Texas utility files for bankruptcy after $2.1 billion power bill

The largest electricity co-operative in Texas has filed for bankruptcy protection after it received a $2.1 billion bill from the state's grid operator following last month's winter storm that left millions without power.

Bitterly cold weather in mid-February left millions without electricity across Texas as the Arctic conditions overwhelmed local utility companies ill-prepared for such weather.

Brazos Electric Power Cooperative, which supplies 16 co-op members serving more than 1.5 million Texans, said it filed for Chapter 11 bankruptcy on Monday after receiving "excessively high invoices" from the state grid operator Electric Reliability Council of Texas (ERCOT).

According to court filings, Brazos said it was hit with invoices from ERCOT totaling more than $2.1 billion, with payment required within days.

Brazos said the bill for the seven-day "black swan" winter event was nearly three times its total power cost of $774 million for the whole of 2020.

"As the month of February 2021 began, the notion that a financially stable cooperative such as Brazos Electric would end the month preparing for bankruptcy was unfathomable," executive vice president and general manager Clifton Karnei said in a court filing.

He said during the storm the price for wholesale electricity was set at the maximum price of $9,000 per megawatt hour for more than four straight days and ERCOT imposed other ancillary fees totaling more than $25,000 per MWh.

"The consequences of these prices were devastating."

ERCOT has come under fire from customers and politicians over its apparent failure to prepare for the cold weather and soaring bills due to the temporary massive spike in the energy market.

Residential customers who signed for variable-rate plans have reported receiving electric bills as high as $16,000.

Brazos said it filed for bankruptcy protection as "it cannot and will not foist this catastrophic financial event on its members and those 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," Karnei said in a press release.

Texas is the only state in the continental US to have its own independent power grid, meaning it was cut off when the weather hit.

State governor Greg Abbott has ordered an investigation into ERCOT, and the Federal Energy Regulatory Commission has also said it will probe the factors behind the power outages.