The oldest and largest electricity cooperative in Texas has filed for Chapter 11 bankruptcy protection following the devastating winter storm that wreaked havoc on the state in February.
Brazos Electric Power Cooperative filed its bankruptcy petition after racking up bills owed to the state’s grid operator, the Electric Reliability Council of Texas (ERCOT), in connection with the outages.
Power companies that went down during the winter storm from Feb. 13-19 were required to pay for replacement power sources at what Brazos described as “excessively high” rates.
The Waco, Texas-based Brazos said it was presented with a bill for more than $2.1 billion for seven days of what it called a “black swan winter event.” It refused to pay, saying the winter storm legally eliminated its requirement to do so.
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The cooperative, which serves more than 1.5 million Texans, said it filed the bankruptcy case “to maintain the stability and integrity of its entire electric cooperative system.”
When February began, the idea that Brazos would end up in bankruptcy at the month’s conclusion was “unfathomable,” Brazos general manager and executive vice president Clifton Karnei said in a court filing.
“Before the severe cold weather that blanketed Texas with sub-freezing temperatures … Brazos Electric was in all respects a financially robust, stable company with a clear vision for its future and a strong ‘A’ to ‘A+’ credit rating,” the company said in a statement.
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Brazos said its alternative would have been to “foist this catastrophic financial event” onto consumers in the form of rate increases.
The winter storm devastated the Texas electrical grid, exposing flaws in the system and relegating millions of residents to days without power.
Founded in 1941, Brazos has more than 2,682 miles of electrical transmission lines and 385 substations, making it the state’s sixth largest transmission provider. All of the power plants it owned are fueled by natural gas, and it purchases power from a coal-fired plant, a solar power faility and a hydroelectric plant.
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