By: Robert Walton |
- Sempra Energy announced today it has expanded the number of parties involved in a settlement regarding its proposed acquisition of Oncor Electric to include nine of the 10 parties, calling the news “a significant step forward” for the deal.
- The new parties to the settlement include Energy Freedom Coalition of America, Nucor Steel and Golden Spread Electric Cooperative Inc. The Texas Legal Services Center, which represents low income customers, is the lone holdout.
- Sempra wants to pay $9.45 billion for Energy Future Holdings Corp., the bankrupt parent of Oncor. But regulators in Texas have been cautious, requiring companies to build in assurances that the utility will operate independently of its parent company’s finances. The deal has an enterprise value of about $18.8 billion. A procedural schedule includes a hearing next month, with a goal of completing the review in early April.
The process to find new corporate ownership for Oncor has stretched years, but with the bulk of the intervening parties now on board with a settlement, Sempra is calling for the Public Utilities Commission of Texas to approve the deal. But one the lone holdout appears to be the Texas Legal Services Center, which represents low income customers in the Oncor service territory, according to a Jan. 5 filing.
In its October motion to intervene, TLSC told the commission that the group “represents low income consumers who take electric service within the Oncor service territory. Low-income consumers may be adversely affected in this proceeding because their rates may be negatively impacted by the proposed merger that is subject to this case.”
TLSC on Jan. 23 filed additional testimony from Carol Biedrzycki, the executive director of Texas Ratepayers’ Organization to Save Energy, Inc.
Biedrzycki said several parties — Oncor, commission staff and Office of Public Utility Counsel — did not discuss the settlement with TLSC or offer to “work with the organization toward a settlement before the stipulation was put in writing and presented to the commission.”
TLSC’s concerns break down into two groups: that the stipulation makes no commitment to maintain energy efficiency programs for residential and low-income customers, and that the “interest savings to residential customers is unreported and there is no agreement as to how any savings that materialize will be returned to residential and low-income customers.”
“The poverty population in the Oncor service area is also the largest in Texas when compared to other electric utility service areas,” Biedrzycki said.
Sempra entered into an agreement to purchase EFH in August of last year, and filed an application with the PUC in October. Federal regulators signed off on the deal in December.
Under the deal’s terms, Sempra would pay approximately $9.45 billion in cash to acquire Energy Future and its 80% ownership interest in Oncor. Sempra has said its equity ownership after the transaction will be approximately 60% EFH.The settlement includes commitments to preserve the existing ringfencing protections and the independence of the company’s board of directors, as well as to extinguish all debt currently at EFH and Energy Future Intermediate Holding Company LLC.
In addition to approval from the Texas PUC, Sempra will also need additional authorization from the U.S. Bankruptcy Court.