By Tom Kleckner
Sempra Energy’s $9.45 billion bid for bankrupt Energy Future Holdings and its 80% interest in Oncor cleared a second major hurdle within a week after the California-based company reached a settlement agreement Thursday with several key Texas stakeholder groups.
The agreement represents a “significant step forward” and demonstrates “positive momentum” for Sempra’s proposed acquisition of a majority stake in the Texas utility, both companies said. Under the settlement, the parties have agreed that the acquisition is in the public interest, meets Texas statutory standards and will bring substantial benefits.
Parties to the settlement agreement include the Public Utility Commission of Texas staff, the Office of Public Utility Counsel, Steering Committee of Cities Served by Oncor and Texas Industrial Energy Consumers. They will ask the PUC to approve the acquisition, consistent with the governance, regulatory and operating commitments in the agreement, the companies said.
Sempra said the agreement includes regulatory commitments that preserve the existing Oncor ring-fence and the independence of the utility’s board of directors. To protect Oncor, its customers and employees, the commitments also include extinguishing all debt currently held by EFH and Energy Future Intermediate Holding Co., the company said.
One consumer representative called the settlement a “good deal for customers,” saying Sempra agreed to a more robust ring-fence than was in place earlier for EFH or Berkshire Hathaway Energy, which appeared to have a solid $9 million all-cash offer until Sempra stepped in. (See Sempra Outmuscles Berkshire for Oncor.)
Sempra CEO Debra Reed said she was pleased with the support from the groups. “We strongly believe that this transaction will benefit Oncor customers and the state of Texas, and we are working with the PUC to facilitate its comprehensive review of our proposal.”
The PUC now holds the key to approval. The commission said in October it would complete its review within 180 days — by early April 2018. It has scheduled a Feb. 21-23 hearing on the acquisition in Austin. (See Texas Regulators Seek More Details on Sempra Oncor Bid.)
The PUC has seen a changeover among its commissioners since the unsuccessful attempts by Hunt Consolidated and NextEra Energy to acquire Oncor. Chair DeAnn Walker and Arthur D’Andrea have replaced Donna Nelson and Ken Anderson, respectively, with Brandy Marty Marquez the only holdover.
“Our partnership with Sempra Energy will result in a strong, well-capitalized Oncor that will help Texas continue to grow and invest in a safer, smarter, more reliable electric grid in the years to come,” Oncor CEO Bob Shapard said. “This settlement agreement moves us one step closer to ending the EFH bankruptcy process.”
Sempra announced the deal in August. It was approved by the U.S. Bankruptcy Court in Delaware in September but is still subject to a confirmation hearing by the court after PUC approval.