HOUSTON (Reuters) – Texas’ largest and oldest electricity cooperative filed for bankruptcy protection in Houston on Monday, citing a $ 1.8 billion bill disputed by the state’s grid operator.
Brazos Electric Power Cooperative Inc. is one of dozens of electricity suppliers facing huge loads stemming from a strong cold last month. The fall threatens electricity and utilities providers who collectively face billions of dollars in shutdown-related charges, executives said.
Unusually cold temperatures wiped out nearly half of the state’s power plants in mid-February, leaving 4.3 million people without heat or light for days and busting water pipes that damaged homes and businesses. Arms and others who pledged to supply electricity to the grid and could not, had to buy replacement energy at high rates and cover the unpaid fees of other companies.
State network operator Electric Reliability Council of Texas (ERCOT) said Friday that $ 2.1 billion in initial bills went unpaid, underscoring the financial stress of utility companies and electricians. More suppliers are likely to reject the bills in the coming days, executives said.
“The municipal energy sector is in a real crisis,” said Maulin Patani, founder of Volt Electricity Provider LP, an independent energy marketing company that is not a member of the Brazos cooperative. ERCOT should suspend service charges to stop other breaches, he said in an interview Sunday.
The city of Denton, in North Texas, sued ERCOT last week in a state court to prevent it from charging it fees that other network users did not pay. Denton Electric could face tens of millions of dollars for fees that were not charged by others, according to the lawsuit.
Debt analyst Fitch Ratings last week also warned of possible rebates to all Texas municipal power companies using the state grid. Fitch said the costs of the storm “could exceed the liquidity immediately available to these issuers.”
ERCOT caused the pressure when it raised spot market rates to $ 9,000 per megawatt hour (mwh) for more than four days and charged huge fees for services. According to industry executives, service rates were 500 times the usual rate.
Brazos Electric cooperative executive Clifton Karnei, who served on ERCOT’s board of directors until last week, signed bankruptcy applications for Brazos Cooperative. Through its 16 utility company members, Brazos supplies electricity to more than 660,000 customers throughout the state of Texas.
Gary McWilliams Reports; Edited by Christopher Cushing, Stephen Coates and Louise Heavens