Texas Electricity Firm Files Bankruptcy of $ 1.8 Billion Network Operator Bill

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

Brazos Electric Power Cooperative Inc. is one of dozens of electricity suppliers facing enormous burdens stemming from a severe cold crisis last month. The results threaten utilities and electricity providers who collectively face billions of dollars in outage-related charges, executives said.

Unusual cold temperatures destroyed 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 that damaged homes and businesses. Brazos and others who pledged to supply electricity to the grid and could not, were forced to buy replacement energy at high rates and cover the unpaid taxes of other companies.

The state’s network operator, the Electric Reliability Council of Texas (ERCOT), said Friday that the initial $ 2.1 billion bills remained unpaid, underscoring the financial stress of utilities and electricity marketers. Probably more suppliers will reject the invoices in the coming days, the directors said.

“The municipal energy sector is in a real crisis,” said Maulin Patani, founder of Volt Electricity Provider LP, an independent marketplace that is not a member of the Brazos cooperative. ERCOT should suspend service charges to stop further inconvenience, he said in an interview Sunday.

The town of Denton, in North Texas, last week sued ERCOT in a state court to prevent it from charging it for unpaid fees by other network users. Denton Electric could face tens of millions of dollars in taxes that were not collected from others, the lawsuit claims.

The debt analyst, Fitch Ratings, also warned last week about the potential demotion of all Texas municipal companies that use the state network. The costs of the storm “could exceed the liquidity immediately available to these issuers,” Fitch said.

ERCOT triggered the stress when it raised spot market rates to $ 9,000 per megawatt hour (mwh) in more than four days and charged huge fees for services. Service fees were 500 times higher than usual, according to industry executives.

Clifton Karnei, the director of the Brazos Electric cooperative, who served on ERCOT’s board of directors until last week, signed the bankruptcy applications for the Brazos cooperative. Through its 16 utility company members, Brazos supplies electricity to more than 660,000 Texas customers.