Editorials

PUC meeting its regulatory mission on Oncor deal

THE EDITORIAL BOARD

Contractors work on Oncor electric distribution lines. The company serves 91 counties in north and west Texas.
Contractors work on Oncor electric distribution lines. The company serves 91 counties in north and west Texas. Fort Worth Star-Telegram

Texans should take note of what happened in Austin on Thursday and be proud.

A state agency charged with regulating some of the state’s most powerful business interests took on one of the biggest and most powerful and did what it’s supposed to do: It regulated.

The three-member Public Utility Commission thoughtfully balanced the interests of consumers and potential investors in Oncor, the state’s largest utility.

Neither consumer advocates nor representatives of investors who want to buy Oncor for $18 billion came away completely happy.

Dallas-based Oncor delivers electricity to more than 3 million Texas homes and businesses, including North Texas. It’s a big deal.

It was part of electric conglomerate TXU Corp., which was bought by private equity firms in 2007 and was renamed Energy Future Holdings. At $45 billion, it was the largest leveraged buyout in history.

It was all a big deal until EFH went bankrupt in 2014 with $42 billion in debt.

A bankruptcy court in Delaware finally approved EFH’s reorganization plan in December, and a big part is the proposed sale of Oncor to a group led by Dallas billionaire Ray L. Hunt.

For tax advantages, Hunt wants to restructure Oncor as a real estate investment trust, something never done before for a large utility company.

The Public Utility Commission was given only until March 27 to examine the deal.

Commissioner Ken Anderson produced an 11-page memo Tuesday laying out an extensive list of stipulations the Hunt investors would have to meet to gain his approval. At Thursday’s meeting, commission Chairwoman Donna Nelson and Commissioner Marty Marquez mostly agreed.

The main sticking point: Hunt wants to continue to collect from customers about $250 million a year in taxes that under the new structure would flow to investors instead of the government.

No, said Anderson and Marquez. They’ll include that issue in a formal rate-setting process for Oncor, perhaps next year. And Anderson and Marquez want customers to keep a share of that $250 million.

Nelson wouldn’t go along, but PUC actions take only two votes.

The commission is expected to take another look at Oncor on March 21 and vote on the deal March 24.

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