Texas’ largest and oldest electrical cooperative seeks Chapter 11 bankruptcy protection, citing last month’s winter storm this left millions of residents of the state powerless.
Brazos Electric Power Cooperative, which serves 16 distribution member cooperatives serving more than 1.5 million Texans, said Monday it accumulated $ 2.1 billion in bills during the severe cold that hit Texas between 13 and on February 19th.
How temperatures plummeted and snow and ice plagued the state over Valentine’s weekend, much of Texas the power grid collapsed, followed by its water systems. Tens of millions piled up in refrigerated houses that slowly cooled or fled for safety. With offline gas-fired power plants, frozen wells, a nuclear power plant shutdown and icy wind turbines, the state experienced severe power shortages and wholesale electricity prices. they rose to $ 9,000 per megawatt-hour.
High prices, which are supposed to act as an incentive for energy producers to create electricity, did not lead to an increase in available energy, as much of the state’s production capacity froze. .
Prior to the freeze, Brazos was “a stable and financial company, with a clear vision of its future and a strong credit rating” A “to” A + “” superior to most electric cooperatives, “he said Monday. in a press release.
The bill reached $ 2.1 billion
Brazos said he received “excessively high bills” from the Texas Electric Reliability Council for warranty and for 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 impose 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 its more than 1.5 million retail members from unaffordable electric bills, as we continue to provide electrical service throughout the process overseen by courts, “Clifton Karnei, executive vice president and general manager of Brazos, said in a statement.
According to energy analysts, Brazos ’bankruptcy filing is likely to be the first of many derived from the winter storm. Most jeans have fixed price plans, according to the state public utility commission, in which a customer pays a predetermined fixed amount for each bit of electricity they use. This leaves the trader exposed to fluctuations in the wholesale price of energy.
“We’ll probably see a lot of electricity providers stop working, particularly those that offer flat-rate plans to people,” Joshua Rhodes, an associate researcher at the University of Texas at Austin, told CBS News recently. “If you sell it at 10 cents a kilowatt-hour and pay $ 9 per kilowatt-hour, it won’t take long to mess up your balance.”
Energy provider Just Energy has said it could stop working after losing up to $ 250 million in blackouts, according to CBS 11 in Dallas.
Electricity provider Griddy sued him again
Brazos’ bankruptcy comes when Texas Attorney General Ken Paxton said he is suing Griddy electricity supplier for having received massive bills from their customers during the February winter storm. The lawsuit accuses Griddy of violating Texas Misleading Business Practices Act and seeks refunds from customers.
Griddy charges $ 10 a month to give people a way to pay wholesale electricity prices instead of a flat rate. But when temperatures fell well below frost last month, wholesale prices rose and Griddy’s customers were left with very high electricity bills. The retailer faces at least one collective action suit of one Texas resident who received a hit with a $ 9,300 bill.
ERCOT moved nearly 10,000 Griddy customers to other utilities on Friday. Griddy said ERCOT “grabbed our members and they have effectively shut down Griddy.”
“We’ve always been transparent and customer-focused 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 blackouts.
Irina Ivanova of CBS News contributed to this report.