Texas’ largest power company has filed for Chapter 11 bankruptcy, but the move is not expected to impact the electric grid.
Saddled with some $40 billion in debt, Energy Future Holdings — formerly known as TXU Corp. before a massive leveraged buyout in 2007 — represents one of the largest bankruptcy filings in U.S. history. The company seeks an agreement with key investors to separate its electric generation and retail assets.
EFH, which had bet big on natural gas prices that plummeted, owns the retail electric provider TXU Energy and Luminant, the state’s largest generator. It filed the bankruptcy petition in a Delaware court.
The reorganization, long in the works, is not expected to impact the companies' daily operations or threaten Texas' electric grid.
"This restructuring is focused on our balance sheet, not our operations," John Young, the company’s president and CEO, said in a prepared statement.
The Electric Reliability Council of Texas, operator of the grid covering most of the state, said it had been monitoring the issue, and does not expect it to threaten electric reliability. EFH’s subsidiary Oncor, whose 119,000 miles of transmission and distribution lines deliver power to more than 3 million homes and businesses, was not included in the filing.
“ERCOT sees no immediate concerns related to system reliability or market efficiency associated with this filing,” the grid operator said in a news release.
ERCOT said it had participated in eight bankruptcies on its market since 2001. This one is the largest.
Disclosure: Energy Future Holdings was a corporate sponsor of The Texas Tribune in 2011 and 2012. A complete list of Texas Tribune donors and sponsors can be viewed here.