A Case Study - Retail Electric Provider Bankruptcies

A Case Study - Retail Electric Provider Bankruptcies Texas Commercial Energy (the "Company" or "TCE") filed for bankruptcy protection on March 6, 2003 in the Southern District of Texas following a sudden and dramatic rise in the price of wholesale electricity. TCE is a Retail Electric Provider ("REP") serving commercial and light industrial customers in the region of Texas administered by the Electric Reliability Council of Texas ("ERCOT"). TCE acquires electricity on the wholesale market and then …

…start-up companies to become involved in the ERCOT market and to further the goal of deregulation of the retail power market, there is certainly the risk that a company will become vulnerable to market fluctuations if it lacks the financial ability to become fully hedged. Letters of credit are one way to provide such credit support and can be used effectively in a bankruptcy case to provide additional financing and equitytype capital for a debtor.