Texas’ largest and oldest power cooperative files for bankruptcy protection in Chapter 11, citing last month’s winter storm which left millions of residents of the state powerless.
Brazos Electric Power Cooperative, which serves 16 distribution member cooperatives covering more than 1.5 million Texans, said Monday it had accumulated $ 2.1 billion in bills during the severe cold that hit Texas Feb. 13-19.
As temperatures dropped and snow and ice hit the state on Valentine’s Day weekend, much of Texas the power grid collapsed, followed by its water systems. Tens of millions crowded into frozen houses that cooled slowly or fled safely. With offline gas-fired power plants, frozen wells, a shutdown nuclear power plant and frozen wind turbines, the state has suffered a severe electricity shortage, and wholesale electricity prices have risen to $ 9,000 per megawatt-hour.
High prices, which should act as an incentive for energy producers to create electricity, have failed to lead to an increase in available energy, as much of the state’s production capacity has been 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 coops. Monday in a press release.
A $ 2.1 billion bill came in
Brazos said he received “excessively high bills” from the Texas Electric Reliability Council for warranties and the alleged cost of the electric service. The bills, totaling $ 2.1 billion, were due in a few days. This is because, as a cooperative, Brazos’ costs are passed on to its members and to the retail consumers served by its members.
Brazos decided that “it cannot and will not prevent this catastrophic financial event on its members and those consumers,” the cooperative said.
“Let me emphasize that this action by Brazos Electric was necessary to protect its member cooperatives and their more than 1.5 million members from inaccessible electricity bills, as we continue to provide electricity services throughout the supervised process. Clifton Karnei, executive vice president and general manager of Brazos, said in a statement.
According to energy analysts, the bankruptcy of Brazos will probably be the first of many results from the winter storm. Most Texans are part of fixed-price plans, according to the state’s public utility commission, in which a customer pays a predetermined set amount for each bit of electricity they use. This leaves the retailer exposed to fluctuations in the wholesale price of energy.
“We’re likely to see a lot of electricity suppliers go out of business, especially those that offer fixed-rate plans to people,” Joshua Rhodes, a research associate at the University of Texas at Austin, told CBS News recently. “If you sell it for 10 cents per kilowatt-hour and pay $ 9 per kilowatt-hour, it won’t take long to upset your balance sheet.”
Energy provider Just Energy said it could give up business after losing up to $ 250 million in outages, according to CBS 11 in Dallas.
Electricity supplier Griddy sued – again
Brazos’ bankruptcy comes as Texas Attorney General Ken Paxton says he is suing Griddy electricity supplier for passing massive bills to its customers during the February winter storm. The lawsuit alleges that Griddy violated the Texas Misleading Business Practices Act and seeks refunds for customers.
Griddy charges $ 10 a month to give people a way to pay wholesale prices for electricity instead of a flat rate. But when temperatures dropped well below freezing last month, wholesale prices have risen and Griddy customers were left with high electricity bills. The retailer faces at least one suit of collective action from a Texas resident who was hit with a $ 9,300 bill.
ERCOT moved about 10,000 Griddy customers to other utility companies on Friday. Griddy said ERCOT “took our members and effectively imprisoned Griddy.”
“We’ve always been transparent and customer-oriented at every step. We wanted to keep fighting for our members to get relief, and that hasn’t changed,” Griddy said.
Last week, the city of Denton sued ERCOT for more than $ 207 million in electricity bills it incurred during the outages.
CBS News’s Irina Ivanova contributed to the report.