The largest and oldest power cooperative in Texas is applying for Chapter 11 bankruptcy protection, with reference to last month’s winter storm it has left millions of state residents without power.
Brazos Electric Power Cooperative, which serves 16 distribution cooperatives that cater to more than 1.5 million Texans, said Monday it had built up $ 2.1 billion in bills during the severe cold that struck Texas between Feb. 13 and 19. .
As temperatures plunged and snow and ice swept the state over Valentine’s Day weekend, much of Texas power grid collapsed, followed by its water systems. Tens of millions huddled in icy homes that slowly became colder or fled for safety. With gas-powered power stations offline, wells frozen, a nuclear power plant shut down and wind turbines frozen, the state experienced a severe electricity shortage and wholesale electricity prices rose as high as $ 9,000 per megawatt-hour.
The high prices, which were supposed to form an incentive for power producers to generate electricity, did not lead to an increase in available power, as much of the state’s production capacity was frozen.
Prior to the freeze, Brazos ” was a financially robust, stable company with a clear vision for its future and a strong ‘A’ to ‘A’ credit rating, higher than most electric cages, it said in a press release on Monday. .
It received a $ 2.1 billion bill
Brazos said he had received “excessively high bills” from the Texas Electric Reliability Board for collateral and for alleged costs of electrical service. The invoices, totaling $ 2.1 billion, had to be paid within days. As a cooperative, Brazos’ costs are passed on to its members and retail consumers served by its members.
Brazos has decided that “he cannot and does not want the catastrophic financial event on his members and the consumers,” the cooperative said.
“Let me emphasize that this action by Brazos Electric was necessary to protect its cooperatives and their more than 1.5 million retail members from unaffordable electricity bills, as we continue to provide electrical services during the process supervised by the court,” he said. Clifton Karnei, executive vice president and general manager of Brazos, said in a statement.
Brazos’ bankruptcy filing is likely to be the first of many stemming from the winter storm, according to energy analysts. According to the state commission for public utilities, most Texans follow fixed pricing plans, in which a customer pays a predetermined amount for every bit of electricity he uses. This leaves the retailer exposed to fluctuations in the wholesale price of energy.
“We’re likely to see a lot of power outages shut down, especially those that offer fixed rates to people,” Joshua Rhodes, a research fellow at the University of Texas at Austin, recently told CBS News. “If you sell it for 10 cents a kilowatt-hour and pay $ 9 a kilowatt-hour, it doesn’t take long to confuse your balance sheet.”
According to CBS 11 in Dallas, power provider Just Energy said it could go out of business after losing as much as $ 250 million.
Electricity provider Griddy sued – again
Brazos’ bankruptcy comes when Texas Attorney General Ken Paxton says he is suing electricity supplier Griddy because he passed on massive bills to his customers during the winter storm of February. Griddy accuses the lawsuit of violating Texas’ misleading commercial practices law and demands refunds for customers.
Griddy charges $ 10 a month to give people a way to pay wholesale electricity prices instead of a fixed rate. But when the temperature dropped well below freezing last month, wholesale prices rise and Griddy customers left sky-high electricity bills. The retailer is facing at least one class action of a Texas resident hit $ 9,300 bill.
ERCOT moved about 10,000 Griddy customers to other utilities on Friday. Griddy said that ERCOT “took our members and effectively closed Griddy.”
“We have always been transparent and customer-oriented in every step. We wanted to continue the fight for our members to get relief and that has not changed,” Griddy said.
Last week, the city of Denton ERCOT sued more than $ 207 million in electricity bills it incurred during the blackouts.
Irina Ivanova of CBS News contributed to this report.