A controversial proposal by investors to buy Oncor, the state’s largest electric utility, is showing serious signs of unraveling.
According to media reports the investors seeking to buy Oncor now balk at conditions on that deal set by the Texas Public Utility Commission. The investors claim that “the transaction as currently configured will not close based on the [PUC] order as written.” They want the PUC to reconsider.
The PUC staff also states in a separate but related rate-setting proceeding that the investor coalition has failed to comply with a host of requirements and is now proposing “a transaction that is materially different from the transaction approved.”
All this spells trouble for Ray L. Hunt and his investment coalition as they try to acquire Oncor. Many observers agree — including those with the investment coalition itself — that extensive delays could sink the deal.
The proposed deal has been widely panned, with the AARP, city coalitions and others warning that it creates new risks for ratepayers, delivers few benefits in return, and also puts ratepayers on the hook for a non-existent tax liability.
Oncor owns and operates approximately 119,000 miles of transmission lines and serves about 10 million Texans around the Dallas-Fort Worth area and elsewhere. Energy Future Holdings, its parent company, is immersed in bankruptcy.
The Hunt deal, which is supported by many of the same investors behind the bankrupt EFH, would divide the utility into two separate entities. This complicated new corporate structure would create a tax savings windfall for the utility. However the investment coalition has balked at sharing any of that windfall — estimated at $250 million annually — with Oncor’s customers.
In an order last month the PUC provisionally approved the transaction but also said the tax issue must be revisited in a separate proceeding. North Texas cities also have begun action that would require the PUC to examine Oncor’s rates under the deal.
The Dallas Morning News reports that if the tax questions aren’t resolve soon, the purchase could collapse under its own weight. The commission will meet May 4 to consider rehearing the case.
— R.A. Dyer