Florida power company renews bid for Oncor Electric

Power generator NextEra Energy has renewed its interest in buying Oncor Electric Delivery as a rival takeover deal led by Hunt Consolidated of Dallas shows signs of unraveling, according to two people familiar with the talks.

NextEra made its position known after Oncor’s parent, Energy Future Holdings, replaced its bankruptcy reorganization plan on May 1, according to the people, who asked not to be named.

While the sale of Oncor to the Hunt group is still possible, the change freed Oncor up to be pursued by other bidders, Chief Executive Officer Robert Shapard said at a Texas regulatory hearing last week. “We are to work with all parties interested in buying the company at this point,” Shapard said at the hearing.

An Energy Future lawyer mentioned a “third party indication of interest” in Oncor in a court hearing on an unrelated matter on Tuesday, but did not elaborate.

NextEra, based in Juno Beach, Fla., owns Florida Power & Light and is a leading generator of wind and solar power in North America. It was the frontrunner to buy Oncor, Texas’ biggest electric-transmission operator, last year before Energy Future cancelled a planned auction and agreed to sell the unit to Hunt and creditors as part of a bankruptcy proposal.

“Moving forward, we look forward to working with all interested parties as these proceedings continue,” Geoff Bailey, director of communications for Oncor, said in emailed statement.

Representatives for Energy Future and NextEra declined to comment.

“Other parties may show an interest in owning Oncor, but we continue to believe that our plan is the best plan for Oncor and its customers,” said Hunt spokeswoman Jeanne Phillips.

Complex transaction

After the Public Utility Commission approved the sale to the Hunt-led group on March 24, the complex transaction began to show signs of breaking down, as regulators placed conditions on the deal. Hunt plans to create a real estate investment trust to operate Oncor, leaving some investors balking at the idea of having to share future tax savings with ratepayers. Then, Energy Future filed a new reorganization plan.

The tax dispute was a key sticking point right up until the PUC vote. Some parties, including one of the commissioners, had said the income-tax savings the buyers would get should be shared with ratepayers. The buyers called the argument “illogical” in a filing with the PUC, and fought it during hearings. Some $210 million to $250 million a year is at stake, Geoffrey Gay, an attorney involved in the case who represents ratepayers, said in an interview in January.

Energy Future filed for bankruptcy reorganization in April 2014, with nearly $50 billion in debt, much of which was racked up by its record leveraged buyout seven years earlier by KKR & Co., TPG Capital and Goldman Sachs Group Inc.’s Capital Partners. That bet went bad when natural gas prices plunged.

Texas regulators are currently discussing whether to grant a request by the Hunt-led group for a rehearing to consider modifying the approval order to remove conditions the consortium’s investors are objecting to. Another PUC meeting is set for May 19.

This story was originally published May 12, 2016 at 3:17 PM with the headline "Florida power company renews bid for Oncor Electric."