By Tom Kleckner
NextEra Energy CEO Jim Robo said Wednesday that the Florida-based company would “vigorously” pursue a $275 million termination fee it says it is owed following a failed attempt to acquire Texas utility Oncor.
The Public Utility Commission of Texas in April ruled that NextEra’s $18.7 billion acquisition of the state’s largest utility wasn’t in the public interest, and then rejected two subsequent rehearing requests. Warren Buffet’s Berkshire Hathaway Energy has since announced it has reached an agreement to buy Oncor’s parent, bankrupt Energy Future Holdings (EFH), which would give it control of Texas’ largest utility. (See PUCT Staff Welcomes Buffett’s Oncor Bid; Debtor Miffed.)
During a conference call with financial analysts following the company’s release of second-quarter earnings, Robo said the termination fee was triggered when NextEra was unable to agree to a list of what it called “burdensome conditions,” which included protective ring-fencing around Oncor and an independent board of directors for the company.
“The agreement has been terminated by EFH … in that the burdensome conditions had not been satisfied, which was one of the precursors to obtaining regulatory approval,” Robo said. “As a result of the termination of merger agreement, we will vigorously pursue our rights to termination of the fee.”
NextEra has also filed a lawsuit in Texas state court against the PUC, asking the court to reverse the regulators’ rejection of the proposed acquisition. Robo declined to address the lawsuit, saying the petition it filed “speaks for itself.” (See “NextEra Sues over Regulators’ Rejection of Oncor Acquisition,” Company Briefs.)
Asked about the Department of Energy’s grid reliability study and its focus on baseload power, Robo said it was too early to speculate about the final report’s conclusions. He said the “data is pretty clear” that the grid does not have any reliability issues.
“The facts are, the grid is very reliable in America right now, particularly as storage prices come down and make renewables more reliable,” he said. “Our industry has a choice of hanging on to the techs of the past or adopting and embracing the technology of the future. We know what our strategy is. We’re going to embrace renewables and embrace them hard.”
NextEra reported an 11% increase in adjusted earnings during the second quarter, from $777 million last year to $881 million this year. Earnings per share were $1.86, up from $1.67, beating Nasdaq’s consensus analysts’ forecast of $1.76.
The company’s stock price jumped almost 2%, from $142.62/share to $145.35/share, after the market opened. It was trading at $144.94/share by late afternoon.