Brazos Electric in Texas files for bankruptcy due to high bills after severe winter weather
Brazos Electric Power Cooperative in Waco, Texas, filed for bankruptcy after getting hit with a huge bill from the state’s grid operator, Electric Reliability Council of Texas (ERCOT), after the winter storms that paralyzed the state in February.
Brazos Electric – the state’s oldest and largest power cooperative serving 16 distribution member cooperatives that serve more than 1.5 million Texans – filed a voluntary petition for relief under Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas.
In a news release, Brazos Electric said it initiated the restructuring to maintain the stability and integrity of its entire electric cooperative system. Prior to the severe cold weather that blanketed Texas from Feb. 13-19, Brazos Electric was financially stable with a strong “A” to “A+” credit rating. The cold weather left some 4.3 million people without power for several days, which led to bursting water pipes and massive damage to homes and businesses.
“As a result of the catastrophic failures due to the storm, Brazos Electric was presented with excessively high invoices by ERCOT for collateral and for purported cost of electric service, payment of which was required within days. As a cooperative whose costs are passed through to its members, and which are ultimately borne by Texas retail consumers served by its Member cooperatives, Brazos Electric determined that it cannot and will not foist this catastrophic financial event on its members and those consumers,” company officials said in a release.
Reuters and several other news outlets reported that Brazos got hit with a $1.8 billion bill from ERCOT.
Brazos Electric will remain committed to delivering affordable and reliable electric service to its Member cooperatives and their retail members throughout the restructuring process. It will also assist Member cooperatives, their retail members, and their communities impacted by the extreme cold weather event in the rebuilding effort. Further, it will support the “fair and expeditious treatment and satisfaction of its liabilities” resulting from the extreme cold weather event.
“Let me emphasize that this action by Brazos Electric was necessary to protect its Member cooperatives and their more than 1.5 million retail members from unaffordable electric bills as we continue to provide electric service throughout the court-supervised process,” Clifton Karnei, executive vice president and general manager of Brazos Electric, said. “We will prioritize what matters most to our Member cooperatives and their retail members as we, and they, work to return to normalcy. We expect this court-supervised process will provide us with the protections and mechanism to protect and preserve our assets and operations and satisfy obligations to our creditors.”
The bankruptcy filing includes several “first day” operational motions, including requests of authorizations to continue paying employee wages and benefits and certain critical vendors. In addition, Brazos will pay all obligations under normal terms of business for goods and services provided on the filing date of March 1, 2021, and thereafter.
