Fort Worth wants Oncor to prove why rates shouldn’t be reduced

The City Council voted unanimously Tuesday night for a resolution demanding that Oncor Electric Delivery file with the city by Sept. 1 information that shows why its electric transmission and distribution rates should not be reduced if its federal tax bill drops.

The vote was 9-0 with Councilwoman Gyna Bivens absent.

The resolution stems from last month’s approval by the state Public Utility Commission of Dallas billionaire Ray L. Hunt’s acquisition of Oncor, the state’s largest electric utility, for $18 billion. Under a restructuring, Hunt’s investment group proposes to split Oncor into two parts, one that would be the operating company and the other a real estate investment trust, or REIT, that would lease equipment to the operating company. But the Hunt group is seeking a new PUC hearing on the terms of the deal.

The Oncor sale is part of the $50 billion bankruptcy of Energy Future Holdings Corp. filed in April 2014. Oncor is an asset of Energy Future Holdings.

Under the new structure, Oncor would have to share with ratepayers about $250 million in annual savings, a federal income tax that has been passed onto consumers, that would not be owed under the new structure.

The PUC last month did not decide on that question and wants to hold a separate hearing on the rate case. That may not happen until mid-2017 and any rate change likely would not happen until 2018.

The 150 member-cities of the Steering Committee Served by Oncor have begun initiating the “show cause” proceedings.

All the cities are poised to pass the same resolution that gives Oncor until Sept. 1 to show why it should be allowed to keep the current rate, said Geoffrey Gay, an Austin attorney who serves as the committee’s general counsel.

A few cities have already adopted the resolution. In addition to Fort Worth, three others were scheduled to approve the resolution Tuesday, Gay said.

Oncor serves about 3 million customers in North and West Texas. Cities can initiate a rate case with Oncor.

“There will be a number of cities taking action,” Gay said. Doing away with the tax “would have a significant impact on future rates. The cities need to be prepared.”

Fort Worth would hold a public hearing on the rate case between Nov. 15 and Dec. 15, according to the resolution.

This story was originally published April 19, 2016 at 8:18 PM with the headline "Fort Worth wants Oncor to prove why rates shouldn’t be reduced."