Griddy is a recent entrant in the Texas Retail Electricity market and has created a new way to buy electricity. They are claiming huge savings, so we decided to check them out to see how they compare to Energy Choice Experts (ECE).
Griddy’s concept sounds great. They say, “You get the wholesale price of electricity…which is the best!” and “Those other guys take the wholesale rate, mark it up through the roof, and shove fees in every nook and cranny they can think of.” Griddy charges you for the spot wholesale price of electricity, TDU fees, and taxes, and then adds $10/month for their service fee.
Our review of Griddy starts with the cost of their plans vs. plans that ECE recommends. We then explain why their customers pay more, what is it like to do business with them, and finally who might benefit from using Griddy.
Will you get the lowest annual cost plan with Griddy or ECE?
Griddy’s website provides usage and historic cost for three different types of households: Apartment, Small House, and Large House. For our apples-to-apples comparison, we used their data from November 2017 to October 2018 in the Oncor distribution area. Then we plugged that data into the ECE model and found the Lowest Annual Cost plans for each type of household, using plans that were available on Power to Choose on November 1, 2017. In other words, the table below shows the annual cost for three types of households depending on which service was used on November 1, 2017– ECE or Griddy.
The bottom line? Energy Choice Experts would have saved Griddy customers 16% to 41% for an average annual savings of $474!
Note, the hyperlinks in the ECE prices show the details of the plans ECE would have recommended to each household type.
How can Energy Choice Experts find plans that are so much cheaper than the Griddy plan?
Let’s start with Griddy’s claim that other guys buy electricity at the wholesale rate and mark it up through the roof. While all companies buy electricity on the wholesale market, there are two distinct ways to buy it. Most companies buy forward contracts throughout the year instead of buying on the spot market. For example, a company might buy 100 mWhs for next March at a rate of 2.8 cents/kWh. Since they have a fixed price on the supply side, they can offer fixed price contracts to residential customers. On the other hand, Griddy buys electricity on the spot market and passes the cost on to their customers. Griddy wants you to gamble that the price you get on the spot market, which changes every 5 minutes, will be lower than the stable price you get from every other supplier. Since there are dozens of other suppliers with multiple plans who each buy forward contracts differently, chances are many of them will buy power at a lower rate than Griddy and in turn they can offer lower prices than Griddy. ECE finds these lower cost plans for customers. If you use Griddy, you are gambling that Griddy will beat everyone else.
Now let’s look at Griddy’s monthly cost. The $10/month fee might seem reasonable for the service of managing a customer’s account, but their fee is actually more due to a Merchant Services Fee. This is a fee Griddy charges the customer for using a credit or debit card. (They do not accept checks.) They charge customers up to 2.9% of their bill plus $0.30 per transaction. For example, in the screenshot of a Griddy statement below, the Merchant Services Fee is $9.01, so the Griddy fee for that month is actually $19.01, not $10.00.
Most companies absorb credit card fees as a cost of doing business. Griddy’s policy to charge the customer for these fees is very odd. It’s only mentioned in the fine print on their website, and customers don’t see the charge in the default view of their statements; they must click on “Taxes & Fees” to see it. Griddy should reflect on this before they accuse other companies of “shoving fees in every nook and cranny they can think of.”
Finally, let’s consider the options ECE has when looking for plans that Griddy does not. For the Apartment and Small House households, we found plans that had exceptionally low rates for their usage patterns.
For the Apartment household, we found a plan that was $31/month for usage under 1,000 kWh/month. Since the Apartment usage exceeded 1,000 kWh only two months of the year, this was a great plan.
For the Small House household, we found a plan that had a higher rate, but rewards customers with an $85 credit when usage exceeds 1,000 kWh/month. Since the Small Household always exceeded 1,000 kWh/month, but didn’t have any extremely high-usage months, this is a great plan.
Griddy does not offer any incentives that might benefit a large number of customers based on their usage profiles. Their customers are stuck paying the spot wholesale price for all electricity regardless of how much each customer uses. Customers that sign up with Griddy are not able to get the incredible deals that ECE can find for many of its customers.
Griddy is clearly a more expensive way to buy electricity, but what is it like to do business with them?
