The oldest and greatest electric power cooperative in Texas has filed for bankruptcy, declaring the state’s significant wintertime storm had resulted in a “catastrophic ‘black swan’ fiscal celebration.”
According to CBS News, Brazos Electric Energy Cooperative’s Chapter 11 petition “is most likely to be the 1st of many” stemming from the storm that devastated Texas between Feb. 13 and 19.
The submitting “suggests that even though the ability blackouts in Texas are around, the approach of settling significant expenditures stemming from the power crisis is just commencing as the fiscal fallout spreads,” The Wall Road Journal stated.
Brazos, which serves 16 distribution member co-ops that retail power to people, stated it was a “model of fiscal stability” until eventually the storm left it in “a liquidity trap that it can’t solve with its present-day stability sheet.”
“Brazos Electric will not foist this catastrophic ‘black swan’ fiscal celebration onto its associates and their people,” Clifton Karnei, the company’s typical manager, stated in a courtroom declaration.
When ability firms went down through the storm, ERCOT, which operates Texas’ ability grid, established the optimum wholesale selling price for electric power at $9,000 for each megawatt hour for additional than 4 straight days and also imposed ancillary fees totaling additional than $25,000 for each MWh.
“The repercussions of these rates have been devastating,” Karnei stated, as ERCOT offered Brazos with invoices amounting to additional than $two.1 billion, like collateral calls, with payment essential within just days.
According to Karnei, the bill was almost 3 periods as much as Brazos expended getting ability for its cooperative associates in all of 2020.
Brazos has additional than two,682 miles of electrical transmission lines and 385 substations, generating it Texas’ sixth-greatest transmission company. It purchases ability from a coal-fired plant, a solar ability facility and a hydroelectric plant.
“We will in all probability see a complete bunch of electric powered vendors go out of organization, specifically individuals that offer fastened-price ideas to people today,” Joshua Rhodes, a analysis affiliate at the College of Texas at Austin, stated. “If you’re offering it for ten cents a kilowatt-hour and paying $9 for each kilowatt-hour, it does not get long to mess up your stability sheet.”