NOTICE DATE: September 2, 2022
NOTICE TYPE: M-B090222-01 Legal
SHORT DESCRIPTION: Brazos Electric Power Cooperative, Inc. files with federal bankruptcy court its Chapter 11 Plan of Reorganization and Disclosure Statement addressing ERCOT's Amended Proof of Claim.
INTENDED AUDIENCE: All Market Participants
DAYS AFFECTED: September 1, 2022 and thereafter
LONG DESCRIPTION: On September 1, 2022, Brazos Electric Power Cooperative Inc. (“Brazos”) filed in its pending federal bankruptcy case Brazos’s Chapter 11 Plan of Reorganization of Brazos Electric Power Cooperative, Inc. (the “Plan”) and Disclosure Statement for Plan of Reorganization of Brazos Electric Power Cooperative, Inc. (the “Disclosure Statement”). The Plan and the Disclosure Statement contain information regarding a proposed settlement between Brazos and ERCOT of the Brazos Adversary Proceeding regarding the amount of ERCOT's amended proof of claim in Brazos's bankruptcy case, the priority of ERCOT's claim, and how Brazos will repay the settled amount.
On September 13, 2022, the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) will conduct a hearing on a Brazos motion seeking, among other things, the conditional approval of the Disclosure Statement. Eligible Market Participants (as this term is defined in the Plan) will receive a separate Eligible Market Participants Election Notice from ERCOT if the Bankruptcy Court enters an order conditionally approving the Disclosure Statement and authorizing Brazos to begin soliciting votes on the Plan. ERCOT expects to start communicating with Eligible Market Participants on the election-notice process next week.
Market Participants may obtain copies of the Plan, the Disclosure Statement, and all documents filed in the Bankruptcy Case free of charge by visiting https://cases.stretto.com/Brazos.
ADDITIONAL INFORMATION: On March 1, 2021 (the “Petition Date”), Brazos commenced its bankruptcy case under Chapter 11 of the Bankruptcy Code, which is assigned Case No. 21-30725 (the “Bankruptcy Case”) and is pending before the Bankruptcy Court.
ERCOT filed an amended proof of claim in the Bankruptcy Case in the amount of $1,886,595,737.08, which is the total amount arising from and related to the settlement or resettlement statements issued by ERCOT to Brazos for operating days prior to the Petition Date and that have not been paid by Brazos in full to ERCOT as of the Petition Date (the “Brazos Short Pay Claim”). ERCOT asserts that almost all of the Brazos Short Pay Claim is entitled to priority treatment as an administrative expense claim in the Bankruptcy Case.
On August 18, 2021, Brazos commenced an adversary proceeding against ERCOT before the Bankruptcy Court, which is assigned Adversary Proceeding No. 21-30863. In this Brazos Adversary Proceeding, Brazos seeks, among other things, to reduce the amount of the Brazos Short Pay Claim and have the entire amount of the reduced claim classified as an unsecured claim. To support its claims against ERCOT, Brazos challenges the applicability of the Public Utility Commission of Texas’s (“PUC”) Emergency Orders (“PUC Orders”) entered on February 15 and 16, 2021 directing ERCOT to set prices at their highest to reflect the scarcity in the market during Winter Storm Uri. Brazos seeks to reduce the Brazos Short Pay Claim by at least $1.1 billion — the amount of the Brazos Short Pay Claim that Brazos claims is attributable to ERCOT’s administrative adjustment to wholesale market prices based on the PUC Orders. Trial in the Brazos Adversary Proceeding began on February 22, 2022, but was suspended by agreement on March 3, 2022 to allow the parties to mediate the disputes.
CONTACT: If you have any questions, please contact your ERCOT Account Manager. You may also call the general ERCOT Client Services phone number at (512) 248-3900 or contact ERCOT Client Services via email at [log in to unmask].
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