Texas Electricity Firm Files For Bankruptcy After Receiving $1.8 Billion Bill
A Texas-based electricity firm has filed for bankruptcy after receiving a $1.8 billion bill following extreme weather in the state last month.
Brazos Electric Power Cooperative, the state’s largest and oldest power firm, filed for bankruptcy this morning citing the large bill, which it has disputed.
It had received the bill from the state’s grid operator, the Electric Reliability Council of Texas (ERCOT). It is one of many electricity providers facing huge charges following the state-wide blackouts last month.
In late February, the Federal Energy Regulatory Commission and North American Reliability Corporation confirmed it had opened an inquiry into what had caused the mass power outages after lawmakers sent a letter demanding answers from ERCOT. The group of congressmen had asked the council to disclose what measures it had taken to prepare for the storm.
In its court documents, the Brazos Cooperative said its finances in the lead up to the storm had been strong, and the prospect of bankruptcy at the beginning of February was ‘unfathomable’.
‘Yet that changed as a direct result of the catastrophic failures that accompanied the winter storm that blanketed the state of Texas on or about February 13, 2021 and maintained its grip of historically sub-freezing temperatures for days,’ the court documents said, NPR reports.
‘Electric generation equipment and natural gas pipeline equipment have been reported to have frozen, causing the available generation within ERCOT to dramatically decline,’ the filing added.
As the cold snap enveloped the state and power shortages ensued, Texas’s Public Utility Commission ordered ERCOT to cap prices at $9,000 per megawatt-hour, as per Reuters. These steep prices remained in place for more than four days.
In its filing, Brazos said ‘the consequences of these prices were devastating’, adding that the invoices it had received for the seven-day storm period amounted to more than $2.1 billion, and were payable within days.
Following the events last month, a total of seven ERCOT board members have resigned from their positions, including Clifton Karnei, Brazos’s executive vice president.
Last week, the board’s chairwoman, vice chairman and two other board members released a joint statement announcing their intention to resign.
‘To allow state leaders a free hand with future direction and to eliminate distractions, we are resigning from the board effective after our urgent board teleconference meeting adjourns on Wednesday, February 24, 2021,’ the statement said.
‘With the right follow-through, Texas can lead the nation in investing in infrastructure and emergency preparedness to withstand the effects of severe weather events – whether in the form of flooding, drought, extreme temperatures, or hurricanes. We want what is best for ERCOT and Texas,’ the members said.
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