Griddy is unusual in that they employ prepay billing. Most Texans are accustomed to getting monthly bills from their electricity companies like they do from their water, gas, cable, and phone companies. But you will not get a monthly bill from Griddy. Instead, when you sign up for Griddy, you pay them at least $49, which they apply as a credit to your account. As you use electricity, they deduct the cost from your credit. When your balance gets down to $25, they replenish your account by charging your credit card an amount predefined by you, from $49 to $500. Depending on your recharge amount and your usage each month, you could end up with no charges or many charges on your monthly credit card statement. Prepay billing is advantageous for people with bad credit because there is no deposit required, but it can be challenging for folks that are used to managing their expenses with a monthly budget.
Not only are Griddy’s bill payment cycles unpredictable, the rate you pay for electricity is too. It changes every five minutes. Most of the time, the spot rate doesn’t fluctuate much, but there are times when it skyrockets. The screenshot below is of the Griddy app when the wholesale price of electricity jumped to $1.0837 per kWh at 6AM on November 14. Normally, the rate is under $0.04 per kWh so this is an increase of over 25 times! Every time there is a price spike, Griddy sends an alert to customers so customers have the option of reducing their usage until prices go back down. While these price spikes probably average out because of lower spot wholesale rates at other times, they often cause anxiety for customers. We asked Griddy customer Melissa K. how she feels about the price alerts. She said, "I woke up this morning to my phone alerting me of yet another price spike! Those things stress me out! I can't imagine what the cost would have been if I didn't turn off my heater!" This happened on a 40° morning. Melissa made a choice to save money, but she had a cold house as a result. While the alerts might prevent you from paying extreme rates for electricity, who wants the stress of turning off your heat or A/C? What if you were not home? Would this stress you out like it does Melissa?
"I woke up this morning to my phone alerting me of yet another price spike! Those things stress me out! I can't imagine what the cost would have been if I didn't turn off my heater!"
- Melissa K.
ECE also has access to 100% renewable energy (wind/solar) plans for earth-conscious Texans. Every ECE analysis includes the cost of 100% renewable energy plans as well as mixed energy plans so customers can decide if they want to pay a premium for renewable energy. For some renewable energy plans, like the one we found for the Small House household, there is no premium. Griddy does not offer renewable energy options for earth-conscious Texans.
Is Griddy right for anyone?
Griddy has unusual business practices, they let customers gamble with volatile spot market pricing, their customers can’t buy 100% renewable plans, their rate spike alerts add stress to their customers’ lives, and Griddy customers pay a lot more than Energy Choice Expert customers. For most people, using Griddy simply does not make sense.
Is Griddy right for anyone? Well, if you meet all of the criteria below, they might be right for you. If you don’t meet these criteria, don’t waste your money on Griddy’s service.
You use a lot of electricity. If you use only 500 kWh/month of electricity, the $10/month fee is effectively an increase of 2 cents/kWh, which significantly increases your annual cost of electricity. However, if you use a lot more electricity than that per month, the effective increase has less impact. For example, if you use 5,000 kWh/month, the effective increase is only 0.2 cents/kWh.
You have the ability to change your usage based upon the current wholesale price. In order to reduce your electricity usage when you get a price spike, you need to invest in smart home features such as thermostats and lights that you can control from your smartphone no matter where you are. For a cheaper, but less effective option, you can program timers for your pool pump and appliances to run during hours the rates are typically cheaper. If you have an electric car, you can also use these strategies to charge the car batteries when rates are low or expected to be low.
You are willing to adjust your lifestyle around current energy prices. Once you’ve made the investment in smart home features, you must also be willing to change your lifestyle to get the savings. Melissa K. turned off her heat on a cold morning when the rate was over $1/kWh, over 25 times the usual rate. Many people would probably do the same for such a high spike (though some might choose a warm house over saving money). But what if the rate is $0.20/kWh? What if it’s $0.15/kWh? At what point would you be willing to be hot in the summer or cold in the winter? Further, can everyone living in the house agree to the same breaking point, or will Griddy ultimately lead to family arguments? Is monitoring energy prices and changing your lifestyle accordingly a hassle you are willing to endure?
Thanks for reading this long post to the very end. If you would like to learn more about Energy Choice Experts, check us out at www.EnergyChoiceExperts.com. We provide an unbiased, apples-to-apples comparison of electricity plans for each customer based on their usage. We guarantee that we will find the lowest annual cost plan.