Texas power crisis deepens as more companies skip payments due to grid operator

HOUSTON (Reuters) - Texas energy companies failed to pay another $345 million for electricity and other services incurred during last month’s cold snap, the operator of the state’s grid said on Monday.

FILE PHOTO: An electrical substation is seen after winter weather caused electricity blackouts in Houston, Texas, U.S. February 20, 2021. REUTERS/Go Nakamura

The state’s deregulated electricity market was thrown into turmoil last month as 48% of its generating plants went offline, fueling up to $9,000 per megawatt hour (mwh) spot rates and $25,000 per mwh service fees. Those charges drove one provider into bankruptcy on Monday.

In all, electricity prices on the state’s wholesale market soared by $47 billion for the about five-day period when cold weather drove up demand and generating plants failed, estimated Carrie Bivens, a vice president at Potomac Economics, which monitors the Texas power market.

Her figure does not include add-on fees or payment defaults, which are significant and are spread to all companies that use grid services under ERCOT rules, she said.

“It is a lot of zeros,” said Bivens of the additional fees.

In all, electricity providers skipped out on $2.46 billion in power and service charges, grid operator Electric Reliability Council of Texas (ERCOT) said. It applied $800 million from collateral and other accounts to reduce the cumulative shortfall to $1.66 billion.

ERCOT did not disclose which companies failed to pay the bills, but said it will begin naming firms and the amounts they have failed to pay in the future.

The state-supervised operator acts as a clearinghouse, collecting cash from marketers that buy power, and sending it to the companies that furnish electrons to its grid.

Texas could cut about $2 billion off the burden facing municipal utilities, marketers and generators by reducing some fees, said Bivens. The governor also could apply a portion of the state emergency fund to cover some charges.

On Monday, electricity provider Brazos Electric Power Cooperative Inc., the state’s largest and oldest power wholesale firm, filed for bankruptcy citing an $1.8 billion debt due to ERCOT. The filing underscored the financial stress on power marketers and utilities from the pricing turmoil.

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

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

Reporting by Gary McWilliams; Editing by Rosalba O’Brien and Stephen Coates