Texas’ largest and oldest electric power cooperative filed for bankruptcy protection Monday after being hit with a $1.8 billion bill from the state’s grid operator following severe cold weather that left millions without power and many facing astronomically high energy bills due to the state’s free market approach to energy.
Brazos Electric Power Cooperative filed for bankruptcy in a Houston federal court Monday, citing assets and liabilities between $1 billion and $10 billion.
Severe cold weather led to widespread power outages and sky high energy rates as demand for electricity soared, with some firms, such as Brazos, having to pay a premium in order to meet their existing commitments.
In court filings, Brazos said it received a $1.8 billion bill from the Electric Reliability Council of Texas (ERCOT), Texas’ grid operator, which it disputed.
The filing comes after Brazos’ executive vice president and general manager Clifton Karnei, who signed the court papers, was the seventh member from ERCOT’s board of directors to resign last week in the aftermath of the blackouts.
Texas’s free market approach to energy differs from the more common fixed-rate approach elsewhere, exposing customers to potentially volatile prices driven by supply and demand. Record-breaking cold in February brought the states’ electrical grid to the brink of collapse, with rolling blackouts instituted to try and retain control. The surge in demand caused by these prolonged power outages predictably precipitated a spike in prices. One electric company, Griddy, has already been hit with a $1 billion class action from customers who accused it of price gouging and issuing bills of as much as $17,000, while ERCOT predicts that billions in unpaid bills will stress the market further.