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

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Ice hangs from a vehicle license plate in Dallas, Texas REUTERS/Jeff Mitchell

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  • Bankruptcy trial on hold for now
  • Judge urges negotiations to resolve dispute

(Reuters) - The largest electric cooperative in Texas and the state's energy grid operator on Thursday agreed to mediate their dispute over a nearly $2 billion bill stemming from last year's historic winter storm that knocked out power for millions of Texans.

Brazos Electric Power Cooperative contends that the Electric Reliability Council of Texas violated the terms of their contract when it charged $9,000 per megawatt hour during much of the storm, which lasted about a week. A trial that began on Feb. 22 over ERCOT's $1.9 billion claim in Brazos' bankruptcy will be paused as a result of the mediation.

The cooperative filed for bankruptcy in March 2021 as a result of the bill from the storm. It had asked U.S. Bankruptcy Judge David Jones in Houston, who is overseeing its Chapter 11 case, to drastically reduce ERCOT’s claim. Brazos, which had another $2 billion in funded debt at the time it filed for bankruptcy, says the amount it owes ERCOT is closer to $770 million.

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The outcome of the trial, or any resolution reached in mediation, will determine how Brazos moves forward in its bankruptcy. It has said it can't develop a reorganization plan until it knows exactly how much it owes ERCOT.

Jones said during Thursday’s hearing that the parties should “sit in a room and understand what the options are.”

U.S. Bankruptcy Judge Marvin Isgur, who is also based in Houston, will oversee the mediation.

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 US; 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:

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

One year after an epic storm, Texas' largest electric co-op takes on grid operator

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Maria Chutchian reports on corporate bankruptcies and restructurings. She can be reached at