PUC to NextEra— What Part Of “NO”?

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Back on April 13, the Texas Public Utility Commission rejected NextEra Energy Inc.’s proposed $18.4 billion acquisition of Oncor. Though not unexpected, the PUC unanimously voted down the deal saying it was not in the best interest of consumers who want the best electricity rates. The chief concern being NextEra dispensing with ring-fencing measures to protect Oncor.

But last month, NextEra returned for a re-hearing saying that the PUC had exceeded its powers by rejecting their bid and listing them in 14 Points of Error. The proposed transaction would enable NextEra to buy up all of Oncor’s equity securities in three transactions:

  1. 80.03% share of Oncor held indirectly by Energy Future Holdings
  2. NextEra acquires 100% of Texas Transmission Holdings Corporation and Texas Transmission Investment, LLC, including the latter’s 19.75%. interest in Oncor
  3. 0.22% interest in Oncor held by Oncor Management Investment LLC

Last week, the PUC again rejected NextEra saying“NextEra Energy’s method ‘of financing the proposed transactions does not entirely eliminate the debt above Oncor, but merely refinances that debt with new debt at NextEra Energy Capital Holdings.” Without ring-fencing, the plan increases Oncor’s financial risk.

What’s Next for Oncor?

There area few possibilities. One is that Oncor could go public but financing that could be a nightmare. Another possibility is that the spurned suitor, Hunt Consolidated Inc, could make another courting attempt. Centerpoint has mulled the purchase as has Berkshire Hathaway and others.

One thing is certain, whoever the PUC allows to buy Oncor will have will have their hands full to protect the power to choose.

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