Brazos Electric Power Cooperative is the first of likely several Texan power coops to file for bankruptcy in the wake of February’s incredibly destructive winter storm.
According to Brazos’s court documents, the company was on solid financial footing when it entered January, with reasonable numbers in both assets and liabilities. Then the storm happened, and Texas’s cloistered power grid was inadequate to the purpose, leaving between 3 and 4 million Texans out of power for days. Brazos was served with a $2.1 billion dollar power bill for the seven-day period of the storm by the Electric Reliability Council of Texas (ERCOT), the legal entity which maintains and operates most of the state’s grid.
ERCOT’s rates fluctuate based on supply, which shrank to nearly nothing as natural gas pipes froze and un-winterized windmills malfunctioned, and demand skyrocketed during the unusually cold temperatures.
“The consequences of these prices were devastating,” said Brazos in its court filing.
ERCOT required full payment within days.
Brazos is a cooperative owned in common by 16 energy brokers, which in turn sell the power at wholesale prices to consumers. Declaring bankruptcy, in this case, is not protection for Brazos alone, but for the entire chain below it.
“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,” said the filing.
Some consumers using wholesale energy pricing have been shocked by household bills as high as $16,000 for a one week period—a week in which power was off for hours or days at a time. Profiting from the storm and the shocking electricity prices are people like Jerry Jones, the billionaire owner of the Dallas Cowboys, who also happens to be the majority shareholder of energy coop Comstock.
Photo: An aerial view of the town of Comfort, Texas, during the February 2021 winter storm that hiked electric power rates by thousands and left people freezing and without water. Credit: Shutterstock