Back to the drawing board for Oncor after PUC says no again to NextEra
Texas regulators rejected NextEra Energy’s $18 billion bid to buy the state’s largest operator of power transmission lines, Oncor Electric Delivery, for a second time.
The Public Utility Commission of Texas had already blocked the deal in April. On Wednesday, commissioners adopted a draft order that denied NextEra’s request for a rehearing on the merger.
Selling Oncor is key to ending the high-profile bankruptcy of parent Energy Future Holdings. Formed by KKR, TPG Capital and Goldman Sachs Capital Partners to buy the former TXU Corp. in the biggest leveraged buyout in history, Dallas-based Energy Future has been working to restructure almost $50 billion in debt since it filed for Chapter 11 in 2014.
“It’s back to the drawing board,” Paul Patterson, a utility analyst at Glenrock Associates in New York, said in a phone interview. “The creditors have to think about what realistically will get through the Texas PUC.”
Robert Gould, chief communications officer at NextEra, declined to comment. Geoff Bailey, a spokesman for Oncor, had no comment.
An Oncor takeover proposed by a group backed by Hunt Consolidated similarly failed last year.
Commissioners expressed concerns throughout NextEra’s proceedings about the loss of ring-fencing measures designed to protect Oncor’s credit rating and who would ultimately control the board of the company.
The “fatal flaw” in NextEra’s application was its refusal to accept those measures, commissioner Brandy Marty Marquez said in a memo referring to the draft order. “Any benefits offered could not overcome that failure.”
Commissioner Kenneth Anderson filed a memo in which he said NextEra had “failed to meet its burden of proof” to show a transaction would be in the public’s interest.
NextEra, owner of Florida’s largest utility, agreed to purchase Energy Future’s 80 percent stake in Oncor last year in a transaction that has been valued at more than $18 billion, including debt. A bankruptcy judge approved the sale in February.
This story was originally published June 7, 2017 at 11:56 AM with the headline "Back to the drawing board for Oncor after PUC says no again to NextEra."