he says. Still, he adds that Griddy’s business model will only work as long as the price of electricity is low. “The good news for them is it’s low—and it seems that it will continue to stay low.”
Since Texas’s energy market is deregulated, consumers are able to choose among energy providers that attempt to woo them with low teaser rates. “It’s just like you might do with your cable operator or cell phone plan,” Jacobson says. “You just have to call and switch your plan.”
Craig calls those fixed-rate policies unnecessary and expensive insurance policies. Even though energy prices vacillate throughout the day, he says consumers are being charged at a higher- than-necessary rate and never get to take advantage of times when prices are lower.
“The average fixed price for energy [charged by utilities] was 7.1 cents a kilowatt hour; the average wholesale ERCOT price in 2016 was 2.8 cents,” Craig says. “That’s a huge overblown margin that’s going straight into the pockets for providers.”
Power providers aren’t incentivized for customers to use less power since they get paid by usage, Craig says. Griddy, in comparison, only makes money from the monthly subscription fee, he says.
The installation of smart meters, which measure individual households’ usage, brought opportunity for the retail power market to utilize new technologies more efficiently, and perhaps to deliver power more cheaply.
“But it didn’t really result in lower prices or better information for the customer,” Craig says. “They’re still getting a paper bill. People still pay their energy bill without understanding it at all.”
Craig says it took about two years to develop Griddy’s software and that the Los Angeles-area company decided to debut in Texas because of its deregulated energy markets. Griddy has raised investment funds but Craig declined to provide further details on how much was raised or who the company’s investors are.
Craig says Griddy could entice customers who support sustainability and slowing climate change as top priorities. “When prices are the cheapest, it’s the greenest,” he says. “When prices go negative, that means the wind is blowing and the sun is shining.”
