|
|
|
|
|
Updated: Texas PUC Commissioners Agree NextEra Acquisition of Oncor Not in Public Interest, Preparing Order To Reject Transaction
As first reported by EnergyChoiceMatters.com yesterday, Commissioners of the Texas PUC agreed unanimously during the March 30 meeting that NextEra Energy's proposed acquisition of Oncor is not in the public interest, and the PUC is preparing an order to reject the transaction on such grounds (Docket 46238)
While Commissioners expressed agreement, no formal vote was taken, and the PUC's action was not final. The PUC said that it will take final action on a formal order at its next open meeting in April
The record in the case is closed, and NextEra Energy (NEE) procedurally may not present a "sweetened" deal for PUC consideration absent approval of all of the parties to the case to re-open the record.
Generally, Commissioners were concerned with governance issues, and NextEra's opposition to certain provisions concerning ring-fencing and Oncor board independence in the manner as proposed by PUC Staff and other intervenors as conditions for approval. Commissioners were concerned with, in particular, the lack of strong ring-fencing under the proposed transaction given NextEra's leveraged position.
As one example, Commissioner Kenneth Anderson said that the Oncor board should have independent authority over distributions and there should be additional restrictions on upstream distributions
Anderson also saw as much downside as upside in the proposed linking of Oncor's credit rating to NextEra Energy
"I worry about removing the ring-fence protections in this situation, where the debt above Oncor isn’t being extinguished, but is instead being refinanced with new debt at NextEra Energy Capital Holdings," said Chairman Donna Nelson. "The parent company will remain substantially leveraged in order to make the purchase happen."
As NextEra has indicated that conditions to address these concerns would kill the transaction, Commissioners agreed that it would not make sense to issue an order conditionally approving the transaction with the provisions to address the governance and ring-fencing concerns, and Commissioners instead agreed to prepare an order rejecting the transaction
Anderson also said that Oncor governance and independence issues were heightened given NextEra's ownership of competitive subsidiaries in ERCOT, including generation and retail supplier Gexa
In a memo, Anderson further detailed his concerns:
"I will not now go over all of the conditions proffered by the various parties, but will instead focus on three key issues that I think are among the main obstacles. Namely: (1) the nature, composition and independent authority of Oncor's Board of Directors, including, but not limited to that board's independent authority over distributions; (2) additional restrictions on upstream distributions; and (3) the related linking of Oncor's credit rating with NEE. In each case I believe that NEE's deal killers are also mine. I believe that a majority of Oncor's board must be truly independent, disinterested and have all of the authority they currently possess as well as those requested by Staff, TIEC and other intervening parties. Without limiting that, I also have concluded that we must impose more restrictive parameters around upstream distributions in order to ensure that Oncor retains sufficient retained earnings to fund the equity portion of capital expenditures approved by its board as well as to maintain the company's liquidity to provide for operations and its overall financial integrity. Indeed Oncor since 2007 has been able to fund the equity portion of its capital investment program by retaining internally generated earnings as noted by Bob Shapard in response to a question from this commissioner. Finally and without belaboring at this time all of the reasons (which can wait upon a more detailed memorandum if it becomes necessary), I see as much downside as upside to linking Oncor's credit rating to NEE. Therefore I would require Staff's version of the condition de-linking the respective credit ratings. These are not the only requirements that I would impose, but given that they are all also NEE deal-killers it seems to me that we would be wasting time and resources to proceed further down the road of appearing to approve the transactions with such conditions."
ADVERTISEMENT Copyright 2010-16 Energy Choice Matters. If you wish to share this story, please
email or post the website link; unauthorized copying, retransmission, or republication
prohibited.
March 31, 2017
Email This Story
Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
NEW Jobs on RetailEnergyJobs.com:
• NEW! -- Sales Manager -- Retail Supplier -- New York
• NEW! -- Sales Manager -- Retail Supplier -- MA / NJ
• NEW! -- Sales Agent -- Retail Supplier -- Multiple markets
• NEW! -- Customer Retention -- Retail Supplier -- Houston
• NEW! -- Director of Channel Sales -- Retail Supplier
• NEW! -- Regulatory Response I/C -- Retail Supplier -- Houston
• NEW! -- Channel Manager, Sales -- Retail Supplier -- Houston
• NEW! -- Commercial Sales B2B -- Retail Energy
• NEW! -- Brand/Marketing/Channel Manager -- Retail Energy
• NEW! -- Business Development Professional -- Retail Supplier -- Houston
• NEW! -- Senior Analyst -- Retail Energy -- Houston
• NEW! -- Manager of Regulatory Affairs -- Retail Supplier
• NEW! -- Channel Manager, Sales -- Retail Supplier
• NEW! -- Implementation Manager
-- Retail Energy -- Houston
|
|
|
|