Texas Electricity Firms Bankruptcy Files Referred to by $ 1.8 Billion Net Operator Account

HOUSTON (Reuters) – Texas’ largest and oldest co-operative for electric power filed for bankruptcy in federal court in Houston on Monday, citing a $ 1.8 billion bill from the state’s network operator.

Brazos Electric Power Cooperative Inc is one of the dozens of electricity suppliers facing huge costs due to a severe cold last month. The outage threatens utility and power marketers who collectively face billions of dollars in eclipses, executives said.

Unusually icy temperatures cut off nearly half of the state’s power plants in mid-February, leaving 4.3 million people without heat or light for days and bursting water pipes damaging homes and businesses. Brazos and others committed to supplying power to the network and could not, had to buy replacement power at high rates and cover the unpaid fees of other businesses.

The state’s network operator, Electric Reliability Council of Texas (ERCOT), said on Friday that $ 2.1 billion in initial bills would not be paid, highlighting the financial strain on electricity and power marketers. More providers are likely to reject the bills in the coming days, executives say.

“The municipal power sector is in a real crisis,” said Maulin Patani, founder of Volt Electricity Provider MP, an independent power marketer who is not a member of the Brazos dome. ERCOT should suspend service costs to stop further defaults, he said in an interview Sunday.

The city of Denton, in northern Texas, sued ERCOT in a state court last week to prevent it from being paid for fees not paid by other users of the network. Denton Electric could face tens of millions of dollars in fees not charged to others.

Debt analyst Fitch Ratings also warned last week about possible downgrades to all Texas power companies using the state’s network. The cost of the storm ‘could exceed the liquidity of these issuers,’ Fitch said.

ERCOT created the pressure when it raised market rates over $ 4,000 per megawatt hour (mwh) over more than four days and charged large fees for services. According to operations managers, the service fee was 500 times the normal rate.

Brazos Electric CEO Clifton Karnei, who sat on ERCOT’s board until last week, signed the Brazos coup’s bankruptcy filings. Through its 16 members of the utility industry, Brazos supplies electricity to more than 660,000 customers in the state of Texas.