By: Jeff Mosier |
The four-year search to find a new owner for Oncor — Texas’ largest regulated utility — appears to be nearly over.
Texas Public Utility Commissioners asked staff members Thursday to prepare an order approving the $9.45 billion sale in time for the agency’s March 8 meeting. Besides that vote on San Diego-based Sempra Energy’s offer, a second approval will be needed from the Delaware court handling the bankruptcy of Oncor’s parent company, Energy Future Holdings.
It appears that commissioners have “blessed” the deal, said Geoffrey Gay, attorney for the steering committee of cities served by Oncor. “The commissioners have the authority to challenge anything or ask questions, but they seem to be content that the parties have addressed every major issue,” he said.
At Thursday’s meeting, commissioners spent just a few minutes on the sale of Oncor, which previously has generated hours of debates and public discussions.
Sempra and Oncor now have all intervenors — including business, government and consumer advocates — unanimously on board with the deal.
“The commission could have further questions on March 8 or further discussions,” said Geoff Bailey, an Oncor spokesman. “But I do think that the unanimous settlement agreement [with intervenors] is a big deal. That’s the first time.”
Earlier, commissioners had questioned some parts of the proposal, such as plans to give some of the acquisition debt to Oncor’s new holding company. That debt “overhang” was subsequently eliminated by Sempra.
Oncor owns and operates power lines that serve about 3.4 million households and businesses, mostly in North Texas.
If approved, the sale would give Oncor additional stability after it was dragged into bankruptcy court by Energy Future Holdings in April 2014. That company, which also owned Luminant and TXU, was created in 2007 by what was the largest leverage buyout at the time.
Eventually, lower energy prices and crushing debt sent Energy Future Holdings into a financial spiral. Luminant and TXU were then spun off under a new parent company, Vistra. Oncor is the final remaining piece of the old Energy Future Holdings empire.
Despite its parent company’s troubles, Oncor has by all accounts operated normally. Since its rates are regulated by the state, the company makes a steady profit every year. And an independent board insulated Oncor from much of Energy Future Holdings’ struggles.
If approved next month, the sale is also expected to give Oncor customers a break on their rates. The deal is projected to improve Oncor’s credit rating. And Sempra committed to returning almost all of those interest rate savings to consumers until the company’s next rate case.
“It’s going to be the best possible solution, and the parties ought to be happy,” Gay said. “And ultimately, it’s in the best interest of ratepayers.”
Oncor customers are already due a financial break thanks to the recent federal corporate tax rate cut. The company previously agreed to return those savings to ratepayers.
PUC approval in March would end what has been an often contentious and unusually long process. Previous efforts by Dallas’ Hunt family, Florida-based NextEra Energy and Warren Buffett’s Berkshire Hathaway all fell through for various reasons.
The sale has to be approved by the bankruptcy judge and PUC, which each have their own goals. The PUC must determine whether the sale is in the public interest, while the court is trying to maximize compensation for creditors.