Texas power coop seeks bankruptcy protection after Winter Storm Uri – “The consumer and the taxpayer are pretty much one and the same. Whether it comes out of your left pocket or out of your right pocket, it’s coming out of your pocket.”
By Michelle Chapman and David Koenig
1 March 2021
(AP) – The largest and oldest power cooperative in Texas is filing for bankruptcy protection, citing last month’s winter storm that left millions without power, and it is unlikely to be the last utility to seek shelter in the courts.
Brazos Electric Power Cooperative serves distributors that supply electricity to more than 1.5 million Texans in 68 counties from the Panhandle to Houston. Brazos said Monday that it was a “financially robust, stable company” before the Arctic freeze that hit Texas between Feb. 13 and Feb. 19.
It said it received excessively high invoices from the Electric Reliability Council of Texas, or ERCOT, which operates the state power grid, for collateral and the cost of electric service. The invoices were required to be paid within days.
As a cooperative, Brazos’ costs are passed through to its members and retail consumers served by its members. Brazos decided that it won’t pass on the ERCOT costs to its members or the consumers, so it filed for Chapter 11 protection, which indicates that the company plans to reorganize its debts rather than liquidate.
Obviously, this week is like hitting the jackpot as some of these incredible prices, I mean frankly we were able to … get super-premium prices.
Roland Burns, president and chief financial officer of Comstock Resources, Inc.
“Let me emphasize that this action by Brazos Electric was necessary to protect its member cooperatives and their more than 1.5 million retail members from unaffordable electric bills as we continue to provide electric service throughout the court-supervised process,” Clifton Karnei, executive vice president and general manager of Brazos, said in a statement.
There could be more. Ed Hirs, who teaches energy economics at the University of Houston, is sure there will be more power company bankruptcies. He cited estimates by BloombergNEF that Texans will pay $50 billion for electricity the week of Feb. 14 compared with $4.2 billion the previous week.
Hirs said the difference will be paid in higher electric rates or borne by taxpayers. Already, Gov. Greg Abbott, a Republican, and both Republican and Democratic legislators have promised to help Texans facing huge bills.
“The consumer and the taxpayer are pretty much one and the same,” Hirs said. “Whether it comes out of your left pocket or out of your right pocket, it’s coming out of your pocket.” […]
Not all energy companies in Texas are suffering because of the freeze.
While many Texans were still without power on Feb. 17, Roland Burns, the president and chief financial officer of Comstock Resources Inc., was telling analysts that the natural gas company was profiting nicely from the spike in prices, which started even before the Arctic weather arrived.
“Obviously this week is like hitting the jackpot as some of these incredible prices, I mean frankly we were able to … get super-premium prices,” Burns said. [more]
