Texas energy crisis deepens as more companies skip payments due to network operator

HOUSTON (Reuters) – Texas energy companies did not pay another $ 345 million for electricity and other services incurred during last month’s cold wave, the state’s grid operator said on Monday.

The state’s deregulated electricity market was thrown into turmoil last month, when 48% of its generating plants went offline, supplying up to $ 9,000 per megawatt-hour (mwh) cash service charges and $ 25,000 per mwh. These charges brought a provider into bankruptcy on Monday.

Altogether, electricity prices in the state’s wholesale market skyrocketed $ 47 billion for about five days, when cold weather increased demand and generating plants went bankrupt, estimated Carrie Bivens, vice president of Potomac Economics, which monitors the Texas energy market.

Its value does not include additional fees or payment defaults, which are significant and extend to all companies that use network services under ERCOT rules, she said.

“There are a lot of zeros,” said Bivens of the additional fees.

In all, electricity providers lost $ 2.46 billion in energy and service expenses, said the electrical network operator of the Texas Electric Reliability Council (ERCOT). It applied $ 800 million in guarantees and other accounts to reduce the accumulated deficit to $ 1.66 billion.

ERCOT did not disclose which companies failed to pay the bills, but said it would start naming the companies and the amounts they failed to pay in the future.

The state-supervised operator acts as a clearinghouse, collecting money from traders who buy energy and sending it to companies that supply electrons to its network.

Texas could cut about $ 2 billion from the burden faced by utilities, merchants and generators, reducing some fees, said Bivens. The governor can also apply a portion of the state emergency fund to cover some expenses.

On Monday, electricity supplier Brazos Electric Power Cooperative Inc., the state’s largest and oldest wholesale energy company, filed for bankruptcy citing a $ 1.8 billion debt to ERCOT. The process highlighted the financial stress on energy traders and utilities due to price turbulence.

A spokeswoman for Governor Greg Abbott declined to comment on Monday’s bankruptcy filing or proposals that the state’s Public Utility Commission reduce rates that skyrocketed during the blackout.

Abbott is monitoring the situation “while ERCOT and its financial advisers work to ensure that the ability to supply electricity is not interrupted,” said spokeswoman Renae Eze.