Texas’ largest and oldest electric power cooperative, Brazos Electric Power Cooperative Inc., filed for Chapter 11 bankruptcy after receiving a $2.1 billion invoice following last month’s historic winter storm that left millions without power in the Lone Star State.
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The Waco-based electricity conglomerate said it “had no choice” but to file after receiving the “excessively high” bill from the state’s grid operator, Electric Reliability Council (ERCOT). These charges were incurred over a seven-day period during Winter Storm Uri, in which unusually frigid temperatures knocked out nearly half of the state’s power plants, leaving 4.3 million people without heat or light for days and bursting water pipes that damaged homes and businesses.
Brazos, which supplies electricity to more than 660,000, said ERCOT’s $2.1 billion invoice was nearly three times the cooperative’s power costs for all of 2020. Brazos responded by issuing a notice of force majeure, rejecting the bills, Brazos executive Clifton Karnei’s statement said.
“The consequences of these prices were devastating,” Brazos Electric said in its court filing.
ERCOT acts in part as a clearinghouse, collecting from power buyers and paying those who provide the demanded electrons. When Brazos and others that committed to provide power to the grid could not, they were required to buy replacement power from ERCOT at high rates and cover other firms’ unpaid fees. Brazos claims the price for wholesale electricity was set to a max price of $9,000 per megawatt hour for over four consecutive days.
“Brazos Electric determined that it cannot and will not foist this catastrophic financial event on its members and those consumers,”
Brazos is only one of dozens of providers facing enormous charges stemming from Uri-related blackouts. ERCOT reportedly incurred charges of around $55 billion across the state, with disputes from dozens, underscoring the financial stress on utilities and power marketers.
The city of Denton, Texas sued ERCOT last week prevent it from charging the city for amounts uncollected from other grid users.
The Texas attorney general has launched an investigation into the blackout, calling for ERCOT and others to provide documents on the outages and pricing, saying they mismanaged the crisis.
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