Texas Struggles With Unprecedented Cold And Power Outages
(Photo : Photo by Justin Sullivan/Getty Images)
HOUSTON, TEXAS - FEBRUARY 21: Texas flags fly near an electrical substation on February 21, 2021 in Houston, Texas. Millions of Texans lost their power when winter storm Uri hit the state and knocked out coal, natural gas and nuclear plants that were unprepared for the freezing temperatures brought on by the storm. Wind turbines that provide an estimated 24 percent of energy to the state became inoperable when they froze.

Following the winter storm that caused statewide blackouts in Texas, Brazos Electric Power Cooperative, the oldest and largest electric power cooperative in the stated filed for bankruptcy, Monday. The electric provider is hoping to get bankruptcy protection in a Houston federal court, disputing a $1.8 billion bill from the grid operator of the state.

Texas' Largest Power Cooperative Files for Bankruptcy

Brazos Electric Power Cooperative Inc. is just one of the dozens of power providers who have been struggling on charges that stemmed from last month's winter snap. According to executives, the winter storm fallout poses a threat to power marketers and utilities who are now facing blackout-related charges which are worth billions of dollars collectively, NPR reported.

Almost half of Texas' power plants were knocked out during the unusually low temperatures in mid-February. The winter storm left at least 4.3 million people without any source of electricity to provide them with heat and light. It also caused several water pipes to burst, damaging homes and businesses.

Brazos Electric Cooperative along with other power providers were committed to providing power to the grid, but couldn't due to the winter storm wherein they were required to cover the unpaid fees of other firms. In addition, they were also mandated to buy replacement power at very high rates.

Moreover, adding to the financial stress of utilities and power marketers, the Electric Reliability Council of Texas (ERCOT), the state's grid operator announced on Friday that there are bills that went unpaid worth about $2.1 billion. Executives also predicted that more providers are likely to reject the said bills in the upcoming days.

Read also: Texas Officials Caution Residents of Carbon Monoxide Poisoning in Wake of Winter Storm Uri

In a statement by the founder of the independent power marketer which is not a member of the Brazos Electric Power Cooperative, Volt Electricity Provider LP, Maulin Patani, he said that the power sector at the municipal level is facing a real crisis. He also called to ERCOT to have the service charges suspended in order to put a pause on further defaults, Reuters reported.

Just last week, the North Texas city of Denton filed a lawsuit against ERCOT in a state court. The lawsuit aims to prevent ERCOT to charge it for the unpaid fees of the grid's other users. According to the lawsuit, Denton Electric could be facing tens of millions of dollars worth of fees if they are required to pay for the feed that weren't collected from the other users of the grid.

Meanwhile, Fitch Ratings, a debt analyst, already made a warning last week about the Texas municipal power firms who use the grip of the state to have potential downgrades. Fitch stated that the costs of the storm could probably go more than the liquidity that is immediately available to the users.

According to Fox Business, it was ERCOT who triggered the squeeze after it raised spot-market rates up to $9,000 per megawatt-hour (MWh). In addition, it also increased the service fees to 500 times that of the usual rate, industry executives stated.

Meanwhile, Brazos Electric Cooperative executive Clifton Karnei signed the company's submission for bankruptcy. Being the largest power cooperative in the state, Brazos providers electricity to more than half a million customer across Texas, through 16 utility company members.

Related article: Texas Suffers Worst Winter Storm, Power Outage Causes Statewide Problems to Citizens