A power cooperative in Texas is filing for bankruptcy, also known as Chapter 11 bankruptcy protection, after last month's severe winter storm conditions, which left millions of residents in the state without power.

Brazos Electric Power Cooperative serves 16 distribution member cooperatives that cater to more than 1.5 million Texas residents across 68 counties from the Texas Panhandle to Houston.

The company said that it was financially stable before the severe cold weather conditions affected Texas between Feb. 13 and Feb. 19. This causes several of Texas' power grids to collapse, which was later followed by disruptions in water services, according to an NBC News report.

"Yet that changed as a direct result of the catastrophic failures that accompanied the winter storm that blanketed the state of Texas on or about February 13, 2021, and maintained its grip of historically sub-freezing temperatures for days," the company was quoted in an NPR report.

The company added that the electric generation equipment and natural gas pipeline equipment have been reported to have frozen, which caused the available generation within Electric Reliability Council of Texas (ERCOT) to dramatically plummet.

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Power Bills

Texas' largest and oldest power cooperative was hit with a $1.8 billion bill from the state's power grid operator. Many consumers are also facing costly power bills with the state's free-market approach to energy, according to a Forbes report.

The price for wholesale electricity was set at the maximum price of $9,000 per megawatt-hour for more than four days straight.

Meanwhile, ERCOT also implemented other ancillary fees amounting to more than $25,000 per megawatt-hour.

Brazos said in a court filing that it received a $1.8 billion bill from ERCOT, which disputed the said claims of the power cooperative.

Brazos added that the consequences of the said prices were devastating. 

The filing comes after Brazos' executive vice president and general manager Clifton Karnei resigned last week, following the widespread power outage. Karnei was the seventh member of ERCOT's board of directors to resign.

The power cooperative said that it recovers its costs from its members, which are then collected from consumers. The filing was done to protect itself, its member cooperatives, and its consumers from the huge power bills.

"Brazos Electric will not foist this catastrophic 'black swan' financial event onto its members and their consumers, and commenced this bankruptcy to maintain the stability and integrity of its entire electric cooperative system," it said in a filing.

Brazos said that it will continue its power services to its consumers as it restructures the cooperative while under bankruptcy protection.

Meanwhile, not all energy companies in the state of Texas are suffering due to the freeze. Ronald Burns, the president, and chief financial officer of Comstock Resources Inc. said that the natural gas company was profiting from the spike in prices.

This started even before the cold weather arrives. Burn said that they were able to get super-premium prices.

Ed Hirs, who teaches energy economics at the University of Houston, said that there will be more power company bankruptcies coming, according to an ABC 27 report.

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