Texas Power Company Seeks Bankruptcy Protection After Storm

The largest and oldest power cooperative in Texas is filing for Chapter 11 bankruptcy protection, citing last month's winter storm that left millions without power.

Brazos Electric Power Cooperative, which serves 16 distribution member cooperatives that cater to more than 1.5 million Texans across 68 counties from the Texas Panhandle to Houston, said Monday that it was a "financially robust, stable company" prior to the severe cold weather that hit Texas between February 13 and February 19.

The company claimed in its bankruptcy filing that it owes a $1.8 billion debt to the Electric Reliability Council of Texas, a charge it disputes, for electricity it purchased during the week of February 15. That amount is more than double what the cooperative paid for power in all of 2020.

Much of Texas' power grid collapsed that week, followed by its water systems. Tens of millions huddled in frigid homes. Others fled for safety. The state, long suspicious of regulation and outside help, was left to seek aid from other states and humanitarian groups as many of its 29 million people grasped for survival.

In addition to advising several power generators to “shed load” in anticipation of the deep freeze, ERCOT raised the wholesale price of electricity in the state from a price of $23.79 per megawatt-hour prior to the winter storm to $9,000 per megawatt-hour in an effort to discourage usage.

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.

"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 prepared statement.

Brazos said that it will continue to supply power to members as it restructures the cooperative while under bankruptcy protection.

Brazos Electric Power serves several, smaller energy cooperatives throughout the state, including CoServ, which has customers in Denton, Collin, Cooke, Grayson, Tarrant and Wise counties.

Both Brazos Electric Power and CoServ have stressed that they will not pass along the high bills to their customers.

“Brazos Electric will not foist this catastrophic 'black swan' financial event onto its members and their consumers, and commenced this bankruptcy to maintain the stability and integrity of its entire electric cooperative system,” Brazos stated in its bankruptcy filing.

The bankruptcy filing comes the same day that Texas Attorney General Ken Paxton said that he's suing electricity provider Griddy for passing along massive bills to its customers during February's winter storm. The lawsuit accuses Griddy of violating the Texas Deceptive Trade Practices Act and seeks refunds for customers.

ERCOT shifted about 10,000 Griddy customers to other utilities on Friday. Griddy said that ERCOT "took our members and have effectively shut down Griddy."

"We have always been transparent and customer-centric at every step. We wanted to continue the fight for our members to get relief and that hasn't changed," Griddy said.