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Houston (Reuters) – Texas’s largest and oldest electricity co-operative filed for bankruptcy protection in a federal court in Houston on Monday, saying a $ 1.8 billion bill was contested by the state’s grid operator.
Brazos Electric Power Cooperative Inc is one of the dozens of utilities facing huge charges due to the severe cold weather last month. Fallout is threatening utilities and electricity marketers who are collectively facing billions of dollars in power outage-related costs, executives said.
In mid-February, unusual temperatures destroyed nearly half of the state’s power plants, causing 4.3 million people to lose heat and light for days, and water pipes to burst, damaging homes and businesses. Brazos and others who promised to power the grid but couldn’t, had to buy alternative power at a high price to cover the unpaid charges of other companies.
The state grid operator, the Texas Electric Reliability Council (ERCOT), said Friday that the initial $ 2.1 billion bill was unpaid, highlighting the financial stress on utilities and electricity marketers. More providers are likely to reject the bill in the coming days, executives said.
“The electricity sector of local governments is in serious danger,” said Maurin Patani, founder of Volt Electricity Provider LP, an independent electricity distributor who is not a member of the Brazos Cooperative. ERCOT needs to suspend service fees to stop further defaults, he said in an interview on Sunday.
The city of Denton in northern Texas filed an ERCOT case in state court last week to prevent other users of the grid from charging unpaid fees. The proceedings alleged that Denton Electric could face tens of millions of dollars in fees not collected from others.
Debt analyst Fitch Ratings warned last week about a potential downgrade to power companies in all Texas municipalities that use the state grid. “The cost of the storm could exceed the immediate liquidity of these issuers,” Fitch said.
ERCOT caused pressure when it raised spot market prices to $ 9,000 per megawatt hour (mwh) for more than four days and charged huge fees for services. Service charges were 500 times higher than normal, according to industry executives.
Clifton Karney, an executive of the Brazos Electric Cooperative, who was sitting on the ERCOT board until last week, signed a bankruptcy filing for the Brazos Scoop. Brazos powers more than 660,000 customers across Texas through members of 16 utilities.
Texas utility file for bankruptcy citing $ 1.8 billion at bill from grid operator
Source link Texas utility file for bankruptcy citing $ 1.8 billion at bill from grid operator