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Texas electric firm files for bankruptcy citing $1.8B in claims

reuters.com

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Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#51

Post by dan-robertson »

jonplackett wrote: post #41

This is the side of privatisation that gets ignored. When private companies screw up, who gets left with the bill? Private companies have no incentive to be ready for really big problems because they know they’ll get bailed out, or just not have to pay. Privatise the profit, socialise the losses.

When a politician enacts a policy that ignores some big tail risk, they won’t be in office when it eventually blows up. Who foots the bill in that case? Certainly the politician and maybe their party won’t suffer election losses from it.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#52

Post by EdwardDiego »

Taniwha wrote: post #49
teruakohatu wrote: post #8

Earlier quoted context omitted.

Or like California is it that deferring costs (winterizing in TX and fire prevention and forest clearing in CA) makes executives look good while kicking problems down the road, maybe even decades down the road. Here in New Zealand the line network operator in the city of Dunedin has underinvested in the city line network, so instead of replacing power poles, they have simply changed the rules so that 2,500+ unservice…

I hate this story - the case of Dunedin's lines company (Aurora) is not a matter of simple underinvestment - a decade or so ago the city built an indoor stadium, it cost hundreds of millions more than they originally claimed, and the local rugby community welched on the 'private fundraising' they promised to bring to the table - the city got stuck having to pay for it all, plus rather than making the promised small a…

Yeah, when the last government was trumpeting a new stadium in Christchurch post-quake as a massive economic boom, I was somewhat dubious. If the rugby franchises want it, maybe they should put their money where their mouth is.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#53

Post by ansible »

azujus wrote: post #33

Interesting does this mean that global warming will cause the insurance crisis in the US?

I expect there will be a big fight about this.

Insurance companies are already worried. I expect them to start writing into their policies exclusions about man made climate change. Which most people won't notice until it is time to file a claim. And then there will be a big uproar.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#54

Post by fredophile »

Sebb767 wrote: post #28
gonzo41 wrote: post #14

Earlier quoted context omitted.

Well the electric grid falls in that category of service, like the military where the market is potentially a bad solution. So in this regard. The electric company was able to be negligent to their personal benefit of 1.8 billion dollars of unfunded liability it created. And then they call bankruptcy and that's the end of that chapter.

Calling that personal benefit when they were hit by a massive surge in supply pricing is shifting the blame a bit, no? Realistically, since the creditors are probably private and the customers, which would otherwise face the loss, are the community, it's actually somewhat the reverse - privatized losses to the benefit of the community (which would otherwise need to pay off the surge in electricity pricing).

> Calling that personal benefit when they were hit by a massive surge in supply pricing is shifting the blame a bit, no?

How is it not personal benefit? This company was essentially acting in the same role as an insurance company for retail customers. They charge a fixed fee for electricity that is above the average price of electricity. When electricity costs less than they charge they make money. When it costs more they lose money. They should have maintained cash reserves from profitable times to handle unprofitable ones. In an extreme situation like the current one in Texas they could seek a loan or already have lines of credit in place to cover any shortfall from their cash reserves. The profit they made went somewhere and it obviously didn't go into a rainy day fund.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#55

Post by TheOtherHobbes »

The 'firm' is Brazos, which was run as a not-for-profit co-op.

Here's a statement from the CEO who resigned describing a precursor event in 2014 and suggesting how the DoE should proceed to make a repeat less likely:

https://www.energy.gov/sites/prod/files/2014/08/f18/karnei_s...

It suggests the problems were systemic and interconnected, but at least some parts of the industry were aware of them.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#56

Post by hurril »

jonplackett wrote: post #41

This is the side of privatisation that gets ignored. When private companies screw up, who gets left with the bill? Private companies have no incentive to be ready for really big problems because they know they’ll get bailed out, or just not have to pay. Privatise the profit, socialise the losses.

Who foots the bill with non-private companies? If anything, _that_ is what's ignored.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#57

Post by pbhjpbhj »

dragonwriter wrote: post #44
29athrowaway wrote: post #38

Earlier quoted context omitted.

He was not born in America so he cannot be a president.

You don't have to be born in America to be President, but you do need to be a natural-born citizen. Of course, the idea of amending the Constitution to remove that requirement to clear the path for a particular candidate (not that long ago, Arnold Schwarzenegger was mentioned) has come up before; current restrictions won't necessarily apply indefinitely into the future.

Is your distinction that it has to be USA territories - colonies like Guam, Puerto Rico? - but not necessarily USA proper, so military bases and consulates count (?) but could be termed 'outside USA' or is something else going on here?

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#58

Post by ansible »

Sebb767 wrote: post #28
gonzo41 wrote: post #14

Earlier quoted context omitted.

Well the electric grid falls in that category of service, like the military where the market is potentially a bad solution. So in this regard. The electric company was able to be negligent to their personal benefit of 1.8 billion dollars of unfunded liability it created. And then they call bankruptcy and that's the end of that chapter.

Calling that personal benefit when they were hit by a massive surge in supply pricing is shifting the blame a bit, no? Realistically, since the creditors are probably private and the customers, which would otherwise face the loss, are the community, it's actually somewhat the reverse - privatized losses to the benefit of the community (which would otherwise need to pay off the surge in electricity pricing).

But they were benefiting. They have had years of not winterizing their systems, which helped them earn quarter after quarter of profits. Those profits were paid to executives and shareholders, who will not help make up the shortfall now.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#59

Post by eloisius »

madaxe_again wrote: post #18
dragonwriter wrote: post #6

Earlier quoted context omitted.

That's kind of what bankruptcy is for, overtly. It's not like some kind of clever hack.

I do find it troubling, however, that it’s more often than not used to clear down the ledger of a going concern, and then continue business as usual, same everything, just a new incorporation. You can bet your bottom dollar that they’ll be buying their own assets back on cents on the dollar, reincorporating, putting everyone back in the same positions, and paying some nice fat bonuses out of the capital they’ll be gi…

Bankruptcy isn’t supposed to be punitive. A company clearing up the books and then being able to generate a profit again in the future is better for creditors than destroying the company completely.

Re: Texas electric firm files for bankruptcy citing $1.8B in claims

#60

Post by TheOtherHobbes »

pmiller2 wrote: post #42
azujus wrote: post #33

Interesting does this mean that global warming will cause the insurance crisis in the US?

With all the extreme weather events, wildfires, and sea level rising that will be caused by climate change, I would not be surprised.

Insurance companies in the UK have been discussing this for over a decade.

There have been some consequences. It's no longer possible to get buildings insurance or mortgages in certain flood prone areas.

This effectively makes them uninhabitable, because uninsured flood damage can easily bankrupt a house owner.

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