Texas electric co-op files for bankruptcy after huge ERCOT winter storm outage bills
A Texas electric cooperative with 1.5 million customers — including some in the greater Fort Worth area — has filed for bankruptcy protection, saying it wants to protect customers from huge energy bills sent by ERCOT after last month’s historical winter storm.
Brazos Electric Power Cooperative Inc. is based in Waco, and provides power to many communities near Fort Worth, including Azle, Denton and areas near Cleburne. The company filed for a Chapter 11 bankruptcy financial restructuring Feb. 26 in a south Texas federal court.
Brazos Electric was a “financially robust, stable company” with perpetually strong credit ratings until the Feb. 13-19 cold snap that essentially shut down Texas and caused widespread power outages, cooperative officials explained in a news release.
After that storm, the cooperative received “excessively high” bills from the Electric Reliability Council of Texas, or ERCOT, which operates the state’s grid, according to a court filing. The total unsecured claim from ERCOT amounts to $1.8 billion, records show.
Brazos Electric officials said they opted to seek relief in court, rather than pass those costs to customers.
Brazos Electric provides wholesale power to 16 member-owner distribution cooperatives in 68 Texas counties. According to court filings, Brazos Electric members include: Denton County Electric Cooperative, doing business as CoServ Electric in Corinth; HILCO Electric Cooperative in Itasca; Tri-County Electric Cooperative in Azle; and United Electric Cooperative Services in the Burleson area.
In all, Brazos Electric lists $1 billion to $10 billion in both assets and liabilities, according to the court documents. Brazos Electric, which began in 1941, bills itself as the oldest and largest electric cooperative in the state.
While some residents in pockets of North Texans get their power from Brazos Electric or other cooperatives, many other homes and businesses in the Dallas-Fort Worth urbanized area are served by electric provider Oncor.
“As a result of the catastrophic failures due to the storm, Brazos Electric was presented with excessively high invoices by ERCOT for collateral and for purported cost of electric service, payment of which was required within days,” company officials said in a statement. “As a cooperative whose costs are passed through to its members, and which are ultimately borne by Texas retail consumers served by its Member cooperatives, Brazos Electric determined that it cannot and will not foist this catastrophic financial event on its members and those consumers.”
In its filing, Brazos Electric asks the court for permission to continue paying employees and vendors, while the financial reorganization takes place.
“We will prioritize what matters most to our Member cooperatives and their retail members as we, and they, work to return to normalcy,” said Clifton Karnei, Brazos Electric executive vice president and general manager. “We expect this court-supervised process will provide us with the protections and mechanism to protect and preserve our assets and operations, and satisfy obligations to our creditors.”
Karnei was among the ERCOT board members who resigned last week after the storm left more than 4 million Texans without power, some for four days.
This story was originally published March 1, 2021 at 12:56 PM.
