Yeah, they pass through the wholesale prices. Most providers do some work to offer fixed retail prices (gaining when wholesale is cheap, losing when it's expensive). Most markets in the US have some sort of system for matching supply and demand, often a wholesale market.

https://www.epa.gov/greenpower/us-electricity-grid-markets has a picture of the various wholesale markets.

Yes you pay a monthly fee and get the grid price. Typically this is a great deal but when these surges happen it isn't