Just Energy, a Toronto-based retail energy provider, is seeking funding relief in the United States and Canada after the freezing storm in Texas indebted it with $250 million. The company has already the creditor protection via an Initial Order under the Companies Creditors Arrangement Act (CCAA) of the Canadian government.
Firstly, the company received the protection of the CCAA from the Ontario Superior Court of Justice; it is seeking similar support under the Chapter 15 of the Bankruptcy Code in the U.S.
Secondly, the company also reached an agreement with one of its Term Loan lenders for a $125 million DIP financing; in addition, Just Energy will receive support with commodity supply and ISO services.
Thirdly, all of this is sought by the company to ensure its operations across North America with no interruptions; and without impact to customers’ bills. Consequently, these payments will allow Just Energy to make payments to ERCOT; with which the company got indebted with more than $250 million, after the boost in prices due to the storm.
Also, “Just Energy sought and received a Stay of Proceedings and other protections provided by the CCAA; in order to provide the Company with breathing room to pursue alternatives that would allow it to emerge as a strong, stable business.” The company says in its statement.
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Just Energy with a $250 million debt that may change
As we reported previously, the freezing storm in Texas caused major energy disruptions in the state and abroad. ERCOT’s handling of the matter provoked a peak in prices to almost irrational levels. In fact, the increase was so high, it sparked suspicions of fraud, or prices being boosted artificially.
Moreover, earlier this month, Potomac Economics, firm that monitors ERCOT’s market, said the grid operator in Texas made a $16 billion mistake during the winter storm. As it kept prices too high for more than a day after the outages took place; late in February 17. Potomac said on a filling ERCOT should have immediately ended the prices intervention.
In addition, Just Energy said in its statement the $250 million debt with ERCOT may change, according to the outcome of the dispute. “Since these disputes are still pending and not resolved, Just Energy is unable to pay the full amounts.”
Finally, this extreme weather event caused ERCOT’s whole market sales to incur in charges of more than $55 billion over a seven-day period; amount equal to what ordinary the company incurs in four or five years. However, the total cost to Just Energy and other companies may change as the dispute with ERCOT will be subject to price adjustments.