The record-breaking winter storm that hit Texas in February led to an unprecedented demand for electricity, which the state’s electric utilities were not able to satisfy at pre-storm price levels. Electric Reliability Council of Texas (“ERCOT”), a non-profit that manages the state’s electric grid and sets the wholesale price of electricity, initiated rolling blackouts and set electric prices to the market cap of $9,000 per megawatt hour. The increase in wholesale electric prices also pushed consumer prices to astronomical levels: one Texas customer was billed nearly $17,000 for electricity in February.

Weeks after Brazos Electric Power Cooperative, Inc. filed for chapter 11, Griddy Energy LLC joined it after suffering similar financial losses. The Griddy filing was precipitated by the increase in energy prices during the winter storm and later lawsuits by Griddy’s customers and the Attorney General of Texas stemming from these price hikes. Griddy intends to release customers from their unpaid electricity bills in exchange for releases from liability.

Griddy is a retail electric provider that provides wholesale electricity pricing to its customers for a $9.99 monthly fee. Griddy claims that, prior to the storm, it was a “thriving business” that saved its customers more than $17 million since 2017.

Griddy blames its financial devastation on ERCOT’s electricity price increase. ERCOT’s decision resulted in Griddy’s customers paying more than 300 times the normal price for electricity. Griddy says it did not profit from ERCOT’s price increase and merely passed on the wholesale cost of electricity to its customers without any mark-up. As of March 14, 2021, Griddy has outstanding accounts receivable balances from its customers totaling over $29 million.

Earlier this month, Texas Attorney General Ken Paxton sued Griddy for allegedly violating Texas Deceptive Trade Practices by passing on the increased energy costs to its customers without sufficient warning. Among the remedies sought in the suit, Texas seeks to recover any amounts debited from consumers’ bank accounts for electrical services provided from February 12-21, 2021.

Griddy’s proposal to relieve customers of the burden of unexpectedly high electric bills is an unusual use of chapter 11 to benefit a company’s customers.