Brazos Electric acts to protect its Member cooperatives and their retail members from unaffordable electric bills.
WACO, TEXAS, MARCH 1, 2021 – Brazos Electric Power Cooperative, Inc. (“Brazos Electric” or “the Company”), a leading, and Texas’ oldest and largest, generation and transmission power cooperative serving 16 distribution Member cooperatives that serve more than 1.5 million Texans, announced today that it filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas.
Brazos Electric initiated this financial restructuring to maintain the stability and integrity of its entire electric cooperative system. Before the severe cold weather that blanketed Texas with sub-freezing temperatures February 13-19, Brazos Electric was in all respects a financially robust, stable company with a clear vision for its future and a strong “A” to “A+” credit rating.
As a result of the catastrophic failures due to the storm, Brazos Electric was presented with excessively high invoices by ERCOT for collateral and for purported cost of electric service, payment of which was required within days. As a cooperative whose costs are passed through to its members, and which are ultimately borne by Texas retail consumers served by its Member cooperatives, Brazos Electric determined that it cannot and will not foist this catastrophic financial event on its members and those consumers.
Chapter 11 is a protective measure that will allow Brazos to maintain the stability and integrity of its entire electric cooperative system and allow the cooperative to continue to provide reliable power and transmission service to its member cooperatives, which includes HILCO Electric.
What Does This Mean For Hilco Users?
A Facebook user asked Hilco, “Will we see any kind of change in the way you handle things or business as usual?”
HILCO Electric Cooperative, Inc responded, “Brazos did this to protect us from unaffordable electric bills. Our plan, as well as Brazos, is to continue to deliver affordable and reliable electric service to our members.”
Another Facebook user said, While I think ERCOT should be liable for all costs, I really appreciate that we won’t get outrageous bills.”
HILCO Electric Cooperative, Inc. explained, “HILCO has fixed tariff rates that do not change. The tariff rates represent the largest portion of your monthly bill. There is a small component of your bill that is variable, which is known as PCRF or PCA. It changes with our cost of power, which is purchased from Brazos Electric Cooperative. The PCRF factor that will be charged in March will increase slightly. Although there is an small increase to that factor, most of the increase in the bills will be from increased usage.
Although Brazos’ recent actions greatly lowered the power cost passed on to HILCO following this extreme weather event, we will be required to pay much higher than normal power costs for this time period. Instead of attempting to collect all of that in March, we are using methods at our disposal to spread this cost out over a period of time to limit the impact on our members.”