UPDATE 6-Texas Electricity Co-op files for bankruptcy, citing $ 1.8 billion grid debt

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* Brazos Electric aims to restructure its debt under judicial supervision

* The president of the regulator Commission of public services resigns under fire

* The financial fallout from the blackout threatens electricity suppliers (adds resignation of the President of the Public Services Commission)

By Gary McWilliams

HOUSTON, March 1 (Reuters) – Texas’ largest and oldest electricity cooperative filed for bankruptcy in Houston on Monday, citing a disputed $ 1.8 billion debt to the state’s grid operator.

Brazos Electric Power Cooperative Inc, which supplies electricity to more than 660,000 consumers across the state, is one of dozens of suppliers facing huge charges resulting from a severe cold snap last month. The fallout threatens utilities and electricity traders, who collectively face billions of dollars in outage-related costs, executives said.

Unusually freezing temperatures destroyed nearly half of the state’s power plants in mid-February, leaving 4.3 million people without heat or lights for days and bursting water pipes that damaged homes and businesses.

Brazos and others who pledged to supply electricity to the grid – and were unable to – were required to purchase replacement electricity at high tariffs and cover unpaid charges from others. companies.

Network operator the Electric Reliability Council of Texas (ERCOT) said Monday that $ 2.46 billion in bills had not been paid, highlighting financial stress on utilities and electricity traders . ERCOT acts in part as a clearinghouse, collecting from electricity buyers and paying those who provide the electrons.

“LIQUIDITY TRAP”

ERCOT sparked the tightening when it raised spot market rates to $ 9,000 per megawatt hour (mwh) over more than four days and levied huge fees for the services. The service charge was 500 times the usual rate, industry executives said.

Brazos executive Clifton Karnei, who served on the board of network operator ERCOT until last week, told Federal Court that Brazos “finds himself in a liquidity trap that he cannot resolve with its current record “.

Brazos said ERCOT’s $ 2.1 billion bill was nearly three times the co-op’s electricity costs for all of 2020. Brazos responded by issuing a force majeure notice, rejecting the bills. , according to Karnei’s statement.

“The municipal electricity sector is in a real crisis,” said Maulin Patani, founder of Volt Electricity Provider LP, an independent electricity distributor who is not a member of the Brazos cooperative. ERCOT should suspend service charges to stop further defaults, he said in an interview on Sunday.

Debt analyst Fitch Ratings, meanwhile, warned of potential downgrades to all Texas municipal utilities that use the state grid. The costs of the storm “could exceed the cash immediately available to these issuers,” Fitch said last week.

State Utilities Commission chairman DeAnn Walker resigned on Monday following scathing criticism from Texas lawmakers over her oversight of the network operator.

Last week, the city of Denton sued ERCOT in state court to prevent it from billing the city for amounts not collected from other network users.

Texas big employer Textron Inc urged the PUC on Monday to cut electricity costs.

The Texas attorney general has opened an investigation into the outage, calling on ERCOT and others to provide documents on the outages and pricing, saying they had mismanaged the crisis. (Reporting by Gary McWilliams; Editing by Louise Heavens, David Goodman and Sonya Hepinstall)

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