By: Jeff Mosier |
The latest effort to free Oncor, Texas largest regulated utility, from bankruptcy court cleared an important hurdle Thursday.
A group of key stakeholders is backing the $9.45 billion plan to buy Oncor, which owns and manages power lines and related infrastructure for about 3.4 million business and homes, mostly in north and west Texas.
The sale now has the approval of the staff of the Texas Public Utility Commission, Office of Public Utility Counsel, Steering Committee of Cities Served by Oncor and Texas Industrial Energy Consumers.
“It’s critical to put this thing to bed,” said Geoffrey Gay, attorney for the Oncor cities steering committee. “I think it’s as good of a deal as we can get. And I’m fearful that if this Sempra proposal dies, the next party in will be worse than what we want.”
While these are major endorsements, they don’t guarantee that San Diego-based Sempra Energy will get approval from the state regulator, the Texas Public Utility Commission. A vote is expected early next year.
“Final authority on our application rests with the PUCT, but, if approved, our partnership with Sempra Energy will result in a strong, well-capitalized Oncor that will help Texas continue to grow and invest in a safer, smarter, more reliable electric grid in the years to come,” Oncor CEO Bob Shapard said in a written statement.
The companies said in written statements Thursday that this “settlement agreement is a significant step forward, demonstrating positive momentum.”
The three-member PUC must determine that Sempra’s purchase of Oncor is in the public’s interest before signing off on the deal. That requirement has already scuttled earlier efforts involving Dallas’ Hunt family and Florida-based NextEra Energy.
In another deal, Warren Buffett’s Berkshire Hathaway received a similar vote of confidence from Texas stakeholders. But the agreement was ultimately shot down by a Delaware bankruptcy court when Sempra arrived with a larger offer.
Sempra officials have already agreed to many significant concessions — such as an independent and “disinterested” Oncor board and a holding company free of debt — previously demanded by the PUC.
Still, there have been tough questions about debt load after the sale, financing of the purchase and financial risk from other Sempra subsidiaries.
Although Oncor remains financially stable, parent company Energy Future Holdings filed for bankruptcy in 2014. The sale of Oncor is needed to pay off some of EFH’s debt.
EFH’s two other companies, Luminant and TXU Energy, were already spun off under new parent company Vistra last year.
This is the second milestone reached this week for the Sempra-Oncor deal. The Federal Energy Regulatory Commission signed off on the sale, although FERC had not been a barrier to previous deals.