What's Next For Oncor, Texas' Largest Power Utility, After Failed $18 Billion Bid?
It’s now up to a bankruptcy court in Delaware to decide what becomes of Oncor. The judge in the case wants to sell the Dallas-based electric delivery company to pay off creditors of its parent company Energy Future Holdings. The Public Utility Commission last week rejected an $18 billion offer from NextEra Energy, but that part of the story isn’t over.
Jeff Mosier writes about energy and the environment for The Dallas Morning News.
Is NextEra giving up? “Well, NextEra said at their bankcruptcy hearing on Monday that they are still going to take a shot at this (bidding for Oncor), but they didn’t give any descriptions of what they could do to revive the deal. The PUC and NextEra seem very far apart. It seemed like NextEra’s deal killers linked up with the PUC’s deal killers.”
Deal killers? “Independence. The PUC believes Oncor needs an independent board, or at least a majority of the board, that cannot be replaced or appointed by NextEra. Next Era, if they’re going to spend $18 billion, they want to have some semblance of control over that company, and they want to have a say in it.”
Would the Ray Hunt family of Dallas try again after last year’s bid fell through? “They haven’t been commenting. But the general perception among people involved in the bankruptcy hearings and in this whole process think the Hunts could, if they can get their investors back and raise the money, would come back and have a shot at this.”
If neither tries again: “The other option would be equitization. Basically taking Oncor and saying ‘Alright, all you creditors, you now own a piece of it. And we’re going to sell Oncor to the public so it’ll be kind of a publicly owned company.' A lot of the bond holders don’t necessarily want to do that because they want to get their cash out of it. They don’t want to own part of another company. They just want their money. I’m also told there could be tax issues with that.”
The Hunt and NextEra bids came at auctions. What about holding a third? “An argument for a third auction is that people have seen two auctions go south. They have a pretty good blueprint of what the PUC thinks and what they want. So it wouldn’t be hard for a company, as long as they had the finances to do it, to come in here and say ‘We know what we can do to make this deal happen.’”
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