The largest and oldest power combined in Texas, the non-profit Brazos Electric Power Cooperative reported that a clean bill of financial health for more than 80 years. This was before Winter Storm Uri hit with a black swan event that plunged the Lone Star State into sub-freezing temperatures and set a premium on electricity that left several Texans with eye-watering bills.
Brazos Electric’s was more than $2.1 billion, causing the company to submit a Chapter 11 bankruptcy petition on Monday.
“As the month of February 2021 began, the idea that a financially stable joint such as Brazos Electric would end the month preparing for bankruptcy was ” the organization’s general director Clifton Karnei composed in a 46-page declaration. “Yet that shifted as a direct consequence of the devastating failures that accompanied the winter storm that blanketed the state of Texas on or about February 13, 2021 and maintained its grip of historically sub-freezing temperatures for days.”
The lender in the company’s doorway has been the Electric Reliability Council of Texas, the embattled state regulator better known as ERCOT and facing growing local and state scrutiny in the aftermath of the historic outages.
“Experts have opined that Texas has been 4 minutes and 37 minutes from a blackout that might have lasted for months,” Karnei noted, mentioning the Dallas Morning News.
Besieged by criticism about a plank of out-of-state residents, ERCOT’s seat and board members resigned in the immediate aftermath of the events. The Texas Legislature kicked off hearings last week into the matter.
“The polar vortex storm not just produced power outages and extreme price spikes, but had many other consequences: water-plant failures and depleting reserves of water leading to boil-water notices for 14 million Texans; heaps of deaths related to hypothermia, carbon monoxide poisoning, car accidents, and fires; and damages to homes and businesses caused by burst pipes which are estimated to be on par with damages from Category 5 hurricane,” Karnei noted.
Availing the business of bankruptcy protections, Brazos Electric’s leader has disputed the giant bill as”force majeure event” and expects a rebound for the company.
“Notwithstanding the catastrophic financial fallout in the Black Swan Winter Event, Brazos Electric along with the Board of Directors firmly believe in its business model, its strong management team, its dedicated, hardworking workers, and its strong, faithful combined base and fully intend to use the bankruptcy process to preserve its business and maximize value for all stakeholders, including the co-op members and, most importantly, the millions of Texans who, more than ever, rely upon the cooperative to meet its energy requires every day,” his statement states.
Harris County Attorney Christian Menefee–the top civil attorney of Texas’s largest county–joined his state counterparts in taking a close look at ERCOT, the state’s Public Utility Commission (PUC) and market participants.
“There was nothing inconsistent about this last frost, and everyone had plenty of notice that it was coming. However, the people running the grid were woefully unprepared and failed to take immediate actions and warn people of what might happen. My office will conduct a comprehensive investigation into these events and take legal action where appropriate”
ERCOT stayed tight-lipped concerning the evolution.
“We’re aware of their filing and will be participating in the court proceedings,” the firm said in a statement.
Learn more about the background of Texas’s energy grid and scrutiny of ERCOT about the newest episode of Law&Crime’s podcast”Objections.”