griddy ties customers to the spot price of power on the grid rather than fixed tariffs, saving money when plenty of supply is available but creating mayhem and sky-high prices when conditions are tight.
Griddy also faces legal action with a law-suit from Texas Attorney General Ken Paxton, accusing the power upstart of contradicting its promise of cheap wholesale prices for Texans “as it auto-debited hundreds of dollars from Texans’ checking accounts daily. Griddy was fully aware of the reality of the risk in its pricing scheme - sky-high energy rates at a time when consumers are the most vulnerable,” the law-suit states.
The frozen Texas power grid had delivered a massive windfall for Macquarie Group with its giant US gas trading unit cashing in on the polar vortex and putting the bank on track for a record 2021 profit.
Macquarie may reap up to $270m in profits after gas briefly soared 300-fold to $US1250 per million British thermal units while electricity in Texas hit a $US9000 per megawatt hour price cap.
However, the Griddy debacle leaves a blemish on its exposure to the blackout amid broader financial fallout from the power crisis.
Macquarie entered into a deal with Griddy on December 7 where it provided a wholesale supply facility and an undisclosed amount of investment capital to support the power company’s growth and market expansion.
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