Brazos Electric seeks more time to control bankruptcy amid mediation

2 minute read

Workers install a utility pole to support power lines after an unprecedented winter storm in Houston, Texas, February 22, 2021. REUTERS/Adrees Latif/File Photo

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  • Co-op says it needs time to resolve $2 bln energy bill dispute
  • Deal with grid operator likely won't come until late April

(Reuters) - The largest power cooperative in Texas is seeking six more months to maintain control over its ongoing Chapter 11 bankruptcy proceedings, saying it needs more time to resolve its $2 billion fight with the state’s electric grid operator stemming from last year’s historic winter storm that left millions of Texans without power for days.

In court papers filed on Friday, Brazos Electric Power Cooperative asked U.S. Bankruptcy Judge David Jones in Houston to extend its exclusive period to file a reorganization plan in light of ongoing mediation with the Electric Reliability Council of Texas that is critical to its restructuring strategy. The co-op’s so-called exclusivity period is set to expire on Monday absent an extension.

Brazos said it is unlikely to reach a deal before late April.

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ERCOT declined to comment.

Brazos filed for bankruptcy protection in March 2021 shortly after the winter storm left it with a $2.1 billion bill from ERCOT. The co-op, which has said the bill for the week-long storm was nearly three times its total power cost for 2020, says it can’t formulate a reorganization plan until it determines exactly how much it must pay ERCOT.

Brazos said in Friday’s filing that while it can’t propose a plan yet, it has been discussing financing options with its member co-ops.

A trial over the bill before Jones began in February but was paused after eight days when Brazos and ERCOT agreed to enter mediation. Brazos has argued that ERCOT failed to follow protocols for setting emergency rates outlined in their contract while ERCOT maintains that it was merely following emergency orders from the Public Utilities Council of Texas during the storm.

The case is In re Brazos Electric Power Cooperative Inc, U.S. Bankruptcy Court, Southern District of Texas, No. 21-30725.

For Brazos: Lou Strubeck and Nick Hendrix of O'Melveny & Myers; Jason Boland, Paul Trahan and Steve Peirce of Norton Rose Fulbright; and Lino Mendiola, Michael Boldt and Jim Silliman of Eversheds Sutherland (US)

For ERCOT: Kevin Lippman, Deborah Perry, Jamil Alibhai and Ross Parker of Munsch Hardt Kopf & Harr

Read more:

Trial over Texas co-op's $2 bln energy bill paused for mediation

Texas bankruptcy trial begins over $2 bln energy bill after 2021 winter storm

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Maria Chutchian reports on corporate bankruptcies and restructurings. She can be reached at maria.chutchian@thomsonreuters.com.