Brazos Electric Power Cooperative on March 1 said that it has filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas.
The company said that it initiated the financial restructuring to maintain the stability and integrity of its entire electric cooperative system, adding that before the recent severe cold weather in Texas, it “was in all respects a financially robust, stable company with a clear vision for its future and a strong ‘A’ to ‘A+’ credit rating.”
The company continued: “As a result of the catastrophic failures due to the storm, Brazos Electric was presented with excessively high invoices by ERCOT for collateral and for purported cost of electric service, payment of which was required within days. As a cooperative whose costs are passed through to its members, and which are ultimately borne by Texas retail consumers served by its member cooperatives, Brazos Electric determined that it cannot and will not foist this catastrophic financial event on its members and those customers.”
In a statement provided to TransmissionHub on March 1, ERCOT said, “We are aware of [Brazos Electric’s] filing and will be participating in the court proceedings.”
Clifton Karnei, executive vice president and general manager of Brazos Electric, said in the company’s statement that the action was necessary to protect Brazos Electric’s “member cooperatives and their more than 1.5 million retail members from unaffordable electric bills as we continue to provide electric service throughout the court-supervised process.”
Brazos Electric said that throughout the forthcoming financial restructuring process, it will:
- Deliver affordable and reliable electric service to its member cooperatives and their retail members
- Help its member cooperatives, as well as their retail members and communities, impacted by the extreme cold weather event of Feb. 13-19 in the rebuilding effort
- Support the orderly, fair, and expeditious treatment and satisfaction of its liabilities resulting from the recent extreme cold weather event
Brazos Electric said that its filing includes several “first day” customary operational motions that the company filed with the court in support of its financial restructuring, such as requests of authorizations to continue paying employee wages and benefits, as well as critical vendors. The company said that it will pay all obligations under normal terms of business for goods and services provided on the filing date of March 1 and thereafter.
As noted in the filing, the “estimated number of creditors” is in the range of “1,000-5,000,” the “estimated assets” are in the range of “$1,000,000,001-$10 billion,” and the “estimated liabilities” are in the range of “$1,000,000,001-$10 billion.”
As noted in the statement, Norton Rose Fulbright is serving as lead restructuring counsel, and Berkeley Research Group is serving as financial advisor to Brazos Electric.