Long-term damage from winter storm in Texas 3:34
(CNN) -
The Texas attorney general says a lawsuit he filed against the energy company Griddy will save some 24,000 Texans from having to pay $ 29.1 million in unpaid bills linked to last month's winter storms.
“My office sued Griddy Energy, under the Texas Deceptive Business Practices Act, to hold them accountable for their escalation from last month's winter storm disaster by debiting huge amounts from customer accounts as Texans fought to survive the storm, "prosecutor Ken Paxton said in a statement Tuesday.
The company filed for Chapter 11 bankruptcy protection on Monday. It said it owes more than $ 29 million to the Electric Reliability Council of Texas (ERCOT), which operates the state's power grid.
That form of bankruptcy allows the company to restructure its debts and reorganize itself to pay off creditors over time.
Through the bankruptcy plan, Griddy "will release all outstanding payment obligations for those Texas consumers who were unable to pay their electric bills due to the high prices charged during the storm," the attorney general's office said.
Paxton further said his office is moving forward with the company "in ongoing good faith negotiations to try to get additional relief addressed" for consumers who have already paid their electricity bills stemming from the storm.
Griddy did not immediately respond to a CNN request for comment.
In an online post announcing bankruptcy, the company blamed ERCOT.
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"ERCOT's actions destroyed our business and caused economic damage to our customers," Griddy CEO Michael Fallquist said in a statement.
While most Texans and Americans pay a flat rate for electricity, Griddy works by connecting customers to the more volatile wholesale electricity market for a fee of $ 9.99.
When electricity generators failed during last month's storms and demand for heating soared, ERCOT raised the price of electricity to the legal limit of $ 9 per kilowatt hour.
He held that price for several days.
Griddy customers who were not without power received large bills that were automatically debited from their bank accounts.
The state attorney general's office received more than 400 complaints from Griddy customers in less than two weeks, as previously reported.
Texas residents report storm damage 1:47
Within days of the storm, ERCOT revoked Griddy Energy's right to work in the state's electricity market for non-payment.
Following that decision, Griddy said they had "no other option but to stop operating."
The attorney general announced this month that he was suing Griddy Energy and Griddy Holdings.
The cause it established was "false, misleading and misleading advertising and marketing practices."
The prosecutor alleged that the company misled customers and downplayed the risk of its pricing system, which charges more when customers are most vulnerable.
An independent monitor from the Texas Public Utilities Commission recently found that ERCOT kept prices too high for nearly two days into the storm.
This meant $ 16 billion in surcharges.
Another public services commissioner resigns
Meanwhile, another Texas Public Utilities Commission commissioner resigned this week at the request of Gov. Greg Abbott, according to a press release from his office.
"I will appoint a replacement in the coming days, who will have the responsibility of charting a new course for the agency," said Abbot.
"Texans deserve trust and confidence in the Public Service Commission, and this action is one of many steps that will be taken to achieve that goal," he added.
The commission chair and another commissioner had also resigned after the storm, CNN reported.
CNN's Eric Levenson and Christina Maxouris contributed to this report.
