Commissioners shouldn’t back down on Oncor
The Public Utility Commission took a tough stand last month on the proposed sale of Oncor Electric Delivery, Texas’ largest power transmission and delivery company.
At least, two of the three commission members took a tough stand.
Now the people who want to buy Oncor, principally Dallas investor Ray L. Hunt and his family, want the commission to reconsider.
The $18 billion transaction, the purchasers wrote in papers filed last week, “will not close” unless the commission changes its March 24 regulatory order.
It’s not up to the commission to make this transaction happen. It’s job is to make sure that if it happens, it will be in a way that best serves the people of Texas.
Mostly, that means people from the more than 3 million homes and businesses, primarily in North Texas, whose electricity is delivered along Oncor’s more than 119,000 miles of transmission and distribution lines.
That certainly doesn’t mean that the Hunts and others are wrong to argue. After all, the commission itself, after many months of study, determined that the transaction would be in the public interest.
The Oncor sale is the linchpin of Energy Future Holdings’ effort to emerge from its 2014 bankruptcy. EFH was created in 2007 when private equity firms bought TXU Energy for $45 billion. Commission members have said they’d like to see the bankruptcy ended.
But there are significant sticking points.
The stickiest is a disagreement over about $250 million a year Oncor collects from ratepayers to pay taxes.
The Hunts plan to take Oncor’s ownership in a complicated new direction — restructuring it as a real estate investment trust — that will mean those taxes won’t be owed by the company. The buyers want that money to go to investors.
Last month, commissioners Brandy Marty Marquez and Ken Anderson Jr. decided that this decision should wait until Oncor undergoes a formal rate-setting proceeding. They leave open the possibility of Oncor customers keeping a share of the $250 million. Commissioner Donna Nelson disagreed.
Marquez and Anderson are right.
Big business transactions and utility regulation don’t get much more complicated than this. Future tax consequences deserve special consideration in a formal rate-making process.
The Hunts make some good points. They ask that any change in how taxes are treated not take place until the conversion of Oncor’s structure actually happens.
Such points of accommodation are possible. But Marquez and Anderson should not back down on keeping some of that money in Oncor customers’ pockets.
This story was originally published April 25, 2016 at 5:53 PM with the headline "Commissioners shouldn’t back down on Oncor."