Brazos Electric seeks chapter court docket ruling on winter storm power costs

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  • BRAZOS ELECTRIC POWER COOPERATIVE, INC.
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(Reuters) – Brazos Electric Power Cooperative Inc has requested the decide overseeing its chapter to find out that Texas’s electrical operator utilized the fallacious pricing mechanism for electrical energy used throughout the state’s historic winter storm that left hundreds of thousands with out energy.

In court docket papers filed on Wednesday, Brazos requested Chief U.S. Bankruptcy Judge David Jones in Houston to challenge a partial abstract judgment ruling on the matter, which it first raised in a lawsuit filed in August as a part of its chapter in opposition to the Electric Reliability Council of Texas Inc(ERCOT) over a $2 billion invoice it obtained after the February storm.

Brazos, represented by Norton Rose Fulbright and O’Melveny & Myers, says deciding the pricing dispute shortly will slender the scope of any additional trial over the invoice and assist it develop a reorganization plan.

Brazos, the biggest and oldest electrical co-op in Texas, filed for Chapter 11 safety in March after it was hit with the huge invoice. The invoice for the seven days the storm lasted is almost thrice the co-op’s whole energy value from 2020, which was $774 million, in accordance with court docket papers. For a number of days throughout the storm, ERCOT set electrical energy costs at $9,000 per megawatt hour.

The co-op is now arguing that ERCOT breached its market participant settlement with it by implementing power charges that don’t adjust to that contract, which requires charges to be set in accordance with ERCOT’s personal protocols in impact on the time. Under sure circumstances, shortage pricing mechanism will be put in force to extend costs throughout power shortages.

But the ERCOT protocols didn’t embody “firm load shed” or rolling blackouts as a shortage pricing set off on the time of the storm, Brazos stated in its August grievance. Without that set off, the co-op stated, ERCOT didn’t have the authority to extend costs to the extent it did throughout the storm.

Had the electrical operator complied with the protocols Brazos says had been in place throughout the storm, the costs would have averaged round $2,404 per megawatt hour, the co-op stated in its grievance.

ERCOT, represented by Munsch Hardt Kopf & Harr, stated in court docket papers that it was merely following orders issued by the Public Utilities Commission of Texas. The electrical operator lately moved to dismiss the lawsuit, saying that within the occasion of a battle, PUCT orders trump the phrases of the participant settlement.

The decide shouldn’t even determine the pricing challenge, ERCOT stated, as a result of it must decide the applicability of the state’s electrical utility rules, which it says are dealt with solely by particular Texas courts or the PUCT itself. Additionally, any choice from Jones would influence different co-ops and market contributors that aren’t concerned within the chapter, ERCOT argued.

The pricing challenge is a pure authorized dispute, which means it may be dominated upon with out the necessity for proof, Brazos stated in Wednesday’s submitting. Its official committee of unsecured collectors, represented by Kramer Levin Naftalis & Frankel, has additionally moved for partial abstract judgment on the matter.

Brazos has requested Jones to contemplate its request on Oct. 18, the identical day ERCOT’s movement to dismiss the lawsuit is scheduled to be heard.

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

For the committee: Thomas Moers Mayer, Amy Caton, Jennifer Sharret, Sean Coffey, Ronald Greenberg of Kramer Levin Naftalis & Frankel; and John Higgins, Eric Wade, Heather Hatfield and M. Shane Johnson of Porter Hedges

Read extra:

Brazos seeks extra time to manage chapter amid new storm-related legal guidelines

Brazos seeks approval of $350 million chapter mortgage

Texas energy cooperative information for chapter, citing $1.8 billion grid debt

Reporting by Maria Chutchian
Maria Chutchian

Maria Chutchian experiences on company bankruptcies and restructurings. She will be reached at maria.chutchian@thomsonreuters.com.

REUTERS/Go Nakamura