Texas power retailer Griddy files for Chapter 11 bankruptcy protection
(Reuters) – Texas power retailer Griddy Energy LLC on Monday filed for Chapter 11 bankruptcy protection after the state’s grid operator took away the company’s customers whom it had charged hefty electricity bills during last month’s rare deep freeze.
Frigid temperatures knocked out nearly half of Texas’ power plants in mid-February, leaving 4.3 million people without heat or light for days.
Texas grid operator, Electric Reliability Council of Texas (ERCOT), last month shut Griddy’s access to the state’s power network and shifted its 10,000 customers to other utilities, as new signs of a financial crisis rose after a state-wide blackout.
ERCOT said last month $2.1 billion in initial bills went unpaid, underscoring the financial stress on utilities and power marketers. (reut.rs/3tnFZ8J)
Unlike other U.S. grid operators, regulators in Texas use scarcity pricing to ensure reliability, but that can cause real-time prices to soar due to shortages.
When power prices spiked to $9,000 per megawatt hour (MWh) and remained at that lofty level for days during the extreme cold in February, some customers of Griddy, which sold power to customers at market rates, received monthly bills of over $10,000.
That compares with an average price for power of $22 per MWh in 2020 in the ERCOT.
Griddy said on Monday it was seeking court authority to release its former customers from those outstanding bills.
“Prior to Winter Storm Uri, Griddy was a thriving business… The actions of ERCOT destroyed our business and caused financial harm to our customers,” Griddy Chief Executive Officer Michael Fallquist said.
High gas and power bills from the Texas freeze have already forced Just Energy Group Inc and Brazos Electric Power Cooperative Inc to seek bankruptcy protection.
Griddy said Baker Botts LLP was acting as its legal counsel in the restructuring.
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