Reported in a recent article on the Wall Street Journal, TXU’s parent company, Energy Future Holdings (EFH), has hired Kirkland & Ellis law firm to help restructure its debt.
Bloomberg News reported EFH has $47.2 billion in debt. EFH has posted losses for the past seven quarters. The lowest natural gas prices since 1999 is one of the contributing factor to EFH recent debt.
TXU Energy is one of the oldest retail electric providers in Texas with thousands of customers. If EFH goes bankrupt it would be bigger than Enron, with the exception of all the illegal stuff.
When energy providers go out of business customers revert to the default provider in their area, which is usually TXU. In this case who would be the default provider?
Energy Future Holdings owns Oncor, Luminant Generation and TXU Energy; could we be looking at a government buyout in the energy sector?
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When shopping for a commercial electric provider, energy managers like to look at how much debt the provider has, how quickly it can adapt to changes in the market and the overall customer service of the company.
Energy managers don’t want to sign a contract with a provider which could go bankrupt in the near future. Getting strapped to a company only to lose what you signed up for does not make business sense.
A company’s adaptability is impotent in a commercial energy company. Having debt makes it harder for providers to adapt to changes in the market. What this means for managers is losing savings.
Many big energy companies will offer great deal but don’t come through when meeting the needs of the customer.
When looking for a commercial energy provider, be sure to find one with adaptability, great customer service and low amounts of debt.
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