By: Tom Kleckner |
The Public Utility of Commission on Wednesday approved a settlement in Oncor’s proposed swap of more than $400 million in assets with Sharyland Utilities, paving the way for the two parties to complete the transaction (Docket 47469).
The exchange will result in Oncor acquiring 54,000 retail distribution customers and assets from Sharyland, in exchange for 258 miles of Oncor transmission lines in West and Central Texas. The PUC’s approval would also dismiss Sharyland’s current rate case, providing “significant rate relief to our customers,” according to the utility’s CEO, David Campbell.
In 2015 the commission opened an inquiry into Sharyland’s rates, which spiked following the utility’s 2010 acquisition of a bundled package of financially troubled electric cooperatives. Sharyland is owned by the Hunt family of Dallas, which failed in a 2016 bid to buy Oncor.
“The Hunt organization and Sharyland took a lot of arrows from customers and others, for problems that really weren’t of their making,” Commissioner Ken Anderson said. “They were faced with an intractable problem. … This will solve that problem. Oncor didn’t have to do this. It couldn’t have happened but for the agreement of everybody.”
The agreement also avoids an expected rate increase for Sharyland’s retail customers in South Texas.
“Ultimately, the proposed transaction seeks to resolve the rate disparity that currently exists between Sharyland’s high retail electric delivery rates and those of Oncor” and other ERCOT transmission and distribution utilities, the order said.
The commission approved Sharyland’s request to recover up to $17 million in transition costs for the proposed transaction, although it directed the utility to use its “best efforts” to sell any assets not being exchanged and to minimize employee-related transition costs.
The PUC also approved the incorporation of Sharyland’s energy efficiency cost recovery factor (EECRF) and transmission cost recovery factor (TCRF) regulatory assets or liabilities into Oncor’s EECRF and TCRF.
Oncor plans to make its 2018 EECRF effective March 1, 2018, and will include a refund of $6,097,744 for its over-recovered 2016 energy efficiency costs. The transaction, expected to close before March 1, will result in a credit of $243,199 for Sharyland’s over-recovered 2016 energy efficiency costs. That total will be combined with Oncor’s EECRF and be refunded to the appropriate Oncor rate classes.
Oncor is already the largest utility in Texas, with 3.4 million wholesale and retail customers.
The commission’s approval led to a round of back-patting among the parties and commission staff.
“It’s been a long process, with a lot of tricky issues we didn’t anticipate,” said Vinson & Elkins’ Matt Henry, Oncor’s legal counsel. “Staff worked hard to help us fight through the things. Working with Sharyland and their team, there was never a point we didn’t find an obstacle we couldn’t work through.”
“Matt is probably just happy he finally has a change-in-control agreement,” said PUC Executive Director Brian Lloyd.
Schedules Set in LP&L, Sempra-Oncor Cases
The commissioners set tentative hearing dates in a pair of upcoming high-profile cases that will keep them busy well into 2018.
Lubbock on Sept. 1 filed its formal application to integrate 470 MW of its load with ERCOT by June 2021. That load is currently served through a wholesale contract with SPP member Southwestern Public Service; the contract expires May 31, 2021.
Another prehearing conference is scheduled Monday for Sempra Energy’s attempted acquisition of Oncor (Docket 47675). The PUC has blocked off Feb. 21-23 for a hearing on the merits.