NextEra Energy has emerged as the front-runner in an auction for bankrupt Energy Future Holdings’ Oncor Electric Delivery unit, people with knowledge of the matter said.
In the next few weeks, Energy Future could name NextEra the stalking-horse bidder for its 80 percent stake in Oncor, which is the biggest owner and operator of power lines in Texas, said the people, who asked not to be identified because the information is private. Oncor is worth more than $10 billion, its chief executive said in April.
Oncor is the crown jewel of Dallas-based EFH, which filed for Chapter 11 protection in April 2014 after taking on too much debt in a $48 billion leveraged buyout, the largest on record. Oncor is considered a prize because Texas is adding electricity customers and state regulators support power line investments. A squabble among creditors over the fate of Oncor derailed Energy Future’s plan to emerge from bankruptcy in less than a year.
EFH also owns Luminant, a power-generating unit, and TXU Energy.
“It’s a great regulated franchise and has good growth,” said Kit Konolige, a utility analyst for Bloomberg Intelligence. “NextEra has already done some transmission in Texas, and they feel like they have some institutional knowledge in the state.”
NextEra, based in Juno Beach, Fla., is the largest provider of electricity generated by wind and solar power in the U.S. In December, it agreed to pay about $4.3 billion for Hawaiian Electric Industries.
That deal shows NextEra’s willingness to expand well beyond Florida, he said. Hawaiian Electric shareholders approved the merger Wednesday, according to a company statement.
EFH is still weighing separate proposals for Oncor and hasn’t made a final decision, one of the people said. Dallas-based Hunt Consolidated and some of Energy Future’s creditors have said they would convert Oncor into a real estate investment trust.
Energy Future spokesman Allan Koenig declined to comment. A representative for NextEra didn’t respond to a request for comment.