Brazos Electric Power Cooperative Inc., a power supplier in Texas, has filed for bankruptcy protection in the wake of the energy crisis brought on the state by an Arctic weather spell last month.
Reuters reports that the power cooperative was forced to file for Chapter 11 protection because of a $1.8 billion bill that the state’s grid operator presented it. The inflated invoice amount was due to Brazos’ failure to supply contracted volumes of electricity.
The Texas grid operator, ERCOT, said electricity providers had amassed a total of $2.1 billion in unpaid bills. According to industry executives who talked to Reuters, more will reject the bills.
According to an NPR report, this may be just part of bills to be paid as a result of the freeze. February events, the report said, had caused tens of billions of dollars in expenses because of the Lone Star state’s free-market principles in electricity supply.
These principles and the free choice of a supplier that offers users to pay wholesale prices for their power that saw some households saddled with bills in the thousands, which was many times higher than their usual bills for this time of the year, even in cold weather.
The state itself is up to its neck in power bills: according to BloombergNEF, Texas paid some $50 billion for electricity, which was 10 times the amount the state paid just a week before the Texas Freeze.
And then there were the companies like Brazos Electric Power Cooperative that had to produce and supply power but couldn’t because the weather caused power plant and wind turbine outages, that many have blamed on utilities’ lack of foresight and respective preparation. As a result, companies had to buy power from those who had it, and pay for it through the nose.
According to BloombergNEF, the third week of February was the most expensive one in the history of U.S. power utilities.
By Charles Kennedy for Oilprice.com