Texas electricity firm files for bankruptcy

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Texas’s largest and oldest electric power cooperative on Monday filed for bankruptcy protection in federal court in Houston, citing a disputed $1.8 billion bill from the state’s grid operator, Report informs, citing Bloomberg

Brazos Electric Power Cooperative Inc is one of the dozens of electricity providers facing enormous charges stemming from a severe cold snap last month. The fallout threatens utilities and power marketers who collectively face billions of dollars in blackout-related charges, executives said.

Unusually frigid temperatures knocked out 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 committed to providing power to the grid could not be required to buy replacement power at high rates and cover other firms’ unpaid fees.

On Friday, the state’s grid operator, Electric Reliability Council of Texas (ERCOT), said $2.1 billion in initial bills went unpaid, underscoring the financial stress on utilities and power marketers. More providers likely will reject the statements in the coming days, executives said.

“The municipal power sector is in a real crisis,” said Maulin Patani, a Volt Electricity Provider LP founder. This independent power marketer is not a member of the Brazos coop. ERCOT should suspend the service charges to halt further defaults, he said in an interview on Sunday.

Debt analyst Fitch Ratings last week also warned potential downgrades to all Texas municipal power firms that use the state’s grid. Costs from the storm “could exceed the liquidity immediately available to these issuers,” Fitch said.

ERCOT triggered the squeeze when it pushed up spot-market rates to $9,000 per megawatt-hour (MWh) over more than four days and levied enormous fees for services. The service fees were 500 times the usual rate, according to industry executives.

Brazos Electric coop executive Clifton Karnei, who sat on ERCOT’s board of directors until last week, signed the Brazos coop’s bankruptcy submissions. Through its 16 utility company members, Brazos provides electricity to more than 660,000 customers across the state of Texas.