Brazos Electric Power Cooperative files Chapter 11

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(Photo by Scott Olson/Getty Images)

Brazos Electric Power Cooperative which serves a large area of Central Texas has announced 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, in part to protect its customers from super-high electric bills.

A statement released by the company said it had done this financial restructuring to maintain the stability and integrity of its entire electric cooperative system.

The statement said that before the severe cold weather that blanketed Texas with sub-freezing
temperatures February 13-19, Brazos Electric was in all respects a financially robust, stable company
with a clear vision for its future and a strong “A” to “A+” credit rating.

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 consumers.

Throughout the forthcoming financial restructuring process, Brazos Electric said it will remain committed to the following:
• Delivering affordable and reliable electric service to its Member cooperatives and their retail
members;
• Assisting our Member cooperatives, their retail members and their communities impacted by
the historic extreme cold weather event of February 13-19, 2021 in the rebuilding effort;
• Supporting the orderly, fair and expeditious treatment and satisfaction of its liabilities resulting
from the extreme cold weather event that severely impacted the state of Texas from February
13-19, 2021.

“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 as we continue to provide electric service throughout the court-supervised process,” said Clifton Karnei, Executive Vice President and General Manager of Brazos Electric.

“We will prioritize what matters most to our Member cooperatives and their retail members as we, and they, work to return to normalcy. We expect this court-supervised process will provide us with the protections and mechanism to protect and preserve our assets and operations, and satisfy obligations to our creditors.”

The filing also includes several “first day” customary operational motions Brazos Electric filed with
the court in support of its financial restructuring including requests of authorizations to continue paying employee wages and benefits and certain critical vendors. Brazos Electric will pay all obligations under normal terms of business for goods and services provided on the filing date of March 1, 2021 and thereafter.

Brazos Electric Power Cooperative is Texas’ oldest and largest, generation and transmission power cooperative serving 16 distribution Member cooperatives that serve more than 1.5 million Texans.

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