Texas power companies face liquidity crisis as bills mount, board leaders resign

Updated on Feb 25, 2021 06:18 AM IST

The Electric Reliability Council of Texas is working to manage ongoing financial stress in the power market as several billions of dollars in invoices are still outstanding from previous event.

The winter storm nightmare knocked out power to more than 4 million customers across the state. Several retail electricity providers “are currently in payment breach” under Ercot protocols.(AP/ File photo)
The winter storm nightmare knocked out power to more than 4 million customers across the state. Several retail electricity providers “are currently in payment breach” under Ercot protocols.(AP/ File photo)
Bloomberg |

Texas’s grid operator has already seen some power retailers default following the grid emergency that saw electricity prices surge last week, and additional defaults are possible, officials said Wednesday.

The Electric Reliability Council of Texas, known as Ercot, is working to manage ongoing financial stress in the power market as several billions of dollars in invoices are still outstanding from last week’s event, according to Kenan Ögelman, vice president of commercial operations. The next two days will be critical in resolving financial obligations, he said during a board meeting Wednesday.

The revelations come as Texas continues to recover from blackouts that left more than 4 million in the dark for days during a deep winter freeze. In the wake of the crisis, six members of Ercot’s board have resigned, including the chair and vice chair, after Governor Greg Abbott criticized the grid operator’s handling of the event.

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Several retail electricity providers “are currently in payment breach” under Ercot protocols, but the grid operator “has not yet taken action to revoke their rights” or terminate their agreements, according to a statement late Wednesday.

If Ercot is unable to collect the revenues necessary to cover defaults, those costs would flow to other market participants, who could then pass those charges onto consumers, Chief Financial Officer Sean Taylor said during the meeting.

Ercot paused collateral collection on Monday but resumed it again a day later due to concerns about downstream financial impacts. Another pause is still under consideration, Ögelman said. However, disrupting the collection process “has a lot of liquidity risk” and could have “chilling consequences,” he said.

The grid operator doesn’t anticipate any issues handling the financial transactions, said Taylor said.

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This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.
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